MEPs from the ITRE (Industry, Research and Energy) Committee take stock of the situation on the energy market one year after the start of Russia’s war against Ukraine, and discuss future perspectives with Energy Commissioner Kadri SIMSON and the International Energy Agency's Executive Director Fatih BIROL. Opening statements by Cristian-Silviu BUŞOI (EPP,RO), ITRE Chair, Kadri SIMSON, European Commissioner for Energy and by Fatih BIROL, Executive Director of International Energy Agency (IEA). This transcription is a result of an automatic process: Please check against delivery.

EU - Ukraine (T)

Brussels

Committee on Industry, Research and Energy

statement

meeting

troubles in Ukraine (T)

Energy (T2)

BUŞOI, Cristian-Silviu (EPP, RO)

SIMSON, Kadri (EE, EC)

BIROL, Fatih (TR)

consequences of the war in Ukraine (T)

ITRE Committee - One year of Russia’s invasion and war of aggression against Ukraine - Consequences on the EU's energy policy: opening statements

https://api.multimedia.europarl.europa.eu/documents/20125/69069656/1678354548865_I238210Chapters%5BSD-EN%5D.srt

SOUNDBITE (English), Cristian-Silviu BUŞOI, ITRE Chair, The main point of this morning agenda, of course, is the exchange of views with the our Dear Commissioner, Mrs. Kadri SIMSON, the Commissioner for Energy, and the very special guest of the ITRE Committee, Mr. BIROL, Fatih the executive director of the International Energy Agency, on the consequences on EU energy policy one year after the Russia's invasion and war of aggression against the Ukraine.

SOUNDBITE (English), Cristian-Silviu BUŞOI, ITRE Chair, I would like to welcome the two distinguished guests and of course, with this it is important to look at what was achieved and how we took the necessary measures and very good measures in order to counterattack the actions, direct actions of Russia and of course, the indirect consequences of the aggression against the Ukraine, but also to look in the future because unfortunately, the war is not over yet.

SOUNDBITE (English), Cristian-Silviu BUŞOI, ITRE Chair, Some will fear of some escalation and it is important in this context we need to respond with urgency to the several challenges still in terms of security of supply, maybe the high energy prices, infrastructure bottlenecks, and of course, to look to the geopolitical context which was changed a lot. And what we expect in the coming months and maybe years in the field of energy policy.

SOUNDBITE (English), Cristian-Silviu BUŞOI, ITRE Chair, That's why I am really grateful to Commissioner Simson and Executive Director Birol for having accepted our invitation to frame this discussion, giving that insight and the extraordinary expertise, and of course, to have this exchange of views with us. We have first the introductory remarks of the two guests, then a first round of political group coordinators or representatives, then the replies, the feedback from them, and then the second round.

SOUNDBITE (English), Cristian-Silviu BUŞOI, ITRE Chair, We have already a number of speakers, so please colleagues, respect the time. Immediately after this, will have also a press conference. I will have a press conference together with the Commissioner and Executive Director by saying that I go directly to Commissioner Kadri SIMSON for a her introductory remarks, please and thank you once again for being here.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Honourable Members. Good morning and I am grateful for Cristian and his Committee for organising this debate to mark the one year anniversary of them REPowerEU strategy that it is very timely. The Russian border against Ukraine has caused a tremendous shift in Europe's energy system. In one year, the transformation triggered by the war and by REPowerEU has been unprecedented.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, In a moment, I will talk about how far we have come in delivering REPowerEU agenda and about what lies ahead. But first, I want to look at what this dramatic year has meant for Ukraine and its energy system. 12 months ago, Ukraine was the main gas standard route towards the European Union 40 BCM a year based on the trilateral agreement concluded in 2019.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, It had a large power sector synchronised Russian and the rail system. Even if plans for synchronisation with a European grid bear in the making Ukraine hostage for nuclear power plants, including the largest in Europe, and was committed to work on improving safety with the help of the Union. It was reforming and modernising its energy regulatory framework. So fast forward one year.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Since October, Ukraine's power sector has been under constant Russian missile and drone attacks. The latest took place this night. Ukrainians have endured constant sacrifices. Europe's largest nuclear power station in Zaporiyia is occupied by military forces in violation of all international conventions with great risks for nuclear incidents.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Technicians, engineers, nuclear experts are risking their lives every day and this very moment to repair and replace damaged infrastructure. Disruption on this scale could have brought any energy system into squeeze. But Ukraine has not given up. It has resisted the invasion and Europe has stood by Ukraine every step of the way.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, We've been able to synchronise the Ukrainian and Moldovan electricity network in the space of three weeks instead of two years as previously planned, and we introduced a strong set of sanctions against Russia, including the oil and coal. We delivered 1600 generators and 1400 transformers to Ukraine and has set up a dedicated fund with their energy community, which today totals €180 million in pledges.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, As we go forward. We will continue to support Ukraine. Currently we are working to promote decentralised production of electricity bills off grid solar panels. And last Friday I welcomed the offer panel to provide Ukraine panels produced in Europe. And this is just the beginning, and I invite all Member States and companies to join this initiative and scale up.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, And I'm also working essentially to make sure that electricity trade volumes can be progressively increased for both imports and exports. We have integrated Ukraine in the gas joint purchasing platform with a view to help secure 2 billion cubic metres of additional gas and we are working on market reforms in the context of their accession process. And then continue engaging with the IAEA to insist that the occupation of Zaporiyia nuclear power plant is a crime and a danger to all and every effort should be made to create set yourself.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Honourable members of the European Parliament. I wanted to start my remarks with Ukraine, because this is not a side story. It's at the heart of our REPower actions. The invasion of Ukraine was preceded by a manipulation by Russia of our gas market to destabilise the Union and create uncertainty. Gas supplies have been used to leverage blackmail and divide Member States to weaken the resolve to both just and illegal war.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, And such actions made it crystal clear that the Union should put an end to the massive dependency we had on Russia built over decades. And this is exactly what we have set out to do with REPowerEU agenda. Many doubted that wasn't even possible. But one year on, another shift in the European energy system is spectacular. At stake, gas diversification, as an example.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Since September 2022. Russian gas is about 8% of all pipeline gas imported to EU. Pipeline gas imports from Russia amounted to 61 billion cubic metres last year. The first gas supplier to Europe is no longer Russia, it is Norway. Some doubted that Europe would ever be able to receive the LNG that was needed to replace Russian gas due to the limitations in their physical capacity of LNG terminals. But the facts tell a different story.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, In less than one year, three new terminals were opened and five more opened by the end of this year for a total capacity of 50%. And in 2022 we received in total 135 billion cubic metres of LNG from the global market. From the United States for instance, we received 56.4. This is 34 billion cubic metres more than in previous years.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, The increase of gas supplies from other sources and Russia was almost 10% higher than they estimated in the REPowerEU communication. And overall the EU phased out Russian gas by two-thirds. We packed up this diversification effort this new tools. We have introduced a common storage policy in three months. Thanks to the work of this Committee and its rapporteur, Professor Buzek, and this has worked well.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, We filled storage up to 95% by November last year and it's still around 57%. This is more than twice the level of our underground gas storage last year, and we have introduced a framework for recorded gas demand reduction. All Member States committed to reduce their consumption by at least 15%, and they did so. Demand dropped by more than 19% between August and January, and this helped us to save 42 billion cubic metres of gas.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, We have set up an energy platform to support diversification and joint purchasing and we have introduced a mechanism to correct price peaks in the ETF gas market, not justified by the fundamentals of global markets, and we will propose to extend MCM to all other hubs. And we did all that without derailing the green Deal. Last year, carbon emissions dropped in Europe by two and a half percent.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, An important part of REPowerEU, was to boost renewables deployment to replace gas in power generation and heating, and this has matched expectations and possibly exceeded them. Last year we generated more electricity from wind and solar than from gas. So 2022 was a record year for solar energy in the EU, with 41 gigawatts of new capacity installed and wind capacity also rose by 15 gigawatts.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, So last year, 39% of our electricity came from renewables. And this wide ranging change happened not just because of top down instructions from governments. It was a grassroots movement. Europeans leading that change. They have installed millions of solar PVs on the roofs. They are putting heat pumps in their homes and they have adjusted their lifestyles.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, This was sadly driven by high energy prices, but not only everyone has played their part. That is where we stand today. But the value of our discussion is not in looking back. It lies in looking forward to the next steps. So let me conclude by making three remarks on the future. First, on the outlook for the next heating season. We are in a good position to end this winter without any shortage and to start the next refilling season with confidence and half full storage.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, But as Dr. Birol will explain in a moment, we should be under no illusion that things are getting easier. This year will be challenging and the year after that as well. Many uncertainties remain and we need to keep a healthy and prudent supply demand balance. I am going to propose to Member States to prolong their voluntary demand reduction by 15% until next year. This has worked well and its best guarantees achieve an adequate level of storage by November.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, We will continue and extend our efforts at diversification around the world and to ensure reliable supplies to Europe. Second, we received last year around 20 billion cubic metres of Russian LNG. I think that we can and should get rid of Russian energy completely as soon as possible. Still keeping in mind our security of supply and I encourage all Member States and all companies to stop buying Russian LNG.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, And not to sign any new gas contracts with Russia once the existing contracts have expired. Committing not to renew existing contracts with Russia is the best way to give a long term assurance to reliable partners that meaningful demand will stay. Third, in my view, Europe will win this energy war when we finally deliver on our renewable energy objectives. For me, the end goal of REPowerEU is not to replace one unreliable source of gas, it's another trusted source of natural gas.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, It is to leverage Europe's energy independence by massively increasing renewables. We need to accelerate our installation rate to be bolder on renewables. And to that end, we need to take five steps this year. First, the dialogue on the registry must be finalised as soon as possible. I welcome the progress that we have had so far, but we need an agreement on ambitious targets and a robust enabling framework by the end of March.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Second, we need to use all the potential, in particular on biomethane and heat pumps. Renewables practical initiative to promote biomethane by the end of this year, and you can also expect from our side that we will present a strategy on heat pumps. And third, we need to accelerate the construction of large scale offshore projects. We have two summits this year, one in Ostend and other in Lithuania, and we will need to make progress.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Fourth, there is a need to look at grid development to remove any bottleneck, and I'm advocating to include creative manufacturing in our Net-zero Investor Act that will be presented next week. And finally, I will prioritise incentivising renewables in the reform of the electricity market design. We need a reform that will help bring down prices and protect consumers, but also that strengthen incentives for new investments in renewables. µ.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Honourable members. One year ago many would have said that ending our dependence from Russia is mission impossible and look at where we are now. This is thanks to our unity and also the work of this Committee. Let me thank in particular you, Chair person. You have been a great interlocutor. Even when we had these difficult choices.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, This Article 122 proposals and we have come a long way, but we still have a tough job ahead of us. So I offer all my cooperation to you, but only together we will be able to deliver the necessary missing pieces in our legislation this year. Thank you.

SOUNDBITE (English), Cristian-Silviu BUŞOI, ITRE Chair, Thank you. Thank you so much. Dear Commissioner, thank you for all your involvement. Congratulation for everything it was achieved. Thank you for coming so often to ITRE Committee to discuss, to take the input from our colleagues, the good ideas that contributed also to the decisions that were taken.

SOUNDBITE (English), Cristian-Silviu BUŞOI, ITRE Chair, And, of course, I think to hold the whole team from DG and IEA and everyone that you coordinated for the good dialogue during this year of crisis. And of course we are looking forward to work very closely together in the future. We have a very important privilege to have here with us today the Executive Director of the International Energy Agency, Dr. Fatih BIROL.

SOUNDBITE (English), Cristian-Silviu BUŞOI, ITRE Chair, Extremely knowledgeable with a very strong voice during this year of crisis of war, but not only, of course, even before, with the most important challenges that the international energy sector, but also European energy sector faced and with a lot of very interesting solutions that I am looking on the website of International Energy Agency, please, Mr. BIROL you have the floor now.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Thank you very much, Mr. Chairman and Mr. Buzek. Madam Commissioner, Dear Members of the Parliament is a great privilege for the International Energy Agency to share our views about the European Energy Station of today and also tomorrow. Dear colleagues, 24th of February was a major milestone in the history of energy, not only for Europe but for the entire world. Because Russia, the country that invaded Ukraine, is not any country when it comes to energy.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, As of 24th February, Russia was the number one energy exporter of the world. Number one in oil, top oil exporter. Number one in natural gas. Major player in the coal markets, in electricity markets and beyond. So therefore, it triggered the first global energy crisis with implications for everybody in the world. But of course, Europe was at the epicentre of this crisis. So today, in the next few minutes, dear colleagues, I would like to talk on the three headlines. One is a congratulations. Second is a warning and third is and indicating an opportunity for Europe.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, First, now, many people thought as of 24th of February and there was a lot of wishful thinking from Kremlin and elsewhere. That Europe is the result of resistance against Russia together with Ukraine and the international community would mean, in court, Europe would freeze and Europe would have major economic damage. But the European countries and the Commission moved in solidarity in a pragmatic way and took very urgent and rushed decisions.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, And International Energy Agency, only one week after the invasion, on 1st of March came up with a ten point plan, which we have suggested to European governments. And today I would like to show you why. I think it is time after one year to congratulate European Union and institutions. At the IEA, we are a number driven organisation. We make our hands dirty with data every day. So just with the numbers, I want to show you why it is time today, after one year, to congratulate Europe and European institutions.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Number one, we have seen that in one year of time, Russian oil and gas revenues, a major input for the Russian budget declined by a major 40%. This is, in my view, a major help to Ukraine and Ukraine's defence and our analysis show the technical line will only deepen in the next months to come. The second indicator, the share of Russian gas in Europe in a very short period of time. One year is very short for the energy sector in a very short period of time decline substantially.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Another good indicator renewables, a huge increase in renewable energies, mainly driven by solar, but also wind and others, huge increase, about 40%. This is driven by also by the fact that many countries see renewable energies as not only a solution to our climate problems, but also a solution to our energy security problems. Energy security was a key driver of the big renewable graft heat pumps. Agadir be craft. Poland is a leader, but in Finland, in rest of Europe, we have seen huge growth in heat pumps to reduce the gas consumption.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, We work very closely with the manufacturers of heat pumps around the world. In Europe, they were always complaining in the past that they don't have enough work to do. Now they are still complaining, because they are not able to meet the demand coming from their customers. Electric cars also be craft. So all clean energy options increased while the gas decreased and many people thought and said Europe has double standards. Europe tells the world that we have to reduce emissions and Europe is using a lot of coal.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Therefore, European emissions will go up. Where is the European instructions, european views. And these views are driven to be wrong as well, because our numbers show that the European emissions decline is a significant 2.5%. So dear colleagues, last year in the middle of the first global energy crisis, Europe being at the epicentre, we have seen that all the efforts from Europe and its partners we were able to see Russian oil and gas revenues decline. The share of Russian energy in Europe decline.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Clean energy options increase and the emissions decrease and we have not seen a major blackout or heating problems. We did have some bruises, economic and social bruises, this for sure, but this is far less worse than it was thought before. So therefore, my first point is congratulations to Europe and European institutions, including the Commission and Madame Commissioner here.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, The second point is a warning, as I mentioned to you. Yes, we are as it seems, we are off the hook, if I may say so this winter, but another winter is coming, the next winter. And there are three factors that are with us now and that may not be with us next winter. So therefore, I see in some government leaders, when I talk with them a bit of overconfidence about the current achievements now, and therefore is my warning. My warning is, next winter may be more difficult than this winter for three reasons.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Number one, this winter we were lucky to import a lot of LNG from the markets to replace the Russian pipeline gas. And one of the reasons that we were able to import a lot of LNG is China, which is the top LNG importer of developed Chinese economy, was met. Chinese domestic gas consumption declined for the first time in the year 2022 since 40 years. Therefore, Chinese LNG imports declined significantly.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Therefore, there were a lot of LNG in the markets and we could go and buy this LNG. But now all the indications show that the Chinese economy is rebounding. Therefore, China's LNG import needs will be increasing. Therefore China is coming to LNG markets as a major strong buyer with strong financial muscles. This is the first reason of the warning. Second reason every year certain amount of LNG projects finish and they come to the market available for the buyers.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, This year, 2023, the amount of new LNG capacity coming to a global markets is one of the lowest in the history. Only slightly higher than 20 BCM, which is very low. Therefore, the pool of LNG is rather small for Europe to buy it. This is the second reason why the warning. Third We have to be honest with ourselves. We have to be realistic here that one of the factors had us this year to go through without major problems is that we had a more than relatively mild winter.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Nobody can guarantee that next winter will be as mild as this winter. And if it is in line with the usual temperatures, then this may be a problem. Therefore, it is my warning here, we shouldn't be too relaxed, to overconfident. We should be happy with our achievement, our solidarity, our unity, our pragmatic policies. But get ready for the next winter, which International Energy Agency is again working with the Member Countries, providing guidance and suggestions to them.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, This is my second point and not my third and last point. It is about the European industry. In September last year, I wrote an Op-Ed by saying that Europe needs to have a new industrial masterplan, because there are two major pressure points. Number one, Europe industry is based on a model which is basically getting the rather abundant and cheap Russian energy. This is finished. There is no going back. European energy in the future will be more expensive than in the past.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, This will put a lot of pressure on the competitiveness of the European industries, as energy is a big part of the production costs of steel, aluminium cars, whatever chemicals, whatever you produce. If your energy input is much more expensive than competitors, you start from a disadvantageous position. We read that the current European energy prices came down compared to a 24th February crisis.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, This is true and this is good news. But dear colleagues, even today's energy prices in Europe are three times higher than the historical average of Europe, three times higher. European natural gas prices today, which people say came down, which they did, which is right, is seven times more expensive than in the United States. So, yes, natural gas is seven times cheaper than European natural gas prices.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Electricity prices, which came down, yes, but they are still three times more expensive than the Chinese electricity prices. So therefore, we have a fact here and this will not change broadly. In the future, Europe energy prices will be higher than previous European energy prices and significantly higher than it's economic competitors. Therefore, European industry policy needs to change. This is the reason, number one, why there is a need new European industry must appear.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Number two, we are, the world is entering a new industrial age. The age of clean energy technology, manufacturing. It is the batteries, it is the electric cars, solar panels, windmills, assemblers and all of them. And who is going to produce this? Currently, there is one country is making a major inroads, it is China. When you look at this chart, you see that China is currently dominating the game.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, For example, batteries, which is the main component of clean energy in many regions. 75% of the batteries in the world is today manufactured in China. And United States came up with the Inflation Reduction Act to be a part of the new industrial age, clean energy, technology, manufacturing. And our numbers show that even euro EUIRA, the Inflation Reduction Act is fully successful go seamless.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, The 75% of the share of batteries, the Chinese share of batteries in the world will go down only to 55%. And what about Europe? And I think Europe needs to be also the part of clean energy technology manufacturing. And it is the second reason I believe Europe needs to analyse in the entire supply chain of clean energy that Europe can have a competitive edge and that kind of financial, economic and also energy policies need to be put in place.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, Otherwise Europe industry will be first producing not competitive products and compete and producing obsolete products. And it is the reason why need to see a new European industrial masterplan in line with the new cost of energy realities and in line with the next chapter of industrial Age. If not, and I am finishing here, I believe, European economy will get a big hit and is the industrial sector is a major backbone of the European employment.

SOUNDBITE (English), Fatih BIROL, Executive Director of the International Energy Agency, We will see significant employment and social pressures and a weak European economy and being less competitive in the industrial sector would mean the Europe's status in the international affairs will be diminished. So these are the three points I wanted to bring to your attention. The first of a congratulations. After last year performance and heads up for the next winter and longer term, the industrial competitiveness and opportunity. Mr. Chairman, thank you very much for the time.

ITRE Committee - One year of Russia’s invasion and war of aggression against Ukraine - Consequences on the EU's energy policy: opening statements

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