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Sixth edition of the Refining Forum

www.ceep.be ▪ No. 3 (40) ▪ March 2016

COVER STORY

Alessandro BartelloniPolicy Director, FuelsEurope

On March the 1st, 2016, the Refining Forum achievedan important milestone when it convened for its sixth edition, with the participation of Climate Action & Energy Commissioner, Arias Canete, MEP Elissabeta Gardini, the Mayor of Thessaloniki, Member States, the Commission, industry representatives, experts, and other stakeholders.

A bit of history, first: on May the 15th, 2012, Commis-sioner Oettinger organised an EU Refining Roundtable, atwhich representatives of 21 EU Member States, Members ofthe European Parliament, the EU refining industry, and tradeunions, shared views on the difficulties faced by the EU oil refi-ning sector and called for co-ordinated action at the EU level.

As a response to these requests, the Commission orga-nised an EU Refining Conference on November the 26th,2012, where stakeholders gave their views on the Com-mission’s proposals for a horizontal sectoral fitness check ofoil refining as announced in October, 2012, in the Commis-sion’s Communication on industrial policy, and on setting upan EU Refining Forum.

The aim of the EU Refining Forum is to provide anopportunity for the industry, Member States, Members of theEuropean Parliament, the Commission, and other stake-holders to come together and discuss planned and futureregulatory proposals, with potentially significant impacts onthe EU’s oil refining industry and on the EU's security ofsupply of petroleum products.

The 6th Refining Forum, with a record participation of140 attendees, and a list of prestigious speakers, witnessedall stakeholders recognising the economic and social value ofthe European refining sector, and calling for a continuedreview of the Fitness Check, and its use in assessing the cu-mulative impact of existing and upcoming legislation. TheForum also benefitted from unprecedented coverage by tra-ditional and social media.

EU refining is key for Europe’s security of supply,and ensures that both climate and environmental legislation are implemented

In his opening keynote speech, Commissioner Cañeteproclaimed that “this Forum goes from strength to strength”.He underlined the crucial role of the European refiningindustry for the EU’s security of supply, and its worldwide ▶3

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CEO’s EDITORIAL

CEEP in March – a time of analysis and consultation

Marcin Bodio, Ph.D.CEO, CEEP

In this issue of our monthly magazine, we analyse the key issues that impacted upon the European energy sector and energy-intensive industry in the recent month.

We discuss the influence of China being potentially gran-ted the Market Economy Status (MES) . This carries the risk ofthe EU not being able to effectively file anti-dumping cases,and implies that a level playing field between EU producersand Chinese exporters will no longer be ensured. Hence, weare calling for a fully comprehensive economic, social andenvironmental impact assessment to be carried out by theEuropean Commission, before any binding decision in thisarea is made.

This month, CEEP responded to the public consultationon the preparation of a new renewable energy directive(REDII) for the period: post-2020. So, we have highlightedinformation about the impacts and benefits associated withthe RED, as well as a number of other key points to take intoconsideration. We strongly believe that REDII should ensure aconvenient investment climate, as well as mechanisms ofsupport schemes, which will not disturb the electricity mar-ket, whilst simultaneously, enabling the development oftechnologies, and thus, contributing to the competency ofthe EU’s industry in the world.

We continue our analysis of how forests and green landscan serve as a significant element in the global storage ofCO2. The absorption factor of GHG emissions by forests andgreen lands, has been included in the Paris Agreement, due,in large part, to the active role of the Polish delegation,supported by others. Take a look at the graphs showing theEU’s CO2 decrease, according to existing regulations,compared with the forest “storage” factor.

We also focus on the concept of the circular economy,which represents a fundamental alternative to the linear‘take-make-consume-dispose’ economic model that current-ly predominates in free market economies. Together withCEEP members, we are deeply interested in promoting thiseconomic model. Although the transition to a circular econo-my seems to be one of the most demanding challengesfacing Europe, we believe it is a great opportunity for ourcontinent to once again become a global leader, by imple-

menting a new approach in the energy and energy-intensivesectors.

Following the visit of Poland’s Prime Minister, BeataSzydło, to Norway, we are looking into the re-animated visionof a pipeline, linking Poland to Norway’s North Sea gas fields.If the Baltic Pipe and its Nordic spurs are to become a reality,recognition of its geopolitical value will have to be matchedby confidence in its commercial value. CEEP is here toprovide you with in-depth analysis on this issue.

Do not forget to read the interesting report from the sixthedition of the Refining Forum. Spurred on by a recordparticipation of 140 attendees, and a list of prestigiousspeakers, this edition of the Forum witnessed all stakeholdersrecognising the economic and social value of the Europeanrefining sector, and called for a continued review of theFitness Check, and its value in assessing the cumulativeimpact of existing and upcoming legislation.

In March, we traditionally celebrate Easter, which isknown as a time of renewal and rejuvenation. May this Easterbring growth, prosperity, and success to your projects,relationships, and ventures. Have a joyous and blissful Easterthat fills you with peace, new life and vitality! ■

ALSO IN THIS ISSUE

Market Economy Statusfor China – impact on theEU steel industry▪page 4

Poland’s gas diversifi-cation: the Nordic dimension▪page 6

Forests and green landsneeded as a global storage of CO2▪page 8

Anthropogenic mineralsin a circular economy approach▪page 9

Circular economy – an innovative concept that requires research▪page 11

CEEP’s response to the consultation on REDII preparation▪page 12

At CEEP, we continue ouranalysis of how forests andgreen lands can serve as a significant element in the global storage of CO2. We also focus on the concept of the circular economy, which represents afundamental alternative to the ‘take–make–consume–dispose’model that currently predominates in free market economies

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CONTINUED

leading position for energy efficiency and innovation. Hestated that short and long-term competitiveness should notbe harmed by the energy transition, even if, in the long run,decarbonisation will have an impact on this sector.

Dominique Ristori , Director General of DG ENERGY, sup-ported the Commissioner’s view, and stressed further the keyvalue of the EU’s refining industry for the broad EU economy.

MEP Elisabetta Gardini urged the European Commissionto be realistic and pragmatic “until the rest of the world hascomparable binding commitments to those of the EU, it is inthe interests of the planet to keep industrial activity inEurope, rather than offshoring it to less environmentallyrigorous regions”.

She also stated that “the refining industry provides valueto the European economy, to the industrial fabric, to citizens,and additionally contributes to the global environment”. Shealso spoke of the need for complete protection from carbonleakage (including both direct and indirect ETS costs) , tomaintain an internationally competitive level playing field.

Peter Mather, VP of BP Europe and a Board Member ofFuelsEurope, underlined the importance of the long-termregulatory stability and strategy, to allow companies andinvestors to plan their business investments, with the confi-dence they will have a long life and value for the long-term.He asserted that refineries will continue to be needed in theEU, even in the long-term, as it is still unclear what othertechnologies could replace the internal com-bustion engine.

Kristine Petrosyan, Oil Market Analyst at the IEA, empha-sised the future increase in refining over-capacity, along withdeclining oil product demand in Europe, possibly leading tofurther industry rationalisation.

The Fitness Check is a key instrumentto measure Refining’s viability

A number of Member State representatives, includingItaly, Belgium, and Spain, reiterated calls expressed at the lastmeeting of the Forum in June, 2015, for the Refining FitnessCheck to be a dynamic exercise, which should be conti-nuously updated, taking into account upcoming legislation,especially the implementation of phase 4 of the ETS, which islikely to add further to the regulatory burden on the sector.

The UK representative talked about the key importanceof domestic refineries for the resilience of the UK economy,in the face of possible international disruptions of energysupply.

The Dutch Presidency of the Council, represented by ErikJanssen of the Ministry of Economic Affairs, highlighted theimportance of the Refining Fitness Check as a referencestudy in the context of industry’s competitiveness. He high-lighted the need to implement the COP21 agreement, insuch a way, as to allow the EU to meet its targets, withoutthis negatively impacting on its’ competitiveness.

On phase 4 of the ETS, he called for effective protectionagainst carbon, investments, and job leakage after 2020, untilcompetitors in third countries are subject to similar regula-tory burdens as the industrial sector in Europe.

EU Refining has an essential role forlocal communities and ensures social welfare

The Mayor of Thessaloniki, Yiannis Boutaris, underlinedthe critical importance of the refinery located in Thessaloniki,for the economic sustainability of his community. Hedeclared that many stakeholders are probably not aware ofthe fact that the latest investments in the refinery, consi-

derably improved the protection of the workers and envi-ronment.

The CEOs of Hellenic Petroleum and CEPSA, intervened inthe debate, stressing further the contribution of the refiningsector to the EU economy, and the need to consider differen-ces in competitiveness, and in regulatory burdens betweenthe EU and other parts of the world.

EU Refining supports the COP 21 outcome,but calls for effective global actionto ensure a level playing fieldamong world economies

John Cooper, Director General of FuelsEurope andConcawe, reiterated the industry’s support for the Com-mission’s approach to COP21 and the Paris deal. He, howe-ver, reminded the Forum - pointing at the expected risingcost of carbon under phase 4 of the ETS - that “until othersignificant regions of the world take up binding commit-ments in GHG reductions, translating into a carbon cost fortheir industries, the best performing EU refineries (as well asthe others) need effective and complete protection fromcarbon leakage”. He also commented that: “We stronglybelieve in the capability of the market, to deliver the mosteffective solutions, to achieve environmental targets in aneconomically sustainable way”.

Finally, Mechthild Wörsdörfer, Director of DG Energy,confirmed that a 7th Refining Forum would take place inAutumn, 2016. The sixth Refining Forum has been out-standing, especially for the consistency of the positionsexpressed, in support of the need to create and maintain theregulatory conditions for the EU refining industry, to com-pete on a level playing field with the rest of the world. ■

COVER STORY

With a record participationof 140 attendees, and a listof prestigious speakers, the6th Refining Forum witnessed all stakeholders recognisingthe economic and social value of the European refining sectorand calling for a continued review of the Fitness Check,and its use in assessing thecumulative impact of existing and upcoming legislation

Alessandro BartelloniPolicy Director, FuelsEurope

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Mirosław MotykaDirector of Government Affairs,ArcelorMittal Poland (CEEP member);Council President of the Polish Steel Association

Since 2014, many European manufacturing sectors, including steel, have been facing a tremendous surgeof underpriced, unfairly traded products from China, flooding into World and European markets.

As of the end of 2015, imports from China were subjectto 52 definitive anti-dumping (AD) measures. In terms ofvalue, the share of imports from China to the EU, affected byAD measures, is 1.38%. The industries with the most measu-res in force are (i) chemical and allied, and (ii) iron and steelwith 14 and 13 definitive measures in force, respectively.

The largest sectors, in terms of market value, are iron andsteel, with turnovers of ca. €29 billion, followed by ceramics,with a €13 billion turnover. The sectors with the highestnumber of jobs in the manufacturing of products, subject toAD measures concerning China, are ceramics, iron and steel ,other mechanical engineering (bicycles), and electronics (so-lar panels). 79% of the 234,300 jobs in the manufacturing ofproducts, covered by the AD measures concerning Chineseimports, are in Italy, Germany, Spain, France, Portugal andPoland.

China has emerged as the world’s largest steel industry,as a direct result of the Chinese government’s intervention inthe market. The Chinese economy is still predominantlygoverne d by state intervention and planning, at nationalas well as sectoral levels, such as in the steel sector: FiveYear Plans impact upon practically every significant costfactor of production, distribution and trading. Market forcesapplicable in OECD economies, do not prevail in China.

Excess steelmaking capacity has worsened worldwide, asglobal steel demand growth softened, whilst new capacitybuild-up continued, notably in China. Global excess capacityin steel is estimated at almost 700 million tonnes, of which,

about 410 million tonnes of steel overcapacity are found inChina alone (that figure represents the combined steeloutput of the EU, USA, Russia and Japan) . Chinese finishedsteel imports into the EU surged by +60% in 2015, YTD, rep-resenting 30% of total EU imports.

China’s internal steel demand has declined since 2014 (-3.3%), 2015E (-3.5%) and 2016F (-2%). Consequently, Chinesesteel exports exploded in 2014 (up to 90 million tonnes) ,further intensifying in 2015 (up to 110 million tonnes).

Now, if and when steel is dumped, what defence mea-sures are available to European producers to fend off such anunprecedented tsunami of dumped imports? There aresome in place at the moment, albeit their efficiency and finalimplementation leave a vast room for improvement. Alas,even this may end, when China ceases being treated as aNon-Market Economy in December, this year. Such a deci-sion, if made by the European Commission, would havedisastrous consequences for many business sectors. Whygrant China the MES status when, obviously, there are noobjective reasons to treat it in this way?

When China joined the WTO in 2001, it had not com-pleted the transition to becoming a market economy. Forthis reason, China made various commitments to continue itstransition to a market economy, and in particular, agreed inits Protocol of Accession to the WTO, to ensure that all priceswere determined by market forces. In the absence of market-based prices, special provisions were introduced in Section15, to address price comparability for anti-dumping investi-gations. Notwithstanding the legal discussions, centering onwhether or not China must be granted market economystatus after 2016, and what methodology could be used bythe EU in its anti-dumping investigations into Chinese goods,the change in China's status after 2016, might compromisethe EU's ability to ensure that the competition between its’companies and Chinese ones is fair.

For the steel industry, recognition or treatment of Chinaas a market economy at the end of 2016, would coincidewith the peaking of Chinese excess steelmaking capacity, ▶

ANALYSIS

The text based on data of Eurofer, Aegis and Scott Study

Market Economy Status for China – impact on the steel industry if it is granted by the EU

Demonstration of steel workers from the Czech Republic, France, Germany, Italy, Luxembourg, Poland, Romania, Spain, and the UK, against granting MES for China

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ANALYSIS

New preliminary questions concerning the energy sector raised before the European Court of Justice.

C-543/15 ANODEDiscretion is granted to Member States, with respect to

defining suitable policies to ensure their security ofelectricity supply. A decentralised market-based capacitymechanism involves a measure, excluding foreign capaci-ties, which is offset by the taking into account of intercon-nections in the determination of suppliers’ obligations.Shall Article 34 TFEU be interpreted as precluding such anexclusion measure? The concept of public security is pro-

vided for in Article 36 TFEU – a criterion which may beused to ascertain whether such a measure is capable ofsatisfying the condition of proportionality required forArticle 36 TFEU.

C-549/15 E.ON Biofor Sverige ABDefinition of the terms ‘mass balance’ and ‘mixture’ in

Article 18(1) of Directive 2009/28 on the promotion of theuse of energy from renewable sources: shall they be inter-preted as meaning that the Member States have an obli-gation to accept trade in biogas between Member States,via an interconnected gas network? If the answer is negati-ve, then, in that case, is the relevant provision of the direc-tive compatible with Article 34 TFEU, despite the fact thatapplication thereof is likely to have the effect of restrictingtrade?

THE COURT OFJUSTICE OF THE

EUROPEAN UNION

Prepared byWardynski& Partners,CEEP member

CONTINUED

and record levels of exports to inter-national markets, including the U.S., theEU, and Latin America.

There have been many initiativestaken up by concerned industries, whocombined forces to form Aegis, a manu-facturing industries representative bodyin Europe, which has called upon the EUand national governments to step-uptheir actions. The extraordinary Compe-titiveness Council, held on the 9th ofNovember, resulted in no concrete ac-tions to enable long-term support ofthe European steel industry. On the15th of February, more than 5,000 va-rious industries’ workers, employees,officers, and trade unionists, took to thestreets in Brussels, to demonstrate theirfears on perceived hair-splitting andfoot-dragging of EU officials in makingthe granting of MES for China, subjectto that country’s implementation of stru-ctural reforms.

Surely, the granting of MES to China,will severely undermine the ability ofkey sectors concerned, to effectively fileanti-dumping cases. The steel sector isone of these key sectors. The risk of nolonger being able to effectively file anti-dumping cases, imp-lies that a levelplaying field between EU producers andChinese exporters, will no longer be en-sured. This, in turn, is a threat to Euro-pean employment, as the jobs in EUsteel mills will be in danger, due to thesubstantial and sustained imports ofdumped Chinese steel.

Therefore, the Commission shouldbe required to carry out a FULLY com-prehensive, economic, social and envi-ronmental im-pact assessment, as requi-red under the Better Regulation guide-lines, for any major legislative initiativewhich involves policy discretion – suchas a proposal regarding MES for China. ■

EU trade with China (overall)

Supply and demand balance in China (million tonnes)

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ANALYSIS

Poland’s gas diversification:the Nordic dimensionIan BrzezinskiSenior Fellow at the Brent Scowcroft Centeron International Security, the Atlantic Council

Poland has long eyed Norway’s oil and gas resourcesin its quest to diversify its sources of imported energy.In February, during her visit to Oslo, Poland’s Prime Minister, Beata Szydło, re-animated Warsaw’s vision of a pipeline, linking Poland to Norway’s North Sea gas fields.

Poland consumes some 16 bcm of natural gas a year,mainly at chemical and fuel plants. 60% of that gas is im-ported from Russia. Over the last decade, Warsaw has work-ed assiduously to reduce that dependency. On April the 1st,2014, Poland significantly increased its capacity to import gasfrom Germany, when the two nations completed invest-ments that give reverse flow capacity to their respective sec-tions of the Yamal gas pipeline. That pipeline was built tosend Soviet gas westwards to Europe. Today, it can directsome 2.3bcm per year of gas in the opposite direction to Po-land, and up to 5bcm in the event of a Russian supply cut off.

LNG terminal in Świnoujście, a port on the Baltic Coast,located near the border with Germany, will start its operationin the mid of this year, with its capacity to handle 5bcm ofgas per year. The terminal effectively links Poland to theincreasingly global LNG market. Together, the LNG terminaland Polish own productions of 4.5 bcm covers almost 60% ofPoland’s demand for gas.

Baltic Pipe Re-animatedA direct tie to Norway’s North Sea gas fields would further

diversify Poland’s gas suppliers. A key element of this visionhas been the Baltic Pipe, a project dating back to 2000. TheBaltic Pipe is a proposed, 250 kilometre, bi-directional , sub-surface pipeline that would link the gas lines near Kovenhavnon Denmark’s eastern coast, with those in Świnoujście. TheEU is now supporting a feasibility study on the project, exa-mining variants ranging in capacity from 2 to10 bcm peryear. The Baltic Pipe is estimated to cost approximately 350million euros, and is included in the EU’s list of Projects ofCommon Interest (PCI).

From its inception, the Baltic Pipe’s viability has been tiedto the construction of pipelines leading to the North Sea.Initial options focused on connecting the Baltic Pipe to theSkanled Pipeline, designed to run along the coasts of south-eastern Norway and western Sweden, and finally intoDenmark . Much of the gas that was to transit throughSkanled, with its 7bcm per year capability, was intended tosatisfy Danish and Polish demand. However, Skanled wascancelled in 2009, due to “increased operational risks,combined with global economic developments, that havegiven an uncertain view on future gas demand.”

Skanled’s demise was a major setback for the Baltic Pipe,even with the latter’s potential to direct Russian gas andexcess gas from the Świnoujście LNG terminal to Denmark .Nevertheless, Poland’s interest in the Baltic Pipe has beengiven new impetus by the approaching termination date ofcontracts between the nation’s largest gas operator, PGNiG,and its main supplier, Gazprom.

PGNiG currently buys up to 10.2bcm of gas a year fromGazprom, and that deal will end in 2022. PGNiG, which hasinvested in several Norwegian off-shore gas fields, and its’Polish government owners, see a strategic opportunity tofurther reduce their nation’s heavy reliance on Russian gas, ifthe Baltic Pipe, with the necessary Nordic spurs, can be cons-tructed by that date. Another Polish company, Grupa LOTOS,is as well active on the Norwegian off-shore gas fields.

The first and simplest option would be to link the BalticPipe to Norway’s Statpipe and Denmark ’s North Sea fields.Norwegian gas would enter the Danish pipeline infrastruc-ture, before flowing though the Baltic Pipe. This approachhas been projected to bring some 3-4bcm of Norwegian gasto Poland. A second, more challenging option involvesbuilding a new pipeline linking the Draupner and Sleipnergas fields in the Norwegian North Sea, to the west coast ofDenmark . Gas would traverse Denmark to reach the BalticPipe. According to ICIS, this option could send up to 10bcmper year to the Baltic Pipe, a level of flow that would requireupgrades to the Danish gas transmission system.

Norway Not Yet Fired UpPoland’s renewed pipeline ambitions for the North Sea,

however, have yet to reignite Norwegian interest. To a cer-tain degree, the prospects of a Norway-Poland gas link arebeing buffeted by Warsaw’s and Europe’s success with ener-gy diversification. The European market now anticipates, notonly the arrival of Azeri gas in 2019, via the Trans-AdriaticPipeline, but also Iranian gas and LNG from the United States,and possibly even from Australia.

In late January, Statoil, Norway’s leading gas and oilproduction company, stated that it has no plans to invest inthe pipelines advocated by Poland. Gassco, a main operatorof Norway’s off-shore pipelines, said that, for now, it will notbuild additional links to continental Europe. The operatorasserted that its current pipelines are “optimised,” meaningthat current and projected production in the North Sea ismatching its capacities. ▶

Source: PLATTS, GISCO, European Comm

ission

Poland–Denmark interconnection ”Baltic Pipe”

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ENERGY ECHO

Poland and Central European states not readyfor EU emissions targets tougher than 40%

In the wake of the Paris deal, Germany, France, andBritain pressed the European Union for more ambitiousgreenhouse gas targets at a meeting of EnvironmentMinisters on March the 4th, which provoked a clash withsome other states. At Paris, the EU agreed to cut emissionsby at least 40% by 2030 from 1990 levels, and to a first globalstock-take in 2023. However, Ministers from Sweden, Bel-gium, Austria, and Portugal, urged the EU to set strongertargets, backing the position of the three leading powersmentioned above. They called for an earlier stock-take, inpreparation for a special UN report in 2018, to get on trackfor net zero emissions in the second half of the century.

However, Poland and its neighbours in Central Europe,warned that the EU should not ramp up its climate goalstoo soon, or ahead of other nations. The EU’s Climate andEnergy Commissioner, Miguel Arias Canete, whilst encou-raging the dissenting members to be “more ambitious”,acknowledged that not all Member States were on boardfor new European targets, higher than declared in Paris. (PW)

Qatar diverts Asian LNG to EuropeFalling import demand in Asia means that LNG is being

re-routed to Europe from Qatar. Inflows of LNG to Europeincreased by 16% in 2015, and look likely to rise further thisyear. However, global gas prices will firstly need to adjustdownwards, to incentivise European operators to switchfrom coal to gas. (PW)

Iran to deliver gas to Iraq in AprilThose two traditional arch enemies, Iran and Iraq, are

set to commence trade in gas next month. Iran will exportit to Iraq, starting at a level of 4 mcm per day, and it may beincreased to 35 mcm daily. Iraq is suffering from a severeelectricity shortage, and Iran’s gas exports are expected tobe directed at power stations.

Iran’s gas supply to Iraq was due to begin last year, buttechnical problems and Iraq’s insecurity meant that theproject was not realised. In fact, 20 kms of the pipeline inIraq, that will be needed for this year’s transfer of gas, havenot yet been completed. (PW)

Reformed ETS to quadruplerefiners’ carbon costs

The next phase of the EU ETS from 2021 will nearlyquadruple the carbon costs of European refiners to ap-proximately 23 euro cents per barrel, up from 6 cents now,FuelsEurope predicts. So, John Cooper, the company’sDirector General, at a forum attended by the EuropeanCommission and representatives from the refining indus-

try, called for free allowances to cover their emissions untilthere is a global price. “We see the pathway to global pri-cing of carbon as key to restoring a global level playingfield,” he declared, as he also raised concerns about theloss of Europe’s industrial competitiveness.

FuelsEurope estimates that refiners will buy 30% of ETSallowances they need, to cover emissions in the next mar-ket phase, when it assumes carbon permits will cost 30euros per tonne, and a 23 euro cent carbon cost per barrel.

Furthermore, it should be noted that Europeans, inaddition to the ETS, have to implement other EU pollutionlaws, whose costs amount to $1.50 per barrel, according toestimates. The Commission, which admitted, last June, thatEU environment law added 47 euro cents per barrel,agreed to analyse the issue further. (PW)

US Presidential Candidates:Where do they stand on energy?

As the respective Democratic and Republican Presiden-tial Nomination campaigns become more intense, it appe-ars to be a good moment to review their energy policies,and where they stand on energy issues.

Hillary Clinton (D): One could say that Obama’s poli-cies are “safe in her hands”. She proposes a reduction in USGHG emissions by more than 80% by 2050. She wants toexpand solar energy across the US to 140GW, and topower every home in America with renewable energy by2026. Significantly, for coal supporters, she would restrict,but not eliminate, the development of fossil fuel resourceson public lands.

Bernie Sanders (D): Has a similar reduction target incarbon emissions by 2050, largely through a tax on carbonand investments in energy efficiency, wind, and solar po-wer. He would ban all fossil fuel leases on public lands, andcut subsidies for fossil fuel producers, in favour of suppor-ting renewable energy development.

John Kasich (R): He supports increasing US energy pro-duction from all sources, as well as “removing barriers” forthe development of advanced energy technologies. He isalso in favour of energy efficiency projects.

Ted Cruz (R): He would set out to eliminate the Depar-tment of Energy, as well as multiple programmes at theEnvironmental Protection Agency. His energy policy callsfor the abolition of all energy subsidies, but supports rene-wable energy, if it can be economically competitive.

Dona ld Trump (R): Has no official energy policy. Judg-ing from his comments in speeches, he supports the ex-pansion of natural gas and oil resource development in theUS. He also believes that the Chinese invented the conceptof global warming “to make US manufacturing non-com-petitive”. (PW)

CONTINUED

During a visit to Washington, D.C. in late February, Nor-way’s Minister of Petroleum and Energy, Tord Lien, assertedthat current and expected market conditions do not favour aNorway-Poland pipeline. In his view, the gas demandnecessary for such an investment has yet to be demons-trated. He suggested that a more feasible option with whichto increase Poland’s import of Norwegian gas would be to ex-pand Poland’s linkages to gas networks, particularly in Germany.

The Baltic Pipe is an initiative of strategic importance, notonly for Poland, but for Central Europe as a whole. Increasedaccess to Norwegian gas would bring greater and much-needed balance to Poland’s portfolio of energy suppliers, andthat of its neighbours, including, with the right interconnec-tors, Ukraine. However, if Baltic Pipe and its Nordic spurs areto become a reality, recognition of its geopolitical value willhave to be matched by confidence in its commercial value. ■

ANALYSIS

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ANALYSIS

Forests and greenlands needed as a global storage of CO2Jarosław CendrowskiCo-ordinator, Grupa LOTOS (CEEP member)

The absorption of GHG emissions by forests and green lands, which serves as an important storage of CO2,has been included in the Paris Agreement, due to the active role of the Polish delegation, supported by others.

It will also prevent the increase of GHG emissions causedby deforestation in some EU countries, such as Denmark, Ire-land and the Netherlands. The situation in such countries asGermany, Austria, Estonia and Latvia should be discussed aswell. We need our Europe to be greener. The role of conser-vation, the sustainable management of forest, and enhance-ment of forest carbon stock , should concern both EUMember States and developing counties with rain forests.

To reach the goal of the Paris Agreement, we need anurgent directive, which will introduce the possibility ofacknowledging forests as a natural CO2 storage, with thesame results as CCS or CCU concepts.

The EU already reached in 2013, its 20% CO2 decreasetarget aimed for 2020. The result is 21%. To better under-stand the impact of forest “storage”, we prepared a graphshowing the EU’s CO2 decrease, according to existing regu-lations, compared to the forest “storage” factor. If this factorhad been included into the EU regulations, the total decreaseof CO2 would have been 23%, instead of the existing 21%.Maybe this does not seem to be a big difference, but theforest “storage” factor will be a great instrument concerningCO2 decreases, and inevitably, will stimulate Europe to bemore green, which we should encourage. ■

CountryLULUCF resultMillion tonnes

of CO2 (2013)

Change in GHG emissions (includingLULUCF, 1990-2013)

France -46.67 -13%Sweden -41.55 -54%Poland -37.59 -20%Italy -34.08 -22%Spain -33.76 8%Romania -24.94 -63%Finland -20.38 -23%Germany -15.69 -23%Portugal -10.16 -10%Lithuania -9.96 -77%Bulgaria -9.30 -51%Slovakia -7.90 -45%Czech Republic -6.74 -36%United Kingdom -5.25 -30%Croatia -5.13 -36%Austria -4.98 14%Slovenia -4.75 -13%Belgium -3.76 -20%Hungary -3.44 -41%Greece -3.32 -1%Estonia -0.33 -34%Latvia -0.15 -35%Denmark 2.39 -25%Ireland 5.61 2%Netherlands 6.24 -10%

CO2 emissionsin the EUData in million tonnes of CO2

The goal to decrease CO2 emissions in the EU by 20% by 2020 was already achieved in 2013

Land Use, Land Use Changeand Forestry (LULUCF)

EU 28 5 068 4 477 -21%

EU 28 with the LUCUF 5 421 4 159 -23%

country 1990 2013 % change

Positive net result of LULUCF

Negative net result of LULUCF

Source: CEEP based on Eurostat data

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STUDY

Anthropogenic minerals ina circular economy approachTomasz Szczygielski, Ph.D. Eng.Warsaw University of Technology

It is estimated, that each year in Europe, approx. 700 m. tonnes of anthropogenic minerals are produced, including 150 m. tonnes of Coal Combustion Products (CCP), of which over 100 m. tonnes are to be found, overall, in all 28 EU Member States, with. 20 m. tonnes being Poland’s share.

The Polish power sector is in a particularly unique situ-ation, because it is expected that in the 2050 perspective, theshare of coal in power generation in Poland, will have fallenmuch below 40%, anyhow this means, that year on year,several million tons of anthropogenic minerals will continueto arise from the Polish power sector, and the intelligent uti-lisation of this volume very clearly fits into the idea of theCircular Economy. The Polish Union of CCP, for almost thelast twenty years has been effectively dealing with the mar-keting and utilisation of anthropogenic minerals. Poland’s uti-lisation rate in excess of 60% is positive.

CCPs are subject to REAC H Regulation, because they areplaced on markets in numerous applications. They arise,together with electricity and steam, in power plants burningcoal and lignite, and are being utilised mainly in the buildingmaterials industry, in civil engineering, roadmaking, under-ground mining and the re-contouring and reclamation ofopen cast mines. Extensive testing and activities that precedethe registration, allow for demonstrating unequivocally, thatCCPs are substances safe for humans and the environment,and from this perspective, are perfectly suitable for furtheruse in numerous material and product applications.

Meeting the requirements of national or European stan-dards, related to particular applications, is a key technicalprerequisite for the utilisation of CCPs in material and pro-duct areas. Endeavours in this direction have dated back halfa century, and CCPs belong to the category of anthropogenicminerals, which are clearly present in numerous technicalstandards, within the broadly understood construction sec-tor. The scope of domains, in which material and productstandards include the application of coal combustion pro-ducts, shows just how important, and a significant part of theeconomy, it concerns.

Saving natural resources, as well as the rational and effec-tive management of them, is a direct goal and context for acircular economy. Analysing the share of anthropogenicminerals, in volumes of aggregates produced in EU MemberStates, one must note that its level is decidedly too low. Itseems that specific solutions and horizontal regulations willbe needed, which should, relatively quickly, lead to reachingthe levels amounting to a genuine priority for secondarymaterials, that is, not resorting to the use of natural aggre-gates, until all the available aggregates based on anthro-pogenic minerals have been fully utilised. Such an approachshould be consistently observed, beginning with the feasi-bility studies, and design stage, through to the rigorous exe-cution of projects.

Eventually, all the anthropogenic minerals arising fromthe combustion of coal for power generation, should be utili-sed within the framework of respective material and product

standards. The starting point will always be an analysis of amarket environment in a given location, which needs to indi-cate the kinds of materials and products, for which there is asustained market demand: its volume, seasonality, directeconomic aspects, etc. Identifying the scale of ‘mismatch’ ofanthropogenic minerals, arising at a particular plant, inreference to the technical requirements of relevant stan-dards, and hence, the directions and scope of the necessarybenefication measures, is vital.

The globally-present, current major directions of the utili-sation of minerals from power generation will not changedramatically, soon. Nevertheless, further research and tech-nical progress, in terms of new directions, is indispensable,and in individual cases may bring about significant changesfor power producers. A scientifically and technically well-founded portfolio of modification solutions will enable theproducer of power and anthropogenic minerals, to select anindividual package of measures which address the specificconditions.

A significant reduction of emissions into the atmosphere– particularly CO2 – is yet another positive aspect of the useof anthropogenic minerals. As CCPs are by-products from thearising electricity generated, their manufacture does notpractically involve any additional CO2 emissions, whichotherwise would have arisen, should traditional binders suchas cement or lime been used in a ‘business-as-usual ’ scena-rio. A successfully implemented TEFRA JI (Joint Implementa-tion) Project, employing a mechanism of Joint Implemen-tation stipulated by the Kyoto Protocol , has partly demons-trated this aspect.

Currently, the position is such that technically, econo-mically, and environmentally well-grounded industrial prac-tices, applied to well-characterised anthropogenic minerals,in practice, is seen as a recovery of waste. The circular econo-my’s approach should allow for the replacement of thepresent very simplistic and narrow perspective, dividing theoutputs of industrial processes into two comfortable, butactually unreal legal categories of product and waste,through an approach based on the idea of co-products fromindustrial processes. This will enable the viewing of themfrom the very beginning, as materials and products meetingthe requirements of technical specifications, avoiding eventhe temporary branding as waste.

The proposed circularity indicators developed by theEllen MacArthur Foundation, within the framework of prepa-rations for implementing the ideas of a circular economy,have focused on product manufacture. This approach has leftout the specifics of massive anthropogenic minerals in gene-ral, and those arising in coal-based power generation, inparticular. It is clear, that sector-specific indicators and regu-lations will markedly reinforce the impact of this idea on thewhole power sector, and therefore, the sector’s actual contri-bution towards a circular economy.

The economic impacts and aspects are a very importantdimension of the approach indicated by the principles of acircular economy, , and indeed, are its target point. Broad andcomprehensive analyses are needed here, consideringespecially the role of active policy, in terms of public procu-rement, mainly within the frameworks of major infrastruc- ▶

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CONTINUED

-tural projects financed from public sources, which on natio-nal or at regional levels, ought to be an opportunity for thevigorous implementation of the Green Public Procurementapproach.

If adequate and extensive educational support is notprovided, the complex issues indicated above will not beimplemented and maintained at the scale significant for theintentions expressed in the Circular Economy package. Itunderlines the necessity of international exchange of know-ledge and co-operation, allowing for preparing, elaboratingand executing educational programmes on the CE as such,as well as on its specific aspects – be it in the basic academic

format, or be it in post-graduate or specialist formula. AlsoImportant is the active shaping of general public opinion andconsumer attitudes, as they directly influence the choicesavailable at numerous levels.

Individual branches of the economy will have to developgeneric strategies in this respect, including indicators anddashboards. Such plans should provide the basis for nationalregulations and policies. Finally, the success of this idea will be,to a large degree, the result of a competent engineeringapproach – allowing for the utilisation of the available resour-ces of anthropogenic materials and products, in a rational ,market-realistic and environmentally-favourable way. ■

STUDY

In essence, a circular economy represents a fundamentalalternative to the linear take-make-consume-dispose econo-mic model that currently predominates. This linear model isbased on the assumption that natural resources are available,abundant, easy to source and cheap to dispose of, but it is notsustainable, as the world is moving towards, and is in somecases exceeding, planetary boundaries

The Ellen MacArthur Foundation defines a circular eco-nomy as one that is restorative, and one which aims tomaintain the utility of products, components and materialsand retain their value. It thus minimises the need for newinputs of materials and energy, while reducing environ-mental pressures linked to resource extraction, emissionsand waste. This goes beyond just waste, requiring thatnatural resources are managed efficiently and sustainablythroughout their life cycles. A circular economy thus pro-vides opportunities to create well-being, growth andjobs, while reducing environmental pressures. The con-cept can, in principle, be applied to all kinds of natural re-sources, including biotic and abiotic materials, water and land.

Eco-design, repair, reuse, refurbishment, remanufac-ture, product sharing, waste prevention and waste recyc-ling are all important in a circular economy. At the sametime, material losses through landfill and incineration willbe reduced, although these may continue to play a much-reduced role in safely removing hazardous substancesfrom the biosphere and recovering energy from non-recyclable waste.

The figure below shows a simplified model of a circulareconomy. The idea is that waste generation and materialinputs are minimised through the eco-design, recyclingand reusing of products. This will create economic and en-vironmental co-benefits, as the dependency on extractionand imports declines in parallel with a reduction in theemissions to the environment caused, for example, by extrac-tion and the processing of materials, incineration and landfill.

The outer circle represents the overall energy flows.Relevant parameters are the total energy efficiency andthe share of renewables, which should both increase,when compared with the linear model. The implicationsfor incineration are not straightforward. Whilst energy re-covered through incineration can partly compensate for(fossil) fuel use, incineration is to be minimised, as theenergy from incineration can be used only once and thusremoves materials from the loop.

The middle circle represents the material flows in therecycling loop, distinguishing between abiotic technicalmaterials (such as metals and minerals) and biologicalmaterials. An increased share of the latter would, inprinciple, be beneficial, as they are truly renewable, whe-reas technical materials are not. In practice, technical andbiological materials are often mixed, which has impli-cations for biodegradability and recyclability. Further-more,using more biological materials may exert additionalpressure on natural capital, with impacts on ecosystemresilience. The inner circle represents reuse, redistribution,repair , remanufacture and refurbishment, bypassing wastegeneration and recycling, and thus, requiring minimalresource input. These approaches retain the value of pro-ducts, components, and materials at the highest possible level.

What is a circular economy?

A simplified model of the circular economyfor materials and energy

Source of information: European Environment Agency, Report No 2/2016

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The circular economy aims at maintaining products, ma-terials, and resources in the economy and lowering wasteproduction. It is the Commission’s response to challengesconcerning global warming, environmental protection andthe waste of resources. We are going to see new legislativeproposals concerning product design, in order to receivemore durable and easy-to-repair products, as well as reco-very and cross-border circulation of secondary raw materials

(including critical raw materials which spread in landfills).There are plans for optimisation of production processes,construction, and demolition.

The European Commission will focus on waste manage-ment, plastic recycling, and avoiding food waste. Theseactions will be supported by incentives to change consumerchoices, and by promoting a collaborative economy (sharingproducts and infrastructure). There will be a need for newinnovative technologies which will support such a systemicchange.

The EU’s public funds, i .e. cohesion funds, will be direct-ed towards programmes supporting the circular economy. Itis a very ambitious action plan which requires change in oureconomic paradigm. In our everyday lives it will be beneficial– repairable equipment, no food waste, a cleaner environ-ment and more co-operation within society. ■

CEEP MEMBERS VIEW

ArcelorMittal is deeply interested in developing and pro-viding technologies, which will contribute to the model ofthe circular economy. As the global community starts facingproblems with access to some natural resources, we need tomove from a “take-make-dispose” model of consumption toa more circular approach for optimal resource efficiency.Steel, with its 100% recyclability, has a key advantage: it canbe recycled over and over without losing its properties.

Therefore, we have developed high-strength and advan-ced high-strength steel grades. Thanks to these steel grades,it is possible to reduce the weight of various applications,whilst maintaining their properties. We support the imple-mentation of legislation promoting product design policythat fosters use of long-lasting and multiple recyclable mate-rials, in order to support the “circularity” of more products.

Another focus should be made on the application ofproper by-product criteria and stream-lining interactions bet-ween waste and chemical legislation, as a step in preventingand reducing waste gene-ration. Recognition of industrial co-generated products as by-pro-ducts is a measure towards aneffective waste prevention. The interaction between chemi-cal and waste legislation should incentivise the recovery andtransformation of waste into secondary resources to berecycled, instead of preventing it. ■

TomaszŚlęzakCountry Manager,ArcelorMittal Poland

AgnieszkaKraińskaLegal Adviser,Wardyński & Partners

The transition to a circular economy seems to be one ofthe most demanding challenges facing Europe. At the sametime, it is a great opportunity for the old continent to onceagain be a leader in implementing a new approach in itsenergy and resource efficiency sectors. A lot must also be

done on the regulatory level, in order to allow for the circulareconomy concept to properly develop into a mainstreameconomy driver.

From a legal point of view, the first step in the process oftransition into a circular economy should, be the identi-fication of the existing legal and administrative barriers,which may hamper the development of the circular eco-nomy concept (e.g. taxes, administrative permits). The nextchallenge would be the preparation and implementation ofregulatory instruments that should incentivise the growth ofthe potential of particular circular economy solutions (e.g.subsidies, tax reductions, support systems, etc.).

We are aware that one of the keys to success in thisambitious project will be the preparation and implemen-tation of transparent, coherent, and logical regulations, enco-uraging the development of a circular economy at the EUand national levels. Therefore, as lawyers and advisors to therelevant sectors of the economy, and to law-makers, we feeljointly responsible for the ultimate success of this process,and are thrilled to be part of the efforts to design Europe'scircular economy scheme. ■

BeataZysLegal Adviser,Cliford Chance

PawełPuaczLegal Adviser,Cliford Chance

Circular economy – an innovative concept that requires extensive research

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CEEP POSITION

CEEP’s response to the public consultation on the preparation of a new renewable energy directive (REDII) for the period: post-2020 (summary)Eldar LatypovEnergy Policy Analyst, CEEP

CEEP has recently responded to the public consultationon the preparation of a new renewable energy directive (REDII) for the period: post-2020. CEEP’s response highlights information about the impacts and benefits associated with the RED, as well as a number of otherkey points to take into consideration.

Evaluation of RED and future outlookCEEP agrees that the RED has definitely contributed to

achieving the EU’s energy and climate objectives, but RESonly accounted for a 11% share of the EU-28’s gross inlandenergy consumption in 2013, whilst the implementation ofthe RED has had a negative impact on energy prices and thecompetitiveness of the EU’s economy, as well. CEEP under-lines the need to maintain affordable energy prices for EUindustry, as well as for end consumers.

The European Commission has to continue investing inR&D activities, in order to make RES more economicallyfeasible, and to be able to give positive price signals forpotential future investors. Mature technologies, such as firstgeneration biofuels, should not be supported, including theelimination of mandatory targets in renewable energy in thetransport sector. The RED was successful in stimulating thestart of the first generation biofuels industry in Europe, andled to large-scale achievements. Despite this, first generationbiofuels are more expensive than petroleum fuels.

At the same time, it has to be remembered that RES suchas wind, solar, and geothermal technologies should bebacked, when necessary. The real potential of biomass andhydro power plants (including pump power plants) shouldalso be properly assessed.

Ensuring stability, transparency,and predictability for investors

CEEP supports policies that are technologically neutral,strive for cost-effectiveness, and are harmonised at the Euro-pean level. A reliable, consistent and predictable regulatoryenvironment would be useful to ensure and facilitate a stableinvestment climate for RES. In this regard, CEEP emphasisesthat all the policies have to take into consideration the endprice for energy. Thus, a price signal is an important driver.

Member States' national energy and climate plansThe most important elements for the creation of the EU's

strategy, are the national strategies with regard to theapplication of RES. As they are going to be long-term plans, itis necessary to harmonise the time period of the EU, with thetime period of the Member States. The strategy of eachMember State must have clearly defined policies andmeasures, that are used, and will be used, in realising itsoverall aims.

RES and the integrated electricity marketCEEP emphasises that the REDII should definitely clarify

the interaction between renewables and the integrated elec-tricity market, as well as the model of calculation of thesecurity of supply of customers, and the contribution ofrenewables to the security of supply. As for electricity de-mand and supply, there is a need to upgrade and extendexisting transmission facilities across the entire region, in or-der to allow for greater integration, and to help the systembetter withstand fluctuations, as a result of the growing shareof intermittent supplies from renewables.

Financial support for RESIn view of the high costs linked to the RES support

scheme, CEEP supports more cost-effective emission reduc-tion mechanisms. The association believes that a single GHGtarget for the ETS sector, is much more cost-effective. Theend price of energy for consumers is a crucial driver for com-petitiveness, especially in Central and Eastern Europe – and asensitive issue for the social balance. Keeping energy pricesin line with economic and social realities, has to be a strongguiding principle for policy-makers, with the foreseeableneed for investment into the energy system and industrialefficiency. Energy efficiency is a key element in balancing amodest rise in energy prices, with the economic requi-rements of competitiveness and cohesion.

REDII complementary to EU measuresIt is crucial to establish a regional priority infrastructure

roadmap, and advance its implementation, in order todevelop missing infrastructure. Some regions in the EU stillremain isolated, representing a serious energy security risk .Deeper regional co-operation within Europe should increasethe security of energy supply, help better to interconnect allMember States, and get rid of ‘energy islands’ within the EU,and, finally, help in a better and more efficient way, to integ-rate renewables into the grid.

CEEP advocates that the EU should continue to com-plement European targets of reindustrialisation, and thecompetitiveness of the European economy on the globalscale, whilst effectively avoiding the carbon leakage threat.The EU must employ a technology-neutral approach to ener-gy systems.

Research and innovation are essential for the develop-ment of advanced RES technologies. Thus, the R&D fundingschemes for innovative and promising technologies, couldproduce more significant and cost-effective results than thecurrent RES binding targets.

The REDII should ensure a convenient investmentclimate, as well as mechanisms of support schemes, whichwill not disturb the electricity market, and which will, simulta-neously, enable the development of technologies, and thus,contribute to the competency of the EU's industry in theworld. ■

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Alexandru ZegreaConsultant, Pflüger International

The 71st Energy Dialogue at the Reichstag discussedthe topic: ‘After Paris – Climate Protection and theLong-Term Role of Coal’, and was held at the invitationof Prof. Dr. Friedbert Pflüger, Mr. Janusz Reiter, andCEEP on February the 26th, 2016.

Mr. Matthias Hartung, Chairman of the Board, RWE Po-wer AG, underlined in his opening remarks, the need for an‘Energiewende’ master-plan, as opposed to the current regu-latory patchwork. Continuing this train of thought, Mr. Har-tung made three main points. Firstly , the Paris ClimateAgreement is a milestone for environmental protection, butdoes not pre-determine a fossil fuel phase-out.

Secondly, the ‘Energiewende’ should not be regarded asa conflict bet-ween renewables and fossil fuels, or betweencentral and decentralised – discovering synergies and oppor-tunities for co-operation should be at its core. Thirdly, coalpower is – as a result of the preferential network access forrenewables – not a competitor, but a reliable back-up, thatwill eventually be phased out, naturally.

Dr. Patrick Graichen, Director of Agora Energiewende,explained that – in contrast to renewables, nuclear powerand efficiency standards – fossil fuels are only loosely regula-ted, and only ineffectively incentivised by the EuropeanEmissions Trading System.

This state of affairs is likely to persist until 2040, despitethe prospect of stricter rules being introduced in 2025. Inorder to reach the Paris climate goals, Germany needs eitherto change the regulations, or introduce carbon capture andstorage technologies.

One of the solutions proposed by Agora Energiewende,would be to re-introduce gas, which is currently beingpushed out by cheap coal , to the German energy system.However, behind any potential solution, a broad compro-mise is needed. If all involved parties are willing to worktogether, only then will German companies gain the reliableframework necessary for long-term planning. ■

REPORT

71st Energy Dialogueat the Reichstag

Eldar LatypovEnergy Policy Analyst, CEEP

“If you think we are going through a crisis of migration and refugees, wait until North Africa has been hit by a climate increase of two degrees, or even only one degree,” that’s what Christopher Jones, the Deputy Director-General for Energy at the European Commission, saidin his opening speech at Claeys & Casteels’ Annual Conference on the 9th/10th of February, 2016, that, indeed, concluded with a special session devoted to the outcome of the UN Climate Change Conference in Paris.

The other four sessions offered pertinent up-to-dateinformation, too. They were concerned with energy security,the integrated internal energy market, renewable sources ofenergy, and energy efficiency, and – still, in the wake of COP-

21 – the decarbonisation of the economy. Following an inter-disciplinary approach, along the lines of policy-law-finance,all the topics were interlinked, regarding the EU energy-mix -from gas, via electricity, to hydropower – from differentpoints of view, according to their role in the context of themagic triangle of secure, competitive and sustainable energy.

The new challenges for the foreign energy policy wereanalysed, as well as innovation, smart grids, capacity mana-gement, and regulatory software; in particular, the parti-cipants got first-hand information on the development of theJuncker Fund and its role for energy infrastructure. Thus, thethirty speakers explored all the facets of the Energy Union,described by Commission Vice-President, Maroš Šefčovič, asthe most ambitious European energy project since thecreation of the European Coal and Steel Community in 1952.

The Conference succeeded again in bringing togetherkey policy-makers, regulators, practitioners, lawyers, acade-mics, researchers, and top-market players. Only a few peoplecame from regional and local enterprises providing publicservices, although these are the backbone of energy distri-bution in all Member States of the European Union. Howe-ver, they will benefit from the results of the in-depth discu-ssions at the Conference, and may get access to the indivi-dual contributions with the help of the organisers.

The next Conference is already scheduled for the14thand 15th of February, 2017. ■

11th Conference on EU Energy Law and Policy in Brussels

REPORT

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Romania’s natural gas reservesto run out in 15–20 years

According to Romania’s energy strategy, published bythe Energy Ministry, the country’s proven natural gas reser-ves will run out in 15-20 years, using the current produc-tion level and replacement rate as a guide. Average annualproduction has amounted to 10.8 bcm in recent years,with the proven reserves annual decline reaching 5%. Thereplacement rate has been 80%. As current natural gas re-serves amount to 101.37 bcm, the stated usage period of15–20 years may be optimistic, to say the least but thereare some other potential areas yet to be exploited, andthese need new investments. (Romania Insider)

Lithuania and Japan sign nuclear dealLithuania and Japan recently signed, in Tokyo, a Memo-

randum of Co-operation on the peaceful use of nuclearenergy in both countries. It paves the way for Japaneseexpertise to advance Lithuania’s nuclear ambitions. Themore specific question of constructing a new nuclear plantat Visaginas, was also discussed during talks betweenLithuania’s Energy Minister, Rokas Masiulis, and officialsfrom Hitachi , the company chosen by the Lithuanian gove-rnment to build the planned plant.

The governments of both countries have promised to“share lessons” learnt from the 2012 Fukushima disaster,such as enhanced safety measures and emergency prepa-redness and response. The Japanese Ministry of Economy,Trade and Industry will help to further extend the collabo-ration, and especially inject Japanese expertise into otherLithuanian energy projects, such as LNG technologies, andbuilding and developing hydropower plants. (Energo)

Croatia to build floating LNG terminalCroatia’s new government has decided to build a float-

ing, instead of an onshore LNG terminal , on the island ofKrk, in an effort to cut costs and speed up the imple-mentation of the project. Hence, the terminal could becompleted in less than two years, which would hastendiversification of gas supply routes in South-Eastern Euro-pe, and bolster the stability of supplies in the region.

Deputy Prime Minister, Tomislav Karamarko, stressedthat the government would give the “highest priority” to

the project, which is a core plank in the European Union’sstrategy to reduce its’ dependence on Russian gas. In themeantime, it remains unclear what will happen to the on-going plans for construction of a land-based terminal onthe island, for which Croatia had received seven non-bind-ing bids from industrial and financial investors. (GLNG)

Visegrad Group sends letter to theEU Commission over Nord Stream pipeline

The European Commission has been requested tolaunch a probe into the planned Nord Stream 2 pipeline. Aletter from the V4 Group – signed by the leaders of Poland,the Czech Republic, Slovakia, and Hungary – wants theCommission to conduct a “rigorous assessment” of theNord Stream 2 pipeline between Russia and Germany,which will circumvent the four Visegrad countries. Theyclaim that the Nord Stream 2 project does not conformwith the objectives of EU energy policy.

In December, European Council President, DonaldTusk, stressed that Nord Stream 2 does not fit into Euro-pean energy security strategy, declaring that: “Nord stream2 should be out of the question because our intention is tobreak our dependence upon the dominant gas provider,and diversify sources”. The V4 Group have confirmed Tusk’sstatement that: “he is not the only one with such a criticalopinion of the pipeline project”, and have, meanwhile,added four other signatories to their letter: Estonia, Latvia,Lithuania, and Romania. (The News; Reuters)

New coal-fired power plant at Kozienice, Poland:set to be Europe’s biggest and most modern

ENEA Wytrwarzanie have hired Mitsubishi Hitachi Po-wer Systems Europe and Polimex-Mostostal to construct anew 1,075MW coal-fired power plant at the existingKozienice power station, which is the second biggest po-wer generating facility in Poland. Armed with a designednet efficiency rate of 45.59%, supercritical technology willbe unified with extensive flue gas treatment, in order tomeet the most stringent environmental protectionrequirements. This unification will also lead to reductions inNOx emissions - by more than 80% - whilst slashing carbonand other emissions. Commercial operations are expectedto start in the second quarter of 2017. (Power Technology)

NEWS FROM THE REGION

MEDIA PARTNER

Annual CEE CleanEnergy AwardsCEEP is a media partner for the 3rd Annual CEE Clean Energy Awards, to be held on the 9th of June in Warsaw.

The CEE Clean Energy Awards recognises companies andindividuals in the C entral and Eastern European Clean EnergyIndustry for excellence in operations, boldness in strategy,and innovative leadership. The Awards represent a cross-sector of clean energy firms, ranging from natural gas produ-cers and distributors (LNG), wind, solar, and biogas/biomassdevelopers, as well as C HP, along with grid and networkoperators. The Awards also acknowledge new types of com-

petitors, particularly energy traders, and other ”asset-light”companies, and the full range of service providers – operatio-nal, financial and professional.

Technologies and innovations which reduce emissionsrelated to coal, oil, and gas, are welcome.

As more than 250 clean-energy executives are expectedfrom across the CEE region, together with investors fromWestern Europe, US and Scandinavia, the (CEE) Clean EnergyAwards will celebrate the contributions of companies, pro-jects, and individuals, who are leading the dynamic and fast-paced changes in the region's clean energy sector.

For more information, and to place your Nomination(deadline: 15th of April) go to: www.CeeEnergyAwards.com.

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TWEETS OF THE MONTH

Follow CEEP on Twitterat @CEEP_energy.Reply, re-tweet, mark asfavourite, join the debate!

Engage with CEEP onLinkedIn and contributeto shaping a network of energy professionals!www.linkedin.com/company/central-europe-energy-partners

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PICTURE OF THE MONTH

Central Europe Energy Partners (CEEP) represents 24 energy and energy-intensivecompanies and organisations from six Central European countries, employing over300,000 workers, with a total annual revenue of more than EUR 50 billion. CEEP is thefirst major body to represent the energy sector companies from the region at the EUlevel. The aim of CEEP is to strengthen the region’s energy security within theframework of a common EU energy and energy security policy. CEEP is an interna-tional non-profit association with its headquarters in Brussels and a branch in Berlin.

CEEP REPORTEditor-in-Chief: Bogdan JanickiPublished by Central Europe Energy Partners, AISBLRue Froissart 123–133, 1040 BrusselsT: +32 2 880 72 97, E: brussels@ceep.beTransparency Register No. 8773856374594www.ceep.be

The European Union flags outside the Berlaymontbuilding were lowered to half mast to pay tribute to the victims of the terrorist attacks which took place on 22 March 2016 at Brussels Zaventem airport and the Maelbeek metro station

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