Energy Supply

Humanity will run out of fossil fuels before the end of this century latest.

It will therefore need to develop sustainable substitutes, especially for air and road transport, as well as for shipping.

Biofuels will be one of them, renewable electricity to power electrical vehicles another one. Both will be complementary.

Biofuels produced from corn, soy beans, palm oil, sunflower seeds, sugar cane/beets and rapeseed already serve that purpose at small scale, especially in Brazil, USA and EU. But these crops constitute basic feedstock for human or animal feeding. Their production cannot be expanded indefinitely, due to increasing scarcity of fertile land across the earth.

Humanity will therefore have to search for alternatives. These should grow on land unsuited for food production, require little fresh water and fertiliser. In addition, their production costs and C02 emissions should be low.

Micro algae appear to fulfil these criteria better than other biomass. They grow everywhere with little or no fresh water and fertiliser. Moreover, they achieve much higher energy yields/ha than any conventional biomass.

But to get to large-scale, low cost algae farming it will be necessary to overcome three major obstacles:

• develop efficient methods for harvesting, drying and separating the natural oil;
• prove the economic viability of algae farming and the competitiveness of algae biofuels with conventional biofuel;
• convince investors to enter the field despite high upfront investment.

During the last 20 years scientific institutes in the USA and Europe have undertaken unprecedented research about algae. Today, we know much better about the qualities of different varieties, e.g. their fat content which can exceed 50 per cent, the optimal conditions for growth, etc.

Private companies, both in the USA and Europe, have developed innovative methods for harvesting and oil extraction.

Thanks to these efforts we know that micro algae have a huge potential for manufacturing biofuels in the future.

The EU wants to be one of the front-runners for what is likely to become a major green industry in the future.

Its 2008 biofuel directive imposes to add at least 10 per cent biofuels to diesel/gasoline. It also requires the EU to promote second and third generation biofuels, in the EU and world-wide.

Consequently, the 7^th Research Framework Programme (2007-13) contributes a tiny amount € 21 million to three projects of industrial algae farming with a total cost of € 31 million. The EU has understood the strategic importance of algae farming for its self-sufficiency with mineral oil.

European industry has also waken up to the challenge. In 2009 it has established the “European Algae and Biomass Association” as their EU-wide lobby.

All this can be no more than a tiny beginning. The 8^th Framework Programme( 2014-20) should step up research on algae farming and processing. In parallel, the European Investment Bank and national development banks should offer venture capital to private investors willing to enter the new field.

Europe has a vital interest in making large-scale production of biofuel from micro algae economically and ecologically viable

Western democracies are committed to the respect of public and private international law. But when exposed to infringements, they often feel powerless.

The Argentinian nationalisation of 51 per cent of the oil and gas company YPF, owned by the Spanish Repsol is the latest case in point.

Argentina argues it needs to exert full control over its oil and gas resources. This is far-fetched: YPF has been subject to Argentinian national jurisdiction, and the nationalisation of the company will not make the country self-sufficient with oil and gas.

Under international law, Argentina is authorised to nationalise YPF provided there is a public interest and shareholders receive fair compensation, which Argentina is not prepared to grant. What is called “nationalisation” is therefore a multi-billion Euro criminal act of plain theft!

In the case of trade disputes, the WTO Tribunal offers a well-established platform for settling dispute. WTO members respect its rulings, if only for fear of reprisals.

Disputes concerning investments in third countries are a different matter, as they usually involve big financial interests. The World Bank International Centre for Settlement of Investment Disputes (ICSID) lack the clout to impose its rulings. Argentina has been taken before the ICSID more than any other country and become notorious for non-compliance.

The EU has offered Spain its “support”. Both the EP and foreign ministers have issued appropriate declarations.

Theoretically, the EU could retaliate by suspending imports of beef, soy beans and other agricultural products from Argentina. This would inflict considerable damage on Argentina, but China would be happy to come to the rescue. More important, it would not be legal under WTO rules. Last not least, Spain might not even obtain a majority within the EU for such a far-reaching act of solidarity.

This leaves Spain with no alternative but to sue Argentine for infringement of the existing bilateral treaty on investment protection and accept the mediation that Columbia has graciously offered to the two parties.

In an era of increasing direct investments in third countries it is high time for the international community to firmly establish the principle of equitable compensation in case of nationalisation and adopt an international treaty defining the rights obligations of host governments and investors.

The EU should take an appropriate initiative, if possible jointly with USA and China.

 

Am 26. Jahrestag der Atom-Katastrophe in der ukrainischen Stadt Tschernobyl weihen hohe Staatsbeamte die Arbeit an einer neuen Schutzhülle ein. Diese wird Block 4 des Atomkraftwerks abdecken, in dem sich vor 26 Jahren der tragische Unfall ereignete. Laut offizieller Angaben aus Kiew belaufen sich die Kosten des Projekts auf kanpp Milliarde Euro.

“Die erfolgreiche Durchführung dieses Projekts wird sicherstellen, dass die Umgebung ökologisch sicher wird und keine Strahlung in die Atmosphäre austritt”, erklärte der Präsident der Ukraine Wiktor Janukowytsch beim Auftakt der Zeremonie zur Einweihung der Arbeiten. Der Bau soll bis 2015 abgeschlossen werden. Das Staatsoberhaupt der Ukraine lobte ausserdem die Unterstützung und die finanzielle Hilfe anderer Länder.

Die neue Hülle wird nicht unmittelbar über dem Reaktor errichtet, sondern soll vielmehr in der Nähe aufgebaut und danach über den gefährlichen Teil des Kraftwerks bewegt werden und dieses wie ein Deckel hermetisch abriegeln. Sie soll 109 Meter hoch und 150 Meter lang sein und den beschädigten Reaktor für die nächsten hundert Jahre umschliessen. In 30 Jahren soll mit dem Abtransport des radioaktiven Materials unter der Schutzhülle begonnen werden.

Der neue Sarkophag wird den alten, unmittelbar nach der Tragödie im Jahr 1986 errichteten ersetzen. Die Konstruktion der ersten Tschernobyl-Schutzhülle hatte am 20. Mai 1984 begonnen – drei Wochen nach dem Störfall – und 206 Tage lang gedauert.

Über 400.000 m3 Beton und 7300 Tonnen Metallgerüst waren verwendet worden, um die 16 Tonnen Uran und Plutonium, 200 Tonnen radioaktives Corium und 30 Tonnen kontaminierten Staub einzuschliessen. Nichtsdestotrotz war als Folge der Explosion und des anschliessenden zehntägigen Brands des Reaktors eine gewaltige Menge radioaktiver Strahlung freigesetzt worden.

Berichten zufolge lag die Gesamtmenge der infolge der Katastrophe von Tschernobyl ausgetretenen Strahlung bei rund fünfzig Millionen Curie. Das entspricht ungefähr der Strahlung von 500 Atombomben, wie sie 1945 auf Hiroshima abgeworfen wurden.

1988 hatten Wissenschaftler bekannt gegeben, dass der Sarkophag 20 bis 30 Jahre halten würde. Aus diesem Grund wurde im Dezember 1997 der Tschernobyl-Schutzhüllenfonds eingerichtet, um Geld für das neue Projekt zur sicheren Abschirmung zu sammeln. Die drei noch in Betrieb befindlichen Blöcke des Atomkraftwerks von Tschernobyl wurden am 15. Dezember 2000 abgeschaltet.

In conditions of the current financial and economic crisis, a question of access to resources of countries becomes critical, since the existing rates of their consumption don’t allow everyone to have enough resources.  The method of using resources acquires critical value.  An answer to the question “who will use the national wealth of states and receive preferences from this?” is crucial. Will this be citizens? Or bureaucrats? Or accountants and brokers?

No, to our opinion, – this will be monopolies, especially, – energy ones.  Precisely they have the greatest influence upon the political leadership of the countries-leading oil and gas exporters and influence the formation of the global politics on the whole.  And in fact, they optimize profits and taxes, spending means on the minimum charity.

Let’s take a look at Russia, for example.  The country is a leading world gas exporter.  “Gazprom” is not only a state gas monopolist, but also a private tool of political influence upon external and internal politics of the state. The curtailment of positions of “Gazprom” at the EU gas markets from 27 % to 23 % in 2009-2010 led to the activization of compensation of external losses of the company at the internal market.  Already now Russian governmental officials predict that starting from 2015 the RF will switch to the equation of the Russian gas prices for internal and external consumers.  This means that “Gazprom” management will again receive profits lost in the EU at the expense of internal consumers.

In April, 2010 the US went through the greatest technogenic accident in the Gulf of Mexico, along with an explosion and further flooding of the oil platform “Deepwater Horizon” which was rented by “BP” Energy Company.  Have simple American citizens whose business went bankrupt due to the ecological pollution in Florida and other states gotten a full compensation? Doubtfully.

One more example, – Ukraine.  Following the Russian analogue, Ukrainian energy-resources and energy infrastructure is used by the government and state energy monopolist “Naftogas” nontransparent for citizens.  Exactly due to this, there is no surprise in the last decision of the Ukrainian Parliament which has adopted the law on reforming the oil and gas sphere of Ukraine.  It opens possibilities for nontransparent privatization of the state energy actives (gas-transport system, gas storage facilities, distribution and heating networks).  Citizens have lost again.  They have no chances to participate in the privatization of state actives created by their taxes over decades.

Energy monopolies in the EU also play their games, often making arrangements about cooperation between themselves with the help of MPs who come to power with the help of citizens.

Thus, we have a conclusion – energy monopolies continue to project the future, hiding behind the interests of citizens.  And political parties and their leaders help them.

Consequentially, for citizens to restore their influence upon policies of their governments, it is necessary not only to “occupy Wall Street”, but also to “occupy” energy monopolies.  And officials always play in favor of the winners.

 

Guest post by Elena Gerebizza - Today concludes the Danish EU Presidency’s informal meeting of energy and environment ministers, where Commissioners for Environment Janez Potocnik, for Climate action Connie Hedegaard and for Energy Günther Oettinger gathered to discuss how best to orient the bloc’s environment and energy policies to ensure a ‘greener Europe to help solve the financial crisis’ . The meeting follows the publication in February of the EU’s Energy roadmap, in which the Commission outlined different scenarios to lead the energy transformation of Europe by 2050 . While the roadmap has elements that could lead to decarbonising the European economy and reducing the amount of fossil fuels within the EU’s energy mix, it would be remiss to suggest that it is the solution to set the EU on a green path towards economic recovery. The EU must address its overreliance on fossil fuels, and in particular those that are imported from abroad.

Tiene el populismo un rostro tan diverso como la personalidad de sus intérpretes. Según su carácter y la idiosincracia cultural del pueblo al que se dirigen se muestra más dicharacheros o melodramáticos en sus gestos, siempre a la búsqueda del aplauso fácil de su público y dispuestos a lanzar cortinas de humo sobre los verdaderos problemas que afectan a la población. En el caso de la presidenta argentina, Cristina Fernández – sobre todo de Kirchner – su fama le viene precedida por antecesores en el cargo de su propio partido el Justicialista y, de forma especial, de la esposa del presidente Juan Domingo Perón, la queridísima Evita. Ella también sabe lo que estar casada con un todopoderoso presidente, Nestor Kirchner, cuyo luto lleva impuesto desde hace año y medio. Y ahora, en su segundo mandato como presidenta sucesora trata de enderezar los múltiples problemas de política interna fruto de los enfrentamientos con los poderosos gobernadores provinciales y las corrientes de opinión opuestas en su partido y en su gobierno.

La expropiación de las acciones de Repsol en la empresa petrolera YPF por parte del gobierno argentino supone un salto cualitativo en la deriva política de pulsiones ultranacionalistas que la presidenta Fernández inició hace unos meses con motivo del aniversario de las guerra de Las Malvinas. La justificación para una decisión de tan amplio calado por parte de las autoridades argentinas se refieren a la necesidad de ”salvaguardar la soberanía hidrocarburífera de Argentina y el objetivo prioritario es el logro del autoabastecimiento de hidrocarburos”. Según la presidenta, la petrolera no ha hecho las inversiones necesarias, algo que lleva meses recriminándole el gobierno austral. Es uno de los escasos países del mundo, que no maneja sus recursos naturales. Después de 17 años desde que se desnacionalizó (YPF), por primera vez ha convertido a Argentina en importador neto de gas y crudo, con un déficit de 3.029 millones de dólares en la balanza del comercio de combustibles. El año pasado Argentina importó combustibles por unos 10.397 millones de dólares, cifra que casi iguala al superávit comercial del país, que el año pasado fue de unos 10.477 millones. Según la mandataria, YPF invertió 8.813 millones de dólares entre 1999 y 2011, lapso en el que obtuvo ganancias netas por 16.450 millones de dólares, de los cuales repartió 13.246 millones entre sus accionistas. Razones y argumentos perfectamente vendibles para una población a la que se le agasaja con el objetivo de no subir los precios de la gasolina o el gas. Un hecho que repercute en la insuficiencia de recursos para realizar nuevas prospecciones en suelo argentino.

Pero más allá de las motivaciones políticas, la realidad tiene más que ver con el control de la caja de liquidez que supone YPF en una situación muy complicada económica en Argentina. Una crisis que combina unas altas tasas de inflación con menores crecimientos que su entorno, fuerte huida de capitales y el tremendo déficit energético reseñado. Puede que el empujón definitivo a una decisión que colea desde haces meses, se deba a la evaluación que Fernández de Kirchner hace de la debilidad del gobierno español, acuciado por una crisis económica muy dura y cuando la prima de riesgo de los mercados de deuda amenaza con rumores de intervención de la Unión Europea. Y es Europa la que debería dar una respuesta coherente y medida a la expropiación, desde la defensa de un modelo de relación internacional, que debe basarse en la legalidad y los principios de seguridad jurídica. Este conflicto no debe plantearse como una batalla de políticos envueltos en sus banderas, ajenos a los verdaderos intereses de los ciudadanos afectados, los argentinos en su calidad de vida y los accionistas de Repsol en sus intereses económicos. Debe recordarse que Repsol compró el 51% de YPF pagando un alto precio por ello, realizó inversiones también cuantiosas para la mejora de su capacidad de explotación y es ahora cuando esta política empresarial le genera beneficios. Y resulta aún más clamoroso el hecho de que cuando en 1992 YPF pasó de manos públicas a privadas, era la única petrolera del mundo que perdía dinero por su mala gestión.

Este es un problema que más allá de las palabras grandilocuentes es un problema entre empresas, la de los intereses de una multinacional Repsol – hispano mexicana – y de los amigos de la presidenta que seguro que estarán detrás de esta expropiación y que copan oligopolísticamente los principales sectores de la actividad en Argentina. Pero no cabe duda que ya ha puesto en solfa las relaciones bilaterales de España y Argentina –  España es el principal inversor extranjero en Argentina por delante de EE.UU - y que se ven comprometidos los proyectos de colaboración birregional Unión Europea América Latina.  Algo que parece importar a Argentina que tiene en estos momentos más de 40 litigios en la Corte de Comercio Internacional que viene perdiendo sistemáticamente y que, sin embargo, de la misma forma no paga las sanciones impuestas. Hace tiempo que Argentina se ha puesto al margen de la seguridad jurídica aún a riesgo de las consecuencias que ello puede causarle. Ha elegido el camino del cortoplacismo y de salvar el día a día, sin pensar en lo que puede pasar mañana.

La reciente Cumbre de las Américas ha puesto de manifiesto la pérdida de peso específico tanto en Estados como en planteamientos ideológicos del Grupo Alba. El proyecto bolivariano promovido por un enfermo Hugo Chávez, que ni siquiera pudo estar presente en la cita de Cartagena de Indias, está en sus horas más bajas. Bolivia, Nicaragua, Ecuador y Cuba a su manera son los reductos de sus postulados estatistas, y aunque la presidenta Fernández  ha hecho mención expresa a que el proyecto nacionalizador de YPF nada tiene que ver con esta senda, la realidad es que su medida representa por su magnitud el mascarón de proa de las posiciones más radicales del continente latinoamericano en el ámbito de la propiedad de los recursos naturales. Si no fuera porque Argentina en esta guerra va por libre, podría pensarse que ha cambiado de bando y desequilibra las posiciones en la región. Pero no llevemos tan lejos nuestras reflexiones porque el populismo no suele desbordar fronteras y la expropiación se agota en sus objetivos de consumo interno. Las posibilidades, pues, de un efecto contagio en la región son mínimas. Conviene recordar que Pemex la petrolera mexicana es accionista en un 20% de Repsol y que la chilena Enap y la brasileña Petrobras están presentes en Argentina y en algún caso comparten la explotación de campos con Repsol. Además, países como Brasil, México, Colombia, Chile o Perú son destinos hoy por hoy seguros para las inversiones dado que sus gobiernos han hecho una firme y decidida apuesta por el desarrollo de sus economías con un modelo de cooperación internacional y atracción de negocios hacia sus territorios.

No conocemos aún la reacción española y, presumiblemente, europea a la expropiación de Cristina Fernández. Convendría que la sensatez imperara y que el populismo no se convierta en una pandemia a este lado del Atlántico. Nos jugamos demasiado en no desaprovechar las oportunidades entre las dos orillas. Si convertimos este conflicto en una suerte de guerra comercial contra Argentina, se verá comprometida la ya compleja negociación de la Ronda Mercosur y habremos perdido una nueva opción de poner las primeras base de una relación birregional de intercambio desde la equidad sin proteccionismos. Al populismo pseudodemocrático se le combate con la defensa de la legalidad desde las instituciones europeas que nos hemos dado. Empezando por defender a los ciudadanos que han depositado sus ahorros en Repsol y que ahora verán valoradas sus acciones por el Tribunal de Tasación argentino que decidirá cuánto debe pagar el gobierno argentino por la compañía. Sus derechos deben ser salvaguardados, más allá de los argumentos y razones que ha expuesto la inquilina de la Casa Rosada. Y el otro interés principal a rescatar es el del pueblo argentino que no tiene porqué sufrir el enfrentamiento de la retórica política y de los gestos trasnochados de mandatarios enlutados.

Wozu werden die erneuerbaren Energien eigentlich subventioniert? Die Stromverbraucher zahlen Milliarden für Windkraft und Solarstrom – und das aus gutem Grund… Ein dauerhafter Bezug solcher Beihilfen macht die bevorzugte Branche nur fett und träge, Innovationen und heilsamer Kostendruck bleiben aus. Die Gesellschaft tut also gut daran, die Unterstützung so schnell wie möglich auslaufen zu lassen.

Keine Branche sollte jahrzehntelang am Tropf des Staates hängen. Und wenn sie es doch tut, dann läuft etwas ganz entschieden falsch – wie bei der Atomenergie: 1954 wurde bei Moskau das erste Kernkraftwerk… in Betrieb benommen und 58 Jahre später verlangt Großbritannien (Frankreich, Tschechien und Polen) allen Ernstes Beihilfen für den Bau von Atomkraftwerken und den daraus hergestellten Strom in Bezug auf die Subventionen den erneuerbaren Energien gleichzustellen…

Selbst Befürworter, die wie das Deutsche Atomforum die Kernenergie als zuverlässigen und wettbewerbsfähigen Garanten der Stromversorgung propagieren, können sich von solchen Forderungen nur verhöhnt fühlen. Zumindest mit der Wettbewerbsfähigkeit kann es ja nicht weit her sein. Wirtschaftlich kann man den Vorstoß also nur als unfreiwillige Bankrotterklärung für die Atomenergie interpretieren…

Subventionen für die Atomkraft würden Ungleiches gleich behandeln: Eine seit Jahrzehnten etablierte und offenbar trotzdem unrentable Technik mit neuen Formen der Energiegewinnung… Die Atomenergie hängt vermutlich auch ohne Gleichstellung mit den Erneuerbaren auf ganz lange Sicht am Tropf des Staates. Bis heute gibt es schließlich kein Endlager für hochradioaktiven Abfall. Und wenn es irgendwann errichtet ist, dürfte es teuer genug werden. Der Müll wird schließlich auch dann weiterstrahlen, wenn es die Atomkraftbetreiber gar nicht mehr gibt.

Hasta hace poco, una de las preguntas más frecuentes que me dirigían tanto los estudiantes como los colegas universitarios de otros continentes se refería a la influencia de la Unión Europea en el mundo y su capacidad de definir sus propias estrategias. Sin duda, el proceso de integración europea generaba unas expectativas muy superiores a [...]

Information concerning possible signing of the gas agreement between Naftogaz of Ukraine and German RWE recently appeared in Ukrainian mass-media.  What’s meant is the delivery of spot gas bought in Europe to Ukraine through pipelines of Slovakia.

Even in case the short-term contract between Naftogaz and RWE is signed, it won’t reduce dependence of Ukraine upon Gazprom.  Annual volumes declared by the new contract can make up about 1 billion cubic meters.  Whereas Ukraine consumes about 70 billion cubic meters of gas per year, out of which at least 40 billion cubic meters under the current contract.

Germany buys about 30 billion cubic meters of Russian gas annually.  In winter  theses volumes grow.  At the beginning of March RWE declared its intentions to reconsider conditions of its own long-term contracts with gas suppliers already in 2013. Priorities will be given to negotiations with the greatest gas suppliers.  Gazprom has a leading place among them.  36 % of purchases of RWE go to Russian gas according to long-term contracts.

Also mass-media have been actively discussing information concerning Ukraine having conducted talks with Turkey and Bulgaria about the delivery of liquefied natural gas from Turkish storage facilities through the Bulgarian gas transportation system.  It is possible already now to ascertain considerable problems of a possible future cooperation. Since both countries are involved in the realization of  “the South stream” project.  And hardly anyone will spoil relations with Russia by means of gas contracts with Ukraine.

Besides, such scheme of gas delivery to Ukraine foresees the attraction of Romania as well. It is impossible to directly deliver gas to Ukraine by means of Bulgarian gas-transport system. Hence, Ukraine can face the aggravation of relations with Romania which already aren’t simple.  As for today the issue of borders with this country continues to be open, especially for the latter.

During the winter period European countries constantly fall short of volumes of gas, especially of the Russian one.  This winter Gazprom was simply compelled to limit gas deliveries to Europe, concentrating fuel resources on covering Russian consumers’ demand.  No additional volumes of gas were within reach.  And nobody in Russia was going to sacrifice the heating of its own population on the eve of presidential elections.

Unlike previous years, Europe starts to cautiously treat the constant accusations addressed to Ukraine of taking gas meant for Europeans.  The fact that Ukraine managed to fill up the lack of gas for Europeans with the help of its own forces out of its own storage facilities is established, as well as the fact that Gazprom lacks financing for the development of new deposits and building of gas pipelines.

In this sense the statements of the Russian leadership concerning the acceleration of building of “the South stream” sound too optimistic.  The situation around the reduction of volumes of Russian gas supply to Europe is a bright confirmation here.

Firstly, this has placed the very participation of European companies in the project of “South stream” construction in doubt.

Secondly, a traditional charge of Ukraine’s unauthorized gas takeoff already didn’t surprised anybody.  The only thing that it testified was a lack of imagination in terms of creation of information provocations.

Gazprom has been constantly denying the reduction of deliveries to Europe.  However, accusations were voiced by the European countries, and by no means by Ukraine. Austria, Slovakia and Poland, which suffered from frosts most of all, declared that deliveries were reduced.  Germany, Hungary, Bulgaria, Romania, Greece and Italy also demanded that deliveries were increased.

Already in the middle of February Gazprom reduced the gas price for the European consumers by 10 % on average.  Whereas Ukraine is unsuccessfully trying to get a discount for the Russian gas.  Previous negotiations were unsuccessful.  Signing of an additional agreement to the current gas contracts again remains only possible.

As for today preparation for parliamentary elections becomes more topical in Ukraine.  The Ukrainian leadership won’t afford itself such luxury as the surrender of the Ukrainian gas-transport system to Russia on the eve of conduction of elections.  Gazprom is interested in the creation of a bilateral consortium on possession of the Ukrainian gas-transport system. And this is the condition for a discount of the gas price. Ukraine insists on the participation of Europe. Hence,  there is no sense to expect the revision of gas contracts of 2009.

Moreover, the price of oil is high and will grow in the nearest future which will accordingly influence the formation of the gas price.  And these are the additional means for the Russia’s budget.  The situation is deteriorated for Ukraine also by the fact that Gazprom goes through financial difficulties it terms of development of new gas deposits and construction of new gas pipelines. Therefore, Russia’s absence of desire to reconsider contracts unprofitable for Ukraine is completely clear. Gazprom has occupied an advantageous position of an observer and recipient of additional profits. Whereas everything what has been left to Ukraine is to disseminate the information about an active search of alternative energy-carriers deliveries in mass-media.

 

Since 2002 the EU has initiated two sets of policies to reduce green house gas emissions from cars:

• encourage the use of biofuels from sun flower seeds, rape seeds, soy beans, wheat, corn and palm oil and obtain a share of 5.75 per cent of total fuel consumption in 2010 and 10 per cent in 2020.
• fix a technical standard of 130 g C02 emission per km for the average newly registered car in 2012.

Both measures were only moderately successful:

• The bio-fuels employed did not really reduce emissions because of additional C02 emissions occurring during their production and processing.
• The fast rise of individual traffic more than neutralised the positive impact of emission standards;

The EU should therefore try to do better in the future.

It should only admit biofuels that reduce C02 emissions by at least 50 per cent, taking into consideration all negative by-effects, from the use of chemical fertiliser to deforestation.

Second generation biofuels like wood, grasses, non-edible parts of plants achieve such results and should therefore be the basis for the future.

Europe has a good chance of becoming one of the leaders in processing cellulosic bio-ethanol. The world` s biggest plant is due to start production later this year in northern Italy. The EU should encourage the development of this innovative industry.

By supporting sustainable ligno-cellulosic bio-ethanol the EU would also render a service to its aircraft industry that calls for sustainable kerosene additives. The future of low-carbon air traffic will depend on higher fuel efficiency of planes and less polluting fuels.

In practical terms, the EU should take two strategic decisions:

• Phase out the use of first generation bio-diesel until 2020.

It should drop the 10 per cent non-mandatory target for the share of biofuels in total diesel/gasoline consumption for 2020 as meaningless, end support mechanisms like the € 45/ha premium for sun-flower and rape seed production and offer incentives for the production of sustainable ligno-cellulosic biofuels.

• Fix much more ambitious car C02 emission standards.

The global car industry has made great strides in fuel efficiency during the last years. But it is far from having reached the limits of what is technically possible.

The EU should therefore have the courage to make the average car twice as fuel-efficient as at present. A fuel-efficiency standard of 70g C02 per km for the average newly produced car should be feasible until 2020.

By fixing such an ambitious standard the EU will oblige both the domestic and foreign car manufacturers to focus on fuel efficiency, which will be crucial for future competitiveness.

These measures are no panacea for converting automobile traffic into a green paradise. In order to achieve substantial reductions of C02 emissions from the transport sector the EU will have to adopt a broad programme of actions. Making public commuter transport and rail transport for goods more attractive must become additional priorities beyond minimising emissions from cars and trucks by stricter fuel efficiency standards. Considering the share of the transport sector in the aggregate C02 balance the EU should put more focus on reducing emissions from transport.

By Richard Dick – President of Orgalime, the European engineering industries association

Can we please stop considering industry as a ‘dirty’ word?  For too long now, industry (and in particular the European engineering industry) has not been given credit where credit’s due.  Orgalime, the European engineering industries association indirectly represents (through our national associations) some 130 000 companies – 95% of which are small and medium sized enterprises (SMEs) that employ over 10 million European citizens; those citizens are people like you and me – working to provide a stable home for our families, working to create a better environment for our planet.  And the jobs they are in are providing the technological solutions to the societal demands that our larger and aging population are crying out for.  The European Commission’s policy ‘labelling’ reads like something from a school report – ‘good’, ‘better’ and now ‘smart’.  Now Europe is into forging smart cities, smart grids, smart meters – the list is endless.  And the greater emphasis on efficiency of resources and energy consumption should not come as a surprise to a world where ‘consumerism’ has almost become to be considered an illness.

Engineers have arguably been smart for centuries, so why is it taking politicians so long to catch up?   Will Europe’s lead in greening its economy mean that the technologies to do so will be developed and produced here or will we just import them?  Let us first remind ourselves of our roots – after all, the industrial revolution did have its beginnings on European soil.  This birthplace, once described as “the most extraordinary district in the world”, is still a remarkable, and beautiful, place to visit today.  At the Ironbridge Gorge, near Telford in the United Kingdom, a huge amount of early industry still survives as furnaces, factories, workshops, canals and the settlements of Coalbrookdale, Ironbridge, Jackfield and Coalport live on.

But this was at a time when coal supplies appeared to be endless and certainly the impact of ‘industry’ on the world we live in hadn’t even been thought of, let alone understood.  It can be argued that the industrial revolution has never ceased – over the 3 centuries that have passed since Abraham Darby founded the Coalbrookdale iron foundry in 1709, is it not that the evolution of industry has become the cornerstone of economic wealth and growth.  Nevertheless, it seems that history seems to have taken all of this for granted.  Those early engineers didn’t have government grants and subsidies to achieve their pioneering work – it was pure curiosity and persistence that prevailed, with the realisation that somehow their efforts would ‘make a difference’.

European industry can and should aspire to maintaining a leading role in the world economy.  However, in order to do so, it must be able to compete on an equal footing with other regions of the world.  This is becoming all the more important at a time when we see a surge of growth shifting rapidly to other regions, such as Asia, while Europe still struggles as it tries to emerge from the economic crisis.  Our industry is doing well in export markets.  This is heartening because it means we are successfully competing on the international scene, and we need this to continue.  However, for our producers of capital goods, it is equally important for the long term that our customers invest here in Europe.  This will be a sign that the industrial policy agenda launched by the European Commission really is bearing fruit and helping to lay the foundations for better longer term structural growth.  Hence our motto: ‘Manufacturing Matters’.  Turning Europe once again into one of the more dynamic economic zones is a goal worth fighting for and it is a goal which we must achieve.

In a global marketplace when the ‘sun never sets’, Europe has to turn its fortunes around.  Why have we ended up in such a situation?  Complacency springs to mind – when things are going well, politicians have the habit of turning on the benefits tap while swishing the knife in areas identified where short term vote winning decisions can be made.  These inevitably have disastrous long-term consequences and are difficult to fix.  Europe has dangerously tussled with the fact that we are the best in everything, when in reality, the rest of the world has caught us up (and in some cases, overtaken us), creating ‘unwelcome’ competition in the manufacturing sector.  But there is still a glimmer of hope – Europe is good at innovating.  But that costs money and when the financial climate is as delicate as it has been, investing in research & development to produce the innovation that Europe so desperately needs is sometimes less attractive because Europe itself, as the mountains of regulation many of which are unfriendly towards industry, is for many becoming an increasingly unattractive place to invest in. Why is this so?

First manufacturing naturally sites itself where there is a market:  opportunities in Europe must outweigh the constraints created by Europe for our industries.  We believe that political decision makers have a crucial role to play in designing measures that help to stimulate market uptake, for example of energy efficient and greener technologies, thereby effectively creating success stories here in Europe which will underpin our export markets.  This is why we are convinced that the institutions’ drive to get national governments to support investment in energy efficiency is a step in the right direction.  The message is simple: innovate, use and produce in Europe. But are governments listening? No on the contrary they are resisting moves in this direction.

And what about the other rules? With the development of the internal market – a major EU success story – came a considerable body of European technical legislation on products.  A few core directives, such as the Low Voltage, Machinery and Electromagnetic Compatibility Directives, and occupational safety directives have both regulated the health and safety aspects of engineering products and their free circulation in an ever larger internal home market.  In recent years, however, the EU has enacted a substantial body of legislation in areas such as the environment, employment and social affairs, consumer legislation, etc… while at the same time continuing to develop or review internal market legislation.  This has led to a highly complex and continuously changing regulatory framework.  If such regulatory measures, taken individually, may often seem justified, the resulting body of regulation has become too unwieldy for manufacturers and in particular the smaller companies to manage.  To make matters worse, national, regional and even local authorities add further requirements.  This is affecting the competitiveness of Europe as a manufacturing base.  What needs to be done to recreate the dynamism which is so essential?

In particular, the European electrical engineering industry that mercifully has its home base in Europe, makes the technologies that are needed to create a living environment more conducive to the quality of life of a maturing society faced with many challenges.  It is these industries that provide the technologies needed to achieve the political goals of becoming more energy and resource-efficient and set up the best energy infrastructure possible.  It is these industries that bring together all the energy efficiency technologies around a ‘smart home’ or a ‘smart building (e.g. by combining intelligent household and consumer electronics with the building infrastructure and energy system). It is these industries that create the road and transportation technologies to generate an intelligent traffic and mobility (e.g. by combining the best features of the different transportation modes such as road, air and train traffic with local urban public transportation and electro mobility concepts).  Thinking in terms of, and believing in, systems and network technologies with the aim of finding the best technical solution to a particular demand or societal challenge is what Orgalime and its members want.

In 2008, after two years of collaboration between the European Commission led by Commission Vice President Günther Verheugen and Europe’s electrical engineering industry led by Edward Krubasik, the then Orgalime President, the Electra report “Twenty solutions for growth and investment to 2020 and beyond” was issued.

Now, in 2012 a stocktaking exercise has been conducted in the form of the Electra 2, which will be launched at the Hanover Trade Fair in April 2012.  The industry represented through Electra aims to:

• Briefly analyse the results of the first Electra report
• Outline the changes that have arisen following the 2008-2009 economic crash as well as the impact of this on Europe’s electrical and electronics industry
• Re-examine the challenges that Europe faces today and present proposals to support European policies in its energy- and resource-efficient growth-and jobs-agenda and outline the steps that need to be taken to make Europe a ‘smart world’.

While innovation will be at the core of the success of our companies, one of the essential elements to ensure that this translates into jobs and growth in the EU will still remain the total cost of production. For this a number of issues remain of the utmost importance:

Think manufacturing technologies…

First and foremost Europe must continue to focus on manufacturing technologies – an area where we lead the world and where we must continue to excel if we are to maintain long term manufacturing competitiveness. This requires that our industry operates in a global framework which is supportive.

Think supply chain…

As a result of the development of regulation, we are increasingly faced with what the institutions euphemistically term as “production leakage”, that is part of our industrial infrastructure is either moving out of the EU or developing new capacity in less regulated areas of the globe or areas with better market prospects: where part of our industry’s own supply chain or customer base migrates to other areas of the world, we are increasingly finding that our own competitiveness is being undermined if our companies do not develop capacity in those areas.  Therefore, when carrying out impact assessments on new policy and regulatory initiatives, a much closer analysis of the supply chain effects should be undertaken.  For example in Europe we are world leaders in the area of production and automobile automation systems.  Our manufacturing base for these productions is largely in the EU: however, if our client base migrates to other areas of the world, we will inevitably have to relocate our R&D and our production close to the sites of our clients.

On the supply side before the downturn in the economy, our industry was becoming increasingly concerned about raw materials availability at competitive conditions: while non-ferrous metals tend to be quoted on exchanges, this is less the case in the area of steel where we have seen a number of tendencies:

• The steel mills which are increasingly large global companies are moving further and further downstream into the territory until now occupied by metalworking SMEs.
• Steel companies are also tending to put pressure on the institutions to limit competition from imported steel, essentially through the use of the anti-dumping instrument.  Two recent cases which were strongly resisted by our industry due to the gap between EU and foreign steel prices (hot-dip galvanised and stainless steel sheet) were withdrawn, but the steel giants are still promoting protectionist policies which will inevitably undermine the capacity of engineering SMEs to produce in the EU many products in the face of competition from imports produced in countries where steel prices are lower.

Think energy costs…

Just as important for our industry is the availability of energy at conditions which are competitive compared to those found in other major manufacturing countries.  Electrical energy in particular, even with increased energy efficiency, is likely to play a growing role in our energy mix and will serve as the basis for the development of areas of technology, such as the electric car.  For these technologies to develop in optimal conditions, it is important to maintain competitive energy prices at a time when the electrical utilities will also be required to invest to improve their efficiency and carbon footprint. Therefore a number of issues are essential in this context, such as:

• Providing a stable, predictable and appropriate legislative framework that mobilises market forces and competition to drive innovation.
• Setting overall energy efficiency targets for each member state, independent of the given energy mix and enforcing the development of a binding roadmap in term of power plants, power transmission and distribution (new and retrofits) based on an exhaustive inventory of the current environment and a clear target for each country.
• Proposing proper incentives for utilities to invest in efficient technologies.
• Encourage the adaptation of the architecture of the Transport & Distribution grids, removing barriers from regional planning and simplify permitting processes.

Think staff…

The engineering industry is a vast industry employing over ten million workers in Europe.  In an industry which by its nature is already cyclical and which sees its production cycles changing very fast, it is essential that regulators recognise that, in addition to full-time and permanent work, there is an increasing demand for a diversity of working arrangements, including part-time, fixed-term and temporary agency work, from both employers and employees.

Flexible labour markets allowing the speedy and efficient deployment of labour are therefore vital if European companies are to respond efficiently to the increasing pressures of global competition.  Linked to the need for flexible labour markets are the demographic problems that Europe – particularly the 15 “old” member states – will face in the years ahead.  Many European countries already suffer from skills and labour shortfalls which will be exacerbated, as Europe’s population grows older.  We therefore support the free movement of workers in the enlarged European Union without any restrictions and also welcome the “blue card” as a temporary measure to alleviate pressure in the demand for skilled personnel.

Companies and their employees will also need to become more open to the idea of working later in life. Governments should re-consider existing provisions which encourage early exits from the labour market and replace them by ones that promote active ageing policies including, for example, flexible retirement arrangements.

Social policies are therefore a vital part of the framework in which companies operate.  Our industry is therefore convinced that, in the field of social policy, more adaptability will contribute to improved competitiveness.  In our view, all existing and forthcoming social policy regulations at European and national level should always be checked against the principle of subsidiarity.

So to conclude, I am a strong believer in the future of manufacturing in Europe: we have the capacity to innovate and when the conditions are right, our companies will invest here; I know this from my personal experience where my own company has won back work which our customers had placed in India.  So there is no inevitability that Europe should become a manufacturing desert.  On the contrary, so long as our politicians and regulators understand that we are the key to getting Europe out of its austerity mood; we are the key to providing our young with a bright future here in our countries.

On friday the 24th of February the European Commission invite stakeholders for consultation in preparation of the 2012 Renewable Energy Strategy.

As recently pointed out in the Commission’s Energy Roadmap 2050, renewable energy sources will play a major part in Europe’s long-term decarbonisation efforts. While the Renewable Energy Directive 2009/28/EC sets a clear framework for further growth in renewable energy until 2020, the debate about how the policy should develop beyond the 2020 horizon needs to start now.

This is why the Commission is preparing a strategy document that will look at the policy framework for renewable energy in a post-2020 perspective, to be published in the second quarter of this year.

The legislative framework as regards renewable energy is laid down in the Renewable Energy Directive which sets an obligatory target of 20% renewable energy in final energy consumption as well as a 10% target in transport for 2020. Given the long-term perspective of investors it is necessary already now to look beyond that year. Against the background of the EU’s ambition to move towards a reduction of 80-95% of GHG emissions in a 2050 perspective, it is clear that a further strong growth in renewables will be needed beyond the 2020 targets.

This public consultation has the aim of soliciting the view of interested parties to assess in how far the orientations of the current policy framework remain valid in the medium term - i.e. until 2030. Interested parties are requested to consider the specific questions addressed in the consultation document. Read more in the EU document.

As far as I can see the traditional lobby organisations from the industry complain about the cost, binding targets and neutrality issues.

Green groups, together with Greenpeace, Friends of the Earth, power association Europex and sustainable energy group Inforse support a post-2020 binding renewables target.

Regarding the ongoing debate on the European financial measurement tools it would be logic to look at national budgets and their role tosupport EU Climate Change targets and the tools for renewable energy. Read also Greeks, be aware of the Trojan horse!

 

 

On February 10th 2012, Total, one of the three giant European oil and gas companies, has announced that it will scrap its nuclear ambitions and focus instead on gas and solar for complementing its huge and flourishing oil business.

This is good news for several reasons.

• It will make Total`s business more sustainable by putting it on three legs and investing parts of its oil profits in sectors with a better long-term future. It will, however, take many years before the solar business will make a substantial contribution to Total`s profits. By the same token it will make the company more attractive to “green” clients, something BP had tried without delivering serious results.
• It will strengthen Europe’s fledgling solar industry.

Thanks to the $ 1.4 billion acquisition of the US Sun Power Corporation last April Total has become the Number three in the global solar PV business. Hopefully, it will further consolidate its position by buying some of the small German solar companies that have failed to become global players. Europe desperately needs competitive solar companies to play a global role.

• The decision by Total to enter the solar market should give a boost to the European solar industry. Its determination to become profitable in two to three years through significant cost cutting efforts will inspire more confidence.

The European Commission should applaud the overdue re-reinforcement of the European solar industry and encourage more mergers/acquisitions.

• Hopefully, Total will also enter thermal solar power generation and make it more cost-effective through economies of scales. To that end, it should join the Desertec Industrial Initiative and help making thermal solar electricity more attractive for North Africa.

It is clear that Russia is interested in inviolability of the gas contracts of 2009. And the longer the negotiating process with Ukraine is protracted, the greater profits “Gazprom” gets. Official representatives of the Ukrainian and Russian authorities constantly declare that the negotiating process is going on. However, Ukraine will hardly get the gas price discount in the near future. “Gazprom” insists on obtaining control over the Ukrainian gas-transport system in exchange for the gas price discount.

         In January it became known that “Gazprom” has reduced prices for 5 EU companies. The discount was received, in particular, by such companies as Wingas, GdF Suez, SPP, Econgas and Sinergie Italiane. According to the Austrian periodical “Die Presse” the discount may make up from 45 to 50 dollars per thousand cubic metres of gas.

         The above listed consumers buy together about 35 billion cubic metres of gas from Russia annually which makes up almost a quarter of all export of the Russian gas to the Western Europe. The specified volumes of gas are almost comparable to volumes which Ukraine received from Russia in 2011, – about 40 billion cubic metres of gas. This almost corresponds with the minimum volume (41 billion cubic metres of gas) which “Naftogaz of Ukraine” was supposed to buy in 2011, according to conditions of the contract of 2009. However, Ukrainian governmental officials have informed that they want to reduce volumes of the Russian gas purchases to 27 billion cubic metres this year. “Gazprom” however insists on 52 billion cubic metres.

         In addition, there appeared information in mass-media, that on January 18 in Moscow “Gazprom’s” daughter company “Gazprom International” and NAK “Naftogaz of Ukraine” have activated cooperation with the aim of creation of a joint venture for the field development on the Black sea shelf.

         That is, despite the delay in negotiations concerning the reduction of gas price, a normal working process continues between gas monopolists of Russia and Ukraine. Arrangements are reached, plans are made, new companies are involved. Then, what is covered by the delay in the negotiating process? What arrangements are reached and actually take place now between the leadership of Russia and Ukraine?

         It is necessary to understand that the existing groups of influence around the president of Ukraine are far from being united. And, first of all, this has to do with economic interests. Representatives of gas and oil traders, and also the owners of municipal services are interested in keeping the gas contracts of 2009. Since, high gas prices allow them to jack up tariffs for the population and industry. And this is the growth of their profits. And business which controls the metallurgical and chemical industry is on the contrary interested in low gas prices.

         Recently Minister of Energy Y.Boyko has informed that Ukraine can extract 70 billion cubic metres of shale gas a year and is going to involve American experts. This statement is at least amazing. Despite the necessity of the mentioned investments amounting to 10 billion dollars a year, the government of Ukraine ignores the warnings of international experts concerning ecological consequences of such projects. Thus, governments of France and Bulgaria have already forbidden the development of the shale gas.

         As a whole, the current leadership of Ukraine in every possible way avoids the question of existing and potential environmental problems and threats in the country. And last statements of the government about the plans to transfer all thermal power stations from gas to coal confirm it.

         In such a way the government plans to save up to 6 billion cubic metres of Russian gas a year. The initiative is supposed to be not bad and even noble. Ukraine is reducing its gas dependence upon Russia. However, this project is too expensive and threatens with ecological problems.

         It is possible to understand the logic of the officials-initiators if we take into consideration those who control coal mining in Ukraine and in which regions it is concentrated. The government prefers not to think of the catastrophic ecological situation in Donetsk and Lugansk regions. The development of means for thermal power stations re-equipment is in the first place. And the practice of “modernization in Ukrainian” testifies: money is invested only after receiving guarantees on the privatization of objects. Accordingly, the statement of the Ministry of Energy of Ukraine looks completely logical: “as soon as the law is adopted, we will direct thermal power stations to concession or for privatization”.

         The current authorities are blindly convinced that all their initiatives will be accepted by the Ukrainian people. However, the population of Ukraine has no immunity to the consequences of ecological disasters and the authorities will not be able to create it. Nobody has forgotten the Chernobyl yet…

In conditions of growth of economic risks for the world and Ukraine, the question of attraction of investments acquires a special topicality.

World media and international organizations publicly point to challenges and risks linked with investment possibilities of Ukraine in 2012.  For example, according to 2011 Forbes rating Ukraine has ended up 105-th among 134 countries, going down by 7 positions in comparison with 2010.  This is according to such basic criteria as property rights, innovations, taxes, development of technologies, level of corruption, bureaucracy and protection of investors.

At the same time, according to the “Doing Business-2012” rating, prepared by the World bank and International Finance Corporation, in 2011 Ukraine has fallen from 149 to 152 position out of 183 countries.  At the end of 2011 the level of Ukraine’s attractiveness for foreign investors has fallen to a record-breaking low level – even in the crisis year of 2009 this indicator was higher.  Pressure from the Ukrainian authorities, corruption, a new Tax Code and non-transparency of legislation are among the main reasons of this downfall.  This is a reaction of the world business commonwealth to actions of the Ukrainian authorities concerning the maintenance of an investment climate in the state.

An indicative fact is that Cyprus continues to remain the greatest investor of Ukraine.  The Ukrainian authorities obstinately continue to refrain from including Cyprus into the list of offshores through which the capital escapes Ukraine.  Only according to official figures of the State Statistics Committee, in 2010 Ukrainian companies invested into Cyprus a sum of 6,5 billion dollars.  Simultaneously, in 2010 Cyprian companies invested 9,5 billion dollars into the Ukrainian economy, which made up 22 % out of a total amount of direct foreign investments into Ukraine this year.

These and other figures show that even a big Ukrainian business doesn’t trust its government.

Ukraine became the last European country, in which the elite prefers to launder the capital rather than to form its own successful state.

It doesn’t understand all the hopelessness of this path.  At the same time, this adds optimism to people — this won’t last long.

Social responsibility of the big business before its own state, especially in times of the present crisis, is now topical in the West.  Maybe, it’s time for the biggest Ukrainian businessmen to follow the example of big American and French businessmen (W.Buffett, B.Gates, 16 top-managers and billionaires of France and others) who are voluntary ready to pay higher taxes to their states during crisis?  Or we still should expect the time when the Ukrainian people will be compelled to take back a part of Ukrainian funds from the offshores and other “islands” by means of a protest for the maintenance of their own survival?  This will lead to the hunt for the capitals.

Many questions remain open.  Hence, Ukrainian investors still have possibilities left to change the situation for the better.  I am sure that following the example of the Ukrainian business, foreign investors will also increase the level of financial confidence in the Ukrainian state.

This will be a game where all parties win.  Or there will come the wind of change.