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Bogdan Janicki, Senior Adviser CEEP 1/30
Coal in the EU – myths and reality
Bogdan Janicki, Senior Adviser, CEEP ę i Nazwisko, Stanowisko
December 11, 2014
World Coal Association – Assocarboni Workshop Looking into the future of coal Rome 18.11.2014
Bogdan Janicki, Senior Adviser CEEP 2/30
Central Europe Energy Partners, AISBL, is an
international non-profit association with its
headquarters in Brussels, Belgium.
The association represents the widely-
understood Central Europe energy sector (coal,
gas, oil, renewables, nuclear, grids), along with
energy-intensive industries (steel, chemicals,
etc.).
CEEP is open to all domestic and foreign legal
entities active in the energy and energy-intensive
sectors, or dealing with any matters related to
the mentioned sectors.
There are three categories of membership:
actual, affiliated and honorary.
Central Europe Energy Partners (CEEP)
Bogdan Janicki, Senior Adviser CEEP 3/30
Concern Achema Group Enea S.A. Energa S.A. Grupa
Azoty S.A. Impexmetal S.A.
Jastrzębska Spółka
Węglowa S.A.
Katowicki Holding
Węglowy S.A.
Kompania Węglowa S.A
Kulczyk Investments Litgrid AB LOTOS Group
Air Liquide
New World Resources N.V.
ArcelorMital Poland
Polish Higher Education – Business
Forum
PSE S.A. SiPower S.A. Tauron Polska
Energia S.A
TRANSPETROL a.s.
The Petroleum-Gas
University of Ploieşti
Węglokos S.A.
CEEP members
Expected members from: Bulgaria, Estonia, Latvia, Slovenia, Croatia, and Hungary.
KGHM Polska
Miedź S.A.
The Polish Electricity Association
PERN Przyjaźń FRUNZE
CLIFFORD CHANCE
Bogdan Janicki, Senior Adviser CEEP 4/30
CEEP's primary purpose is to support integration of the Central Europe Energy and energy-intensive sectors within the framework of the common EU
energy and energy security policy.
The association acts to:
¢ Identify, monitor, and where possible, aim to reduce specific and common risks to energy and energy-intensive sectors companies in Central Europe.
¢ Find solutions for and provide assistance, in relation to fundamental challenges arising from the evolution of EU energy policy, to organisations, such as members of the association.
¢ Foster, broaden and strengthen the position of its members within the internal EU energy market.
¢ Transmit and make available to EU bodies, and other international energy and energy-intensive sector institutions, CEEP members' positions on and expertise in energy and energy-intensive sectors issues, especially, but not limited, to the region of Central Europe.
¢ Support its members' efforts to build up their profile and active participation in the international energy and energy-intensive sectors’ institutions and associations; and
¢ Identify, advise on, and promote programmes and activities which strengthen and expand members' international positions.
Purpose and Mission
Bogdan Janicki, Senior Adviser CEEP 5/30
¢ To increase the energy security of Central Europe, as well as the European Union as a whole. ¢ To strengthen the idea of energy solidarity within the European Union. We do believe that only common activities of all EU member states could be successful in enhancing the energy security of Europe. ¢ To build relations and facilitate contacts between Member organisations and EU bodies and agencies, individual representatives and associations of energy and energy- intensive sector companies, as well as international energy sector think-tanks and lobbies based in Brussels.
Major tasks:
Bogdan Janicki, Senior Adviser CEEP 6/30
European Union
Saturated EU Economies
Non saturated EU economies GDP per capita in 000’ EUR, 2013 year
European Energy Security from a Central European point of view
GDP per capita in 000’ EUR 2013 year
Source: CEEP based on Eurostat data
* 2012 data
Bogdan Janicki, Senior Adviser CEEP 7/30
2005 2006 2007 2008 2009 2010 2011 2012 2013
saturated economies 26.7 27.8 29.2 29.2 27.5 28.3 29.1 29.7 29.8 non saturated economies 6.3 7.1 8.3 9.4 8.3 9 9.5 9.7 9.8
0
5
10
15
20
25
30
35
GDP per capita ( 000’EUR) UE 28
Source: CEEP based on Eurostat data
Bogdan Janicki, Senior Adviser CEEP 8/30
Energy Prices (EUR/MWH)
Nuclear energy
Lignite
Hard coal
Natural gas
Fuel oil
Gas oil
Source : Central Mining Institute In times of crisis,
EU countries need cheap sources of energy
Solid fuels are cheapest
Bogdan Janicki, Senior Adviser CEEP 9/30
¢ The European Council endorsed a binding EU target of at least a 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990
• The ETS sector would have to deliver a reduction of 43% in GHG compared to 2005
• The non-ETS sector a reduction of 30% compared to 2005
In order to bring about the required emissions reduction in the ETS sector, the annual factor by which the cap on the maximum permitted emissions within the ETS will have to be increased from 1.74% currently to 2.2% from 2021.
European Council decisions – 23.10.2014
Bogdan Janicki, Senior Adviser CEEP 10/30
¢ A greenhouse gas reduction target of 40% should by itself encourage a greater share of renewable energy in the EU of at least 27% in 2030 (indicative for Member States)
¢ Member States with a GDP per capita below 60% of the
EU average may opt to continue to give free allowances to the energy sector up to 2030
¢ 10% of the EU ETS allowances to be auctioned by the
Member States will be distributed among those countries whose GDP per capita did not exceed 90% of the EU average (in 2013)
European Council decisions – 23.10.2014
Bogdan Janicki, Senior Adviser CEEP 11/30
What next after European Council decisions?
Reform of the EU Emissions Trading System (ETS) - the Commission proposed to establish a Market Stability Reserve (MSR) – expected CO2 price: 40EUR/t According to the plan, at the begining of December 2014, the draft proposal will be circulated by the Commission for public consultation. The final document is expected to be confermed by the end of this year Free allowances for the energy sector – only for existing Power Plants or also for new Power Plants? Carbon leakage - appropriate levels of support for sectors has been declared by the Council. But at what level, and what sectors?. Benchmarks – what will be the rules of benchmarks for each industry sector?
Before us is a hard Hme to win the best soluHon for Central European economies
Before the EU is a difficult challenge to create specific rules for targets adopted by the European Council
Bogdan Janicki, Senior Adviser CEEP 12/30
Electricity retail prices paid by households and industrial consumers in 2011 (in EUR/ kWh )
Source: Eurostat energy statistics
Note: Range for annual consumption of: household group DC: [2 500 kWh – 5 000 kWh]; industry group IC: [500 MWh – 2 000 MWh].
Bogdan Janicki, Senior Adviser CEEP 13/30
GDP per capita (EUR) vs. electricity prices paid by households and industrial consumers (EUR/kWh) in 2011
INDUSTRY HOUSEHOLDS
Source: Eurostat energy statistics
Note: GDP in Romania – data for 2010
Bogdan Janicki, Senior Adviser CEEP 14/30
Source: ERT Benchmarking Report 2013
EU industry production
Bogdan Janicki, Senior Adviser CEEP 15/30
Compe..ve advantage/disadvantage
USA – low energy prices ( shale gas revoluHon)
EU – high energy prices ( EU climate policy)
Unemployment rates: EU-28, US
The EU needs cheap energy to be compe..ve
Source: European Commission
US versus EU
Bogdan Janicki, Senior Adviser CEEP 16/30
Competitiveness of the EU economy depends on energy prices
Source: World Energy Outlook 2012
Bogdan Janicki, Senior Adviser CEEP 17/30
Evolution of end - user electricity price index for industry
Source:Euracoal
Bogdan Janicki, Senior Adviser CEEP 18/30
CO2 emissions per capita (kg/cap) 2012
Source: JRC
2011 2012 2011 2012 2011 2012 Belgium 9,89 9,58 Malta -‐-‐-‐ -‐-‐-‐ Latvia 4,27 4,33 Denmark 7,83 6,97 Netherlands 10,03 9,82 Lithuania 5,29 5,26 Germany 9,59 9,75 Austria 8,94 8,38 Hungary 5,18 4,93 Ireland 8,60 8,48 Portugal 4,62 4,62 Poland 8,67 8,42 Greece 8,18 7,79 Finland 10,97 9,88 Romania 4,08 3,91 Spain 6,22 6,12 Sweden 5,27 4,84 Slovenia 8,49 8,46 France 5,81 5,85 U.K. 7,55 7,73 Slovakia 7,34 7,42 Italy 6,69 6,32 Bulgaria 7,71 7,10 CroaHa 5,44 5,51 Cyprus -‐-‐-‐-‐ -‐-‐-‐ Czech Rep. 11,41 10,81 Luxembourg 21,92 21,75 Estonia 15,82 15,75
2011 2012 USA 17,12 16,36 Canada 16,33 16,04 Australia 19,36 18,77 Japan 9,77 10,40 Russia 12,41 12,39 South Korea 12,90 12,97 China 6,91 7,09 India 1,51 1,59 Brazil 2,27 2,31 Turkey -‐-‐-‐ -‐-‐-‐ Indonesia 2,01 2,00 South Africa 6,30 6,32 EU 7,53 7,42
Bogdan Janicki, Senior Adviser CEEP 19/30
EU-27 net imports
Source: European Commission
Bogdan Janicki, Senior Adviser CEEP 20/30
European hard coal production, lignite production and coal imports 2013
Bogdan Janicki, Senior Adviser CEEP 21/30
International hard coal market, 2012
Major coal producing and importing countries, 2012
Top coal exporting countries, 2012
Source:Euracoal
Bogdan Janicki, Senior Adviser CEEP 22/30
EU-27 Gross Electricity Generation
Source: European Commission
Bogdan Janicki, Senior Adviser CEEP 23/30
EU Ambitions – wishful thinking?
From 1990 to 2010, the EU is the only region of the world to have decreased its CO₂ emissions (-9.2%). During the same period, competing economies have increased their CO₂ emissions, and total worldwide emissions increased by 46%.
Source: ERT Benchmarking Report 2013, EIA
Bogdan Janicki, Senior Adviser CEEP 24/30
Fossil fuels – Coal
Source: BP
Bogdan Janicki, Senior Adviser CEEP 25/30
World - Population, GDP, Energy Demand
Source: Exxon Mobil, CEEP
World population (million)
Bogdan Janicki, Senior Adviser CEEP 26/30
Electricity generation by source
Source:IEA
Bogdan Janicki, Senior Adviser CEEP 27/30
Germany: Depletion and new construction of plants (GW)
Source: Poyry Management Consulting
Bogdan Janicki, Senior Adviser CEEP 28/30
Improving energy efficiency by 15%, means that CO2 emissions can be reduced by at least 30%.
Energy efficiency (%)
Source: Central Mining Institute, EURACOAL, others
Energy efficiency
Significant improvement
30/38
Bogdan Janicki, Senior Adviser CEEP 29/30
Carbon Capture and Storage
CO2
Capture
Transport
COAL, NATURAL GAS
70% cost
10% 20%
Present technology would increase electricity cost by 30-50%
COAL MINE
ONSHORE OFFSHORE
Storage
Depleted reservoirs, Aquifers
CO2-‐EOR Other possibiliHes ( CCU)
CO2
Source :Petrofac, CEEP
Power plants
Steel industry
Chemical industry
Others
NATURAL GAS FIELDS
Bogdan Janicki, Senior Adviser CEEP 30/30
Thank-you for your attention
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