Unconventional Gas and EU Energy Policy

1.  Unconventional Gas and EU Energy Policy Brussels, 14th April 2011 Michael Schuetz Policy Officer Indigenous Fossil Fuels Michael.Schuetz@ec.europa.eu Disclaimer: This presentation is a working-level input on unconventional gas and not an official position of the European Commission. Should you wish to obtain a political statement or for media related purposes please contact the Commission's press service or the Commissioner's spokesperson.

2. Gas in EU Energy Mix Source: Eurostat

3. EU-27 Import Dependency 2005 2005 2008 2008 2020 2020 2030 2030 100 80 60 40 20 in % 94,1% 92,7% 84,3% 82,8% 82,4% 75,9% 62,3% 57,7% OIL GAS (based on 2009 baseline scenario)

4. The January 2009 Gas Crisis and its Impact (6-20 January 2009) > 75 % 50 - 75 % 25 – 50 % < 25% 0% Ukraine  % of missing gas supply – 300 mcm/d for 14 days 4 |

5. Initial Commission assessment: • Unconventional gas could strengthen domestic production and contribute to security of supply • EU will still have to import most of its gas • Further presentation: • Commission energy policy priorities and their relation to unconventional gas • European Union legal framework for unconventional gas projects • Specific activities of the Commission on unconventional gas

6. Commission Energy Policy Priorities • Focus on implementing agreed policies (internal energy market, security of gas supply, energy efficiency, Renewables Directive) • Energy Strategy 2011 – 2020 • Energy Infrastructure Package • Energy Efficiency Action Plan • Communication on External Energy Relations • Energy Roadmap 2050

7. Third Internal Market Package • Non-discriminatory access to networks is an essential condition to allow fair competition between suppliers • Regulation on conditions for access to the natural gas transmission networks (Gas Regulation) • Regulation establishing an Agency for the Cooperation of Energy Regulators (ACER Regulation) • Directive concerning common rules for the internal market in natural gas (Gas Directive) • Regulations took direct effect on 3 March 2011

8.  Energy Infrastructure Package • November 2010: Communication on • Energy infrastructure priorities for 2020 and beyond • Challenges faced in each sector (electricity, gas, oil, CCS) • Strategic planning and proposal for set of tools • 2011: Legislative proposal to create a facilitating environment for private and public investments in energy infrastructure 8 Unconventional Gas and EU Energy Policy, Michael Schuetz, 14/04/2011 |

9. European Infrastructures PrioritiesGas and Oil 2020 Southerngas corridor Baltic energy market inter-connection plan South-North gas interconnections in Western Europe North southgas & oil interconnectionsin Central & South East Europe

10. Energy Roadmap 2050 • Support transition to low-carbon energy system in 2050 • Focus on energy security, competitiveness as well as decarbonisation, throughout transition • Identify European-wide perspective • Support from scenario analyses – but scenarios cannot be read as policy options • Low Carbon Economy Roadmap came first (8 March) • Conclusions on energy policy challenges will be in Energy Roadmap 2050 • Public consultation until 7 March • Informal Energy Council 2-3 May • Adoption planned for end of 2011

11.  Principles of EU Policy and Legislation • Member States have right to determine exploitation of energy resources and energy mix (Art. 194 TFEU) • Member States are free to set more stringent environmental protection measures than required by EU-legislation (Art.193 TFEU) • Subsidiarity • EU-Directives transposed and implemented by Member State. • Often EU-Directives set objectives, but means are up to the Member States 11 |

12.  Legal Framework on EU Level • Existing legislation covers all hydrocarbon exploration and production (conventional and unconventional) • Hydrocarbon Directive • Water Framework Directive, Groundwater Directive • Environmental Impact Assessment • REACH (Chemicals) • Natura 2000 • Other (waste, noise…) • Within this framework Member States have to ensure appropriate licensing and permitting regimes 12 Unconventional Gas and EU Energy Policy, Michael Schuetz, 14/04/2011 |

13. Assessing the Potential • “In order to further enhance its security of supply, Europe’s potential for sustainable extraction and use of conventional and unconventional (shale gas and oil shale) fossil fuel resources should be assessed.” [European Council 4. Feb. 2011] • Economically recoverable potential ? • Following ongoing projects • Explorations in EU just started • JRC literature study focusing on economic impact • Review of the evidence

14. Assessing Environmental Impact • Exchange with US • Agreed at EU US Energy Council Nov. 2010 • US only country with extensive experience • First activity: conference on 14 March 2011 http://www.acus.org/event/european-unconventional-gas-developments • Legal Study • Evaluate appropriateness of EU legal framework • Including environment issues • Based on cases in selected Member States • Possible good practices

15.  Conclusions • Best use of indigenous (fossil) fuels important • Economically viable potential unclear • Other security of supply policies remain necessary • Environmental concerns: credible answers needed • EU has legal framework in place • Member States have to ensure appropriate licensing and permitting regimes • Important: Innovative companies • EU Commission works on further improving gas market conditions and gas infrastructure 15 |