1UA1 – Energy. Business. Ukraine.

Under any conditions the Ukrainian gas transmission system (GTS) will remain in national property in line with the national legislation, Ukraine’s Deputy Foreign Minister Konstiantyn Yeliseyev said this after the talks in the European Commission dedicated to preparation of the donor conference on modernization of the Ukrainian GTS.

The diplomat voiced hopes that a text of the final declaration of this international forum due in Brussels on April 23 would reflect such a principled position of the Ukrainian party, UKRINFORM reports from Brussels.

Yeliseyev noted that Ukraine along with European partners had been readying this conference since 2006. At the same time, the January gas crisis has helped the international forum on modernization of the Ukrainian GTS gain a political dimension in addition to a particularly investment and economic content.

“It is of great importance for us that the conference be the first one among other such events. It should prove that, against the background of new projects, in particular, the South Stream or the North Stream, the Ukrainian GTS was, is and remains a strategic, component part of the common European transit system. In our opinion, this is what the importance of this conference lies in,” Yeliseyev underscored.

Source: ForUm

The transit of natural gas via Ukraine to Europe plummeted 52.4%, or by 12.6 billion cubic meters (bcm), to 11.1 bcm in January-February 2009 compared to the same period of 2008, a source at the Fuel and Energy Ministry told Interfax on March 17.

At the same time, the transit of gas increased 51.7% in February 2009 compared to January 2009.

The transit of natural gas via Ukraine to Europe plummeted 58.3% to 4.41 bcm in January 2009 compared to January 2008.

Russia’s Gazprom cut gas supplies to Ukrainian consumers on January 1 due to the lack of a contract for the new year and suspended gas supplies that were to be transited to Europe on January 6-7. Gas supplies to Ukraine resumed on January 20 after contracts were signed for supplies and transit.

Ukraine transited 116.9 bcm of gas to Europe in 2008, up 4.3% from 2007.

Source: Interfax

The Japanese government concluded a deal on Wednesday to buy 30 million tons in greenhouse gas emission credits from Ukraine, Japan’s first purchase of emission credits from abroad.

Japan will purchase the credits as early as fiscal 2009, which starts in April, through the government-affiliated New Energy and Industrial Technology Development Organization.

The value of the deal was not disclosed, but is estimated at around 38 billion yen on the basis of market prices in Europe.

The Kyoto Protocol on climate change requires Japan to cut its emissions by 6 pct from the level of fiscal 1990 in the five years through fiscal 2012.

But as the country is expected to fall short of the target by 100 million tons even if it cuts emissions to a maximum extent possible, the government plans to cover the gap with emission credits from overseas.

Source: Jiji Press

European Union leaders are hoping at a summit that starts Thursday to agree on a small energy-focused stimulus package they have been arguing over for months.

What they won’t be discussing, according to EU diplomats involved in the process, is whether to launch a fresh round of national stimulus packages in response to criticism from the U.S. that Europe isn’t doing enough to battle the global recession.

EU officials in Brussels and most of the bloc’s 27 governments say they should wait to see how the existing stimulus packages — amounting to about €200 billion ($260 billion), compared with $787 billion for the U.S. — work before discussing new ones. This week’s two-day meeting is expected to reaffirm that resistance ahead of an economic summit of the Group of 20 nations in London on April 2.

Criticism has come from within the EU, too. Hungary, hit particularly hard by the financial crisis, has asked for a roughly €180 billion fund to be set up to rescue economies in Eastern Europe. That request was quickly rejected.

A draft of the summit’s final communiqué says the leaders will ask finance ministers to examine whether an existing €25 billion fund for troubled economies can expand. EU leaders expanded the facility from €12 billion in December; about €10 billion has been used.

A German government official said the EU had provided money from the facility at short notice to Hungary and Latvia, and would do so again if a country needed funds. But talking about additional funds now would “send the wrong signal” to financial markets, suggesting that more countries in Central and Eastern Europe need aid to finance their economies, the official said.

Instead of upping the ante, EU leaders will spend much of their summit on Thursday and Friday arguing about €5 billion they have already committed to the European Commission, the EU’s executive arm.

The commission wants to spend this money, surplus from its roughly €900 billion budget, on energy and technology networks. Some countries have objected to the plan, because they don’t agree on the list of projects and want more control over the cash.

The proposed projects include money for so-called interconnector pipelines to link national natural-gas networks. In January, a price dispute between Ukraine and Russia disrupted gas supplies to the EU, leaving some countries without heat or power

to operate factories. Also included in the proposal is money for carbon-capture storage projects, and for the EU’s delayed Nabucco project to build a gas pipeline to the Caspian Sea via Turkey.

German Chancellor Angela Merkel will argue at the summit that the commission’s €5 billion surplus shouldn’t be used to support Nabucco, according to the German official. Germany says the money should go to projects that will use the funds — and so stimulate the EU economy — immediately. Nabucco’s construction is scheduled to start in 2011. Germany also says Nabucco’s problem isn’t financing, but finding sufficient gas to fill the pipeline.

Critics say the EU’s squabbling over relatively small sums reveals a serious failure in coordination.

“Member States have to date not even managed to agree on the release of €5 billion of EU budget money in response to the crisis — i.e. about 0.05% of the EU’s GDP. We will need a considerably improved level of coordination on economic recovery measures … if they are to have the desired effect,” said Arnaldo Abruzzini, secretary-general of pan-European business lobby Eurochambres, in a statement.

Economists critical of the EU response to the financial crisis so far also argue that the European Central Bank hasn’t gone far enough to loosen monetary policy.

ECB President Jean-Claude Trichet told a news conference that the ECB is studying possible “unconventional” policies.

Source: WSJ

The triple-headed crisis of an economic downturn, climate change and pressure on European energy security are at the top of Europe’s agenda right now. It will be very important that, at the upcoming European Council summit on 19-20 March, the EU charts a course that can guide us safely through the storm, so that we emerge all the stronger to face the challenges of the future.

The issues are closely interrelated, and so their solutions must be integrated. Measures to improve energy efficiency are vital to efforts to address the current crisis as a more efficient use of existing energy supplies will at the same time make EU less dependent on energy imports and reduce the effect of our energy use on the climate. Moreover, such measures make sense in a time of economic and financial difficulties.

Today, a common understanding is emerging across Europe and within the new US administration: That climate and energy-related efforts must be seen as part of the solution to the current crisis. It will remain vital to continue to ensure that this understanding translates into concrete action.

At the forthcoming summit, the European Council is expected to allocate a total of EUR 5 billion to a number of projects designed to kick-start the economy – the vast majority of these projects being energy-related. Denmark is satisfied that priority is being given to the development of new energy infrastructure, including the Baltic Interconnection Plan. Denmark also supports security policy objectives in the earmarking of funds for energy projects such as the construction of the Nabucco gas pipeline, which is to supply Europe with gas from Central Asia and the Caucasus, thereby enabling us ultimately to become less dependent on one large external supplier – Russia.

Lagging behind on energy efficiency

However, action at European level lags behind in the important area of energy efficiency. It seems that the enormous potential of energy efficiency measures is not yet fully appreciated. The Danish example is an eye-opener: Over the last 25 years, the level of energy consumption has been constant despite the growth of our economy.

Very few know that the EU has adopted an energy efficiency improvement target of 20 per cent. This target was set as part of the so-called “20/20/20 decision” from the European Council summit in March 2007. The decision is an agreement to achieve a triple target by 2020: a 20 per cent share of renewable energy, a 20 per cent improvement in energy efficiency, and a 20 per cent reduction in greenhouse gas emissions (or a 30 per cent reduction if this target forms part of a global climate agreement in which other industrialised countries make corresponding commitments). Unfortunately, only the targets regarding renewable energy and greenhouse gas reductions are binding. This should also be the case for the energy efficiency improvement target.

The recent gas crisis, where Russia again cut off gas supplies to the Ukraine, had serious repercussions in large parts of Europe. It would not be overstating the case to say that the crisis was the most serious attack on the EU’s energy supply in recent times. The new Czech EU Presidency took active steps in the gas crisis and clearly voiced the EU’s views. The Czechs did a great job. And the Commission was able at very short notice, in cooperation with European energy companies, to deploy observers to monitor the gas transit. Evidently, the latest gas crisis should not have come as a surprise. And it would be naïve not to prepare ourselves for recurrences. Energy has become part of foreign- and security policy.

However, in protecting Europeans from another such crisis, it would be wrong to focus exclusively on finding new sources of energy supplies. The serious economic difficulties faced today are an added reason for improving energy efficiency. We must not let ourselves be lulled into inaction by the fact that energy prices are lower today than they were six months ago. This price level is a natural consequence of the economic downturn. Prices will rise again. And the cheapest energy is inevitably the energy we do not use. Moreover, improvements in energy efficiency will be positively reflected in the climate accounts.

Helping the European economy recover by allocating funds to energy efficiency-related projects is a very sensible, comprehensive approach to the challenges, we are currently facing. In Central and East European Member States in particular, this could lead to very tangible benefits for the climate, the economy and for European energy security.

A turning point

Calculations show how much impact reductions of unnecessary energy consumption and CO2 emissions could have on Central and East European economies. For example, if the district heating network in Rumanian towns were renovated and modern pump technology installed in the pumping stations, energy consumption in the network could be reduced by 40 – 60 per cent. This type of investment typically has a payback time of only 1-2 years, and in the long run the potential savings are so huge that the Central and East European countries quite simply cannot afford not to undertake such investment. Also in relation to the heat consumption of consumers, savings of up to 50 per cent are achievable if modern pumps, thermostats and meters are installed and individual billing of heating is introduced.

The potential for energy saving in the Central and East European housing stock is also colossal. Large savings are achievable if the standard renovation work is combined with new energy-saving windows and modern insulation. An extensive programme of renovation can create 50,000-185,000 new jobs in Central and Eastern Europe and at the same time reduce CO2 emissions by up to 62 million tons annually – corresponding to Denmark’s total CO2 emissions. At the same time, the renovation programme will create better quality homes that are draught-proof and have 70-80 per cent lower heat consumption – and it will also produce less air pollution from the power plants, furnaces and boilers that are needed to supply the buildings with heating.

The original Greek meaning of the word ‘crisis’ is a turning point. We should focus on and invest in energy efficiency measures which combine sound economic sense and protection of the environment and also contribute to increasing energy security.

Per Stig Møller is Danish minister for foreign affairs; Connie Hedegaard is Danish minister for climate and energy.

Source: EUOBSERVER

The amount of international investments into the modernization of Ukraine’s gas transportation system may reach EUR 2.5 billion, deputy Foreign Minister Kostiantyn Yeliseev told the press in Brussels following his talks with representatives of the European Commission on organization of an international donor conference on modernization of the Ukrainian gas transportation system, due in Brussels on March 23.

Having conducted its own technological evaluation of the Ukrainian gas network, the EC concluded the Ukrainian gas transportation system needs investments in the amount of EUR 2.5 billion, according to the Ukrainian diplomat.

With the maximal loading of the gas transportation system in its current condition, Ukraine stands a chance to guarantee transit to the European market of natural gas in the volume of 145 billion cubic meters a year.

Source: ForUm