The energy dialogue between the EU and Russia

The Kyoto Protocol

Initial phase1991 : TACIS programme 1994 : Signature of the Partnership and Co-operation Agreement (PCA)

Intensification 1997 : Entry into force of the Partnership and Co-operation Agreement (PCA) : trade (WTO based, MFN trade rules), political dialogue, justice & home affairs (co-operation to prevent illegal activities, drugs, money laundering, organised crime), institutions. 1999 : EU Common Strategy on Russia : integration into a common European economic and social space. Russian Common Strategy towards the EU : construction of a Europe without dividing lines Northern Dimension : answer to the special regional development challenges of northern Europe. Producing concrete results 2000 : Energy Dialogue launched - an important element in the concept of the.... 2001 : Proposal for a Common European Economic Space 2002 : « Wider Europe » initiative 2003 : Sankt Petersburg Summit : concept of four common spaces

EU-Russia RelationshipA reminder

The four Spaces

• Common Economic Space

• Common Space of Freedom, Security and Justice

• Common Space of Co-operation in the Field of External Security

• Common Space of Research and Education

The Common InstitutionsA reminder

Summit EU/Russia Twice a year

Head of State

Permanent partnership Council

On specific issues

Ministerial level

Cooperation Committee Once a year

Officials

Parliamentary Commission (EP-Duma)

Ad hoc Members of the EP and of the Duma

Sub-Committees Several a year

Working groups

Where : The EU-Russia Summit in Paris

When : 30th October 2000

Nomination of two sole interlocutors : Mr François Lamoureux, Director General of the European Commission and Vice-Prime Minister of the Russian Federation, Viktor Khristenko

Objectives

progress in the definition of an EU-Russia energy partnership,

contribute to the security in energy supply as well as in energy demand,

cooperation on energy saving,

rationalisation of production and transport infrastructures and importance of electricity interconnections,

facilitate investments,

contribute to the relations between producer and consumer countries,

support the Energy Charter Treaty

contribution to the ratification of the Kyoto protocole

The Energy Dialogue EU-Russia

The Climatic Contrast

Source : The Siberian Curse, Fiona Hill and Clifford Gaddy, Brookings Institution Press, 2003.

It gets colder from West to East not necessarily from South to North

Difficult Demographics

Ricardo law of comparative dis(advantages)

T° (in Brussels March 15 2004 12° C

Population 2003(million)

Novosibirsk -21 1434

Yekaterinburg -11 1260

Omsk -25 1130

Chelyabinsk -6 1068

Ufa -10 1074

Perm -12 980

Krasnoyarsk -20 929

Kabarovsk -9 606

Barnaul -24 575

Irkutzk -17 585

Novokuznetzk -28 556

Tomsk -19 488

Kemerovo -22 475

Ulan-ude -14 347

Bratsk -21 260

Yakutzk -18 196

Norilsk -34 170

Energy production (Mio toe)Energy production (Mio toe)

0

200

400

600

800

1000

1200

1400

1600

1800

1990 2000 2010 2020

RenewablesNuclearGasOilCoal

Europe (EU-25) Russia

0

100

200

300

400

500

600

700

800

900

1000

1990 2000 2010 2020

Sources: Russian Federation: 2003 Russia’s Energy Strategy until 2020, European Commission.

Energy Security: Energy imports and exports (in mtoe)

173163

124

258

200

2313

0

50

100

150

200

250

300

Oil Natural Gas Coal Electricity

2000 2020

EU Energy Imports Russian Energy Exports

518

186

91

2

632

450

128

20

100

200

300

400

500

600

700

Oil Natural Gas Coal Electricity

2000 2020

Sources: Russian Federation : Russia’s strategy until 2020, European Commission : trends to 2030

The importance of the European market GAZPROM Sales and Receipts

Sources : IEA, European Commission, Gazprom

Export price to Europe$ 130 / 1000 m3

Domestic price to households$16 / 1000 m3

Domestic price to industry$ 23 / 1000 m3

Gas volumes

Russia 63%

Receipts from gas sales

Russia 35,5%

Europe and others 64,5 %

Europe and others 37 %

Required price to finance investments

2006 : $ 41/1000 M3

2010 : $ 62-70/1000M3

Electricity production by fuel

0%

20%

40%

60%

80%

100%

2000 2020

EUR 25 Russia

0%

20%

40%

60%

80%

100%

2000 2020

Hydro and Renew

Nuclear

Oil

Natural Gas

Coal

Sources : Russian Federation : 2003 Russia’s Energy Strategy until 2020, European Commission : Trends to 2030

Nuclear power plants : production capacity in Gwe (2000 – 2020)

98

140

21

100108

42

0

20

40

60

80

100

120

140

160

USA EUR25 RUSSIA

GW

e 2000

2020

Sources USEIA; Minatom; Russian Federation : 2003 Russia’s Energy Strategy until 2020; European Commission : Trends to 2030.

Russia

Nuclear power plants : load factor

Source : Minatom

Energy Intensity

Natural GasElectricity

0

0,2

0,4

0,6

0,8

1

1,2

2000 2020

Russia EU

Koe per Euro of GDP

0

0,5

1

1,5

2

2,5

3

3,5

2000 2020

Russia EU

KWh/ Euro of GDP

Sources: Russian Federation : Russia’s strategy until 2020, European Commission : trends to 2030

Adj. PPP

Adj PPP Adj PPP

Adj PPP

Potential for Energy Conservation in Russia

0

500

1000

1500

2000

2500

3000

2000 2005 2010 2015 2020

mio

tc

e

GDP/Energy intensity 2000 Technological potentialStructural reforms

A. Mastepanov, Ministry of Energy, Russian Federation

CO2 Emissions (million tonnes)

010002000300040005000600070008000

EU 25 EU15 Russia USA China

1990

2000

2010

2020

Russia Energy SectorInvestment requirements

Natural gas26%

Oil33%

Electricity16%

Nuclear4%

Coal3%

Heat10%

Energy Efficiency8%

Total requirements 2003-2020€ 715 thousand million

Sources : Russian Federation : Russia’s Energy strategy until 2020 and European Commission.

Why should Russia ratify

• The Kyoto protocol is not a constraint on Russia’s economic growth

- Russia will most likely still be below its 1990 level in 2020. No

doubt that it will meet its obligations;

- Huge potential for energy conservation;

- Emission trading will benefit Russia as will Joint implementation.

• Ratification by Russia of the Kyoto protocol will enable its entry into force and contribute to confirm the role of Russia as a global and responsible player in the environmental field.

• Ratification will be welcomed by developing countries that expect vast investments through the Clean Development Mechanism.