Professor Anđelko Milardović, PhD
Introductory part – Forum Prologue
The Institute for European and Globalization Studies (digital think tank: www.inegs.com) organized the 5th Jubilee International Energy Forum, “European Union Energy Policy and Energy Democracy” (https://interenef.com/). The patron of the Forum was Mr. Zoran Milanović, President of the Republic of Croatia.
The forum was held on July 23, 2021, in Split. It is part of a broader project entitled Global Risk Society and the New Social Paradigm (https://inegs.com/nova-drustvena-paradigma/). The Institute for European and Globalization Studies, as the organizer of the Forum, promotes three public policies as part of a new social paradigm. The first is IT, the second is energy and the third is the Mediterranean agricultural policy. Social systems cannot function without information (I), their transfer/technology (T), food (F) and energy (E). This triangle represents a social interactive network structure. Food cannot be produced without energy and information/technology. Without energy, the transfer of information is impossible. Energy transfer is impossible without today’s IT systems. Everything is intertwined! There is no room for simplifications. It is, therefore, a model that should be in the function of the self-sustainability of social systems in interaction with the world in the time of the global risk society, part of which is the Covid-19 pandemic. Within the Institute for European and Globalization Studies, energy policy is one of the three policies presented in the forums (more at: IEGS Forums www.inegs.com).
IT, food/agriculture and energy are the three dominant markers of contemporary 21st century geopolitics. Such markers, which include water, will be the cause of future wars. Wars will spur new waves of forced migration. The same waves of migration can occur due to shortages of food, water and energy. The future will be interesting! Life in the postmodern world is a complex structure. It should be viewed holistically in an interactive form. Otherwise, nothing can be understood. One can only make mistakes! We’ve had enough of failures!
What was actually discussed at the 5th Jubilee International Energy Forum? The panel summary follows!
EU energy policy – Common energy market between myth and reality
Moderator of the first panel: prof. Davor Škrlec, PhD
The panel was attended by Oliver Koch, PhD (European Commission-Directorate General for Energy), Franc Bogovič (Member of the European Parliament), M.Sc. Petar Sprčić (member of the Management Board of HEP) and Andreas Rörig (CEO, Eon Croatia), and also by Kristina Čelić, PhD, Director of the Energy Directorate at the Ministry of Economy and Sustainable Development.
The adaptation of the national legislation of the Republic of Croatia to the EU legislative package “Energy Union” adopted by the European Parliament in 2018 and 2019 is underway, with an emphasis on renewable energy sources, energy efficiency and the electricity market. It was pointed out during the discussion that, among other things, the legislative package aims to improve regional cooperation between Member States with the aim of better exploiting the potential of renewable energy sources and their integration into energy systems. National energy and climate plans play an important role in this implementation. The electricity market is still dominated by the national company HEP, so for other market stakeholders this creates the impression of a lack of competition and market liquidity. Through a dynamic discussion, it was concluded that retail customers are not sufficiently informed about the electricity market, that procedures for changing suppliers are often unclear and complicated, that the process of changing suppliers takes too long, but that the biggest problem for all market stakeholders is the Croatian Energy Regulatory Agency. (HERA) and HEP Distribution System Operator (HEP ODS).
In the second part of the panel, the panelists gave their first impressions of the new legislative proposal of the European Commission “Fit for 55” which should enable the realization of the Green Deal and the goal of reducing EU emissions by 55% by 2030. It was pointed out that energy transition is a great challenge for all Member States, especially for those who have a large share of fossil fuels (coal) in their energy mix, and that the omission of natural gas as a transition fuel for these Member States and those poorer is an even greater technological and financial challenge. The European Recovery and Resilience Fund will play a key role here and the success of an individual transition will depend on the quality of national recovery and resilience plans. The discussion concluded that the transition should respect the technical neutrality of technologies in order to achieve the goals of decarbonization of society and increase investment in energy efficiency with the goal of reducing energy consumption, both electricity and heat, in the economy, public sector and with citizens. Special attention should be paid to the protection of citizens so that the projected increase in natural gas prices, but also the entire energy transition, does not cause an increase in financial expenditures for citizens. Additional efforts should be made for developing measures to prevent energy poverty. The panelists concluded that Member States should implement EU legislation on the electricity market as soon as possible so to enable citizens to participate equally in the market as individual energy producers or organized in energy communities / cooperatives. The regulatory framework should oblige distribution system operators to accelerate the establishment of advanced metering systems in order to enable citizens to better participate in the electricity market, but also due to the needs that intensive electrification of road transport will place on the electricity distribution system.
Second panel – Diplomatic Energy Club – Croatia / EU, Framework for the picture of energy geopolitics in the 21st century
Moderator of the second panel – Daria Karasalihović – Sedlar, PhD
Participants of the second panel – held in hybrid form were Marcinkowski Bartosz – Head of the Political and Economic Department, Embassy of the Republic of Poland in Zagreb, Vitaly Yermakov Senior researcher from the Oxford Institute for Energy Studies from the Russian Federation, Wojciech Jakóbik – Editor-in-Chief of the Biznesalert portal, Robert Bošnjak from Plinacro, Head of the Strategic Development Service in Zagreb, Vladimir Prohorov, Deputy Ambassador of the Embassy of the Russian Federation in Zagreb and Vladimir Ivanov, Economic Relations Advisor of the Embassy of the Russian Federation. The panel focused on the geopolitical implications of the Nord Stream 2 gas pipeline project.
Marcinkowski Bartosz presented Poland’s views and stated that regarding Nord Stream 2 and its detrimental impact, Poland’s position remains unchanged. The pipeline is seen in Poland as a clear threat to European security and Poland is convinced the Kremlin could use it politically. He further argues that Nord Stream 2 weakens Europe’s energy security and resilience, representing a potential geopolitical tool for Moscow to exert greater influence in Europe.
Marcinkowski states that Poland strongly opposes the use of natural gas as a political tool and opposes increasing dependence on one source, one route and one supplier in the EU. He concluded by saying that they see Nord Stream as an initiative that undermines the trust among allies in both the EU and NATO. He also stated that Poland will continue to work with Ukraine and its allies, including the United States, on solutions that will allow us to mitigate the consequences of the construction of Nord Stream 2. It will continue to support countries aspiring to membership in Western democratic institutions and will continue to reduce current and future threats to peace and energy security as they see it fit.
Vitaly Yermakov cited four key points: 1) Completion of the construction of Nord Stream 2, now inevitable, marks the success of Russia’s strategy to reduce the risk of third country transit. 2) This strategy stems from fundamental changes in the geography of Russian gas supply and new configurations of Russian pipelines connecting the new production facilities at Yamal with the German target market by the shortest possible route through the northern regions of Russia and the North Stream. 3) In contrast, the irreversible decline in gas production in Russia’s inherited fields in Nadym-Pur-Taz and the aging of the pipeline infrastructure leading to Ukraine create constraints on future transit flows through Ukraine. 4) The characterization of Nord Stream 2 as a “redundant” gas pipeline does not take into account these important facts and therefore creates false expectations regarding the future role of Ukrainian transit.
Wojciech Jakóbik, as a representative of the Polish media, stated that Nord Stream 2 refers not only to gas supply but also to safety. This aspect shows that this is not in the security and foreign policy intentions of the European Union. This could lead to an increase instead of a decrease in gas prices in Central and Eastern Europe, concludes Jakobik, which is not in line with the new, ambitious climate policy. One day the project could become an unwanted orphan. Hydrogen deliveries to Europe should also be considered from the point of view of energy security, which is another argument against such deliveries through Nord Stream 2.
Colleagues from the Russian Embassy, Vladimir Prokhorov and Vladimir Ivanov took a diametrically opposite position from the Polish interlocutors. They stated that Nord Stream 2 is a purely commercial project that satisfies the interests of Russia, Germany, and the EU as a whole. By putting the project into operation, additional diversification of gas supply routes is ensured. Sustainable gas supply at competitive prices to European countries will be implemented by the shortest route, which will also lead to a reduction in the “environmental footprint” of gas transport to European consumers. They concluded that strategically Nord Stream 2 would strengthen European energy security in the coming decades, and therefore the countries interested in the project are firmly committed to completing the construction of the pipeline.
Robert Bošnjak commented on the situation on the domestic gas market and stated that Croatia has a well-developed gas transport and distribution system, with a total length of over 20,000 km through which gas is directly supplied to over 680,000 consumers in 19 out of 20 counties and the city of Zagreb. The gas transmission system is connected to the regional and European gas system via interconnections with Hungary and Slovenia, and the LNG terminal and evacuation pipelines to the LNG world market and enables gas transport to the regional and European market. These interconnections enable a secure and diversified gas supply to consumers in the Republic of Croatia and the surrounding area. The developed gas transport and distribution system in the Republic of Croatia is the basis for activating the professional, technical, and natural potentials needed for the transport of decarbonized gases and for the collection and storage of CO2. The Republic of Croatia has a significant number of used gas and oil fields in which it can store and pipeline infrastructure with which it can transport decarbonized gases and CO2. He stated that in that part of the Republic of Croatia as the owner of the underground, oil, and gas producers as existing and potential concessionaires and Plinacro as a transporter can synergistically participate and be technological leaders in the region, which is very important from the energy transition.
Third panel – Geopolitics and energy. Nord Stream 2 and global players. All against all.
Moderator of the third panel: Ana Stanič – leading expert in EU law and international law
The panel was attended by Matthias Dornfeldt, PhD from the Free University of Berlin, Mr. Konstantin Simonov from the National Energy Security Fund in Moscow and Katya Yafimava, PhD from the Oxford Institute for Energy Studies. The panel provided a different perspective on the debate on Nord Stream 2. Katja Yafimava, PhD began the panel by discussing the regulatory barriers to the launch of Nord Stream 2 after a July 21 agreement was reached between the US and Germany where Germany is supposed to respond to any attempt by Russia to use energy as a weapon against Ukraine and other Central and Eastern European countries. In exchange, the US consent to stop blocking the project. It analyzed the possible difficulties that North Stream 2 could face as part of the EU OTS certification process in view of the recent ruling of the Court of Justice regarding the OPAL exemption. She then put forward arguments as to why there was no evidence that Gazprom was “manipulating” the gas market in Europe.
Her position was reiterated by Mr Simonov, who continued the debate by expressing concern over the ongoing politicization of natural gas in the EU. He pointed to the OPAL exemption case as evidence of increased politicization. In his view, the European Court’s reference to the principle of energy solidarity as a basis for annulling the OPAL exemption comes down to a reference to a political objective whose nature and scope are undefined and imprecise from a legal perspective.
Dr. Mattias Dornfeldt presented the German perspective of Nord Stream 2, specifically explaining the role of Nord Stream 1, the forerunner of Nord Stream 2. The panel then discussed in detail the terms of the US-German agreement and how it was received in Ukraine and other Central and Eastern European countries. Finally, the panel concluded by discussing the future role of gas in the EU and what this could mean for Nord Stream 2.
Fourth panel – Energy Democracy
Moderator of the fourth panel – Nadežda Kokotović Energy Club Brussels
The fourth panel focused the discussion on major and long-term geopolitical projects on the internal plan, on the direct supply and management of sustainable energy to citizens. The European Green Deal has a holistic approach to energy and creating a sustainable future, with an emphasis on nature conservation, combating energy poverty and the green oath “first, do no harm”. Thus, energy democracy is a relatively new political, economic, and social concept that combines the energy transition in technological terms with the ideas of democracy and citizen participation in a new energy paradigm based on renewable energy sources and energy efficiency. New phenomena are now emerging such as prosumers, small local power plants that are being replaced or supplemented with large public and private energy companies.
Mario Rajn, the mayor of Križevci and member of the board of the Association of European Cities in Energy Transition Energy Cities, Zoran Kordić, co-founder and CEO of the Green Energy Cooperative (ZEZ) and Anes Podić, an environmental activist from BiH, spoke about this. Mario Rajn presented the development plan of Križevci, the goal of which is to become an energy independent town by 2030. The first group-funded solar power plant in Croatia was put into operation in Križevci, and in the next phase it is planned to connect Križevci and 59 settlements with public intercity transport using green hydrogen and to use geothermal wells in the city center for heating public institutions and improve the waste management system.
Zoran Kordić presented the basic challenges that energy cooperatives face and explained that civic awareness is what primarily motivates citizens to become members of some of the many energy cooperatives, but also other projects in Croatia that are focused on sustainable development, tourism, and agriculture. ZEZ is a member of RESCoop, the European organization that is most responsible for the fact that since 2019, energy cooperatives have received legal status in the EU.
Anes Podić from the Eco-Action presented the fight of non-governmental organizations in BiH and other countries of the Western Balkans against the construction of small hydropower plants, which cause huge damage to rivers and local communities, and in turn produce a negligible amount of energy. The role of the European Commission and the Energy Community in the need for the Western Balkan countries to transpose into their legislation the EU Water Framework Directive, as well as the EU Directive on Birds and Habitats, was emphasized.
Prof. Anđelko Milardović, PhD, Founder of Interenef, Institute for European and Globalization Studies, Digital Think-tank (www.inegs.com), Split-Zagreb
Prof. Davor Škrlec, PhD, Faculty of Electrical Engineering and Computing, Zagreb
Prof. Daria Karasalihović Sedlar, PhD, Faculty of Mining, Geology and Petroleum Engineering, Zagreb
Ana Stanič, Leading Expert in EU Law and International Law, E @ A Law Ltd., London
Nadežda Kokotović, Director of Brussels Energy Club, Brussels-Sarajevo
Split, August 24, 2021