Caspian Energy (CE): Ms. Simson, what are the European Commission’s plans for the ensuring of the gas energy security which is of concern to almost all the EU countries today? Will there be new plans or projects stimulated inside the EU – in Italy, Greece, Croatia, Romania?
Kadri Simson, European Commissioner for Energy: In the last decade, the EU has significantly diversified its gas supplies, both in terms of sources and routes. The Trans-Adriatic Pipeline (TAP) is part of that diversification and has been shipping Caspian gas to the EU since December 2020 and we have already seen the positive effect on the Italian gas market. The EU has also considerably ramped up its capacity to receive and use LNG.
There are also several Projects of Common Interest currently underway that will make the EU’s gas system even more resilient and prepared for different scenarios in the future. Some of the key projects in Central and Southern Europe are the Greece-Bulgaria Interconnector, domestic reinforcements of the Bulgarian transmission system, Bulgaria-Serbia Interconnector, Alexandroupolis LNG terminal and storage projects in Romania and Bulgaria. In 2021, the Croatian Krk terminal, financed by the EU, started operating.
CE: What will be the fate of long-term contracts? Do you consider this form of consumer-producer relationship to be obsolete?
Kadri Simson: The Commission has proposed last December, as part of gas and hydrogen markets decarbonisation package, that long-term gas contracts in the EU should not be able to extend beyond 2049. The EU has committed to become climate neutral by 2050 and this step gives a clear policy signal, helping to avoid the lock-in effect and stranded assets.
CE: Will the EU continue supporting the EastMed gas pipeline project and further development of the Southern Gas Corridor with branches toward the Balkans?
Kadri Simson: The Southern Gas Corridor could possibly also become extended to the Western Balkans. This will depend on the gas demand in the region and market interest. There also needs to be policy consistency with decarbonisation package that the Western Balkan countries just adopted in the context of the Energy Community framework. Another binding market test of the TAP Consortium is scheduled for July 2022. Any extension of the corridor will need to be market driven.
Regarding EastMed, the EU has defined it as a Project of Common Interest. The project promoter should finalise the remaining project development activities and assess the commercial viability of the project before it makes a final Investment Decision. The Commission will monitor closely this process and remains open for additional consultations with the project company.
CE: Tell us something about the EU’s ambition to be climate neutral.
Kadri Simson: Fighting climate change and doing our part to deliver the Paris agreement remains a central priority for the EU. As the current Commission took office, President von der Leyen presented the European Green Deal, our commitment to become the first climate-neutral continent by 2050, as well as a strategy for growth and jobs.
The Commission has already made a number of concrete legislative proposals – in July and December last year – to reduce greenhouse gas emissions by at least 55% by 2030. This includes proposed changes to EU laws on renewable energy, energy efficiency and energy performance of buildings; moves to reform the gas sector and create a market for hydrogen, extend the carbon pricing system, decarbonise the transport sector, and improve energy taxation as well as introduce a Carbon Border Adjustment Mechanism. An important part of the package is the Social Climate Fund, which is designed to alleviate the social impact of the transition.
As the production and use of energy are responsible for 75% of the EU’s emissions, it is crucial to ramp up the share of renewables (40% by 2030) in our energy mix and significantly improve energy efficiency. Renewable hydrogen will play an important role in greening sectors like transport and heavy industry. But it is also clear that natural gas will continue to have a role in transition, in particular as a replacement for more polluting fuels.
Thank you for the interview.
