Norway and the European power market

The EU's own production of energy is decreasing. This is true for all energy sources except renewable energy, which is increasing.

The general trend is that the EU's energy consumption is increasing, and accordingly, that the EU's import dependency rises. In 2007, the EU reversed this trend for the first time since 1994. According to 2008 preliminary data, however, import dependency rose again and reached about 54 %. We expect that energy demand and energy imports will continue to rise when the economy rebounds.

In the energy sector, the EU imports mainly oil, gas and solid fuels (coal). In 2007 the EU import dependency for oil was 82,6%, and 60,3% for gas. (Preliminary 2008 figures show that the oil dependency rate reached about 84,5%.) Almost needless to say, Norway plays a crucial role for the EU in the energy field. Norway is the EU's second largest provider both of oil and gas, next to Russia. In 2007, 15% of the EU's oil imports came from Norway. And as much as 27% of the EU's gas imports came from Norway.

One might add that for the EU's security of supply, gas is more vulnerable – as this mainly is transported through pipeline systems. This is a challenge to the EU, who receives more than ¾ of its gas from three countries (Russia, Norway and Algeria). We hence much appreciate Norway as a large and stable provider of energy, with a potential for further growth, not only in oil and gas. Norway is a close partner to the EU, and through the EEA Agreement, Norway is an integral part of the EUs internal energy market.

The EU has adopted major decisions which pave the way for the evolution of the EU's future energy position and its energy markets. I will mention three important milestones:
    The Climate and Energy Package – from December 2008.
    The Third internal market package for gas and electricity, from March 2009.
    The European Energy Programme for Recovery – from April 2009.

In December 2008, the “Climate and energy package” was approved. The package was setting out the EU strategy to reach the so-called 20-20-20-targets: The EU aims to reduce greenhouse gas emissions by at least 20% by 2020, increase the share of renewable energy sources to 20% by 2020, and also cut energy consumption 20% by 2020.

Regarding renewables, one should keep in mind that the EU is in a quite different situation than Norway (where one has 60% renewables in the energy mix, and where almost all electricity comes from renewable hydropower). Renewables' share in the EU's energy mix is around 9 % (2006-figures), and the 20% target hence implies strong investments in the renewables' sector.

In the Climate and energy package you will find a directive revising the European Emission Trading System, a directive on Carbon Capture and Storage (CCS) as well as the Renewables directive – of which all are directly relevant to Norway.

The Commission has estimated how the new energy policy will develop – compared to a baseline (i.e. no change in energy policy), with moderate energy prices and high energy prices. Under baseline conditions the primary energy needs in 2020 continue to grow, with fuel needed for the transport sector as the main driver. With the new energy policy, however, energy demands are expected to fall. The consumption of renewable energy is expected to increase, obviously sharper with the new energy policy. Greenhouse gas emissions will fall quite sharply with the new energy policy.

In March 2009, the “Third internal market package” for gas and electricity was approved with a view to foster functioning and competitive energy markets which will eventually enhance Europe's energy security. The aim is:
    to separate production and supply from transmission networks
    to facilitate cross-border trade in energy
    more effective national regulators
    promote cross-border collaboration and investment
    greater market transparency on network operation and supply
    increased solidarity among the EU countries

In April 2009 the "European Energy Programme for Recovery" was adopted by which the EU dedicated 4 billion euros to support new energy infrastructure. In December the Commission approved 15 energy projects which will receive financial support from the Recovery-programme. Among these projects, we find carbon capture and storage demonstration sites. We also find off-shore wind as well as gas and electricity inter-connectors.
    gas and electricity infrastructure projects received €2.365 billion (60% of budget)
    Offshore wind energy projects received €0.565 billion (14% of budget)
    Carbon capture and storage projects (CCS): €1.05 billion (26% of budget)

As mentioned, Norway plays a crucial role for the EU in the energy field. This is quite obvious when looking at EU import figures, which clearly shows Norway's role as the EU's second largest external provider of both oil and gas (next to Russia). In 2007, 15% of the EU's oil imports came from Norway. And as much as 27% of the EU's gas imports came from Norway. Norway has strengthened its position as a major gas supplier to the EU, and we are glad that Norway aims to further increase its gas exports to the EU in the years to come. There is little doubt that Norway will continue to play an important role on the European oil and gas markets in the years to come.

In general, I can say that the cooperation between the EU and Norway is very close in this area. Norway is an important player in the EU internal energy market. Since 2002, the EU Commissioner for Energy and the Norwegian Minister of Petroleum and Energy have met regularly, in the context of the annual EU-Norway Energy Dialogue. Obviously, the importance of Norway as an energy partner of the EU is not limited to oil and gas. Norway shares the European Union objectives on climate change and sustainable development and it is particularly committed to the deployment of cost efficient carbon capture and storage technologies. We are well aware of the Norwegian ambitions in this field, and the Energy Commissioner himself has visited the Sleipner field, where Statoil has injected one million tons of CO2 per year since 1998.

Regarding CCS, we are particularly glad that Norway will contribute with around 160 million euros for various efforts to develop and promote CCS over the next five years. This was part of the new EEA Financial Mechanism, where negotiations were concluded before Christmas last year.

Regarding renewables, I will also underline that the new renewables framework is something the EU is very proud of. The EU's ambition to achieve the 20% renewables target will imply heavy investments in the renewable energy sector. This is a big challenge, but this opens important possibilities – also Norwegian actors should be aware of. I will mention that a Commission study shows that reaching the 2020 renewable energy targets is expected to lead to around 2.8 million jobs in the renewable energy sector and generate a total value added of around 1.1% of GDP.

The EU's renewable framework is also relevant for Norway, through the EEA agreement. Discussions are now ongoing, on how the EEA countries will join this framework. I will not go into details, but will only say that we obviously believe that the ambitions of the EEA countries should match the EU's own ambitions. We are aware that Norway is very advanced when it comes to renewables, with a very large share of renewable energy in its energy mix. This also implies that efficiency measures in the heating and transport sectors can increase the share of renewable energy rapidly.

I will conclude, by saying that the importance of Norway as an energy partner for the EU can not be underlined enough. It is not only EU's second main supplier of oil and gas, but also an important player in the internal energy market and a front-runner in clean energy technologies like CCS and renewables.

I hence look forward to a continuous constructive cooperation between Norway and the EU in the energy field.

Norway and the European energy market