RepublicofBulgariaMinistryofForeignAffairsDIPLOMATICINSTITUTEFOREIGNAFFAIRSRESEARCHPAPERSEnergyandClimateDiplomacyJune20231717REPUBLICOFBULGARIAMinistryofForeignAffairsDiplomaticInstituteENERGYANDCLIMATEDIPLOMACYFOREIGNAFFAIRSRESEARCHPAPERS17June,2023ThisJournalisissuedwiththesupportof:Editor-in-chief:SlavtchoNeykovEditor:GrigorMonovskiPrepressandPrint:St.GeorgePublishingLtd.GraphicDesignandCover:St.GeorgePublishingLtd.Publishedby:©BulgarianDiplomaticInstitute,2023http://bdi.bgFacebook:BulgarianDiplomaticInstituteSofiaISSN2815-4878(Online)CONTENTS2022-2023–UnprecedentedEnergyChangesWellBeyondtheExpectations…...........................................................................6IntroductiontotheEditionbySlavtchoNeykovTheRePowerEUPlanandEnergySecurityinSoutheastEurope.........................9Alexios-MariosLyberopoulos,AmbassadoroftheHellenicRepublictoBulgariaANewBalanceofPower–Europe’sEnergyTransitionamidGeopoliticalUpheaval..................................................................................23KristianRuby,SecretaryGeneralatEurelectricTheWayfromtheEnergyUnionFrameworkStrategytotheRePowerEUPlan.......................................................................................34ZinaidaZlatanova,LiberalInstituteforPoliticalAnalysesEU’sEnergyandClimatePoliciesataTimeofAdverseGeopolitics……...…..…45PeterPoptchev,PhD,Ambassador(Rtd.),HeadofNetZeroFoundation-InternationalClimateNetworkOilMarketsAftertheInvasionofUkraine:MovingTowardsStrategicCompetition………………........................……………62IrinaPatrahauandLuciavanGeuns,TheHagueCenterforStrategicStudies(HCSS)Loss&DamageFinanceandMitigationPledges:PrioritiesforClimateDiplomacyin2023..............................................................75MarianFeist,PhDandOliverGeden,PhD,HertieSchool’sCentreforSustainabilityandStiftungWissenschaftundPolitik(SWP)TheImpactoftheEnergyTransitionandtheGlobalEnergyCrisisonEUTechnologyLeadershipPolicy...................................................................85YankoYanakiev,PhDOntheFossilGasFutureoftheEuropeanEnergyMix.......................................98SvetoslavIvanov,CEOofOvergasInc.ADTheArduousPathofDecarbonisationinSoutheastEurope..............................108CostisStambolis,ChairmanandExecutiveDirectoroftheInstituteofEnergyforSouth-EastEurope(IENE)ElementsofCooperationintheCommonPolicytoGuaranteetheEnergySecurityoftheRegionofsoutheastEuropeandtheexampleofBulgariaandRomania...................................................................................120ChiefAssistantProfessorIvoTsekov,PhDEnergyModellingoftheElectricitySystemofBulgariaandtheGreenDealGoals–anUpdateoftheStory...........................................131LyubomiraGancheva,EnergyexpertGeopoliticalProjectionsontheEuropeanElectricityMarketandtheirBulgarianDimensions.........................................................................141NedkoKosev,PhDStudentFromPoliticstoPractice:TheCriticalRoleofHumanCapitalinAchievingtheRenewableEnergyTransformation.........................................153VeselinTodorov,PhD,Eng.,ChairmanoftheSolarAcademyBulgariaAssociationIdentifyingtheLinksbetweenPolicyandProsumers:WhyisTransformationLateandWhatLedtoThisCrisis?.................................162LyubomirGrozdanov,BusinessDevelopmentexpertattheIndependentBulgarianEnergyExchange(IBEX)MoreabouttheBulgarianDiplomaticInstitute....................................................170MoreabouttheBulgarianco-operationandhumanitarianaid............................172Thecontentsofthisjournalaretheauthors’soleresponsibility.TheydonotnecessarilyrepresenttheofficialpositionsandviewsoftheBulgarianDiplomaticInstitute,aswellastheBulgarianMinistryofForeignAffairs.62022-2023–UNPRECEDENTEDENERGYCHANGESWELLBEYONDTHEEXPECTATIONSSlavtchoNeykov,Editor-in-ChiefMemberoftheNationalConsultativeCounciloftheBulgarianDiplomaticInstituteDEARREADERS,Welcometothe2023editionoftheENERGYANDCLIMATEDIPLOMACYJOURNAL,issuedbytheBulgarianDiplomaticInstitute(BDI),andthankyouforyourinterestinit!Asinpreviousyears,theauthorsrepresentdifferentsocialgroups–youhavethechancetoreadtheviewsandcommentsofdiplomats,representativesofEuropeanandnationalbusinessassociations,headsofcompanies,researchers,etc.Despitetheirdifferentbackgrounds,theyarecertainlyunitedbytheirinterestintheenergyandclimatedevelopmentsatinternational,European,regionalandnationallevel,regardlessofwhethertheyareprofessionallyengagedwiththesetopicsornot.AndIamgratefultoallofthemforsharingtheirviewsalsointhecurrentissue.Thejournalhasbeenpreparedwhiletheworldingeneral,andconcretelyEurope,underwentimmensepoliticalandeconomicchangeswithinmonths–andtheenergysectorplayedoneofthekeyrolesinthistransformation.Thus,fromtheenergyperspective,atpoliticallevel,thewarbetweenRussiaandUkraineboostedаwholesetofnewelementsinthepoliticalorder.Newalliesappeared,oldfriendshipswerebroken.Furthermore,thepoliticalchangescausedsubstantialeconomicreorientationprocesses–thisconcerns,interalia,thelocation(includingredirection)andthetypeofinvestments,aswellasreassessmentoftheroleofdifferentenergysourceslikegas,coal,oil,etc.Onthisground–andmostlyfromtheEuropeanperspective–theauthorsofthearticlesincludedinthisyear’seditiondulyreflectintheirownwaythefactsandchanges,whichoneofthemcallsa“newbalanceofpower”.Withoutanydoubt,theEUenergypolicycontinuedwithitspivotalrolethroughoutEurope,butitwasalsochangingwiththetime.Infact,thesestep-by-stepchangeswerereflectinginawayalsothepoliticaldevelopments.Afteritbecameclearthatthewarwillnotstopasquicklyasexpected,andthattheEUsanctionstowardsRussianeedongoingupdates,newEUpolicyconceptswerebroughttothetable.OneofthemistheREPowerEUPlan1,whoserealisationisinpracticaltermsongoing.BeingbackedupbytheprincipleddecisionforincreasingtheEuropeanenergysecuritybyreducingthedependencyonunreliablesuppliers(concretelyRussia),theplanisalsoaimingtoboosttheenergysavingandtoacceleratethecleanenergytransition.1https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/repowereu-affordable-secure-and-sustainable-energy-europe_en7However,thechangesintheEUenergyrelatedframeworkintherecentyeararenotdueonlytothewarbetweenthetwocountries.Certainly,thiswaracceleratedtheprocessofnewdevelopments,butinrealtermstheactivemovetowardsmoreenergysecurity,diversificationandthegreentransitionhasbeenplannedwellbefore.Andsofar,theresultsofthenewpolicies’approacharebeyondbelief!Thetechnologicalboommakesrenewablescheaperandmorereliableliterallywithinjustdays–andtheirincreasingshareintheenergymixisalreadyafactallaround.Inparallel,countrieswhichwereclosetobeing100%dependentonRussiangashavecompletelycutofftheirrelationswithRussiaasasupplier.Concretestepstowardsdiversificationofnuclearfuelarealsotobeseen.Energysavingsprosper.Theaveragecitizensbecomeactivelyinvolvednotonlyintheconsumptionbutalsointheproductionofelectricity.Inthisaspect,itshouldbealsorecalledthattheoverallframeofpositivestepswasconfrontedbybigenergy-relatedturbulences.Thelatterwereclearlyseenparticularlyinthesecondhalfof2022,whentheEuropeancountriesfacedanunprecedentedpriceincrease,mostlyforelectricityandgas,combinedsometimeswithsupplyproblems.Conceptually,thecrisesweremetcollectivelythroughoutEurope,bothintheEUandtheEnergyCommunity,butthekeyresponsibilitieswereandstillareforthenationalauthorities.Onthisground,peoplesometimesevenwitnessedcontradictorymessagesfromtheEuropeaninstitutions–e.g.,abouttheroleofcoalandnuclear,abouttheformatofstateaids,etc.However,attheendoftheday,theseprice-relatedcriseswerealsograduallyovercometogetherwiththeissueofsecurityofsupplyforthecountrieswhichwereconfrontedwiththem.Inthiscontext,asidefromtheEuropeanlevelsolidarity,keyrolewasplayedbythebilateraland/orregionalrelations.Thus,alongthedevelopmentsintheEuropeanenergypolicyframe,thestepstowardspromotionoftheserelationsshouldbestronglyfurtherencouraged.Theoverallenergypolicydevelopmentswalkhandinhandwiththeclimate-relatedconcerns.Infact,asidefromthetheoreticalelaborations,onecaneasilyfindalreadypracticalexamplesforsubstantialchangesinmanycountries.Inthese,theenergyandclimateconsiderationshavebroughtforwardneweconomicdevelopmentsinthecontextofthegreentransition.TheprocessisactivelysupportedconceptuallyandfinanciallybytheEU.DespitethisactiveEUsupport,againtheroleofthenationalauthoritiesiscrucialwhenitcomestopracticalimplementationbothintheenergyandtheclimatedirections.Basedontheirexperienceintherecentyear,theyshouldbeencouragedtoproposeamendmentsintheEUframework.However,untiltheseamendmentsarelegalreality,theimplementationobligationsremain–theruleoflawshouldnotbeunderestimatedatanymoment.Infact,theoveralllookatthearticlesinthiseditionshowsthattheytouchuponalltheaspectsmentionedabove.Certainly,thisisdonebytheauthorsintheirownway,accordingtotheirunderstandingofthefacts–andtheiropinionshouldbedulyrespected.8ThecurrentpublicationhasbecomeanindispensablepartofBDI’sresearchactivitiesontopicsrelatedtoenergyandclimatediplomacyandsecurity.TheInstitutehasbeenactivelyfosteringdialogueandexchangeofideasbetweenallthestakeholders–publicdomain,businesscommunities,academiaandtheNGOsector,involvedintheprocessofenergytransformation.However,suchprofoundchangeisnotlinearandisnotlimitedtopurelyreplacingfossilfuelswithrenewables.Itentailsdeepandoverarchingchangesinthefunctioningoftheworldeconomyandthereforepoliticsandgeopolitics.Itismorethanobviousthatthediplomaticandenergy/climatedomainsarecloselyintertwined,asissuessuchastheclimateemergencyortheenergysecuritycrisisrequireglobalconcertedefforts,eventhoughtheireffectshavetheirownspecificregionalmanifestations.Inthisregard,theBDIisstrivingtoattractinternationalexpertiseinordertoshedlightintotheongoingprocessesandissuespertainingtoenergyandclimatediplomacy.SomeofthearticleswouldalsobeafocusofdiscussionwithintheAnnualSeminaronEnergyandClimateDiplomacy,whichtheBDIhasbeenconductingformorethanadecade,andwhichisanotherimportantforumfornetworkingandexpertexchange.Onceagain,thankyouforyourinterest–IhopeyouwillenjoyreadingthearticlesthewayIdid,regardlessofwhetheryousharecompletelyorpartiallytheviewstheyexpress.Mr.SlavtchoNeykovhas30yearsnon-interruptedexperienceintheenergysector,includingasSecretaryGeneraloftheBulgarianMinistryofEnergy,Com-missionerintheStateEnergyRegulatoryCommission,expertattheEnergyChar-terSecretariatinBrusselsandaDirectoroftheEnergyCommunitySecretariatinVienna.Throughouttheyears,hisareaofactivitieshasbeenlinkedtointernationalandEUenergylaw,energydiplomacyandenergypolicymattersatnational,re-gionalandEUlevel.HewastheleaderoftheBulgariannegotiationteamonChap-ter14“Energy”duringtheBulgarianaccessiontotheEU.Priortohisinvolvementintheenergysector,hehasworkedasastateprosecutorandalegaladvisor.HisuniversityleveleducationinBulgariaincludesalawdegreeandtwoyearspostgraduatestudiesonInternationalEconomicRelationsandForeignEconomicActivities.HealsoholdsMasterofArtsinEuropeanIntegrationfromtheUniversityofLimerickinIreland.Sincetheendof2014,Mr.NeykovactsasaChairmanoftheBoardofManag-ersoftheEnergyManagementInstitute(www.emi-bg.com).Mr.NeykovisamemberoftheBoardofDirectorsofEURELECTRIC.HeisalsoamemberoftheNationalConsultativeCommitteeoftheBulgarianDiplomaticInstitute.9THEREPOWEREUPLANANDENERGYSECURITYINSOUTHEASTEUROPEAlexios-MariosLyberopoulos,AmbassadoroftheHellenicRepublictoBulgariaIntroductionSinceRussia’sunprovokedandunjustifiedinvasionofUkraineandthesubsequent“weaponization”ofenergysupplies,theEUhasbeeninthe“eyeoftheenergystorm”.ThewarinUkrainehasturnedouttobeamajorshockforEuropeandtheworld,asithaspushedenergypricestorecordhighlevelsand,atthesametime,hasraisedseriousconcernsaboutenergysecurityonourcontinent.AstheInternationalEnergyAgencyputitinitsWorldEnergyOutlook2022report“Weareinthemidstofthefirsttrulyglobalenergycrisisinhistory”2.AsaresultoftheloomingenergysecuritycrisisatatimewhentheEuropeaneconomywasstilltryingtorecoverfromtheadverseeffectsofthe“COVID-19”pandemic,Europewasfacedwithcriticalenergychoicesfortheshortaswellasforthelongerterm3.Afterall,theclimatecrisisalsoappeared,atthattime,moresevereandthreateningthaneverbefore.ThequestionwhichwasbeingposedinEurope,immediatelyaftertheoutbreakofthewarinUkraine,was:“WhichpathshouldnowEuropefollow?MorefossilfuelsfromothersourcestoreplaceRussiansupplies(energysecurityanddiversificationofenergysupplies)ormoreinvestmentincleanerenergysources(greenenergytransition)?”4.Fortunately,theEUinstitutionsandgovernmentshavequicklycometorealizethatthisisnota“blackandwhiteissue”5.TheyacknowledgedthatallMemberStatesdoneedtorelyonalreadyavailableenergysources(evenfossilfuels),inordertodealwiththeimmediateenergysecuritythreatandtheurgentneedtopowertheirhouseholdsandeconomyintheshort-to-mediumterm.However,theyalsoacknowledgedthatforthelongertermthisisnotasustainableandacceptableoption.TheEuropeanCommissioninparticular,initsattempttoarticulateanewandcomprehensiveresponsetotheemergingcrisis,wasurgentlymobilizedandquicklydevelopedanewstrategywhich,inessence,“merges”thetwingoalsof“energysecurity”and“greenenergytransition”intoasingleframework.TheideaunderthenewcircumstanceswasthattheEuropeanGreenDealgoalsremaincentraltotheEuropeanAgenda,eveninthenewgeopoliticalreality.Thegreenandjustenergytransitionisaprerequisitein2WorldEnergyOutlook2022,p.19.Availableat:[https://www.iea.org/reports/world-energy-outlook-2022]3“IntroductorySession”,26thNationalConference“Energy&Development2022”withthetitle:“Europe’sCriticalEnergyChoices”,InstituteofEnergyforSEEurope(IENE),Athens,November22-23,2022.4Mr.DimitriosTsitouridis,CountryCoordinatorforGreece,DGEnergy,Brussels.Remarksatthe“IntroductorySession”ofIENE’s26thNationalConference“Energy&Development2022”,Athens,November22-23,2022.5Ibid.10theEU’seffortstoachieveitsclimatetargetsfor2030and2050,butnowitisalsothekeytotheUnion’senergyandpoliticalindependence,deprivinganyexternalactor(Russia)ofthepossibilitytoinfluenceorundermineitsstrategicchoices.TheEU’sresponsetoRussia’sbrutalwarinUkraine,andthesubsequentchallengesitcreatedfortheenergysector,wasthelaunchingoftheambitiousREPowerEUPlan.ThePlanistheculminationoftheEU’sstrategytomoveawayfromdependenceonRussianfossilfuels,tobecomemoreself-sufficientonenergyresourcesandtospeedupthecleanenergytransition.Itisbasedonthreecentralpillars:i.diversificationofgassupplies,ii.boostingenergyefficiencyandenergysavingsandiii.accelerationofrenewablesdeploymentwithahigherEUrenewableenergytargetof45%intheEU’senergymixby2030.Onthisground,themain(yetnotexclusive)focusofthisarticlewillbeonaspectsrelatedtothefirstmentionedpillaron“diversificationofgassupplies”,sincethelatterisrelatedtomajorrecentdevelopments,initiativesandinfrastructureprojectsthatareofparticularimportanceforenergysecurityintheregionofSoutheastEurope(SEE).Thispillarislinkedtotheestablishmentoftheveryimportant“EUEnergyPurchasePlatform”whichhassetthetoneforsubsequenteffortsinEuropeandinSEEtostrengthenenergycooperation,tomakefulluseofexistingenergyinfrastructureandtopromotenewrelevantinfrastructure,inaspiritof“solidarityandunity”6toovercometheenergycrisisandachievethegoalsofenergydiversificationandgreentransition.Thispillarisalsoveryimportant,accordingtoourview,asa“booster”tomajorstrategicdiplomaticpartnershipsbetweenthecountriesintheregion,suchastheonedevelopedlatelybetweenGreeceandBulgaria.Thediplomatically-drivenpartnershipbetweenthetwocountriesindevelopingjointenergyconnectivityinfrastructureprojectsisveryimportantforaddressingbothregionalandEUenergysecurityconsiderations.Concreteexamplestobementionedinthiscontextaretheexistinginfrastructureprojects(IGBInterconnector,UGSChiren,RevithoussaLNGTerminal),theprojectsunderimplementation(FSRUAlexandroupolis,IBSInterconnector,electricityinterconnection“Maritsa-NeaSanta”,840MWAlexandroupolisCCGTPowerPlant)andplannedprojects(expansionofUGSChiren,4newLNGTerminalsinGreece).Further,itshouldbenotedthatrelevantdevelopmentsarerelatednotonlytogeopoliticalfactorsbutalsotorecentmarkettrends.Inthiscontext,onemightquoteoneoflastyear’scontributorstothe“EnergyandClimateDiplomacyJournal”,thatthosejointenergyconnectivityprojectsconstitute“comprehensiveinfrastructurewhich,insynergy,canprovideenergysecurityfortheregion,especiallyinthecontextoftoday’sinternationalsituation”7.The“EUEnergyPurchasePlatform”initiativeThecornerstoneoftheEU-sponsoredinitiativestodealwiththeissueof“diversification6SeeStatementbyEUCommissionPresidentUrsulavonderLeyenonEnergy,September7,2022:[https://ec.europa.eu/commission/presscorner/detail/en/speech_22_5389]7ExcerptfromarticlebyformerBulgarianMinisterofEnergyAlexanderNikolov,“Bulgarianenergypolicyinthecontextofenergysecurityintheregion”,EnergyandClimateDiplomacy,June2022,p.12.11ofgassupplies”inthecontextoftheREPowerEUPlan,istheestablishmentofthe“EUEnergyPurchasePlatform”forthecommonpurchasesofgas,LNGandhydrogen.ThisplatformwillaggregatedemandforgasacrosstheEUaheadofnextwinterandenablecompaniestojointlynegotiategaspurchaseswithnon-Russiansuppliers.AlreadyattheBrusselsEuropeanCouncilon24-25March2022,theEuropeanCouncilmandatedEUMemberStatesto“worktogetheronvoluntarycommonpurchaseofgas,LNGandhydrogen,makingoptimaluseofthecollectivepoliticalandmarketweightoftheEUanditsMemberStatestodampenpricesinnegotiations”.ThesameEuropeanCouncilalsoannouncedthat“thecommonpurchasesPlatformwillalsobeopenforWesternBalkancountriesandthethreeassociatedEasternPartners”8.Inshort,thegoalofthisschemewouldbetoleverageEUgasdemandtoattractreliablesuppliersfromglobalmarketsandensurepricestability.Sincethen,theEuropeanCommissionhasintensivelyworkedonthemeanstooperationalizedemandaggregationandjointgaspurchasesbycompanies.Currently,variousmodelsareunderdiscussionandoptionsrangefromjointtenderingbycompaniestothecreationofjointventures9.Tothatend,anIndustryAdvisoryGrouphasalsobeencreated,aimingatprovidingtheCommissionwiththenecessaryknow-howandinformationondemandaggregation,thejointpurchaseandthetimelydiversificationofsources.DemandaggregationismandatoryforMemberStatestoensurethatcompaniesundertheirjurisdictionaccountforatleast15%ofthevolumesneededtofillgasstorages10.Withregardtooptimizationoftheinfrastructureandsupplyattheregionallevel,theEUCommissiontogetherwiththeMemberStateshavedecidedtoestablishRegionalGroupstoworkondefiningandimplementingmeasuresintheimmediateandshorttermtosupportdiversificationandsecurityofsupply.OnMay5,2022,duringtheRegionalMinisterialMeetinghostedbyBulgariainSofiawiththetitle:“SoutheastEnergyTransition–RegionalCooperationforEnergySecurity,DiversificationandTransition”,theEuropeanCommissionandBulgariasetupa“SoutheastEuropeRegionalTaskforce”–thefirstofitskindestablishedaspartoftheEU’sEnergyPurchasePlatform–thatwouldconcentrateonimplementingtheREPowerEUPlanintheregion.TheaimofthisTaskforce,incoordinationwithneighborsinthegreaterregion11,wouldbe“tojointlydiversifyenergysupplies,mostofallgasdeliveries,strengthenenergysecurityandidentifytheneedsandopportunitiesforcommonuseofinfrastructureandpotentialnewsuppliers”.Also,“itistaskedtosupportandcoordinatejointpreparednessplans,includinginternationalpurchase,storageandinterconnections”.The“SoutheastEuropeRegionalTaskforce”hasbeenthefirstGrouptoadopt(andisalready8Ukraine,Moldova(becauseoftheTrans-Balkanpipeline)andGeorgia.See:[https://euneighbourseast.eu/news/latest-news/eu-agrees-to-buy-gas-jointly-and-opens-common-purchase-platform-to-georgia-moldova-and-ukraine/]9SeePressRemarksbyEUCommissionerMarošŠefčovičaftertheconclusionofthe2ndformalmeetingoftheSteeringBoardoftheEUEnergyPlatform:[https://ec.europa.eu/commission/presscorner/api/files/document/print/en/speech_23_1347/SPEECH_23_1347_EN.pdf]10CouncilRegulation(EU)2022/2576of19December,2022,“enhancingsolidaritythroughbettercoordinationofgaspurchases,reliablepricebenchmarksandexchangesofgasacrossborders”.11Bulgaria,Greece,Romania,Serbia,NorthMacedonia,MoldovaandUkraine.12implementing)anActionPlanwhichsetsoutthesteps(investmentandreforms)thatwillimprovethediversificationofsupplyinourregion12.ThereasonwhytheoutcomeoftheRegionalMinisterialMeetingofMay5,2022,inSofiawassoimportantforsubsequentenergysecuritydevelopmentsinSEE,isthatithashelpedtoforgeacommonstanceamongallaffectedpartnersatregionalleveltowardstheRussianpolicyof“weaponizationofenergysupplies”,focusinginteraliaontheneedtofurtherstrengthenregionalenergycooperationandenergydiversificationthroughintensifyingthedevelopmentofenergyconnectivityinfrastructure.Subsequentdevelopments,onlyafewmonthslater,suchasthegrandopeningoftheIGBInterconnectorinOctober2022,thelaunchingofconstructionworksoftheIBSInterconnectorinFebruary2023andsignificantprogressintheimplementationofothersupportiveconnectivityprojects(e.g.AlexandroupolisFSRU)areputtingtheregionontherighttrackintermsofthenecessaryinfrastructuretosecureanddiversifygassources.ThemainreasonswhyenergysecurityintheSEEregionmattersforthefuturesuccessoftheoverallEUenergysecuritystrategylaunchedundertheREPowerEUPlanarethefollowing:1)SEEistheregionintheEUmostvulnerabletoRussia’spolicyof“weaponization”ofenergysupplies,duetoitshithertohighdegreeofdependenceonRussianfossilfuelsandthehighdegreeofcarbon-intensity(coal,gas,oil)initsenergyand/orelectricitymix,2)SEEistheregionofEuropemostcloselylocated,ingeographicterms,tothe“theaterofthewar”(strategiclocation)and3)SEEisaregionthatpossessessignificantenergyresourcesandiscrossedbycriticalenergyinfrastructureforEurope’scurrentstrategytomoveawayfromdependenceonRussianfossilfuelsinthefuture(e.g.,TransAdriaticPipeline/partoftheSouthernGasCorridor,IGBInterconnector,gasstoragefacilities,LNGterminalsandelectricityinterconnectionsunderdevelopment).TheimportantroleofgasconnectivityinfrastructurebetweenGreeceandBulgariainpromotingthegoalsoftheREPowerEUPlanThroughtheestablishmentofawidenetworkofinternationalenergyrelationsandpartnershipsintheBalkansandSoutheastMediterraneanregion,Greece’senergydiplomacypursuesthegoalsofmaximizationofenergysecurity,competitivenessofpricesanddiversificationofsources.Thecountrywishestoactasagatewayandan(regional)energytransithubfromeasttowestandfromsouthtonorth.Asaresult,geopoliticalchallenges,diplomaticinitiativesandenergyinfrastructuredevelopmentsalongtheso-called“Southern”or“VerticalEnergyCorridor”areofcrucialimportanceforitsdiplomacy.Inparticular,Greeceactivelypromotestheimplementationofthe12Seethefollowinglinks:[https://commission.europa.eu/news/action-plan-regional-energy-platform-south-east-europe-2022-06-02_en]and[https://ec.europa.eu/commission/presscorner/detail/en/IP_22_3299]13“SouthernGasCorridor”(crossingGreece,Bulgaria,Romania,Hungary,UkraineandMoldova),whichwillactuallybeanetworkofexistingandfuturenaturalgasinfrastructureprojectsgreatlyenhancingthetermsofenergysecurityinSEEandinEuropeasawhole.ItspurposewillbetocarrynaturalgasandLNGfromavarietyofsources,suchastheRevithoussaLNGTerminal,thesoon-to-be-completedAlexandroupolisFSRUandotherplannedLNGterminalsinGreeceandtheTAP,throughBulgariatoCentralandEasternEuropeancountries.AkeyprojectfortherealizationoftheVerticalGasCorridor,whichoperatesasitsfirstpart,istherecentlycompletedandinauguratednaturalgasInterconnectorGreece-Bulgaria(IGB)13.IGBreshapestheregion’senergymapandopensanentirelynewroutefordiversifiedandsecurenaturalgasdeliveries.Itstimelycompletion–onlyafewmonthsaftertheUkrainianwareruptedandgassuppliestoEuropeonbehalfoftheRussianFederationweredrasticallydecreasedorevencutoff(caseofBulgaria)–marksacrucialmilestonetowardsthegoalofdiversificationofenergysourcesandroutesintheSEEregion.TheIGBprojectnotonlysuppliesBulgariawithnaturalgasofnon-Russianoriginbutalsoallowstransportationofsignificantquantitiestoothercountries.Itsplannedcapacityincreaseto5bcmannuallyfromtheyear2025inconjunctionwiththeprospectofdoublingthecapacityoftheTAPpipelineto22bcmannuallyfrom2028onwards,outlinesaframeworkforfurtherdeepeningenergycooperationbetweenGreeceandBulgariaandenhancingtheEuropeanenergysecurity.Besides,thisinfrastructurecanbealsousedforthetransportofhydrogeninthefuture.Thus,thegastransmissioninfrastructureprovidesanopportunityforthesuccessfulandacceleratedintroductionofhydrogenintotheenergymix,andtheGreekandBulgariangastransmissionoperatorsarealreadycooperatinginthecontextofsubmittingimportantH2projectsasIPCEIprojectcandidates14.Therefore,energyinfrastructuredevelopmentbetweenthetwocountriescontributestothepromotionoftheenergysecurityandenergytransitiongoalsoftheREPowerEUPlannotonlyintheshortrun,butalsointhecontextofalong-termperspectivealongmultipleoptions.BulgariaisGreece’sstrategicpartnerforthediversificationofenergysourcesinSEEandbeyond.Infact,thecooperationbetweenthetwocountriesprovidedconcretepositiveeffectnotonlyforthembutalsoforothercountriesinneed,includingMoldovaandUkraine.Thus,shortlyafteritscommissioninginOctober2022andduetothedeterioratingconditionsofenergyinsecurityandinstabilityintheregion,theIGBInterconnectorhasacquiredaweightygeopoliticalimportance.Ontheonehand,ithasgreatlyassistedBulgariaindealingwithitssevereissueofshortageofgassuppliesandskyrocketinggasprices,bytransportinguptoatotalof7.9millionmegawatthourssinceitslaunching15andprovidingmuchneededdiversificationofgassupplies.Ontheother13“HellenicMinistryofForeignAffairs:EnergyDiplomacy”:[https://www.mfa.gr/en/energy-diplomacy/]14SeerecentstatementsbyBulgartransgaz’sCEO,VladimirMalinov:[https://3e-news.net/en/a/view/41114/vladimir-malinov-cooperation-with-reliable-suppliers-of-liquefied-natural-gas-ensured-uninterrupted-supply-to-the-country]15ICGBnewssection:[https://www.icgb.eu/news/over-3-million-megawatt-hours-were-trans-ported-through-igb-since-the-beginning-of-the-year/]14hand,itcontributedtotheliftingofMoldova’senergyisolation,bysupplyingthelatterwithAzerinaturalgasfromtheTAPpipelinethroughtheroute“Greece-Bulgaria-Romania”.OnDecember1,2022,aMemorandumofUnderstandingforthedevelopmentofthe“SouthernGasCorridor”wassignedinAthensbetweengassystemoperatorsDESFA(Greece),Bulgartransgaz(Bulgaria),Transgaz(Romania),FGSZ(Hungary),ICGB(Bulgaria)andGastrade(Greece),“confirmingthecommitmentofallpartiestoworktogetherwiththeaimofexploringthepossibilityofbuildingthenecessaryinfrastructureforthetransportofnaturalgastothetransitcountriesandtotheEUmarketfromGreecethroughBulgaria,RomaniatoHungaryandviceversa”16.TheNaturalGasSystemOperatorofUkraineexpresseditsintentiontoparticipateandbenefitfromthisinitiative.Asaresult,theIGBInterconnectorisdevelopingintoa“game-changer”fortheregionofCentralandSoutheastEuropeinthelightofrecentgeopoliticalevents,strengtheningenergyconnectivityandprovidingarealdiversificationofgassuppliesnotonlytoBulgariabutalsotoHungary,Romania,MoldovaandUkraine,andinthenearfuturetothecountriesoftheWesternBalkans17.BasedonrecentDESFAdata18,Greeceisgraduallyestablishingitspositionasregionalenergyhub,almostquadrupling(+288.68%)itsnaturalgasexportsinthepreviousyear.In2022,theRevithoussaLNGTerminalwasthecountry’smainnaturalgasentrygateandalmost35%oftheLNGoffloadedatRevithoussa–30terrawatthoursor2.5bcm–wasexportedtoBulgaria.SecuringtheRevithoussaLNGterminalfortheprovisionofstablesupplyofLNG,asareplacementofpipelinegascomingfromRussiain2022,wasveryimportantfortheenergydiversificationandenergysecurityofBulgaria.Inaddition,thecaretakergovernmentofBulgariaalsotookanotherhugestepforwardtowardsenergyindependencebydoublingitscapacitycommitmentsatthefutureAlexandroupolisLNGterminal(FSRU).AccordinglyforGreece,securinggasstorageintheBulgaria’sundergroundgasstoragefacilityinChirenuptoacertainlevelisveryimportantforpreventingpossiblefuturesupplydisruptions,pursuanttoRegulation(EU)2022/1032of29thJune2022withregardtogasstorage.TherecentMoUsignedinAthens(February2023)betweentheMinistriesofEnergyofGreeceandBulgaria,allowsenergycompaniesfromGreecetobookinjectionandwithdrawalcapacitiesatBulgaria’sChirendepot,whileatthesametimeallowingBulgariancompaniestoreserveslots,storagecapacityandregasificationcapacityattheRevithoussaLNGterminalandotherGreekLNGterminalstobedevelopedinthefuture.ThesigningofthatMoU,isaremarkableexampleofhowourstrategicbilateralapproachtoenergycooperationcanservetheregionalgoalsofsecurityofgassupplyandgasstoragewhicharesetbyEURegulationsandtheREPowerEUPlan.Lookingforward,theplannedupgradeoftheRevithoussaLNGterminal’scapacityto375,00016DESFApressreleases:[https://www.desfa.gr/en/press-center/press-releases/memorandum-of-understanding-between-gas-systems-operators-from-bulgaria-greece-romania-and-hungary-for-the-development-of-the-vertical-corridor]17SeerecentinterviewofICGBExecutiveDirectorMs.TeodoraGeorgieva:[https://3e-news.net/en/a/view/42245/teodora-georgieva-the-igb-is-changing-the-rules-of-the-game-for-the-balkans-in-terms-of-natural-gas-supplies]18DESFApressreleases:[https://www.desfa.gr/en/press-center/press-releases/stoixeia-desfa-gia-thn-katanalwsh-fysikoy-aerioy-to-2022]15cubicmetersofLNG(almostdoubledcapacity),theexpectedcompletionoftheFSRUinAlexandroupolisbythebeginningofnextyearandtheplannedexpansionoftheundergroundgasstorageinChirenenvisagingthedoublingofitsstoragecapacityareprojectsofkeyimportanceforincreasingthediversificationandsecurityofgassupplies,sincetheyareexpectedtoincreasetheshareofLNGintheenergymixofbothcountriesinaccordancewiththeREPowerEUPlan.ComplementarityofLNGTerminalsandGasPipelinesasa“game-changer”forenergysecurityinSEEUnderthespecificconditionscreatedintheEuropeanenergylandscapeduetothewarinUkraineanditsaftermath,includingthelaunchingoftheREPowerEUPlan,thefocusofthedebateabouttheenergyfutureofEuropehaschanged.Thegoalsofenergysurvival,energysecurityandtheimplementationoftheREPowerEUPlanforphasing-outRussianfossilfuelshavebecomeapriorityforEuropeintheshort-to-mediumterm,withouthowevercompromisingthesteady,long-termgoaloftransitiontoanet-zeroeconomy.Withinthischanginglandscape,naturalgasinfrastructureiscalledupontoplayauniquerole.Thus,theimplementationoftheREPowerEUstrategyisultimatelyaprerequisitenotonlyforensuringEurope’senergysurvivalandsecuritybutalsoforthesmoothtransitiontothegreeneconomy.Objectively,thegreaterregionofSoutheastandCentralEuropehastraditionallybeenlargelydependentongassupplycontractswithRussia.ThewarinUkrainehasemphaticallystressedtheneedforaregionalcomplementarityofinfrastructure,forthebenefitofallpartiesaffected.Towardsthefulfillmentofthisneed,apartfromnaturalgaspipelines,thedevelopmentofLNGterminalswillplayakeyroleinthefuture.LNGsuppliesenjoyseveraladvantagesoverpipelinegassupplies,themostimportantbeingthattheycanbeshippedandimportedfromanywhereintheworld.Infact,thepivotingawayfromRussiangassuppliesunderthepresentEuropean“gassupplymix”–particularlywhiletheRussianoffensiveonUkrainianterritorycontinuesbutalsointhelongterm–leavesLNGastheonlymeaningfulsupplyalternativetoRussiangas.TheEUturnedtoLNGandemergedin2022astheleadingmarketforthistypeofgas,takingthereinsfromAsia19.Moreover,itsgrowingappetiteforLNGalreadyhasaprofoundimpactonmarketpricingandflowdynamics.ImportingLNGasawayofdiversifyingsuppliersandrouteshasbecomeparticularlyimportantinthecontextoftheRussianinvasionofUkraineandhastakencenterstageintheEU’splantoreducedependenceonRussiangasimports.Asaresult,governmentsarelookingforLNGimportinfrastructuresolutions.ThisfindinghasspecialweightforSoutheastEurope.StartingwithGreeceandmovingfurthernorthtocountrieslikeBulgaria,Romania,NorthMacedonia,Serbia,MoldovaandHungary(excludingUkrainefromtheequation),thedependenceoftheentireareaofSoutheastandCentralEuropefromRussiannaturalgassupplieswascalculatedin2021at60%,i.e.,volumesapproaching22to19EUCommissionQuarterlyReportonEuropeanGasMarkets(3dQuarter2022):[https://energy.ec.europa.eu/news/new-reports-highlight-3rd-quarter-impact-gas-supply-cuts-2023-01-13_en]1623bcm.Atthesametime,thisregionisoneofthefewinEuropethathasasignificantprospectforstrengtheningdemandfornaturalgasinthemediumterm,ofaround10%untiltheyear203020.Infact,theonlyfacilitiesthatcanrealisticallyofferalternativesuppliesofnaturalgastothisregioninthecomingyearsaretheTAPpipelineandthealreadyfunctioningorplannedLNGterminals.Thelatterrepresenttheonlytrulyindependentinfrastructureinthesenseofrouting,sincetheydonotpassthroughtransitcountriesthatare“unpredictable”intheirinternationalbehavior.TheonlysuchLNGterminalscurrentlyoperatingintheSoutheastandCentralEuroperegionaretheoneofRevithoussainGreeceandtherelativelysmallercapacityterminalontheislandofKrkinCroatia,whichservesmainlytheCroatian,HungarianandSlovenianmarkets.ItisquiteevidentthatthoseLNGterminalsarenotsufficienttomeettheincreasedneedsoftheentireregion.Therefore,LNGterminalssuchasthosecurrentlybeingdevelopedinAlexandroupolisorplannedtobedevelopedinthenearfutureinotherregionsofGreecearecomingtofillalargegapoftheneedsanddemandforliquefiednaturalgasgeneratedintheregion21.(Source:WSPGlobalInc.[https://www.wsp.com/en-gl/insights/time-for-lng-in-europe])20InstituteofEnergyforSEEurope(IENE),Athens,November22-23,2022:[https://www.iene.eu/articlefiles/inline/sifnaios%2023%2011%202022.pdf]21PrivateentitiesinGreeceareadvancinginvestmentsinfivenewfloatingliquefiednaturalgasstorageandgasificationunits(FSRUs)inordertocoverincreasingfueldemand.See:[https://www.ot.gr/2023/01/09/english-edition/electricity-and-gas-from-greece-will-power-the-balkans/].WiththecreationofthenewFSRUsthatwillbeconnectedtothenetworkduringtheperiod2023-2025,deliverieswillsubstantiallyincrease,andGreeceisexpectedtoachieveanannualLNGhandlingcapacityof25bcm(approximatelyfourtimesthecurrentdemand).17However,inordertohavethosenewterminalsoperatingeffectively,itiscrucialtocompleteanetworkofnewprojectsintheregionwhichareinvariousstagesofdevelopment(alreadyoperating,inthefinalphaseofconstructionorplannedforthefuture).Oncecompleted,theseinfrastructureprojectswillcomplementeachotherbycreatingtheconditionsforthesmoothtransitofgasthroughoutthewholeregion.Inaddition,theywillenhanceenergyliquidity,supportthecreationofanaturalgashubonagreaterscaleand,ultimately,acceleratethebalancingofpricesattheregionalandEuropeanlevel,inrelationtoothermajorEuropeangashubs(e.g.,ItalianPuntodiScambioVirtuale/PSV).Inthiscontext,thenaturalgasinfrastructureprojectsthatarebeingdevelopedontheterritoryofGreece’sstrategicpartnerintheBalkans,Bulgaria,areofkeyimportancefortheachievementoftheaboveobjectives,whicharealsoobjectivesoftheREPowerEUPlan.InadditiontotherecentlycommissionedIGBInterconnector,thelaunchingofconstructionworksfortheBulgaria-SerbianaturalgasInterconnectorproject(IBS)wasinauguratedjointlybyPresidentsRadevandVučićonFebruary1,2023.TheIBSInterconnector,accordingtotheBulgarianMinistryofEnergy,willbereadyaroundautumn2023.ItwillbesuppliedviatheIGBInterconnectorwithgasfromtheTAPpipelineandverysoonfromtheFSRUinAlexandroupolis.TheBulgarianMinisterofEnergyacknowledgedthatBulgaria,asanimportanttransitcountry,enjoysastrategicadvantagebutalsobearsresponsibilityasaguarantorofsecurityintheenergysector,notonlyforitselfbutfortheentireregion22.Inaddition,theIGBInterconnector,asa“game-changer”fortheEU’senergysecurity,willalsoenablesuppliestoRomaniathroughtheIBRInterconnectorproject,whichforeseesthepossibilityforreversegasflows.Lastbutnotleast,veryimportantfacilitiesforthefunctioningoftheoverallnaturalgastransmissionsystem,aregasstoragefacilities.Bulgaria’sUGSChirenfacility,withcurrentstoragecapacityof550mcm,isplannedtoalmostdoubleitscapacityto1bcminthenearfuture,whichmeansmoreflexibilitytothesystemandmorebenefitsforthecountriesoftheregionandtheirenergysecurity.TheFSRUAlexandroupolisterminalproject,inwhichBulgartransgazEADalreadyowns20%ofitssharecomposition,isperhapsthemostimportantandessentiallinkinthecomplementaryoperationoftheabovementioned“chainofinfrastructure”.ByacceptingLNGsuppliesfromanysourceworldwide(whencompleted),thisterminalwillbeabletosupporttheviabilityoftheabove-mentionedtrans-Balkangasinfrastructureunderdevelopment,aswellasenergysecurityinthegreaterregion23.AlongwithFSRUAlexandroupolis,theconstructionofanotherterminalinthesamearea(ThraceLNGterminal)isplannedinthecomingyears,aswellastheconstructionofthreemoreLNGterminalsthroughoutGreecethatwillchangetheentireenergymapinourregion24.Inthemedium-to-longterm,thoseprojectsmayeffectivelysupport,throughthereverse22BulgarianNewsAgency–BTA:[https://www.bta.bg/en/news/balkans/399891-wrap-up-presidents-of-bulgaria-serbia-attend-start-of-construction-on-bulgaria]23See:[https://3e-news.net/en/a/view/42413/from-2024-the-alexandroupolis-terminal-will-provi-de-access-to-significant-quantities-of-gas-from-alternative-suppliers]24See:[https://www.reuters.com/business/energy/greek-lng-terminals-pipeline-2022-11-30/]18flowoftheTrans-Balkanpipeline,thesupplyofnaturalgastotheSoutheastEuropeanregionandalsotoUkraine,whichwillbeindireneedformoreenergyresourcesforitsreconstructionafterthewarends.Thecontributionofthoseprojects,insynergyandcomplementaritywiththecorrespondingprojectsimplementedinneighboringBulgaria,isofcriticalimportancefortheenergysecurityoftheSEEregionand,ultimately,forEurope.Theyopennewcorridorsofregionalcooperation,inthediplomaticsense,anddemonstratethattheenergysectorcanbeatoolofsolidarityincountriesaffectedbyRussia’spolicyof“weaponization”ofenergysupplies.Finally,theyputourcountries,Greece,Bulgariaand,recently,Romania25atthecenterofstrategicdevelopmentsinasensitiveregion,makingthempointsofreferenceandreliablepartnersofEuropeandtheinternationalcommunity.Thewayahead:Positive“Spillovereffects”ofGreek-BulgarianbilateralgascooperationonotherenergysectorprojectsandinitiativesadvancingregionalenergysecuritygoalsInordertosecureaffordableandcompetitivedeliveryofgasthroughcross-borderinfrastructuredevelopedbetweenGreeceandBulgaria,thetwocountriesarealreadyveryactiveparticipantsintheSEEGroupofthe“EUEnergyPurchasePlatform”.FollowingthesecondformalmeetingoftheSteeringBoardoftheEUEnergyPurchasePlatformonMarch2,2023,inBrussels,theEuropeanCommissioniscurrentlyworkingonatightscheduletopreparefornextwinterandthestoragerefillingseason.22EUMemberStateshaveexpressedtheirpreliminaryinterestinaggregatinggasdemandofmorethan17bcmofgasforthenext3years,toppedupbycloseto4bcmofgasdemandsignaledbyMoldova,UkraineandSerbia.Thededicatedplatform,whichwillenableEUMemberStatestopoolnaturalgasandLNGdemandandmakejointpurchases(AggregateEUmechanism),waslaunchedonMarch22,2023,byserviceprovider“PRISMA”.Acallforexpressionsofinterestforcompanies(whichcannotbelinkedtoRussiainanyway)toactasa“Centralbuyer”or“Agent-on-behalf”waslaunchedonthatdate.Theprocedureisopentoallcompanieswhichofferservicesinthose2modelsofcooperation26.Lastbutnotleast,onApril25,2023,theEUEnergyPlatformforthejointpurchasingofgas–viaitsAggregateEUservice–wasexpectedtolaunchthefirstcallforplacingademandtobuygas,whichwouldbeopenuntilMay2,2023.ThelogicadvocatedbytheEUCommissionservicesisthat“Themoreparticipantswehave[inthePlatform],thehigherthechancesoffindingattractivegasdeals”27.25TrilateralschemeofdiplomaticcooperationbetweenGreece,BulgariaandRomaniahavingalreadyconvenedtwomeetings(Athens,May12,2022,andSofia,October13-14,2022).See:[https://www.bta.bg/en/news/bulgaria/343882-trilateral-meeting-of-bulgaria-greece-and-romania-held-in-sofia]26Forupdatedinformationonthe“EUEnergyPurchasePlatform”andthefunctioningof“PRISMAEuropeanCapacityPlatformGmbH”,see:[https://energy.ec.europa.eu/topics/energy-security/eu-energy-platform_en]and[https://help.prisma-capacity.eu/support/solutions/articles/36000428919-requests-for-expression-of-interest-in-offering-agent-on-behalf-and-central-buyers-services]27See:[https://energy.ec.europa.eu/news/eu-energy-platform-first-call-placing-demand-buy-gas-open-25-april-2023-04-18_en]19AtthebeginningofMarch2023,theBulgarianMinistryofEnergyhaslaunchedanimportantregionalinitiativetoanalyzethegasmarketinSoutheastandCentralEurope,whichisexpectedtoprovideanswerstothequestionsregardingthedemand(identificationofthenecessaryquantitiesforeachcountry)andthepossibilitiesforimplementingalternativegassupplies.Thegoalistousethisinformationtoassesswheretoincreasetransitcapacityandwheretoinvestinadditionalinfrastructure.AccordingtotheBulgarianEnergyMinister,Mr.RosenHristov,EnergyMinistersofGreece,NorthMacedonia,Serbia,Hungary,Romania,MoldovaandUkrainehaveallembracedtheinitiativeandareplanningtosignaninternationalMemorandumsothatthegastransmissionoperatorscanstartworkonthislarge-scalestudy28.Onceallparametersarereceived,thepartiestotheMemorandumcanstartplanningofsuppliesanddiversificationofgassourcesfortheregionofCentralandSoutheastEurope.Inthisregard,Mr.Hristovalsoannouncedattherecent“4thP-TECCForum”inZagreb29thatinthecomingperiodtenderswillbeheldforsecuringlong-termcontractsfordeliveryofLNGfrommultiplesourcestofurtherdiversifygassupplies,basedonthealreadysecuredinfrastructure.Hementionedinhisspeechthat“inordertohavesecurityinenergysupplies,itisnecessarytoworkattheregionallevel,notonlyatthenationallevel”.Agasmarkettesthasalreadybeenlaunched,whiletakingintoconsiderationthedemandofallneighboringcountriesforaperiodof3to4years;furtherstepsinthiscontextwerelinkedtotheassessmentofthecurrentconditionofthenaturalgastransmissionsystemandtoplansforupgrades.CompletionoftheAlexandroupolisFSRUand“complementaryinfrastructure”,suchastheIBSInterconnectorbytheendofthisyearaswellastheGreece-NorthMacedoniagasInterconnectorby2024,willbeveryimportantinthisrespect–itwillprovideaccesstonewquantitiesofgasfromvarioussources(USA,Qatar,Algeria)atcompetitivepricesforthemarketsintheregion.Inthatway,itwillensurethatmuchofournorthernneighbors’demandismetthroughthosesystems.Therefore,inthecomingperiod,workingtogetheronfurtherdevelopingrelevantcross-bordergasinfrastructureandcommunicatingmuchmoreonthebestpracticesintherelevantcountrieswillbecrucialformeetingcommongoals.Steppingontheiralreadyintensivegascooperation,thiswinterGreeceandBulgariahavealsoundertakennewjointdiplomaticinitiativestobuildastronggatewayforadditionalenergysuppliestotheBalkancountriesandEasternEurope.ThesigningonFebruary16,inAthens,oftwobilateralMoUsinthegasandoilsectorsmarksanothercrucialmoveforward,notonlyindeepeningbilateralenergycooperationbutalsoincommunicatingtothegreaterregionasharedvisionontheroleofenergyasacatalystforsynergiesandanenablerofpeace.ThefirstMoUon“CooperationintheSecurityofGasSupplyandGasStorage”,whichissimilartotheoneGreecehasalreadysignedwithItaly,aimsatincreasingtheresilience28See:[https://business.dir.bg/energien-pazar/do-dni-podpisvame-memorandum-sas-sasednite-darzhavi-za-analiz-na-tarseneto-na-priroden-gaz](inBulgarianlanguage)29March1-2,2023.See:[https://3e-news.net/en/a/view/41731/rosen-hristov-in-order-to-have-security-in-energy-supplies-it-is-necessary-to-work-at-the-regional-level]20oftheenergysecuritysystemsofthetwocountries,practicallyconsolidatingtheenergysolidaritybetweentheminaperiodofintenseuncertainty.ThesecondMoUon“CooperationforExploringthePossibilitytoConstructtheAlexandroupolis-BurgasOilPipeline”,proposedbyBulgaria,servestwomaingeopoliticalpriorities:a)theneedfortherapidandcompleteindependenceofEuropeaneconomiesfromRussianhydrocarbonexportsandb)thecreationofanewoilroutewhichbypassestheBosphorusStraits’commercial,transport(railwaynetwork)andenergyinfrastructurenetwork.Atthesametime,thispipelinereducestheriskofacatastrophicenvironmentalaccidentthatcouldoccurintheBosphorusStraitsduetotheoversaturationoftheirusebydozensoftankersandhundredsofcommercialandpassengershipswhichrunthroughthenarrowseapassagebetweentheEuropeanandAsiancoastsofIstanbul.However,inordertomoveforwardwiththatinitiative,thedirectsupportofthestatesinvolvedisneeded.Further,thesupportbytheEuropeanCommissionitselfisalsoamust,astheprojectservesafundamentalobjectiveoftheREPowerEUstrategy:endingEuropeandependenceonRussianhydrocarbonsby2027.AsidefromitsroleatEuropeanlevel,thenewoilpipelineprojectisveryimportantforBulgaria,GreeceandtheSEEregionasawhole,initsefforttodiversifythesupplywithnon-Russianoil.ForBulgaria,itisimportantbecausethecountryhostsonitsterritorythelargestoilrefineryintheBalkans(“LukoilNeftochimBurgasAD”),producingoilproductsfortheentireregion,anditoperatespredominantlywithRussiancrudeoilwhichnowmustbephased-out.Therefore,newroutesforthesupplyofnon-RussianoilmustbesoughtinorderforthisstrategicrefineryforBulgariaandforthewholeregiontocontinueoperating.ForGreece,itisequallyimportantbecauseAlexandroupolisisbecomingaregionalenergy,transport-logisticsanddefensehubandwillbeabletoreceiveoilfromvarioussourcesinthefuture.Bytheendofthecurrentyear,GreeceandBulgariaarealsoexpectingfinalizationofconstructionofthesecondelectricityinterconnectionlinebetweenNeaSantaandMaritsaEast,along-awaitedIPCEIprojectthatisanticipatedtofurtherincreasethepowertransmissioncapacityattheborderofthetwocountries.Withthisproject,thetransportabilityofelectricityexportstoBulgariawillincreaseto1,400MWandofimportstoGreeceto1,700MW.ThecompletionofthisprojectwillalsobeofstrategicimportanceforthetwocountriesandfortheSEEregion,sinceGreeceiscurrentlydevelopinganumberofparallelconnectivityprojectsatastrategicpointofintersectionofinternationalelectricitygridinterconnections,throughwhichgreenelectricitycanbeexportedtoBulgariaandthewholeregion.OnJanuary14,2023,inthepresenceoftheGreekPrimeMinisterandtheBulgarianMinisterofEnergy,constructionworksonthe840MWnew“AlexandroupolisPowerGenerationUnit”(CCGT)withnaturalgasasfuelwereinaugurated.Thisnewunit,withtheparticipationofbothpublicandprivateinvestorsfromGreece30,willbeconnectedtothe“NeaSanta-MaritsaEastelectricityinterconnectionline”andis30See:[https://depa.gr/a-joint-venture-of-dei-depa-commercial-and-damco-energy-alexandrou-polis-power-plant-enters-the-implementation-stage/?lang=en]21expectedtoplayanimportantroleinimprovingthesecurityofelectricitysupplyofGreeceandtheSEEregion.Thecostoftheinvestmentisestimatedataround400millioneuros,andthenewunitthatwillalsoreceivegasfromtheAlexandroupolisFSRUwillbereadyin2025.Lastbutnotleast,onDecember14,2022,theCouncilofMinistersofBulgariasenta“LetterofSupport”totheEUconcerningtheinclusionofthe“projectfortheconstructionofanelectricalinterconnectionbetweenEgyptandGreece”(GREGY)ontheIPCEIlistofprojects.Thisprojectaimstoensurethetransferof3,000MWofgreenenergyproducedinEgyptfromrenewablesandisfullyinlinewiththeEU’sgreenenergytargets.Itsimplementationisexpectedtohelpincreasethecross-bordertransmissioncapacityoftheelectricitynetworkontheborderbetweenGreeceandBulgaria,whichwillpromoteBulgaria’senergysecurityandregionaltradeinelectricityand,mostimportantly,contributesignificantlytopromotingclimatetargetsandachievingthegoalsoftheEuropeanGreenDeal.ForGreece,the“GREGYProject”31iskeytoincreasingsecurityofpowersupplyintheregionand,atthesametime,transitioningtoacleanerenergymixandazero-carboneconomy.ThelatestnewsrelatedtothisprojectisthatGreecehassubmittedaproposalforanexpandedEuropeangridthatwouldfacilitatethetransferofelectricitygeneratedbyRESbetweenthecontinent’ssouthandnorth.Withthatproposal,supportedby14EUMemberStates(includingBulgaria)attheEUCouncilofMinistersMeetingonMarch28,2023,theGreekgovernmentisseeking,interalia,anapprovedEUdecisiontoincreaseinvestmentsinelectricityinterconnectionsinordertobeabletotransportquantitiesofgreenenergybyunderseacablesfromNorthAfrica(Egypt)toGreeceandfromtheretoEurope,viatheWesternBalkans32.TheGreekinitiative,placingemphasisonthedevelopmentofelectricitycorridorslinkingthecontinent’snorthandsouth,wouldenablemoreconsistentgreenenergysupplyalloverEuropethroughouttheyear.Inthelongterm,thesignificantpotentialoftheEasternMediterraneanandSoutheastEuroperegionsforbothrenewableelectricitygenerationandgreenhydrogenproductionanditsimportfromtrustedandreliablepartnerswillundoubtedlyencouragefutureinvestmentsinhydrogeninfrastructure.Tothisend,BulgartransgazEADandtheGreektransmissionoperatorDESFAarealreadyworkingtointerconnecthydrogennetworks33.Thiswillallowbothcountriestomaintainakeyroleinthesustainableandsecureenergysupplyfortheregion,contributingtoitsgreentransitionandachievingnetzeroemissionsby2050,inaccordancewiththeEUHydrogenStrategyandtheREPowerEUPlan.31Project’sshortpresentationisavailableatthefollowinglink(byELICAGroup):[https://www.iene.eu/articlefiles/inline/karydas%2022%2011%202022.pdf]32TheGreekproposalisbasedondataprovidedby“ENTSO-E”,accordingtowhichanadditionaloverallcapacityof64GWcanbeaddedat50cross-borderelectricityinterconnectionsinEuropebetween2025and2030,adevelopmentthatwouldboosttheEuropeangrid’sefficiencyby55%.33See:[https://energypress.eu/desfa-bulgartransgaz-seeking-ipcei-support-for-hydrogen-related-projects/]22ConclusionUnderthecurrentgeopoliticalsituation,theimplementationandfurtherplanningofsignificantenergyconnectivityprojectsinourregionisa“game-changer”inprovidingSEEcountrieswithincreasedsupplyoptionsandaccesstoalternativesuppliersofenergy.Inthelongerterm,implementationofinterconnectionprojectsfacilitatinge.g.theflowofLNGintheregionwouldfurtherintegratetheenergymarkets,helpinbuildingresilienceofenergysystemsintheregionandeliminateRussia’sabilityto“weaponize”energysuppliesinthefuture,inlinewiththegoalsoftheREPowerEUPlan.Tothisend,thediplomatically-drivenpartnershipbetweenGreeceandBulgariainenergyinfrastructuredevelopmentisvitalforthegoalof“diversificationofgassupplies”,whichconstitutesoneofthethreecentralpillarsofthePlan.Recently,theGreek-Bulgariandiplomaticpartnershipisactivelyexpandingitsreach,toalsoincludeotherprojectsadvancingsecurityofenergysuppliestoourregion,whileatthesametimecontributingtoitsfurtherelectrificationandgreenenergytransition.InthisdifficultperiodfortheEuropeancontinent,GreeceandBulgariaareleadingbyexampleinourregion,onabilateralbasiswitharegionallook,withinthecontextoftheEuropeanenergypolicy.H.E.Alexios-MariosLyberopoulosgraduatedinLaw(LL.B)attheAristotleUniversityofThessaloniki,thenspecializedinPublicInternationalLawattheUniversityCollegeLondon(UCL)–LL.MandacquiredaMaster’sdegree(MPhil)in“EuropeanOrganizationandDiplomacy”attheNationalandKapodistrianUniversityofAthens.HecontinuedhisstudiesattheDiplomaticAcademyoftheHellenicMinistryofForeignAffairs.HebeganhisprofessionalcareerasalawyerandeditoronInternationalAffairsandcontinuedasadiplomatinvariouspositions,initiallyattheMinistryofForeignAffairs,thenasSecondSecretaryatthePermanentMissionofGreecetotheUNinNewYork.In2004,heheadedtheConsulateGeneralofGreeceinIstanbul,afterwhichhewaspromotedtoFirstCounsellorofEmbassyandplacedatthePermanentMissionofGreecetotheUNinGeneva,inchargeforHumanRights.HisdiplomaticcareercontinuedasDeputyHeadoftheEmbassyofGreeceinRomeandthenasConsulGeneralofGreeceattheConsulateGeneralofGreeceinOdessa.In2019,hewaspromotedtotherankofMinisterPlenipotentiary,afterwhichhewasappointedasthedirectorofboththeDirectorateD2“NATO,Euro-AtlanticSecurityandOSCE”andtheDirectoratefor“Strategic&OperationalPlanning”oftheHellenicMinistryofForeignAffairs.23ANEWBALANCEOFPOWER–EUROPE’SENERGYTRANSITIONAMIDGEOPOLITICALUPHEAVAL34KristianRuby–SecretaryGeneralatEurelectricMyniecewasonceaskedtopointoutEuropeonaglobeinconnectionwithaprimaryschoolassignment.Afteramomentofconsideration,herfacelitupandshestartedturningtheglobe.“It’swhereallthesmallcountriesare,right?”Althoughthegeographyremainslargelythesame,theworldaroundusischanging.WarreturningtotheEuropeancontinentisjustoneinastringofdevelopmentsoverrecentyearsthathascalledintoquestionthebalanceofpowerestablishedsincetheSecondWorldWar.Thetectonicplatesofgeopoliticsareinmotion.Russia,onceseeminglyonapathtowardsdemocracyandbecomingareliabledestinationforforeigninvestment,hasdeterioratedintoanauthoritarianstatewithsuppressionofthepoliticalopposition,controloverthemedia,andconsolidationofpowerbyarulingelite.Increasingly,itiswieldingitsglobalinfluencebymeansofmilitaryaggression.AndrecentlyVladimirPutinhasassertedhisambitionto–atleastpartly–re-establishtheterritorialbordersoftheSovietUnion.China,onceconsideredanemergingeconomy,hasnowtrulyemergedasanindustrialpowerhousewithdominantpositionsinseveralcriticalindustries.And,breakingwithacentury-longtradition,itisadoptingafarmoreproactiveandassertiveroleinforeignpolicy.TheUnitedStates–previouslyaleadingadvocateofglobalfreetrade–hasrampedupeffortstoreshoreitsindustriesinrecentyearsandfindsitselfinanincreasinglytensestand-offwithChina.Internally,deepcultural,economic,andpoliticalriftsarepolarisingthecountry,whichinturncastdoubtsoveritslong-termdirection,includingitsforeignpolicy.Therule-basedworldorderrootedinuniversalvalues,inwhichEuropehaslongimagineditself,isinfluxandincreasinglygivingwaytogeopoliticaltension,ideologicalrivalry,andprotectionistindustrialpolicy.Securityisnolongeragiven,puttingtheEUinapinch.Europeisatseriousriskofbecoming‘thesmallcountries’inmorethanjusttheliteralsense.Tonavigatethenewbalanceofpower,TheEuropeanUnion(EU)mustactswiftly,bydoublingdownonitsgreenambitionsandreinforcingitsresilience–indefence,industry,andenergy.Theendofhistory–anditssubsequentrenaissance;twodecadesofPaxAmericanaWhathashappened?Ratherthanthenewsituation,manypunditsregardtheprecedingdecadesasthehistoricalanomaly.InthewordsofformerPrimeMinisterofFinlandAlexanderStubb,wehavebeenona30-yearvacationfromworldhistory.Followingthedissolutionofthebi-polarworldorderoftheColdWar,aperiod34TheauthorwouldliketothankNicSteinwandforvaluableinputandcontributions.24ofunchallengedUSleadershipfollowedinthe1990sandearly2000s,famouslytoutedasthe“endofhistory”byFrancisFukuyama.TheUnitedStatesbecamethekeyplayershapingglobalpoliticsduetoitsmilitarymightandeconomicdominance.Theperiodwascharacterisedbyconcertedeffortstoestablisharule-basedworldorder.TheworldexperiencedaperiodofacceleratedglobalisationandanincreaseinglobaltradeandinvestmentspurredbytheestablishmentofaninternationalrulesetundertheWorldTradeOrganisation(WTO).Anothersignificantcharacteristicofthiserawastheemergingefforttotakeglobalactiontoprotecttheenvironment.Withthegrowingconcernsaboutclimatechangeandthedeclineofbiodiversity,countriesaroundtheworldcametogethertoaddressthesechallenges.FollowingthesuccessoftheMontrealProtocoltoreignintheuseofozone-depletingsubstances,thesigningoftheUnitedNationsFrameworkConventiononClimateChangeaswellastheConventiononBiologicalDiversityin1992werelandmarkachievementsintheestablishmentofaglobalgovernancestructureforprotectionoftheenvironment.Overall,thesecuritysituationinthe1990swasmarkedbyrelativepeaceandstability.Havingemergedasthesolesuperpowerontheglobalstage,theUnitedStatesmainlyundertookhumanitarianinterventionsinplacessuchasSomalia,HaitiortheBalkans,whereitplayedaleadingroleinendingtheconflictsinBosniaandKosovo.TheUSalsoledacoalitionofcountriestodriveIraqoutofKuwait.Althoughcontestedatthetime,bothfortheirefficiencyandlegitimacy,theseinterventionsweregenerallyseentobecarriedoutinresponsetoclearviolationsofinternationallawandhumanitariannorms.However,thesituationchangedintheearly2000s,astheUSanditsalliesinitiatedtheWaronTerrorinresponsetotheattacksofSeptember11,2001.TheUSinterventionsinIraqandAfghanistaninthe2000swerewidelyperceivedaslesslegitimatethanthoseofthe1990s,astheywerebasedondoubtfulintelligenceandlackedclearjustificationsunderinternationallaw.Inaddition,poortreatmentofwarprisonersaswellasscandalsinvolvingtortureandharshinterrogationtechniquesfurthererodedthemoralauthorityoftheUSanditsalliesintheeyesofthebroaderinternationalcommunity.Inthefirstdecadeofthenewmillennium,Chinawasprimarilyfocusingonreformsandeconomicdevelopment.JoiningtheWorldTradeOrganisation(WTO)in2000,thecountrysoughttobuildindustrialstrengththroughacombinationofopeninguptoforeigninvestmentandtargetedindustrialpolicies.Inreturnformarketaccess,foreigncompanieshadtoacceptlocalcontentrequirements.Domesticcompaniesofstrategicimportancereceivedacombinationofpreferentialtreatment,suchasguaranteeddemandpipeline,coupledwithdiscipliningmeasurestoensurecontinuoustechnologicalupgrading.Russia,onitsside,wasbusybringingordertoitssocietyaftertheshocktherapyandchaoscapitalismofthe1990s.Thecountry’sforeignpolicymainlyfocusedonconflictsinthefragmentedpost-Sovietspace,notablywithChechnyaandGeorgia.Vladimir25Putin’sworldviewwasalreadyclearatthetime,however.Inhis2005annualstateofthenationaddress,hedeemedthecollapseoftheSovietempireasthe“greatestgeopoliticalcatastrophe”ofthe20thcentury,servingasanomenofthingstocome.Showingteeth–changingthegeopoliticalgameinthe2010sInthe2010s,Russianforeignpolicysawasignificantshifttowardsamoreaggressivestanceontheworldstage.InadditiontocovertoperationscarriedoutinEUcountries,Russiarefineditsmethodsofhybridwarfareandincreasinglybegantosystematicallydeploycyberattacksandpropagandaseekingtomeddleinthepoliticalaffairsofothercountries.Theshiftinpolicywasalsomarkedbyseveralhigh-profileactions,includingRussia’sinvolvementintheMaidanprotestsinUkraine,itsinterventionintheSyrianCivilWar,andtheannexationofCrimea.China,previouslyfocusedonestablishingitselfastheworkshopoftheworld,alsobegantoshiftitsfocusinthe2010s.WithXiJinpingassumingpowerin2013,Chinagraduallyleftthe“PeacefulRise”adageoftheHuJintaoeraanddevelopedamoreassertiveandoutwardorientedmentality,perhapsbestexemplifiedintheirextensiveBeltandRoadInitiativewithinvestmentstothetuneof$575billionin70Asian,African,andEuropeancountries.TheUnitedStates,too,waspartandparceloftheshiftingbalanceofpowerinthisperiod.WiththeinaugurationofPresidentDonaldTrumpin2016,populismwonoutinAmerica.Withhis‘AmericaFirst’electioncampaignTrumpstruckanoteofnationalself-centerednessandisolationism.Now,uponelection,heeyednearlyalltheinstitutionsmakinguptheglobalpowerstructureAmericahadbeenatthecenterofhereto.InadditiontoaggravatingChina,healienatedalliesintheNorthAtlanticTreatyOrganization(NATO),decriedfreetradedealsliketheNorthAmericanFreeTradeAgreement(NAFTA),andpulledoutoftheParisClimateAccordwhichhadbeennegotiatedjustoneyearearlier.ThisdemonstratedthattheUS,whichmanycountedonasastableally,waspronetothewhimsoftheadministrationinpower.Italsocalledintoquestionliberalcooperationonaglobalscale.DatafromtheGlobalTradeAlertdatabaseshowthatby2017morethan50%ofexportsfromG20countriesweresubjecttoharmfultrademeasures,upfrom20%in2009.AndeventodaywithPresidentJoeBiden,cooperationseenbeforetheTrumpAdministrationhasnotbeenrestored,andtensionsamongalliesarehigh.The2022InflationReductionAct(IRA)thatofferssubsidiesforgreentechnologyisexemplaryofthis,asitputspriorityonAmericanmadetechnologiesthroughlocalcontentrequirementswhichfliesinthefaceofWTOrulesandskirtsEuropeanindustry.2020s-decadeofdisruptionThe2020skickedoffwithtwoseveresystemicshocksthattippedthescalesfurther.Thecoronaviruspandemicthatgrippedtheworldformorethantwoyears26precipitatedmajordisruptionsintheglobaleconomyandshiftedworldviews.Then,justasemergencyrestrictionswerebeginningtoeaseacrosstheworld,Russia’sPresidentVladimirPutinordereda‘specialmilitaryoperation’inthesovereignnationofUkraine–whatinthefullestextentofthedefinitionclassifiesas‘war’.Theseeventstriggeredtwothings.First,theycreatedmassiveuncertaintyinsupplychains.Duringthepandemic,manyeconomieswereshutteredandthefragilityofsuchahyperconnectedworld–whereessentialsuppliesaresourcedfromplacesallovertheglobe–becameapparent.WiththeRussianinvasion,thismaterialisedinenergysupply.Nearly40%ofEurope’sgassupplywassourcedviapipelinefromRussiabeforetheinvasion,andasignificantportionofthatflowedthroughUkraine.Withthetwoatwar,gasflowsfell,andwithPresidentPutindismayedattheWest’ssupportforUkraine,Russiaalsodeliberatelytaperedoffgasdeliveries,creatingasupplycrunchthatresonatedacrosstheworld.Thisreinforcedasecondrealisation;thatstrategicresilienceisnowamust.Althoughthisseemedtobealongtimeinthemaking,itwasthismomentespeciallythattippedtheEUovertheedge.GreenambitionsoutlinedintheEuropeanGreenDealcouldnotbemetbyrelyingonotherstodotheheavylifting.Defenseofthecontinentcouldnotbeleftuptoallies.Producingthetechnologiesneededforbothcouldnotbedonehalfwayacrosstheworld.ThedebateinEurope,andindeedtheworld,onwhatthenewbalanceofpowerlookslikeisnowbeingrevisited.Eventsarestillunfolding,andthescalehasnotfounditsbalance.Itiscertainthatongoinggeopoliticalchurnwillhavefar-reachingconsequencesforinternationalsecurity,economicstability,andthedistributionofresourcesinthenearfuture.Cleanerandgreener–theEUGPStotheNewWorldOrderTheEUhasevolvedsignificantlyoverthepastthreedecades–culturally,economically,andintermsofpoliticalpriorities.AlthoughstillironingoutthecreesesoftheIronCurtain,theEuropeanUnionisnolongerasimpleamalgamationofcooperativestates–itisafunctioningsupranationalframeworkforeconomic,political,legal,social,andculturalintegration.Throughrecentpoliticaloverhauls,ithasbeentryingtomakegoodontheambitiontoleadonclimateactionandtodevelopafuture-friendly,sustainableeconomicmodel.TheEuropeanGreenDeal,envisionedbyCommissionPresidentUrsulavonderLeyen,effectivelyfunctionsasastrategic,politicalobjectiveforthecontinent.Withthegoalofbecomingthefirstnetzerocontinentby2050,theEUaimsnotonlytobealeaderinthefightagainstclimatechange,butalsotobecomeagreenpowerhouseeconomy.ThekeyelementsoftheGreenDealincludedaEuropeanClimateLaw,aBiodiversityStrategyfor2030,anIndustrialStrategyandCircularEconomyActionPlan,andaplantotransformandmodernisethecontinent’sagriculturalsector–theso-calledFarmtoForkStrategy.Alongsidethis,theCommissionsettoworkonstrengtheningthe2030emissionreductiontargetstobringnetzeroby205027moreclearlyintorange.Withatargetof55%below1990levelsby2030,theCommissionlaunchedaslewoflegislationinJuly2021.Thepackage,dubbedFitfor55,wieldedoveradozenoflegislativeproposalsaimedatmakingtheseemissionreductionsareality.Thisincludedamongotherthingsaregulationtophaseoutinternalcombustionengine(ICE)passengercarsandvansby2035,anincreasedtargetforrenewablesintheenergymix,acarbonborderadjustmentmechanismforimportsofcarbon-intensivegoodsandservices.Policymakerswereworkingthroughthelegislativeproposalswhenin2022,afterweeksoftensebuildup,theRussianarmyrolledoverUkrainianborders.TheinvasionofUkraineservedasacatalystforEurope’sgreenambitions.Asthedaysturnedtoweeksandmonths,RussiabecameevermoreaggressivetowardstheEUinthefaceofitsresolvetosupportUkraine.AsEuropeancountriescametogethertolevysanctionsovertheblatantactofaggression,PresidentPutinbegantolevyhisownsanctions.HedeliveredanultimatumtoEUcountriesviathestategascompany,Gazprom,toeitherpayforgasdeliveriesintheRussiandenominatedRubel,orfaceshutoffs.Determined,manycountriesdeclined,aslong-termcontractsdictatedthatpaymentcouldbemadeinEuros.Nonetheless,Putinillegallywentforthcullingdeliveries.WithnearlyaquarterofEuropeanenergyderivedfromnaturalgasandfacingaserioussupplycrunch,Europeneededsolutions.AsadirectresponsetothesupplycrunchfromRussia’sinvasion,theCommissionREPowerEUplansoughttoendtheEU’sdependenceonRussianfossilfuelsthroughenergysavings,diversificationofenergysupplies,andacceleratedroll-outofrenewableenergy.TheEUuppedtheanteonitsgreentransformation,andthistimeitwasaboutsecurity,notjusttheclimatecrisis.Mostrecently,theEUalsomadegoodonitsGreenDealpromiseforanindustrialstrategy,althoughratherinareactionarymannerthanatrailblazingone.InAugustof2022,USPresidentBidenannouncedhisgoliathIRAearmarkingsome€345billioninpublicspendingforgreenenergyandclimatechangesolutions.Whilethespendingaloneamountedtotaxcutsanddirectsubsidiesforthingslikerenewableenergyandhydrogenproduction,electricvehicle(EV)manufacturing,andsoon,aredflagforEuropewasthepreferentialtreatmentofUSproducedgreensolutionsvialocalcontentrequirements.SpurredonbytheuproarthisignitedinEuropeoverwhatmanysawasblatantprotectionism,theEUneededtoact.InFebruarythisyear,attheannualconferenceinDavos,Switzerland,PresidentvonderLeyenannouncedtheGreenDealIndustrialPlan(GDIP)togotoetotoewiththeIRA.Thefourpillarsofthisplanincludeapredictableregulatoryenvironment,fasteraccesstofunding,skills,andopentradeforresilientsupplychains.ThesepillarshighlightwheretheEUthinksitneedstoimprove,andtheplansignalsthattheEUisalsoworriedoflosingitscompetitiveadvantageingreendevelopments.Althoughafirstmoverinthemanufacturingofmanygreentechnologies,Europetodayischallengedintermsofcompetitiveness.Asia,andspecificallyChina,has28comeoutoftheshadowsovertherecentdecadestobecomeamajorcontenderingreentechnology.Whenlookingatthemostimportanttechnologiesforagreeneconomy–electrolyserstoproducegreenhydrogen,batteriesforvariablerenewableelectricitystorageandEVs,andEVsandsolarpanelsthemselves–manyofthemarepredominantlymadeinAsia.Nottomentiontherawmaterialsneededtoproducethem.63%ofrareearthminerals,vitaltoproduceEVsandothercleantechnologies,areminedinChina,while85%oftheirprocessingisdonethereaswell.90%ofwafersandothersolarPVcomponentsareproducedinChina.Europelacksaccesstothefirstlinkinthesupplychain–therawmaterials.Inaworldoffreetradeandfriendlycooperationthereislimitedneedtoshoreupthefollowinglinks,likeprocessingandmanufacturing.Buttheworldischangingfast.Ratherthanthe‘justintime’rationaleofahyperconnectedworld,“justincase”nowseemstobethetuneofthetime.Infact,permitting,whichhasalsobeenamajorroadblockincleanenergy,notonlymakesminingforthefewrawmaterialsonthecontinentquitedifficult,butalsomakesmajorfacilitiesformanufacturingdifficulttobuildaswell.Europeisoneofthemostregulatedplacesintheworld,andwhileitisapositiveforqualityoflife,itcomplicatesindustry.Now,asitbecomesmoreattractivetolocateinplacesliketheUS,andhardertocompeteagainstanearmonopolyinChina,Europewillneedtotakestepstoenticeitsindustrytostayonthecontinent.EnergytransitionforclimateandsovereigntyTheinitialreasonfortheenergytransitionisthattheEUrealisestheneedtoactonclimatechange.Settingemissionsreductiontargets,aimingformassiveadditionsofrenewableenergyandensuringefficientuseofenergy,istheclearestcutwaytodecarboniseEuropeansociety.WhilethereisnodoubtthatclimatechangeremainsakeyvariableofEurope’sdecarbonisationmission,theshiftingbalanceofpowerhasintroducedotherargumentsforcarryingouttheenergytransition.Russia’sweaponisationofenergyquicklyafteritsinvasionwasaclaxontotheEUthatitneededtoshoreupitssecurityofsupplyforenergy.ThisisexactlywhatREPowerEUwasmeanttodo.Alongsimilarlines,thegasshockwasnotjustfeltinEurope,butallovertheworld.TakingsomuchgasofflineforEuropemeant,intheshort-term,theyhadtofinditelsewhere.TheUSisoneofthebiggestliquifiednaturalgas(LNG)exportersintheworld,andasakeyally,theycouldcertainlycometoEurope’said.TheproblemisthatEuropedidnothavetheregassificationinfrastructureinplacetohandlesuchdeliveries–gascomingfromRussianormallycameviapipeline.Thus,aconundrum:Europeinvestsingasassetstoshoreupshort-termsupply,butthoseassetsbecomestrandedinviewoftheenergytransitionandphasingoutofnaturalgas.Whatthiscrunchdid,wasforceEurope’shandwherenosolutionwouldbeefficient,anditwouldremainreliantonexternalpartnersforitsenergy29needs.Nolonger.Theenergytransitionheretakesonathirdargument,beingthatitisthewaytoEuropeanindependence.Theonusisclear.Europe’spathwayinthenewworldorderistheenergytransitionandtherearesixelementstoitthataddressthechallengesfacingEurope.First,electrifyindustry,transport,andbuildingswithclean,energyefficientsolutions.Buildingonthat,energyefficiencywillhavetobethenameofthegameineverytechnology.Energyimportsthatcannotbereplacedwillhavetobediversified.Whereitcanbedone,though,energyimportsmustbereplacedwithcleanpowerthatdeliverssynergiesacrossdifferentsectorsoftheeconomy.Todothat,reinforcedanddigitaliseddistributiongridsarethebackbonetoensurethissystemstandsonitsowntwofeet.Finally,bringingitalltogether,industrialcapacitymustbebuiltup,especiallyincleanpower.Electrification–energisingtheEUinthenewbalanceofpowerElectrificationisEurope’sspeedwaytodecarbonisationandindependenceintheworld.InastudybyEurelectricpublishedin2017,directelectrificationofindustry,transport,andbuildings–thatbeing,usingelectricitydirectlyforenergyneeds–itwasfoundthattheEUcouldreduceCO2emissionsby80-95%thankstoapotentialelectrificationof63%offinalenergyconsumptionintransportandbuildings,and50%inindustrialprocesses.Inlightoftoday’sevents,electrificationwouldgoalongwaytoendrelianceonforeignimportsofenergy.Smartmetersandthermostats,heatpumps,EVs,electrolysers,rooftopsolarPV,andon-sitebatterystoragearealltechnologiesavailablenowtodecarbonisebuildings,transport,andindustrywithcleanenergy.Nottomentiontheefficiencygainsinenergyconversion.Europeanpolicymakershavealreadyputelectrificationattheheartoftheenergytransition,buttheEUisstillnotelectrifyingfastenoughtodeliverondecarbonisationtargets.Morecouldstillbedone.Taxingelectricityfairlyasanenergycarrierisagoodstart,asisprioritisingthedirectelectrificationofeverythingthatcanbemoreefficientlypoweredbyelectricitythatisnotalready.Energyefficiency–thefirstfreedomfuelBeyondefficiencygainsfromelectrificationonitsown,energyefficiencyshouldbebakedintoalldevelopmentsfromhereonout.Withyearsofscarcityinsight,energyisapreciousresource,andwecannotaffordtouseitinaninefficientway.Recently,theEuropeanParliamentvotedontheEnergyPerformanceofBuildsDirective(EPBD)tobringEurope’sbuildingstockintohigherclassesofenergyef-ficiency,asbuildingsaccountforsome40%ofEurope’sfinalenergyconsumptionand36%ofemissions.ThiswillbevitaltoreducingtheamountofenergydemandintheEUandguaranteeingsecurityofsupply.Technicalsolutionsaswellneedtohavetheenergyefficiencyprincipleinmind.Forexample,technologieslikeelec-30trolysisforgreenhydrogenproductionaresuperblyinefficient,losing40%oftheenergydeliveredbytheelectricitytoproduceit.Thereisaplaceforhydrogentobesure,butonlywhenitisthemostefficientuseoftheenergywehave.Funnellingenergyresourcesintoless-than-optimalefficientsolutionswillsimplygoagainsttheobjectiveofenergyindependence.Here,wemustensurethatthemostenergyefficientoptionsareprioritised.Thismeansmakingthemthefinanciallyattractiveoption,butitalsomeansensuringthatcustomersknowthatitisthemostenergyefficientandfinanciallyattractiveoptionaswell.Providingcustomerswiththistransparentinformationwillbekeytogettingthemengagedintheenergytransitionandrollingoutmoreenergyefficientsolutions.DiversifyenergyimportsItwouldbenaïvetoassumeEuropewillshutoffimportsofenergyovernight.Nonetheless,itisimportantthatresidualimportsarenotconcentratedinthehandsoftoofewpartners,andthatthosepartnerscanbeconsideredreliable.ThisisperhapsthestarkestlessonforEuropevis-à-visRussia’sinvasionandtheweaponisationofenergy.With40%ofgassupplieshavingoriginatedinRussiabeforethewaronlytobeturnedoffpracticallyovernight,shocksrangoutacrossenergymarkets.Lessonlearned:oneshouldnotbeluredintostrategicdependencieswithone–whatismore,unpredictable–partner.Intheshortterm,Europewoulddogoodtoseekclosertieswithmorereliableallies.CanadaandtheUnitedStatestheclosestamongthem.AnothercouldbethemorerecentlydiscoveredLeviathangasfieldintheEasternMediterranean,andNorthAfricansupplierslikeAlgeria.Althoughnotreliablebeyondadoubt,thekeyisdiversificationsothatanydisturbanceinsupplycanbebufferedbysupplyfromotherpartners.NorthAfricaalsohasahuge,vastlyuntappedsourceofpotentialsolarelectricity.Astheenergytransitionmarcheson,gaswillsurelybecomelessofapriority,buttheintermittencyofrenewablegenerationwillcertainlyremainachallenge.Interconnectorsarethusalsovitaltoensureenergy–especiallyvariablerenewableenergy–canflowtowhereitsneeded,inandoutsidethebloc.CleanpowerispoliticalpowerThesimplestanswertotheenergycrisis,althoughwithalaggingeffect,istobuildoutasmuchrenewableandcarbonneutralpowercapacityaspossibleinthecomingdecades.Thisisthecoreoftheenergytransition,anditstandstomakeEuropeself-sufficientinitsenergyneeds.Nonetheless,manyraisethequestionaboutbaseloadandthevariabilityofrenewables.However,therearesolutionsforthat,too.ByretrofittingmanyofEurope’slongstandinghydroelectricdams,wecanutilisetheircapacityflexibilitypotentialmoreefficiently.Beyondthis,existing31nuclear,whichprovidesasteady20-25%ofEurope’selectricity,alsoformsacheapandefficientsourceofelectricitythatwillberequiredinthenextdecades.Advancednucleartechnology,likesmallmodularreactors,alsodeserveconsideration.Whatiscriticallyneededtoensurethebuildoutisrapidapproval.Permittingstilltakestoolong.Awindturbinetakestwoyearsforbuildoutbutuptoeightyears,ormore,justtogetthepermit.Toreachourtargetsandendourrelianceonfossilfuels,thisneedstospeedup.Wecannotwaitanotherdecadeifwewanttodelivertheplus700GWofcleancapacityby2030assetoutinREPowerEU.Escapingthegrid-lock:investmentininfrastructureWhilediscussingthetremendousbuildoutofcleanenergycapacityneededforEurope’senergysecurity,whatoftengoesunmentionedistheneedtobuildoutthegridinturn.TheruleofthumbshouldbethatforeveryEurospentongenerationcapacity,anadditional50e¢-atleast-shouldbeearmarkedforthedistributiongrids.In2021,Eurelectricreleasedastudyestimatingsome€400billionwasneededindistributiongridsaloneby2030.AndthatwasbeforeFitfor55andREPowerEUuppedtheante.Theneedforreinforcementanddigitalisationisclear.30%ofthelow-voltagegridsintheEUaremorethan40yearsold,andtheywerebuiltforadifferenttimewheregenerationwashighlycentralisedinbigpowerplants.Mostofthenewcapacityenteringthegridtodayconnectsatthelowandmediumvoltagelevel,causingcongestionconcernsforutilities.Modernisationofthesegrids,aswellastheirdigitalisationtounderstandflowsonamoregranularlevel,willbevitaltointroducinghundredsofgigawattsofdistributionlevelvariableenergysources.Moderntariffstructureswillbethekeytounlockthenecessaryinvestmentsininfrastructure.ButcomplementaryfinancingthroughthevariousinstrumentsundertheEUMulti-annualFinancialFrameworkislikelytoaccelerateinvestmentsinareaswherecustomersareparticularlysensitivetopriceincreases.Moreover,amoremodernandagilegovernancebynationalregulatorsisessentialforthegridmodernisationtokeeppace.IndustrycapacityforpowercapacityUnderlyingallofthisistheindustrialcapacitytoproducethenecessaryequipment.WhatwefacetodayisanearmonopolywhenlookingtoChinaforgreentechnologies,butwehavelearnedthatwecannotbesostrategicallydependent.DevelopingthecapacityathometomanufactureourEVs,electrolysers,solarpanels,windturbines,andsoon,hasbecomeparamountforEurope’sautonomy.WiththeCommission’srecentlytabledlegislationaspartoftheGreenDealIndustrialPlan,theNetZeroIndustryActandtheCriticalRawMaterialsActlooktomakethathappen.TheNetZeroIndustryActtabledinMarch2023aimsatensuringthat40%of32keytechnologiesaremanufacturedintheEUby2030.Itidentifieseightstrategictechnologieswithahighpotentialtodeliveronthisbenchmark,includingsolarPVandsolarthermal,onshorewindandoffshorerenewables,gridtechnologies,heatpumpsandgeothermalenergy,batteriesandstorage,carboncaptureandstorage,andsustainablebiogasandbiomethane.Asfortherawmaterialsneeded,whicharealsoheavilyconcentratedinthehandsofChina,diversificationofthesupplychainisvital.TheCriticalRawMaterialsActseekstodiversifythesesupplychainsbyrepatriatingatleast10%oftheEU’sannualconsumptionforextraction,atleast40%ofannualconsumptionforprocessing,andatleast15%ofannualconsumptionforrecycling,by2030.Beyondthat,theActdictatesthatnotmorethan65%oftheUnion’sannualconsumptionofeachstrategicrawmaterialatanystageofprocessingshouldcomefromasinglethirdcountry.TheaimofthesecomplimentaryActsundertheGDIPisclear.Gettingtherewillbemoredifficult,however.Especially,questionsremainovertheNetZeroIndustryAct.Strategictechnologychoicesalwaysentailquestionsoverwhetherthechosentechnologiesarethe“right”ones.Also,thejurywillbeoutonwhethertherevisedtenderingrulesforcleantechnologystriketherightbalanceintermsofa)incentivisingdomesticproduction;b)championingresilienceandsustainability;c)beingmanageableforbothadministratorsandbidders;andd)ensuringcompetitivenessofdomesticindustryandavoidingunnecessarypriceincreases.Certainly,thestrategieswillhavetobebackedbymorerobustmeasures,includingaclearerlinktofundinginstruments.AsEuropeisapproachingtheelectionofanewParliamentandCommissioninthecomingyear,allofthetargetsthathavebeensetintheprioryearswillneeddeliverance.Tomakeithappen,policymakersshouldmakethenextsittingaboutthat,andenableitwithaclearandcoherentimplementationstrategy.ManagingEurope’snewfateas‘thesmallcountries’Deliveryhingesonsixfactors.Electrificationneedstobeprioritised.AlthoughatthecentreofnearlyallgreenlegislationintheEU,therateofelectrificationstillmustspeeduptoreachdecarbonisationtargets.Thisgoesinhandwithenergyefficiency.Ensuringcustomersknowtheiroptionsandtheirbenefitsintermsofenergyusageandpotentialsavingswillbekeytoloweringoverallelectricitydemand.Then,wherenotpossibletoreduceenergyimports,itwillbevitaltodiversifysothatEurope’ssecurityofsupplycanneveragainbedisruptedbyarogueactor.Thetruesecurityofsupplythoughwilllieinourabilitytorolloutmassamountsofcleanenergyandstoragetechnologies.Permittingwillbekeytothis.Supplementarywillbedigitalisedandexpandedgridstohandleprosumerinteractionsandthemassvolumesofcleanenergythatweaddtothesystem.Toenableitall,thestartingpointoftheGreenDealIndustrialPlanwillneedtobereinforcedwith33anall-encompassingstrategy–somethingthenextCommissionshouldcertainlyprioritiseforthedeliveranceofalltherest,andfortheenergytransition.GettingalltheseelementsrightisthepathwaytodecarbonisingEurope’seconomy.Itistheroadmaptoenergysecurity.ItisthespeedwaytoenergyindependenceandEuropeanautonomy.Theenergytransitionhastakenonnewmeaningamidtoday’sgeopoliticalupheaval:itisthekeytoolfortheEUtomanageitsroleas‘thesmallcountries’inaworldwithlesscertainty,morefriction,andanewbalanceofpower.KristianRubyisthecurrentSecretaryGeneralatEurelectric-thesectorassociationwhichrepresentsthecommoninterestsoftheelectricityindustryataEuropeanlevel,plusitsaffiliatesandassociatesonseveralothercontinents.Heiswidelyrecognisedexpertwithastrongcommunicationprofileandextensiveexperienceinpoliticalaffairs.HejoinedEURELECTRICfromWindEurope,whereheservedasChiefPolicyOfficerandwasinchargeofdevelopmentandimplementationofthepoliticalstrategy.Priortothis,RubyworkedasajournalistandservedsevenyearsasapublicservantintheDanishMinistriesofEnvironment,andClimateandEnergyandintheEuropeanCommissioninthecabinetoftheformerClimateActionchief,ConnieHedegaard.Kristianholdsamasterdegreeinhistoryandinternationaldevelopment.34THEWAYFROMTHEENERGYUNIONFRAMEWORKSTRATEGYTOTHEREPOWEREUPLANZinaidaZlatanova,LiberalInstituteforPoliticalAnalysesThegreenandclimatepolicyoftheEUhasitsmanytools.However,neitherenergynorenvironmentandclimatefallunderthepolicieswheretheEUhasanexclusivecompetence.ThesearethepolicieswheretheEuropeanUnionhasanabilitytoprojectitsweightontheglobalstageoreffectivelyprotectitscommoneconomicinterest–suchastrade,customsunion,competitionormonetarypolicy(fortheEuroarea).TheseareasaredesignedbytheEUtreatiesinawaytobeabletowithstandthepowerfulpressureofexternaleconomicforces.TheEU’scommonforeignandsecuritypolicy,ontheotherhand,ischaracterisedbyspecificinstitutionalfeatures,suchasthelimitedparticipationoftheEuropeanCommissionandtheEuropeanParliamentinthedecision-makingprocedureandtheexclusionofanylegislationactivity.ThatpolicyisdefinedandimplementedbytheEuropeanCouncilandbytheCounciloftheEuropeanUnion–theForeignAffairsCouncil.Amidthiscomplexlegalframework,theEUistryingtospeakwithonevoiceandtoengageinaconstructivewaywithitspartners,aswellasplayacentralroleontheglobalenergystageandbethetrueleaderinclimatepolicy.Onthe26June2014,theEuropeanCouncilsetthecreationofanEnergyUnionasoneofthefivemainobjectivesoftheEuropeanstrategicagenda,whichsetsoutEU’sprioritiesfortheyearstocome.Ontheinternationalstage,theEnergyUnion35“aimedatallowingtheEUtospeakwithonevoice,instrumentalforthenegotiationandtheimplementationoftheParisAgreement.TheEUwaswillingtocontinuetoleadbyexampleinglobalclimateaction.”However,inbetween,thepoliticalandpolicyframework,whichaffectstheEuropeanenergyscene,haschangeddrasticallywithinseveralyears.Thiscausedsubstantialpolicy-orientedchangesatEUlevelleadingtoasetofnewinitiativesandnewlegislationonboard.Inthisrelation,thereisanobjectiveneedforacloserlookattheEnergyUniongoals,particularlyalongtheREPowerEUplan.EnergyUnion:AFrameworkStrategyforaResilientEnergyUnionwithaForward-LookingClimateChangePolicyThestrategyhasfivedimensionsdesignedtobringgreaterenergysecurity,sustainabilityandcompetitiveness,withemphasisonsustainabilityandcompetitiveness.TheEuropeanCommissionfirmlybelievesthatasuccessfulgreentransformationcanindeedreducedependenciesandminimisesuppliers’potentialtoweaponiseenergy.Forthisreason,anddespitethedeclarationsoftheopposite,theEnergyunionlooksfromatoday’spointofviewmoreasan35COM/2015/080finalhttps://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52015DC008035inward-lookingproject.Thatapproachisbasedontheassumptionthatawell-functioningandbigenoughmarketisagoodtool,vis-à-visexternalsuppliers.Thefirstdimension“Energysecurity,solidarityandtrust”containsapartdevotedtotheexternalenergypolicy–“StrongerEuropeanroleinglobalenergymarkets”,buttherestofthestrategydealsmainlywiththeinternalEUissues.Theprogresswasmeasuredannuallyusingdifferentdimensionsandgivingprioritytodifferentaspectsofthestrategy.Thatiswhyitisdifficulttomeasurestrictlytheoverallprogress.TheCommissionconsidersthestrengtheningandcompletionoftheinternalenergymarketandcoordinationofenergypolicymaininstrumentsforincreasingEU’sgeopoliticalcapacity.Forthatreasonandtheinstitutionalreasonslistedabove,thegeopoliticalapproachintheEU’senergypolicyistriggeredbyexternal(dramatic)events–suchastheUkrainecrisisbackin2014,COVID-19consequencestotheglobalsupplychainsin2021andthewarofRussiaagainstUkrainein2022.InitsEnergySecurityStrategy36from2014theCommissionwarnedandcalledforawarenessamongbothpolicymakersandconsumersaboutthestepsthatneedtobetakeninthenearfutureforreducingdependenciesoncertainfuels,suppliersandroutes.Infact,theEnergyUnionbuildsonthisEnergySecurityStrategy.Accordingtothelatter,thekeydriversofenergysecurityarethecompletionoftheinternalenergymarket,betterenergyefficiencyandmoresolidarityamongtheMemberstates.TheunderstandingoftheCommissionwasthattheEUneedstotransformEurope’senergysystemandtherespectiveactionsweresetoutandlistedasfifteenpointsattheendofthedocument.Theinitiativestobedevelopedhaveacleartimetableforadoptionandimplementationaswellasrespectiveresponsibilities.TheseinternalreformsrequiredactionsonbothEUandMemberStatelevelsatthesametimeandalotofnegotiationswithinandbetweentheEUinstitutions.TheFiveEnergyUnionDimensionsThefirstdimension“Energysecurity,solidarityandtrust”dealswithdiversificationofsupply(energysources,suppliersandroutes),workingtogetheronsecurityofsupply,strongerEuropeanroleinglobalenergymarketsandmoretransparencyongassupplyinparticular.TheCommission,however,believesthecompletionoftheinternalenergymarket,enhancedenergyefficiency,andsolidaritybetweentheMemberstateswillensureenergysecurity.Theseconddimensionisrelatedto“Afully-integratedinternalenergymarket”.TheCommissionanalysestheneedtoupdatetheinternalmarket’shardware–thatmeanstocompleteandmodernisethenationalandtrans-Europeanenergyinfrastructureandupgradeandmodernisetheinternalenergymarket’s“software”,meaninglawsandregulationstobeputinplacethatprovideforbettergovernanceoftheEnergyUnionandtherespectivenationalsystems.Theinternalmarket36COM(2014)0330https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A52014D-C033036integrationshouldensurebettercooperationbetweentheMemberstateswithinacommonEUframework.Protectionofthevulnerableandempowermentofconsumersarealsopartofthatpillar.Thethirddimensionfocuseson“Energyefficiencyasacontributiontothemoderationofenergydemand”.TheStrategypaysspecialattentiontotheenergyefficiencyofthebuildingandtransportsectors.Transportrepresentsmorethan30%offinalenergyconsumptioninEurope,anditsdecarbonisationandenergysavingreformsseamurgentalreadyin2015.Thefourthdimensionemphasiseson“Decarbonisationoftheeconomy”.TheCommissionseesawell-functioningEUEmissionsTradingSystemasapillarofEurope’sclimatepolicy.Itisseenasatoolthatwilldeliverafairpriceongreenhouseemissionsandstimulatetheirreduction.TheEuropeanCommissionwantstheEUEmissionsTradingSystemtofullyplayitsroleasatechnology-neutral,cost-effectiveandEU-widedriverforlow-carboninvestments.Otherideaswhosedevelopmentwewillseeinthesubsequentstrategies,suchaslandandforestsectors’inclusionintheEU2030framework,arepresentedinthischapter.TheEU’slong-standingambitiontobecomealeaderinrenewableenergyisclearlyoutlinedinthischapteraswell.Thefifthdimensionisaboutthe“UnionforResearch,InnovationandCompetitiveness”Actionsshouldbegroupedaroundthefollowingfourpriorities,towhichMemberstatesandtheCommissionwouldcommitandcontribute:–beingtheworldleaderindevelopingthenextgenerationofrenewableenergytechnologies;–facilitatingtheparticipationofconsumersintheenergytransitionthroughsmarttechnologies;–efficientenergysystemstomakethebuildingstockenergyneutral;–moresustainabletransportsystemsthatdevelopanddeployatlargescaleinnovativetechnologies.AdditionalresearchprioritieswhichrequireamuchgreaterlevelofcollaborationbetweentheCommissionandthoseMemberstatesthatwanttousethesetechnologies:–Aforward-lookingapproachtocarboncaptureandstorage(CCS)andcarboncaptureanduse(CCU)forthepowerandindustrialsectors,whichwillrequireanenablingpolicyframework,includingareformoftheEmissionsTradingSystem.–Ensurethehigheststandardsofsafety,security,wastemanagementandnon-proliferationinthenuclearenergysector.TheEUshouldalsoensurethatitmaintainstechnologicalleadershipinthenucleardomainsoasnottoincreaseenergyandtechnologydependence.RecallingthesefactsabouttheEnergyUnioncertainlyprovidesimportantframefortheanalysisoftheREPowerEUmechanismassuch.37TheREPowerEUPlan37Since2020,eventsunseeningenerationsoccurredandforcedanurgentrealitycheckandchangeofthecourseofaction.Theinterruptionofthesupplychainsandphysicalstopoftheworld’stransport,blockageofkeytransportroutes,healthandsanitaryemergenciescreatedaverydifferentpolicyenvironment.InthemiddleoftheCOVID-19pandemic,onthe25January2021,TheCounciloftheEuropeanUnionadoptedconclusionson“ClimateandEnergyDiplomacy–DeliveringontheexternaldimensionoftheEuropeanGreenDeal”.38ThedocumentsaysthatEUenergydiplomacywillcontinuetoplayakeyroleinmaintainingandstrengtheningtheenergysecurityandresilienceoftheEUanditspartnersandcallsontheCommissionformoredecisivemeasurestoensureEurope’sleadership.Ayearlater,amidthedramaticallychangedgeopoliticalrealityandtheaftermathoftheCOVID-19pandemic,itbecameclearerthaneverthattheUnion’senergysecurityandenergyindependenceareakeypillarofeconomicandpoliticalresilienceandamatterofstrategicautonomy.ThecentralelementofEU’spolicyresponsetotheseimmediatechallengeswastheREPowerEUplan.TheStateoftheEnergyUnion2022Report39showswhatactionshavebeentakenbytheEUinresponsetothecurrentenergycrisis,howmuchprogresshasbeenachievedoveralland–mostimportantly–itmakesthetransitiontoanewlong-termapproachformeetingthenewchallenges,notablythroughtheREPowerEUplan.ItslevelofambitionmatchesthegravityofthesituationwhenitwasdevelopedandrequirestheEUtoactswiftlyanddecisively.TheREPowerEUisnolessthanaclearandsoundroadmapintendedtoeliminateEurope’srelianceonRussianenergysourcesby2027.Therenewableenergysectorisplannedtoplayakeyroleinthisefforttogetherwithamuchmoreactiveinternationaleffort.Theplanconsistsofthreepillars:–reductionofconsumptionandsavings;–diversificationtofindalternativeenergysuppliesofgas,oilandcoalasquicklyaspossible,andlookinginthelongtermforrenewablehydrogensupplierswhilefuture-proofingthecorrespondinginfrastructure;–accelerationofthetransitiontorenewableenergysources,perceivedasthecheapestandcleanestenergyavailablethatcanbeproduceddomestically.TheJointCommunicationonEUExternalEnergyEngagementTheplanwaspublishedalongwithanewJointCommunicationonEUexternalenergyengagement40sendingaclearmessagethatthegreenenergytransition37COM(2022)230finalhttps://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2022-%3A230%3AFIN38https://data.consilium.europa.eu/doc/document/ST-5263-2021-INIT/en/pdf39https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0547&qid=166659-511355840JOIN(2022)23final,https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=JOIN%3A2022%3A-23%3AFIN38isattheheartoftheEU’sdriveforenergyindependenceandmovingawayfromRussianfossilfuels.GreenandclimatediplomacyisbasedonanassumptionthatgreentransformationcaneliminateorreducedependenciesnotonlyfortheEUbutglobally.Theambition,asdeclaredintheJointCommunication,istolaythefoundationsofthenewglobalenergysystemthat“willbefundamentallyandstructurallydifferentfromtodays”.Thereareseveralgroupsofkeyactions:–leadingbyexampletoacceleratetheglobalgreenandjustenergytransitionremainsafirmcommitmentoftheEU;–acentralroleisenvisagedtotheactionspreparingtheEUforrenewablehydrogentrade,includingnegotiatingafavourableinternationalframework;–repoweringUkraine’senergysystemandcooperatingwiththecloseneighbourhoodisoutlinedasapriorityactionofthebroaderpolicyforfuturesupportforthepartnersimpactedbyRussia’sinvasionofUkraine.TheJointCommunicationrecognisesthatmanychallengesstilllayahead.Atthesametime,thereisarareopportunitytobuildontheEU’sleadershipinthegreentransformationandmakethatchangeinclusiveandfairforasmanycountriesandregionsaspossible.Thedocumenttriestogiveacomprehensiveandstructuredsolutionofhowtomeetemergingchallengesandusenewopportunitiesatthesametime.Theproposedsolutioncanbesummarisedasfollows:ShorttermactiontoenddependencyonRussianfossilfuelsMovingawayfromRussiangasandoilrequiresshort-tomedium-termsubstitutionfromothersuppliers.ThepotentialsolutionsincludeasupplyofLNGfromtheUSandCanada,andatrilateralagreementwithEgyptandIsrael.However,theJointCommunicationsuggeststhat“theEUwillfavourdiversificationstrategiesthatencompassbothgasandgreenhydrogeninvestments.”Tothisend,theEUhaslaunchedtheEUEnergyPlatform.NorwayincreaseditsdeliveriestoEuropeandbothAlgeriaandAzerbaijanhaveexpressedtheirwillingnesstodosoaswell.CountriesinAfrica,suchasNigeria(alreadysupplying15%ofEU2021imports),SenegalandAngolaalsoofferuntappedLNGpotential.HydrogenTheCommissionsuggeststoexplorethepotentialofreliablehydrogenpartnerships.ItenvisagesthreemajorhydrogenimportcorridorsfromtheNorthSearegion(NorwayandUK),theSouthernMediterraneanandUkraine,assoonasconditionsallow.TheMediterraneanisconsideredtheregionwithparticularlyhighpotential.Thefutureglobalhydrogenmarketmustbebasedoncommonrules,namelyforstandards,certificationandgoodregulatorypractice,intermsofinfrastructureandtrade.TheEUconsidersitsregulatoryframeworkforhydrogentobethemostadvancedandwillseeksupportforitsworldwideacceptance.SupportingandcooperatingwiththeneighbourhoodAnotherpriorityisthesupportpartnersaffectedbyrecentcrises,whoseeconomiesslowlystartedtorecoverfromCOVID-19whenfoodandenergyprices39reachedunprecedentedhighs.Tothatend,theEUwilldeployitsdevelopmentandtradetoolstohelpdevelopingeconomiesrecover,notablyinAfricaandtheEU’sneighbourhood.RepoweringUkraine’senergysystem,ensuringnuclearsafetyandpromotingregionalcooperationwiththenearneighbourhoodbecomepartoftheEUenergypriorities.FuturefullintegrationoftheenergymarketsofUkraine,theWesternBalkans,MoldovaandGeorgiahasalreadystartedwiththeopeningoftheEUplatformforcommonpurchasesofgas.Forthatpurpose,aREPowerUkraineinitiative41isunderpreparationtorestoreandrebuildthedamagedUkrainianenergysystem.Finally,theEUplanstoproposetotheWesternBalkanstofullyintegrateintotheEUinternalelectricitymarket.LeadingtheglobalgreentransitionTheglobalisationofthegreentransitionisalsosupportedbydevelopmentaidandotherfinancialinstrumentsoftheEU.Forinstance,inOctober2019,theEUtogetherwithArgentina,Canada,Chile,China,India,KenyaandMorocco(furthercountrieshavenowjoined),launchedtheInternationalPlatformonSustainableFinance,and35%fortheNeighbourhood,DevelopmentandInternationalCooperationInstrument2021-2027shouldbespentonclimate.Beingconsistentinitsefforts,alreadyin2014,anEUflagshipinitiative–GlobalClimateChangeAlliance+waslaunched.ItsmainchannelforEUsupportindevelopingeconomieswastheGlobalClimateChangeAlliancePlus(GCCA+).Thisinitiativeranfrom2014to2020andprojectsarecurrentlybeingfinalised.ThefulllistofEU’sglobalinitiativescanbefoundontheEuropeanCommission’swebsitedevotedtothetopic.42TheEUisalreadythelargestdonortotheglobalcommitmentforclimatefinanceandthistrendwillcontinue.TheEUwillexplorepossibilitiesfortransitionpartnershipswithmoreregionsandcountriesaroundtheglobe,promotingandfinanciallyandtechnicallysupportingthegreentransition.TheEuropeanCommissiontogetherwiththeEUHighRepresentativehavelaunchedtheGlobalGateway43,anewEuropeanstrategytoboostsmart,cleanandsecurelinksinthedigital,energyandtransportsectors,andtostrengthenhealth,educationandresearchsystemsworldwide.CooperationinresearchandtechnologyandAccesstocriticalrawmaterialsThesubstitutionoffossilfuelsbeyondrenewableenergyandhydrogenisapriorityinresearchanddevelopmentactivitiesintheEUanditspartnerships.Thatisthecasewithcriticalrawmaterials,accesstowhichisessentialtodevelopthelowcarboneconomy.TheEUisaimingatpreventingfuturedependenciesinthissector.SustainableRawMaterialValueChainPartnershipswithCanadaandUkrainearealreadyestablished,andtheEuropeanCommissionislooking41CommunicationfromtheCommissiontotheEuropeanParliament,theEuropeanCouncil,theCouncil,theEuropeanEconomicandSocialCommitteeandtheCommitteeoftheRegions:Ukrainereliefandreconstruction,COM/2022/233andJOIN(2022)23final,p.1142https://climate.ec.europa.eu/eu-action/international-action-climate-change_en43JOIN(2021)30finalJointCommunicationtotheEuropeanParliament,theCouncil,theEuropeanEconomicandSocialCommittee,theCommitteeoftheRegionsandtheEuropeanInvestmentBank–TheGlobalGateway40towardsAustralia,LatinAmerikaandpartofAfricatoapplythesameapproachofmutuallybeneficialpartnerships.TheJointCommunicationisindeedadocumentaboutengagementandpartnershipfortheEUtopromotetheinternationalisationoftheEuropeanGreenDealtotackletheglobalchallenge.ItdoesthisthroughanactiveEuropeandiplomacythatmakesuseoftradeanddevelopmentinstruments,aimedatengagingwithothermajoreconomiestoconvincethemtojoinEurope’seffort.44However,intherecentyearstherestrictivemeasuresthattheEUimposesonpersonsandbusinessesshouldbecommentedbrieflyinlightoftheenergydiplomacy,too.IncaseoftherecentsanctionspackagestowardsRussia,theEUrestrictivemeasuresinvolvemanyEUpolicies,includingtrade,investment,competition,andresearchandtechnology.Althoughtheycannotbedirectlylinkedtotheenergydiplomacy,itiswellknownthatrestrictionsandsanctionsareaforeignpolicytoolandnotaneconomicpolicyinstrument.Restrictivemeasures,orsanctions,areoneoftheEU’stoolstopromotetheobjectivesoftheCommonForeignandSecurityPolicy(CFSP),includingforpreservingpeace,preventingconflictsandstrengtheninginternationalsecurity.InMarch2023,theCounciloftheEuropeanUnionsaid:“EUenergydiplomacywillactivelysupporttheimplementationofrelevantsanctionsandtherolloutoftheprice-capmechanismonRussianoilandpetroleumproducts.”45TheStateoftheEnergyUnion2022ReportgivesalsoaninterestinginsightontheBulgariansituationandstartingpositionaheadoftheREPowerEUimplementation.ThepublishedsnapshotsperEUcountriescomparekeynationalfigureswiththeEUaverageinareasofenergysecurity,markets,energypovertyandRecoveryandResiliencePlancontributiontotheGreenTransition.TheplaceandpotentialofBulgaria:TheinternalsituationStateoftheEnergyUnionasof2022:BulgariaAccordingtothe2022ReportontheAchievementofthe2020RenewableEnergyTargets46,“therenewableenergysharesin2020varywidelyacrossMemberstates,reflectingthedifferentstartingpositionsandnationaltargetssetforeachMemberStateinREDI.Consideringbothnationaldeploymentandcurrentlynotifiedstatisticaltransfers,allMemberstatesexceptfromFranceachievedashareequalto,orhigherthan,their2020bindingrenewableenergytargetunderREDI.SomeMemberstatesexceededtheirtargetsbyfar;Swedenwas11.1percentpointsaboveitstarget,Bulgaria7.3percentagepoints,andFinland5.8percentagepoints.”44https://www.eeas.europa.eu/eeas/climate-environment-energy_en45CouncilconclusionsonClimateandEnergyDiplomacyasapprovedbytheCouncilatitsmeetingheldon9March202346COM/2022/639final,REPORTFROMTHECOMMISSIONTOTHEEUROPEANPARLIAMENTANDTHECOUNCIL2022ReportontheAchievementofthe2020RenewableEnergyTarget41TheReportisaccompaniedbyverydetailedenergysnapshotspercountrythatarelookingintoenergysecurity,energymarkets,energypovertyandtherespectiveCountrySpecificRecommendationsintheenergysector.Bulgaria’sindicatorscanbeeasilycomparedtotheEUaverageandwithotherMemberstatesindicators.TheoverallenergyimportdependencyofBulgariain2022comparedtotheEUaverage47ispresentedinFigure1.Figure1.2000201020192020BGEUBGEUBGEUBGEUFuelImportDependency(%)46.6%57.8%40.4%57.4%38.3%62.3%38.1%59.2%ofSolidfossilfuels35.2%29.8%24.5%38.2%7.2%43.3%9.2%35.8%ofHardcoal101.0%43.2%86.0%57.7%57.6%67.9%69.0%57.4%ofOilandpetroleumproducts97.5%99.8%104.3%102.1%104.2%105%99.4%105.6%ofCrudeandNGL98.7%92.5%99.1%94.4%102.6%96.6%99.4%96.2%ofNaturalgas93.5%65.7%92.6%67.8%100.4%89.7%96.4%83.6%Source:EUenergystatisticalpocketbookandcountrydatasheetsbasedonEurostat,EuropeanCommissionBulgariaEnergySnapshot2022DependencyfromRussianFossilfuels48–Figure2Figure2EU2744%26%54%BG75%63%85%Source:Eurostat,EuropeanCommissionBulgaria,EnergySnapshot2022Oneparticularaspectintheoverallenergycontext,whichneedsspecificattention,istheenergypoverty,beinganindicatorthatiseasytocompare.Itisalsoapartofthe2022snapshotspercountryandhastobetakenintoaccountwhentakingdecisionsintheenergysector.Beyondcertainlevels,energypovertymightinfluencethepace,thesubstanceandthefinancialcostofreforms,andforcegovernmentstodivertfrompoliciesdecidedtogetherwithotherMemberstates.ThecomparisonofjustsomeMemberstatesgivesadouble-digitdifferencebetweentheresultsandlooksthefollowingway49:Inabilitytokeephomeadequatelywarm(households%)isreportedtobe23.7%forBulgaria,17.5%forGreece,10.1%forRomaniaand1.7%forAustria,atEU27averageof6.9%.Arrearsonutilitybills47Negativevalueindicatesnetexporter:countrythatexportsmorefuelsthanitconsumes.Valueshigherthan100%mostlyrefertothebuildofstocks(increaseoffuelinstocks),however,theymightbealsoaresultofstatisticaldiscrepanciesinrawdata.48Eurostat,2020,shareofRussianimportsovertotalimportsofnaturalgas,crudeoil,includingintra-EUtrade.FortheEU27average,thetotalimportsarebasedonextra-EU27imports.ForcrudeoilinBG,theRussiansharecanbeunderrepresentedduetounclearultimatecountryoforigin.2019datahasbeenused.2020importdataisnotinformative,aslargequalitiesofcrudeoilimportshadbeencategorisedasfrom‘notspecified’tradepartners.49Source:Eurostat:StatisticsEurostat(europa.eu)EuropeanUnionStatisticsonIncomeandLivingConditions(EU-SILC)202142(households%)–19.2%forBulgaria,26.3%forGreece,7.3%forRomaniaand2.4%forAustria,atEU27averageof6.4%.BulgariaandtheREPowerEUplanThemostimportantpartoftheREPowerEUthatrelatestoBulgariaistheadditionalfinancing50providedandtheJointCommunicationontheEU’sExternalEnergyEngagement.Inordertoencourageambitiontospeedydecarbonisation,MemberstatescanfollowtheEuropeanCommission’srequestofupdatingRecoveryandResiliencePlansinordertoaccessfundingfortheirsustainableenergy-supplyinfrastructure.AccordingtotheEUClimateLawadoptedinJune2021,eachcountryhastoindividuallydecidehowtoreachnetzeroby2050.TheREPowerEURegulationof27February(EU)2023/435givestheopportunitytoeachMemberstatetopresentanadditionalREPowerEUchapterinitsRecoveryandResiliencePlan.Forthatpurpose,theRegulationstipulatesforanallocationof20blnEuroadditionalnon-repayablefinancialsupport.TheREPowerEUchaptersshouldincludenewreformsandinvestments,startingfromthe1February2022,contributingtotheREPowerEUobjectivesandtacklingthecrisiscausedbyrecentgeopoliticalevents.TheindicativeallocationforBulgariais480,047mlnEuro.51ThisAnnexsetsoutthemethodologyforcalculatingtheallocationshareoftheresourcesintheformofadditionalnon-repayablefinancialsupportundertheFacilityreferredtoinArticle21a(1)availableforeachMemberState.ThoughEUMemberstateshavetosubmituntiltheendofAugust2023theirrevisedNationalRecoveryandResiliencePlans,theEuropeanCommissionisurgingthemtosubmittheirrevisedplansevenearlier.Bulgariadoesn’tannounceanyplansyet,atleasttothebroaderpublic.ThesituationisdifferentinGreece.Thecountry’srevisedRRFplanwillbelinkedtoGreece2.0programmerevisionsresultingintheadditionofnewactionsfortheallocationofanadditional769mlnEurothecountryisentitledtofromtheREPowerEUprogramme.BulgariaandtheregionTheJointCommunicationontheEU’sExternalEnergyEngagement(EEE)looksforbroadeningthegeographyofEU’spartnershipsintheshort-tomid-term.IfBulgarialooksintothemeasuresplannedfortheWesternBalkansandotherimmediateorcloseneighbours–theWesternBalkansareconsideredkeystrategicpartner:“Theresilience,energysecurityandgreentransitionofUkraine,MoldovaandWesternBalkansarelinkedtotheEU’sandthereforeacentralpriority.”SpecifictoolinthecontextistheEUEnergyPurchasePlatform,whichismeanttoenhancecooperationbetweenEUMemberstatesbyalsoincludingtheneighbours.BulgariawasthefirstcountrytoagreeinApril2022tosetupinSofiaafirstregionaltaskforce,aspartoftheEU’sEnergyPurchasePlatform.50REGULATION(EU)2023/435OFTHEEUROPEANPARLIAMENTANDOFTHECOUNCILamendingRegulation(EU)2021/241asregardsREPowerEUchaptersinrecoveryandresilienceplansandamendingRegulations(EU)No1303/2013,(EU)2021/1060and(EU)2021/1755,andDirective2003/87/ECprovidesadditionalnonrepayablefinancialsupport51ANNEXIVatoREGULATION(EU)2023/43543Thetaskforcewasestablishedataministerialmeetingcalled“SoutheastEnergyTransition–RegionalCooperationforEnergySecurity,DiversificationandTransition.”OfficialsfromBulgaria,Greece,RepublicofNorthMacedonia,Romania,Serbia,Turkey,Ukraine,AzerbaijanandtheEuropeanCommissiondiscusseddecarbonisationandthegreentransitioninearlyMay2022inSofia.TheaimofthetaskforcesetupinSofiawasfortheparticipatingcountriestojointlydiversifytheirenergysupplies,mostofallgasdeliveries,andstrengthenenergysecurity.Withoutanydoubt,theEUwillalsocontinuesupportingtheWesternBalkans’GreenAgendaintheframeworkoftheirEUaccessionperspectivereformefforts.TheEnergyCommunity,withthesupportfromtheEuropeanCommission,isworkingtodeterminetheenergyandclimatetargetsfor2030.TheCleanEnergyPackagefromNovember2021undertheEnergyCommunityTreatyismeanttosendinvestmentsignalsandtoreinforcepoliticalwillandaction.TheEU’sintensiontofullyintegratetheWesternBalkansintotheEUinternalelectricitymarketalsoprovidesinterestingopportunitiesfortheneighbouringEUcountriesintermsofinvestinginacceleratedgreentransition.TurkeyismentionedonceintheStrategywithregardtothecooperationinmeetinggreenstandards:“CooperationwithTurkeyshouldcontinueondecarbonisation,toensurealignmentoftheTurkishlegalframeworkwiththeEUacquis,includingthroughtheTurkishInvestmentPlatform.”UkraineandMoldovacanbeliterallyseenpresentinalmosteverypartoftheEEEStrategy.ConcerningthethematicrangeofactionsthatshouldbeofinterestforBulgaria,nuclearsafetyandsecurityareanimportantpartoftheEngagement.Onthesafetyissue,theEUmobilisesitsEuropeanInstrumentforInternationalNuclearSafetyCooperationtoaddresstheurgentneedsofthecurrentsituationinUkraine.Diversificationoffuelsupplyfornuclearpowerplantsisanimportanttasktoenddependencies.Nuclearenergyislikelycomingbacktostayforawhile–itturnedouttobeanimportantpartofthegreentransitioninatleasthalfoftheEUaswellasintheneighbourhood.Amidthissituation“…theEUwillassistnuclearutilitiesinexpeditingthelicensingprocessofalternativefuelfortheRussiandesignVVERreactorsandworkwithinternationalnuclearorganisationssuchastheInternationalAtomicEnergyAgency(IAEA)andtheNuclearEnergyAgency(NEA)undertheOrganisationforEconomicCo-operationandDevelopment(OECD)tobuildupcooperationintheareaofsecurityofsupply.WorkwithpartnerssuchasCanadaisalreadyongoing.”TheEnergyUnionprovidedaframeworkoftheneededpoliciesalreadyin2015.ThatframeworktakesintoaccounttheconstrainsandopportunitiesoftheTreatiesinthefieldofenergy.ItisanexampleofhowforwardlookingtheEuropeanCommissioncanbe,anticipatingfutureproblems,includinggeopoliticalones,andgivingpotentialsolutions.Whileconsideringthebestwayandtimeforimplementingthesesolutions,thesituationwaschangeddramatically44bytheeventsafter2020.TheREPowerEUplanisanexampleofaswiftreactionbyEUinstitutionsandMemberstatestogetherfacingeventsunseenforgenerations.Ultimately,itisinthehandsofnationalgovernmentshowtheywillmakeuseoftheEuropeanframeworkandhowpreparedtheywillbetofacethenextcrisis.ZinaidaZlatanovahasaMaster’sinLawfromSofiaUniversity“St.KlimentOhridski”andisalong-timeBulgarianandEuropeanpublicservant.Currently,sheisamemberoftheBoardofDirectorsoftheLiberalInstituteforPoliticalAnalyses.TheorganisationisactiveinEuropeanaffairs,Europeaneconomy,democracyandthegreentransition.SheservedasHeadoftheRepresentationoftheEuropeanCommissioninBulgaria.ZinaidaZlatanovaservedalsoasaBulgarianMinisterofJusticeandDeputyPrimeMinisterforEUFunds.45EU’sENERGYANDCLIMATEPOLICIESATATIMEOFADVERSEGEOPOLITICSPeterPoptchev,PhD,Ambassador(Rtd.)HeadofNetZeroFoundation-InternationalClimateNetwork.IntroductionAtthetimeofwritingthisarticle,positivereferencestotheEuropeanUnion’soverallperformanceseemtoprevail.FromitsCOVIDrecoveryinitiativestotheEU’seffectiveresponsetotheRussianinvasionofUkraine,theEUhasdemonstrateditcannotonlyweathercrisesbutprovideleadershipintimesoftrouble,observetwoWilsonCenterresearchers.[1]However,thingsdidnotquitelookthiswayonlyafewyearsago.BythetimeoftheMay2019EUParliamentaryelections,theEuropeanprojecthadalreadybeenputtothestrainofanarrayofEuro-skeptic,anti-EuropeanandopenlydestructivepoliticalforcesfrombothwithintheUnionand,increasingly,frompowerfulexternalsources.Intheperiodstartingwiththe2007-2008globalfinancialandeconomiccrisis–theresponsibilityforwhichwasneverfullyattributedtotheculpritparties–atleastthreeradicaldevelopmentshadoccurredinEurope:Brexit;right-wingpopulism,whichforthefirsttimesinceWWIIdemonstrablyfounditswayinparliamentaryrepresentationandpoliticalinfluence;andleft-wingpopulism(which,amongstothers,threatenedtheeurozonein2015).[2]ImportantdifferencessurfacedbetweenFranceandGermany,hithertoregardedasintegratedEurope’ssolidcommonfoundation,onissuessuchastherulesandmanagementoftheeurozone,theEuropeanCentralBank’spolicyorEuropeandefense.Ideassuggestingatwo-oreventhree-speedEuropeanUnionwereopenlyadvancedinBrusselscircles,exacerbatingtheparallelriseofill-conceivedEuro-skepticismincertainCentralEuropeancountries.Theexternalenvironmentandforeignactorsborethemarksofequallydramaticdevelopments.AnunsubstantiatedshiftintheUSposturetowardstheEuropeanUnion,initiatedbytheTrumpAdministration,highlightedthecauseofthenationstate–amostsensitiveissueinEurope,discouragedintegrationandundertookhigh-levelinterventionsintoEuropeanpoliticsundertheeyesofshockedEuropeanaudiences.Thiscameontopofasteadystreamofcyberattacks,disinformationandhybridoperationsbyRussiansourcesinthegovernmental,parliamentary,partypolitics,criticalinfrastructureandothervitalsystemsofmostEUMemberStates.TheKremlinpolicysoughttodivideandweakentheEuropeanUnion,aspointedoutbyanumberofEuropeanpoliticians.Foritspart,ChinaalmostsucceededindetachingtheCentralandEasternEuropeanMemberStatesfromtheirWesternEUpartnersthroughthe16+1formatandtheBeltandRoadInitiativeinvestments.46BitterdivisionsamongMemberStatesonfiscaldisciplinehadcontributedtothisoutcome.TheCommissioncontinuedwithpoliciesinsupportoftheEuropeanproject,includingenergyandclimate,butaunityofpurposeseemedtobemissing.Theoutcomeofthe2019Europeanparliamentaryelections,however,demonstratedahigherlevelofpositivepoliticalactivismandamorematureEuropeanelectoratethanexpected,bothofwhichcontributedtothepreservationofthetraditionalconsensusofsupportforfurtherEuropeanintegration,theeurozone,globalizationandtransatlanticunity.Againstthisbackdrop,andbringinganewspiritofambitiontoBrusselspolitics,EuropeanCommissionPresidentUrsulavonderLeyenlaunchedtheEuropeanGreenDeal(EGD),aconceptandagrandstrategyofhistoricsignificancetothepeopleofEuropeandtheworldatlarge.Onthehomefront,theEGDhasbeendesignedtoplaytheroleofanewgrowthstrategythataimstotransformtheEUintoafairandprosperoussociety,withamodern,resource-efficientandcompetitiveeconomywheretherearenonetGHGemissionsby2050andwhereeconomicgrowthisdecoupledfromresourceuse.Internationally,theEUcommitstoactasagloballeader,continuingtopromoteandimplementambitiousenvironment,climateandenergypoliciesacrosstheworld.Itwilldevelopastronger‘greendealdiplomacy’focusedonconvincingandsupportingotherstotakeontheirshareofpromotingmoresustainabledevelopment.[3]TheEUbelieveditwassettingacredibleexample,complimentedwithdiplomacy,tradepolicy,developmentsupportandotherexternalsoftpowerpolicies.TheEUadvocacyprovedeffective:lessthanayearaftertheEGD’slaunch,dozensofcountriesacrosstheworldshared,ordeclaredsupportfor,theEuropeantransformationalapproachandclimatetargets,includingnineofthetenmostdevelopednations.COP26inGlasgow,whileofmoremodestoutcomethaninitiallyplanned,highlightedseveralnoteworthytrends:-multilateralaccordsonkeyissuessuchasreductionofmethaneorphas-ing-downofcoalprovedpossible;-ChinaandtheUS,thetwoleadingglobalemitters,indicatedtheyweregen-erallypreparedtoworktogethertotackleclimatechange;butaboveall,-450banks,investorsandinsurersrepresenting$130trillioninassets,namedGlasgowFinancialAllianceforNetZero,committedtodecarbonizetheirbusinessesbymid-century,usescience-basedtargets,andprovide2030interimgoals;theircommitment,albeitvoluntary,hasindicatedforthefirsttimeaftertheParisAgree-mentthatalargepartoftheglobalbusinessandbankingcommunityacceptsthenet-zeroconceptastheoverarchingprincipleoftheirfurtheractivities.[4]Takingtheworldonatransformationjourneyto2050andbeyond,astheEUsuggests,cannotbehoweveronlyaboutcooperation.Ithasbeenevidentfromthestartthattheprocesswillentailsevereformsofindustrial,technologicalandresourcecompetitionthatwillunavoidablyleadtoare-orderingofthegeopolitical47andgeoeconomicstandingofstatesandgroupsofstates,astheglobalfossil-basedeconomygraduallygiveswaytocomprehensivenet-zerosolutions.Thereagain,theEUisparticularlywellplacedtoactasafacilitatorinmultilateralforaandotherformatsdealingwithtradeandcompetitiondisputes.ThreemonthsaftertheclosureofCOP26,RussiainvadedUkraine.Adeeperanalysiswillrevealthattheemergingglobalconsensusonthefeasibilityofclimateneutrality,shapedinGlasgow,wasnotunrelatedtotheKremlin’sfinaldecisiontogotowar…TheEuropeanUnionisundoubtedlythemostnegativelyaffectedpartyintheensuingdisruptivetrendsininternationalrelations,inwaysmuchmoreimportantthanjusttheinterruptionofcontractedRussianenergysupplies.Today,themagnitudeandthepaceoftheglobalenergytransition,decarbonizationandbiodiversityaredrivenprimarilybytheEuropeanGreenDeal,theUSReductionofInflationActand,withsometrepidation,China’sXIVNationalPlan.Consistentnet-zeropoliciesarealsopursuedbytheUK,Japan,Canada,theRepublicofKoreaandAustralia.Indiajoinedlatebutbeingthethirdbiggestpolluter,itscontributionisappreciated.SoistheimportanceofBrazil’sAmazonbasinthankstoachangeofclimatepolicyunderthenewpresident.Whilethefirstandthesecondbiggesteconomiesexperienceroadblocksontheirrespectivepathwaystonet-zero,albeitofdifferentnatureandmarketimplications,itistheEuropeanUnionthatisfacingreallycumbersomechallenges.Ofthethree,theEUisthemostdisadvantagedintermsofownfossil-basedenergy,whichdeniestheEUevenalimitedleewayforamorerelaxedpursuitofitsambitiousgreentransitionplans.TheUnionoperatesinacomplexconsensus-buildingenvironmentbydefaultandanevenhardertoachievecoordinationofEGD-relatednationalimplementationmeasures.Notably,theUnionhasalsoofferedthecountriesintheWesternBalkans,itsEasternandSouthernNeighborhoodsaswellasleadingcapitalsintheGlobalSouthtoworkwiththeEUstrategicallyinacommonquestofclimateneutralityandlong-termeconomiccooperation:thisrequiresstrategicinsight,resourcesanddiplomaticcloutthattheUnionhasyettodevelopinfull.TheEUhasembeddedthesepoliciesandcoreinterestsinanapproachthatseekstobringthetechnocraticandbusinessimperativesintheGreenDealclosertotheaspirationsoftheEuropeancitizens.TheEU’scontributiontotheglobalgreenanddigitaltransformationshouldbeseenasintrinsicallylinkedtotheUnion’sprinciples,valuesandstrategicgoals.Theseinvolve,amongothers,commitmentstosociety’ssecurityandsocialjustice;theneedtostrengthentheEuropeanproject;andthechallengeofbeingastalwartofdemocracyandhumanrightsworldwide.Thelong-standingambitionofenhancingEU’sroleofaglobalgeopoliticalplayerremainshalffulfilled.TheMultilingualDigitalPlatformfortheConferenceontheFutureofEurope,where48,530contributionswith18,955ideaswererecorded,isindicativeofthethinkingandpreferencesoftheEuropeancitizensandotherstakeholders.The48Platformratedclimatechangeandtheenvironmentastheleadingtopic.ThecontributorscalledforastrongerEUpresenceintheglobalpoliticalarenainlinewiththeEU’scorevalues.RelatedtorecenthikesinenergypricesandtheEU’sproblematicdependencyonRussiangasandoilsupplies,contributorshavecalledforanacceleratedswitchtorenewableenergysources,promotingmoreconsciousenergyconsumption,aswellasadvocatingEUenergysovereignty.TheysuggestedthattheEUshouldbebolderinitsexerciseofbothsoftandhardpower.[5]ThecurrentadversegeopoliticalenvironmentandabourgeoningglobalcompetitionareleadingthelistofrisksandthreatsimpactingonEU’sveryvocationofarecognizedandinfluentialsoftpowerandaleadingtradingblock.Tocounterthesesetbackstoitslong-termenergyandclimatepolicies,theUnionhasdevelopednewstrategiesundertheGreenDealIndustrialPlan.TheinitiativewillpreventfragmentingthesinglemarketbyincentivizingrelevantEuropeancompaniestokeeptheirproductionlineshereandbymakingEuropeacentrallocationforcleantechinnovationandindustries.Morethanever,theUnionneedsunityandsolidarityamongitsMemberStates,andapropitiousinternationalsetting,tobeabletofullyrealizeitsopenandconstructivepolicies.ThisarticleaddressestheEU’senergytransitionandclimatepoliciesinthecurrentcomplexandchallenginggeopoliticalcontext.FromenergycrisismanagementtoconceptualizingEU’snet-zeroindustryTheintentionallycreatedenergycrisisexposedtheEU’sseverevulnerabilitytovolatilefossilfuelsandunreliableenergysuppliers.FewoftheexistingEUsafetynetsrelatedtosecurityofsupplyandsolidarity,e.g.,thoseinscribedintheEnergyUnion,workedsatisfactorily.TheEUneededafull-blowncrisistorealizethattheexistingresiliencemeasureswereessentiallyineffective.SoacuteweretheimplicationsthattheUniondidnothesitatetoreconfigureandbend,albeittemporarily,suchtenetsastheenergytrilemmaandestablishedmarketfundamentals.ThecountermeasuresproposedbytheEuropeanCommissionwereslightlychaoticandunconvincingatthebeginningbuttheysoonassumedamoresystematicandcomprehensivecharacter,coveringindustrialsectors,smallandmedium-sizedenterprises(SME)andhouseholdsalike.Someobserverskepttheircriticismregardless.WhatreallyoccurredwasanunanticipatedandenforcedaccelerationoftheprocessofabandoningfossilfuelsintheEU.Itgatheredstrengthfromatroveofconcepts,experiments,technologiesandindustrialapplicationswhichtheMemberStates’energyandindustrialsectorshadalreadyappliedoradoptedintheinitialstagesofimplementingtheEuropeanGreenDeal(EGD).Inotherwords,hadtheEUbeenfacedwithsuchmassiveinterruptionsofcontractedenergysuppliesintheabsenceoftheEGDstrategies,theUnion’sresponsecouldnothavebeensorapid,largelyeffectiveandforward-looking.ThebruntofhardshipandsacrificefellontheEuropeancitizensandonEuropean49business.ThecitizensinparticularhavereactedwithlaudablecivicmaturityandhaveimparteddecisivepoliticalsupportfortheUnion’sapproach.TheoccasionaloutburstsofprotestinEuropeancitiesshouldratherbeseenasareiterationoftheEuropeancitizens’righttoafreepublicvoice.BeingsupportiveofEUandWesternsanctionsonRussiaandRussianofficialsandoligarchs–andofEUassistancetoUkraine’swareffort–ontheonehand,andexpressingangerwiththerisingcostofliving,ontheotherhand,isafeatureofEuropeandemocracyanditsvalues.AFlashEurobarometersurveywasconductedinthe27MemberStatesbetween13and20April,2022,with26,066EUcitizenshavingbeeninterviewedonline.[6]ThesurveyestablishedlargeconsensusamongEUcitizensinfavoroftheEU’sharshresponsetoRussia’sinvasionofUkraine.Inparticular,roughly85%ofEuropeansbelievedthattheEUshouldreduceitsdependencyonRussiangasandoilassoonaspossibletosupportUkraine.ThevastmajorityofEuropeancitizenssawtheabruptandpainfulshiftinEUenergypolicythroughtheprismoftheEuropeanandtheEuro-AtlanticinterpretationofRussia’sinvasionofUkraine.ThisshouldexplaintheconsistencyofEU’ssupportiveattitudetoUkraineandthefar-reachingmeasuresintendedto“drasticallyacceleratetheEUcleanenergytransition”.Renewableenergyandcleanhydrogen,amongothers,standoutastwokeyareasinwhichtheEUhasclearlyprovenitsabilitytomobilizeresourcesfastandtoagreeonconsiderablymoreambitioustargetswithinmuchshortenedtimeframes.TheREPowerEUMay2022planisaboutrapidlyreducingtheUnion’sdependenceonRussianfossilfuelsbyfastforwardingthecleantransitionaswellasjoiningforcestoachieveamoreresilientenergysystemand“atrueEnergyUnion”.IncomparisontoprecedingstrategicdocumentsissuedbytheCommission,theREPowerEUischaracterizedbyboldertargetsandamoreelaborateguidanceastohowMemberStatescanreachthem.VerymuchliketheEuropeanGreenDeal,REPowerEUisamasterstrategicdocument,whichisbeingupgradedbyfollow-upstrategies,recommendations,plansandacts.ItencouragesMemberStatesto:saveenergy;diversifysupplies;quicklysubstitutefossilfuelsbyacceleratingEurope’scleanenergytransition;andsmartlycombineinvestmentsandreforms.Takentogether,theseactionswillstructurallytransformEU’senergysystem,explainstheEUCommission,andpointsoutthattheyrequire“effectivecoordinationbetweenEuropeanregulatoryandinfrastructuremeasures,aswellasnationalinvestmentandreformsandjoined-upenergydiplomacy”.[7]WhatstartedasacontingencyresponsetoanunprecedentedenergycrisissoonacquiredthecharacterofareinvigorationandaccelerationoftheEuropeanGreenDealinitskeydimensions.ChallengedsimultaneouslybyextraordinarydisruptionsofglobalenergyandcommoditiesmarketscausedbyRussia’swarofaggression,andbywhatBrusselsfindstobeanunfaircompetitionintherealmofnet-zerotechnologies,industriesandsubsidies,theUnionhasreactedwithstrategicforesightandvigornotseeninalongtime.TheEUinstitutionsdeveloped50notonlyimmediatecrisisresponsemeasuresbutproceededtoacceleratetheimplementationofrenewables-basedelectrification,massiveapplicationofgreenhydrogenandshapingtheEUcleantechindustrialbase.Theemphasisisclearlyonforwardlookingnet-zeropoliciesandinnovativetechnologiesasareliablestrategytoendthecarbondependency.Acertainreturntotheuseoffossilfuels,bothindigenousandimported,doesnotcontradictthecleantechdrive.Itisratherapartofaflexiblescheduletotackleenergymarketdisruptionsuntil–relativelysoonerthanpreviouslyplanned(“asmallwindow”)–thebulkofEuropeanenergy,industry,transportation,buildingsandothereconomicsectorsarefirmlyandirrevocablysetonanet-zeropathway.Thecurrentmarketpictureforinvestmentsinoilandgasishighlyuncertainandunpredictable.Reliableindustrysourcespointoutthatcapitalinvestmentinoilandgasprojectslooks“attractive,albeittemperedbythestillveryrealthreatofdecliningdemandnextdecadeandbeyond”.Anyincrementalinvestmentinoilandgaswillcontinuetobeinlow-cost,short-cycle,fast-paybackprojectswithabelow-averageemissionsfootprint.[8]Asmentioned,thegrowingcompetitionfromboththeUSandChina(althoughofvastlydifferentimplicationsfortheEU)–andperhapsevenfromothermajornet-zeroplayers–willcomplicatetheUnion’scleantechplans.ThistypeofchallengecaninprinciplebetackledbytheEU’susualtacticsandinstruments,inwhichitexcels:consultation,negotiationandvariousformsofenergy-,climate-andtraditionaldiplomacy.Inthiscase,however,theEU’srealnegotiatingpowercanonlycomefromanacross-the-boardsurgeofcleantechinnovationandindustrialactivitiesinallMemberStatesandkeycompanies,basedonefficientcoordination,soundregulationandadequatefunding.Bypursuingitsstrategicnet-zerointerestsinthisnewglobalcompetitionarena–wheregeoeconomicsmeetgeopolitics–theEUshouldbepreparedtochangeandimprovemanyofitsbusiness-as-usualmodelsandapproaches.TheNet-ZeroIndustrialPlan,andtheproposedAct,isapromisingstart.AstotherelatednecessityofgarneringhigherlevelsofEUunityandsolidarity,anynewproposaloftheCommissionshouldbecommunicatedandexplainedinmuchmoreelaboratetermstoarangeofstakeholders:governments,businesses,socialpartnersandcitizensalike.WhentheEuropeanGreenDealwaslaunched,civilsocietyactivistsacrossEuropewerethrilledtonotetheCommission’swillingnesstoinvolvethecitizens.Unfortunately,littleinthewayofEUinstitutions–citizenscooperationonEGDissueshassofartakenplace.TacklingthesecurityofgassupplychallengeTheEuropeanUnionhasbeendescribedas“gas-hungry”,consumingroughly400bcm/y.SeveralEUMemberStatesinNorthwestEurope,atthetimeUKincluded,plusItalyconsumedabout80%ofallEUsupplies.Russiangasimportsgrewinthepastthirteenyearsfrom30%toabout40%ofconsumption.51WhenREPowerEUwaspublicizedinMay2022,buildingontheFitfor55benchmarksandsettingwhatlookedlikeoverambitioustargets,manyexperts,bothwithinandoutsidetheEU,expresseddoubts,inparticularinthefeasibilityofabreakwithRussiannaturalgas.Inlessthanayear,Europehasactuallymanagedtoovercomethisdangerousdependency(by70bcmbyendof2022,with10bcmabovetarget)andintendstoterminatebuyingRussiangasby2027.CommissionPresidentUrsulavonderLeyenstatedthattheEUhasreplaced80%ofRussianpipelinegas,hasfilledEUstoragefacilitiesandreducedEUdemandbymorethan20%intheperiodfromAugusttoNovember2022.TheUnion“broughtdowngaspricesquickerthananyoneexpected”,statedvonderLeyenatDavos–fromtheirpeakinAugust(€350perMWh)Europeannaturalgaspriceshavedropped80%byJanuary2023:thisisbelowthelevelsfrombeforetheUkrainewar.[9]Ayearago,Russiatookadvantageofhighinternationalenergypricesfollowingtheinvasion.Russia’soilandgasexportrevenuesare,however,sufferingtoday:onamonthlybasis,theydroppedby$12billioninJanuary2023comparedwithayearearlier–adeclineofabout40%.[10]TheEuropeanenergydiplomacycontributedsubstantiallytothisoutcome,workingwithlike-mindedandfriendlycountriesbilaterallyandmultilaterally,e.g.,intheG-7format.TheTrans-Europeanenergynetworks(TEN-E)frameworkhashelpedestablishamoreresilientEuropeangasinfrastructurebasethatenablesmorediversifiedsupplies.OncetheongoingProjectsofcommoninterest(PCI)andProjectsofmutualinterests(PMI)areimplemented,wrotetheCommissioninMay2022,allMemberStatesandNeighboringcountrieswillhaveaccesstoatleastthreegassourcesortothegloballiquefiednaturalgas(LNG)market.In2022alone,gasPCIswithatotaladditionalgastransmissioncapacityof20bcm/yhavebeen(orwillbecommissioned).Anumberofkeyprojectsco-financedbytheEUwerecompletedorlaunched,suchastheGasInterconnectorPoland-Lithuania(GIPL),ofkeyimportancetotheBalticregion,andanewliquefiednaturalgasterminalatAlexandroupolisinNorthernGreecethatwillhelpEuropeandtheBalkansbecomelessreliantonRussiansupplies.[11]Inthemeantime,theCommission’sPresidenthaspersonallyundertakenseveraltoursofsuccessfulenergydiplomacy,securingadditionalvolumesofnaturalgastothesingleEuropeanmarketfromgas-richcountries–notablyfromtheUnitedStates,butalsoAlgeria,Azerbaijan,etc.Thelatestsuchdevelopment,on17March2023,markedahigh-levelunderstandingbetweenPresidentvonderLeyenandNorway’sPrimeMinisterJonasGahrStoere,inthepresenceofNATOSecretary-GeneralJensStoltenbergandEquinorCEOAndersOpedal,onacommitmentbyEquinortosupplysufficientgastotheEUonalong-termbasisthroughtheEUEnergyPlatformforjointpurchasesoffuels.TheNorwegianenergyministerhaspreviouslysaidhedoesnotfearEurope’sjointgasplatformwouldbecomeabuyers’cartelthatwoulddisadvantageNorwayasasupplier.Thetruthofthematteristhatonseveraloccasionsinthepast11yearsauthorizedNorwegianrepresentativeshaveindicatedNorwaywasreadytosupplyortosubstituteanyamountofRussian52gasremovedfromthesinglemarket,providedNorwegiancompaniesstrucklong-termcontracts.NorwayhasnowreceivedassurancesthattheEUwouldbuyitsgasoverthelongtermsoOslohasanincentivetomaintainproduction.[12]WiththeexceptionoftheJointStatementonUS-EUCooperationonEnergySecurityofJanuary2022,andsubsequentEU-UShigh-levelstrategicarrangements–thelatestoneofMarch2023onnewinvestmentstocreatecleanenergyindustriesandjobsonbothsidesoftheAtlantic–nootherCommission-brokeredaccordongashasprovidedalargermeasureofsecurityofsupplythantheEU-Norway(Equinor)deal.StartingwithfillingEUgasstoragethissummer,theEquinordealisofatrulykeyimportancebecauseitprovidesmuchneededliquidityandelasticitytothesinglegasmarketnotonlylong-termbutaboveallinthenexttwo-threecriticalyearsuntiltheUSincreasesitsLNGexportcapacity,backedbyAmerica’slimitlessshaletechnologyresources.NeithertheEUCommission,norheavilygas-dependentMemberStateshaveillusionsthattheissuewithsecurityofgassupplyhasbeenfullysolved.TheregionalassessmentofadditionalgasinfrastructureneedsshowsthatitwillbepossibletofullycompensatetheequivalentofRussiangasimportsbyacombinationofdemandreduction,arampupofdomesticproductionofbiogas/biomethaneandhydrogen,andlimitedadditionsofgasinfrastructure.ThemostimportantneedsarelinkedtomeetingdemandinCentralandEasternEurope,andinthenorthernpartofGermany,aswellasthereinforcementoftheSoutherngascorridor.Thislimitedadditionalinfrastructureshouldsolvetheneedsfortheforthcomingdecade,withoutleadingtoalock-inoffossilfuelsandstrandedassetsthatinhibitthelong-termtransitiontoaclimate-neutraleconomy.Foritspart,theE3GConsultancypointsoutthatEUMemberStatesandtheEuropeanCommissionhaveagreedtoextendlastyear’stargetfora15%(60bcm)gassavingstargettorepeatthesesavingsafurtheryear.Whilenecessary,thisemergencymeasuredoesnotputtheEUontracktoreachthe52%structuralreductionofgasdemandforeseenbytheREPowerEUplan.[13]Underthecircumstances,theCommissioncontinueswithestablishingnew,strongerschemesofsolidarityamongMemberStates,pushingforandincentivizingalsorenewablegases,and,ofcourse,openingawholenewindustrialeraofcleanhydrogen.TheremarkablegrowthofEU’scleanhydrogeneconomyWhentheEuropeanGreenDealwaslaunched,mostEUMemberStates’nationalintegratedclimateandenergyplansregardedhydrogenasjustanotherenergycarrier.SeveralMemberStatespaidonlytokenattentiontogreen(renewable)hydrogenanddidnotenvisageanyparticularhydrogen-basedindustrialapplicationsbefore2030,perhapseven2032.Atthetime,automobilecompaniesfromJapanandtheRepublicofKoreahadalreadyestablisheddealershipsintheUSmarket,sellinghydrogenfuelcellvehicles.53Thefirstsignsofanincreasing“institutional”pressuretointroducehydrogen-basedtechnologiesforthesakeofEGD-setbenchmarkswererecordedinchemical,energyandindustrialcompaniesintheRuhrareaofGermany,whereindustryassociations’leaderscomplainedthatthepressurecametoosoonafterthesamecompanieshadbeensqueezedintosubstitutingcoalfornaturalgas.LongbeforetheRussianinvasion–whichonlysubstantiatedtheUnion’swisechoicetoprioritizehydrogen–bothEuropeanacademicsandindustrialistswereactivelypropagatingthetechnologicalandeconomicadvantagesofrenewablehydrogen.Theirprojectproposalsanddesignsinvariablyfeaturedcross-border,eventrans-continental,dimensions.Againstthisbackdrop,theREPowerEUvisionofamorethanthree-foldincreaseinthevolumeofcleanhydrogeninthesinglemarketby2030cameaslittlesurprise.Renewablehydrogenwillbekeytoreplacenaturalgas,coalandoilinhard-to-decarbonizeindustriesandtransport.Hence,REPowerEUsetatargetof10milliontonsofdomesticrenewablehydrogenproductionand10milliontonsofrenewablehydrogenimportsby2030.Thesub-targetsforrenewablefuelsofnon-biologicaloriginforindustryandtransportwerealsoalignedwiththeREPowerEUambition.EU’srobustactiononrenewablehydrogenrepresentsbothapowerfulenergytransitionpolicyandaclimatepolicy.Upscalingtheuseofrenewablehydrogen,ammoniaandotherderivatives,assertsaCommissionStaffdocument,wouldacceleratedecarbonizationandgreatlyreducetheEU’sdependenceonnaturalgas(byapproximately27bcm),oil(byapproximately3.9Mtoe)andcokingcoalimports(approximately156Kt)fromRussia.[14]Higherlevelsofconsumption,uptothe20MtofhydrogenannouncedintheREPowerEUcommunication,isassumedtobedeliveredfromthirdcountriesintheformofammonia(forexamplefromAngolatoGermany)andpotentiallyintheformofotherhydrogencarriersandderivatives.Takingintoconsiderationtheneedfornewproductioncapacityanddedicatedtransport(transmission)infrastructureforrenewablehydrogen,thelattercanonlystarttocontributesignificantlytotheEUambitiousdecarbonizationeffortsafter2027,estimatestheCommission.ThisassessmentmightproveinaccuratebecausetheinterestinrenewablehydrogeninmostEUMemberStatesgrowswitheverynewfacilitationschemeorregulationproposedbytheCommission,andwithnewtechnologyinnovationsstimulatedbytheNet-ZeroIndustryAct.Theentrepreneurialspiritandbusiness-to-businesscooperationreigningovervariousactivitiesandformatsoftheEuropeanCleanHydrogenAlliance(ECHA)–aBrussels-basedvolunteer,EU-wide,industryassociation–havecontributedtothestart,insomecasesthefruitionofhydrogenprojectsinmorethanhalfoftheEUMemberStates.ECHAworkscloselyandproductivelywiththerelevantCommissionDirectorates.InarecentjointCommission-ECHAdeclaration,theEuropeanmanufacturersofelectrolyzerserialproductionmadepublictheirintentiontoreachacombinedannualproductioncapacityof17.5GWin2025,atenfoldincreasecomparedto2022.[15]54Theroadmaponhydrogenstandardization,launchedinMarchthisyear,wasdraftedbyECHA’sWorkingGrouponStandards.ThisisamostvaluablecontributionbytheAlliance:itprovidesacomprehensiveoverviewofstandardizationgaps,challengesandneeds,allofwhichhaveimportantpracticalconnotationsinviewoftheplannedhugevolumesofimportedrenewablehydrogenfromanumberofthirdcountries.Hydrogenqualityissuesareexpectedtoemergeoncehydrogenisinjectedintothehydrogennetworkfromdifferentproductionprocessesandtransportedthroughameshednetwork,includingcross-border.Theroadmaphighlightssixkeyactions(toodetailedtoquotehere)whichshouldpavethewayfornewhydrogenstandardstoacceleratetherolloutoflarge-scalehydrogensolutions.AnumberofTSOsandinfrastructurepromotersharborhopesofusingexistinggastransmissionpipelinesandequipmenttotransporthydrogenwhenthenecessarydemandarises.TheEUCommission’sexpertshavenowwarnedthatblendingalreadylowvolumesofhydrogenintothenaturalgasnetworkcancausesignificantproblemsandadditionalcostsforend-users(pilotprojectswerecommissionedinsixEUcities18monthsago).Thecoststoadapttoacertainlevelofhydrogenblendareinfactquitecomplex.Theseincludetheadaptationcoststochangeofend-useappliances,e.g.,furnaces,turbines,engines,householdboilers,ortochangeofcompressorstationsandmeasuringequipment/comptographs.Atthetimeofwriting,thedebateontheapplicabilityofblendingisstillgoingonamongEuropeanstakeholders.HailedasalandmarkagreementbetweentheEuropeanParliamentandtheCouncil,arecentlyagreedregulationforthedeploymentofalternativefuelsinfrastructure(AFIR)setsmandatorydeploymenttargetsforelectricvehiclechargingandhydrogenrefuelinginfrastructurefortheroadsector,forbothcarsandheavy-dutyvehicles.[16]IndustryassociationHydrogenEuropeisreportedtohavesaid:Despitenot[fully]meetingindustrydemands,theagreementisasatisfactorystartingpointthatalsolaysthefoundationsfortheuseofhydrogeninmaritime,aviationandrailtransport.Byallaccounts,theEuropeaninstitutionshavesentastrongsignalthatcleanhydrogenmobilityisaviableandrealisticsolutiontofossilfuelsinthetransportsector.AnnouncedlastyearandlaunchedsimultaneouslywiththeNet-ZeroIndustrialPlan,therecentlyopenedEuropeanHydrogenBankrepresentsanimportantnewadditiontotheUnion’sgrowingambitionconcerningrenewablehydrogen,itscarriersandderivatives.TheBankaimstoattractprivateinvestmentsinhydrogenvaluechainsinboththeEUandinthirdcountries,byconnectingrenewablehydrogensupplywiththeemergingdemandbyEuropeanoff-takers,andthustoestablishaninitialmarketforrenewablehydrogen.Withacapitalof€3billion,theBankwillpromotetheproductionofrenewablehydrogendomesticallyaswellasimportsfrominternationalproducerstoEuropeanconsumers,planstheEUCommission.Theinternationalandcross-borderschedulesofprojectstobe55financedbytheBanksuggestthatthefast-emergingEUrenewablehydrogenmarketwillbydefinitiondependonEuropeanenergydiplomacy.Itisindicativethattheglobalmomentumbehindthehydrogenindustryshowsnosignsofslowingin2023–“exportprojectannouncementsarecomingthickandfast”,saidAurora’sheadofhydrogenresearch,AniseGanbold.ThisexperthasdoneafactcheckandfoundthatimportinghydrogenintoEuropeevenoverlongdistancesmakeseconomicsense,giventhemuchlowercostofrenewableenergyinmarketssuchasMoroccoandAustralia.[17]AnexceptionalemphasisonrenewableenergyIntheEUapproachtorapidlyreducedependenceonRussianfossilfuelswellbefore2030byacceleratingthecleanenergytransition,theEUpolicyonrenewableenergytakescenter-stage.TheREPowerEUplanenvisagesscalingupofrenewableenergyinpowergeneration,industry,buildingsandtransporttoalevelthatwouldtranslatetoabidingtargetof42.5%(45%optional)inarevisedRenewableEnergyDirective.Themeasureisexpectedtocontributesubstantivelytoreducingnetgreenhousegas(GHG)emissionsbyatleast55%by2030.Itisthereforeviewedas“akeybuildingblocktoreachtheEU’senergyandclimateobjectives”.TheRenewableEnergyDirective(whoseamendmentispresentlyunderconsiderationbytheEuropeanParliamentandtheCouncil)willfurtherdevelopcommonrulesandtargetsforthedevelopmentofrenewableenergy(includingrenewablehydrogen)acrossallsectorsoftheeconomy.CooperationmechanismswillenableEUcountriestoworktogethertomeettheirrenewableenergytargets.Thearrayofpoliciesandmeasuresonrenewableenergy,whichtheCommissionhaddevelopedinthepreceding6-8months,isunderstoodfullywhenseenincloseconnectionwiththeMarch2023proposaloftheCommissiononanewEUelectricitymarketdesignand,bythesametoken,ifthenewdesignisseeninconnectionwith,orformingpartof,theGreenDealIndustrialPlan.Massivedigitizationintheenergysectorandclimaterelatedspheresispartoftheoverallchange.ThisinterlinkedandmutuallyreenforcingsetofreformpoliciesreflectstheUnion’spoliticalwilltobuildarenewables-basedenergysystem.Atthisstage,suchasystemisconsideredessentialandindispensabletoreachingtheEU’senergyandclimatetargets.PartandparcelofthisambitionistriplingthedeploymentofrenewablesintheEUbytheendofthisdecade.Thisisaglobaltrend.Thefirsttrulyglobalenergycrisis,triggeredbyRussia’sinvasionofUkraine,hassparkedunprecedentedmomentumforrenewables,writestheInternationalEnergyAgency(IEA).Renewablesaretheonlyelectricitygenerationsourcewhoseshareisexpectedtogrow,withdecliningsharesforcoal,naturalgas,nuclearandoilgeneration.ElectricityfromwindandsolarPVmorethandoublesinthenextfiveyears,providingalmost20%ofglobalpowergenerationin2027.[18]56CumulativerenewableelectricitycapacityinEuropeisexpectedtoincreasewithnearly60%(+425GW)between2022and2027,morethantwiceasmuchasinthepreviousfive-yearperiod(2016-2021).SolarPVleadsgrowth,followedbyonshorewind,offshorewind,bioenergyandhydropower.Three-quartersofEuropeanexpansion,observesIEA,isconcentratedinsevencountries–Germany,Spain,theUK,Turkey,France,theNetherlandsandPoland.TheproposedreformoftheEU’selectricitymarketdesignisbothcomprehensiveandmultifacedbut,forthesakeofthisinitialreview,referencewillbemadetoonlyafewexamples.Aboveall,thereformallowstheEuropeanindustrytohaveaccesstoarenewable,non-fossilandaffordablepowersupplywhichisakeyenablerofdecarbonizationandthegreentransition.ToenhancethecompetitivenessofEUindustryandtoreduceitsexposuretovolatileprices,theCommissionisproposingtofacilitatethedeploymentofmorestablelong-termcontractssuchasPowerPurchaseAgreements(PPAs)–throughwhichcompaniesestablishtheirowndirectsuppliesofenergyandtherebycanprofitfrommorestablepricesofrenewableandnon-fossilpowerproduction.[19]Equally,ifnotmoreimportant–inviewofthehardshipswhichtheEuropeancitizensandsmallbusinesseswere/areputtingupwith–isthepartofthereformwhichconcernsprotectingandempoweringconsumers.Thereformwillgiveconsumersawidechoiceofcontractsandclearerinformationbeforesigningthese,providingthemwiththeoptiontolockinsecure,long-termpricestoavoidexcessiverisksandvolatility.Pricestabilitywillbefosteredbyreducingtheriskofsupplierfailure.Vulnerableconsumersinarrearsshallnotbedisconnected,andMemberStateswillbeallowedtoextendregulatedretailpricestohouseholdsandSMEsincaseofacrisis.Consumerswillbeabletoinvestinwindorsolarparksandsellexcessrooftopsolarelectricitytoneighbors,notjusttotheirsupplier.ThisshouldbeparticularlygoodnewstoconsumersinCentralandEasternEuropewherecentralizedenergysystemsstillprevail.Intermsofelectricitygeneration,2022willgodowninhistoryastheyearinwhichsolarandwindovertookeveryotherformintheEU–gas,nuclear,orcoal.And2023islikelytoseethetrendcontinued.ThereformproposalbytheCommissionhasevokedimmenseprofessionalinterest.Mostcommentsarepositiveandencouraging.Someexperts,ontheotherhand,pointouttheneedformorerobustregulation.Forexample,theElectricityDirectiveoftheCleanEnergyforallEuropeansestablishedtherightforcustomersandeligiblepartiesoftheirchoicetoaccessmeteringandenergyconsumptiondata,aswellasdatarequiredforcustomerswitching,demandresponseandotherservices.However,writesSofiaNikolaioftheFlorenceSchoolofRegulation,thereiscurrentlynolarge-scale,uniformandeasyaccesstoconsumers’energydataacrossMemberStates.ThisabsenceisevenmorerelevantwhenconsideringdatasharingbetweentheEUmembers.Thelowdegreeofharmonizationofdataaccessproceduresrepresentsanobstacletotheflourishingofcross-border57energyservices,withnegativeconsequencesforthequalityandcompetitivenessofEuropeanenergyretailmarkets.[20]Onecansafelyconclude,inbroadterms,thattheproposedreformoftheEUelectricitymarketdesigncanboostrenewables,betterprotectconsumersandenhanceindustrialcompetitiveness.ThisassessmentissupportedinparticularbytheprovisionsoftheNet-ZeroIndustryActandtherelatedCriticalRawMaterialsAct.StrengtheningEurope’snet-zerotechnologymanufacturingecosystemInanexplanatorymemorandum,theCommissionpointsoutthattheglobalmarketforkeymass-manufacturednet-zerotechnologiesissettotripleby2030withanannualworthofaround€600billion.EU’spartnersandcompetitorshavegraspedthisopportunityandaredeployingambitiousmeasurestosecuresignificantpartsofthisnewmarket(Chinaaloneaccountsfor90%ofmanufacturingoutput).Thesedevelopmentsarealsodrivenbysecurityofsupplyconsiderations.Theresilienceoffutureenergysystemswillbemeasuredbyasecureaccesstothetechnologiesthatwillpowerthosesystems.Anearexhaustivelistincludes:renewableenergytechnologies;electricityandheatstoragetechnologies;heatpumps;gridtechnologies;renewablefuelsofnon-biologicalorigintechnologies;electrolyzersandfuelcells;fusion;smallmodularnuclearreactorsandrelatedbest-in-classfuels;carboncapture,utilization,andstoragetechnologies;aswellasenergy-systemrelatedenergyefficiencytechnologiesandtheirsupplychains.Ifavailableinadequatenumbers,thesetechnologieswillfacilitatethedecarbonizationofEU’seconomicsectors,fromenergysupplytotransport,buildingsandindustry.Inturn,asecuresupplyofenergywillbeessentialforensuringsustainableeconomicgrowth,andultimatelypublicorderandsecurity.[21]Itshouldbenotedthatthe“publicorderandsecurity”consideration,whichinanEUwithsubstantivesocialdimensionsisvitalfortheUnion’ssmoothandsuccessfulfunctioning,turnstobecrucialinanadversegeopoliticalsettinginparticular.Inthisrespect,theCommission’sproposalwillcontributetoachievingtheEUtargetsoftheEuropeanPillarofSocialRightsActionPlanfor2030ofemploymentrateofatleast78%andparticipationintrainingofatleast60%ofadults.Toensuretheavailabilityofskilledworkforcesupportingtheproductionofnet-zerotechnologiesintheEU,theActintroducesanadequatelyfundedNet-ZeroIndustryAcademy.TheNet-ZeroIndustryAct(NZIAct)derivesfromtheNZIPlan,thelatterhavingbeenissuedsixweekspreviously.TheActisbuilton“fourpillars”:(i)apredictableandsimplifiedregulatoryenvironment;(ii)fasteraccesstofunding;(iii)enhancingskillsand(iv)opentradeforresilientsupplychains.TheNZIActandthecross-referencescontainedthereinrepresentaholisticanddetailed“manual”onhowtheMemberStates,actinginunisonwiththeEuropeaninstitutionsandamongthemselves,canreachthetargetssetintheEuropeanGreenDealandsubsequentupgrades.ItwouldseemtheUnionnowhasahithertomissingcouplingbetween58long-agreedcommonenergyandclimatetargetsandanimplementationroadmap,comprisingregulatory,marketandindustrialmeasuresbasedonanimpressiveambitiontoquicklyrolloutthenecessarynet-zerotechnologyproductsandclosetheprocurementgapwithpartnersandcompetitors.TheNZIActsinglesoutNet-ZeroStrategicProjectsandgivesthempriority(“fastest”permittingtimelinesandstreamlinedprocedures)astheywouldbeessentialforreinforcingtheresilienceandcompetitivenessoftheEUindustry.WithoutprejudicetoStateaidrules,MemberStatesmayundertakeactivitiestoaccelerateandcrowd-inprivateinvestmentsinnet-zerostrategicprojectstospeedtheirimplementation.Thetechnologyreadinesslevel(TRL)isthefirstofthreecriteriatodefineaNet-ZeroStrategicProject(theothertwocriteriabeingdecarbonizationandcompetitiveness,andsecurityofsupply).TheoverallobjectivesoftheRegulationproposalareaimedatensuringthatby2030,themanufacturingcapacityintheUnionofthestrategicnet-zerotechnologiesapproachesorreachesatleast40%oftheUnion’sannualdeploymentneeds.TheNet-ZeroEuropePlatform,introducedintheAct,willsupportinvestmentbyidentifyingfinancialneeds,bottlenecksandbestpracticesforprojectsacrosstheEU.ItwillalsofostercontactsacrosstheUnion’snet-zerosectors,relyingparticularlyonexistingindustrialalliances,andassisttheCommissionandMemberStatestocoordinateactionandexchangeinformation.Innovationandtechnologyadoptionarekeytothetaskofacceleratingthecleantechindustry.Whileaimingatpromotionofinnovationinnet-zerotechnologiesandregulatorylearning,theActmakesitpossibleforMemberStatestosetupregulatorysandboxestotestinnovativenet-zerotechnologiesandstimulateinnovation,underflexibleregulatoryconditions.Giventhecomplexityandthetransnationalcharacterofnet-zerotechnologies,theCommissionwarnsthatuncoordinatednationalmeasurestoensureaccesstothosetechnologieswouldhaveahighpotentialofdistortingcompetitionandfragmentingthesinglemarket.Toavoidthis,theActhighlightstheneedtocreateacommonEUlegalframeworktocollectivelyaddressthiscentralchallengebyincreasingtheUnion’sresilienceandsecurityofsupplyinthefieldofnet-zerotechnologies.Regardingexternalaspects,inparticularregardingemergingmarketsanddevelopingeconomies,theEUwillseekwin-winpartnershipsintheframeworkofitsGlobalGatewaystrategy,whichcouldcontributetothediversificationofitsrawmaterialssupplychainaswellastopartnercountries’effortstopursuetwintransitionanddeveloplocalvalueaddition.Thisisareallyimportantareaforenergyandclimatediplomacy.ItnecessitatesfurtherelaborationinwhatcouldbeastandingconsultationformatbetweentheCommissionandtheMemberStates.TheActalsostimulatestheexpansionoftheUnion’smanufacturingcapacityforenergyefficienttechnologies,suchassmartgridtechnologies.Attransmissionlevel,highvoltagedirectcurrent(HVDC)systemsareneededtoconnectoffshorerenewableenergies;whileatdistributionlevel,connectingelectricityprovidersandmanagingdemand-sideflexibilitybuildsoninvestmentsininnovativegrid59technologies,suchaselectricvehiclessmartcharging(EVSC),energyefficiencybuildingandindustryautomationandsmartcontrols,advancedmeterinfrastructure(AMI)andhomeenergymanagementsystems(HEMS).GridmodernizationisaweakspotinmanyMemberStates:itwouldbeagoodideatoprioritizesmartgridtechnologiesprojectsacrosstheUnion,CentralandEasternEuropeinparticular.EU’sglobalresponsibilitieswillonlygrowWhenthestrategistsbehindtheEuropeanGreenDealrecommendedthattheEUshoulddevelopa“strongergreendealdiplomacy”toinducetherestoftheworldtotakeuptheirshareinmovingtonet-zeroby2050(2040inUNSecretary-General’sexpediencycall),eventheycouldnothaveprobablyenvisagedthatthegreentransitioncouldbeaffectedbysoseveregeopoliticalstand-offs.TheseveritycomesofcoursefromRussia’sunprovokedaggressionagainstUkraine.Butmanyotherdesignsaimedatdelayingorblockingtheclimateneutralityprospectstakeplaceregardless.Presently,theproponentsofanindefiniteadherencetofossilfuels-basedeconomicmodelsseemtobecontentwithadrawofsorts,representedandpersonifiedbySultanal-Jaber,theCEOofAbuDhabiNationalOilCo.,whowillchairCOP28inNovemberthisyear.He’sbeenbehindbillionsininvestmentsinrenewableenergy–andalsoleadsanoilcompanythatpumpssome4millionbarrelsofcrudeadayandhopestoexpandto5million/d.[22]High-levelWesternrepresentativeshavevoicedsupportforMr.al-Jaber,trustinghisnegotiationacumenwillpreventacollapseofthegreentransitiondrive.ItisanothermatterhowtheAbuDhabiConference–climateconferencesaredifficulttopredict–willassessadualisticconceptonfossilfuelsandrenewables,withitsimplieddelayingeffectontheglobalclimateurgency.SofarastheEUisconcerned,itisclear–inlightofallEU’senergyandclimatepoliciesfromtheadoptionofREPowerEUonwards–thatacceleratingallprocessesconducivetoreachingtheEU2030targetsandgoals,fullyandonschedule,isnotonlyamatterofpoliticalnecessitybutofsocialandeconomicadvancementoftheEUasawhole.ThiswouldbeagoodbasisforfurtherstrengtheningoftheEuropeanproject–andthismeansagreementsonissuessuchasforeignandsecuritypolicy(theUnionisintheprocessofdevelopinganEconomicSecurityStrategy);fiscalandmonetaryunion;migration;andenlargement.TotheextentthatEU’senergyandclimatepolicies,includingtheemergingcleantechindustry,areopentointernationaltradeandcooperation,theEU’s“haste”intheenergytransitionshouldbewellcommunicatedandarguedwiththeEU’snumerouspartnersaroundtheworld.However,thereisone,hopefullytemporary,exception.EU’sdialoguewithChina,althoughkeepingtodiplomaticcivility,isatasomewhatstrainedjunction:the2020EU-ChinaComprehensiveAgreementonInvestment(CAI)hasbeeneffectivelystalledandmostlikelywillbereassessed.Indicativeof60thetrendistheCommissionPresident’sviewthattheEUneedsto“defineitsfuturerelationshipwithChina”insensitivehigh-techareassuchasmicroelectronics,quantumcomputing,robotics,artificialintelligenceandbiotech.[23]AnauthorityonEuropeanaffairs,AdamTooze,directoroftheEuropeanInstituteatColumbiaUniversity,hasrecentlywrittenintheForeignPolicymagazinethatEuropeangovernments,businessesandsocietyareacceleratingtheenergytransition.Andtheyaren’tdoingsoonideologicalgrounds–althoughUSself-appointedrealistsarefondofaccusingEurope’senergypolicy-makersofmakingstrategicchoicesforthesakeofgreenideology–orbecausetheyareblindtotherisksofnewdependencies(notablyChina).Theyaredoingsobecause–inaworldoftoughchoicesanduncertainty,includingaboutUSpolitics,mountingecologicalcrisisandgeopoliticalrisk–thegreenenergytransitionsimplylookslikethesmartestbet.[24]Theauthorofthisarticlecouldn’tagreemore.Sofia,10April2023AmbassadorPeterPoptchev,PhD,acareerdiplomat,wasassignedtoBulgarianembassiesandpermanentrepresentationsinLagos,Geneva(Disarmament),Brussels(NATO),Dublin,andVienna(UN,OSCE,IAEA).Hehasbeenelectedaschairmanofseveralimportantmultilateralnegotiations,whichmaturedintomultilateraltreaties,conventionsandprotocols.HerepresentedBulgariainEUandNATOformats,andservedasa“qualifiedexpert”oftheUNSecretaryGeneral.HewasappointedasBulgaria’sfirstAmbassador-at-largeforenergysecurityandclimatechange,andalsoactedasadvisortofoursuccessiveministersofeconomyandenergy.Theauthorofbooksandarticles,AmbassadorPoptchev,nowretired,writes,lecturesandconsultsonforeign,security,energyandclimatepolicy.HehasfoundedandheadsNetZeroFoundation-InternationalClimateNetwork.Contactdata:peter.poptchev@gmail.com61BIBLIOGRAPHY[1]ElisabethKoch&JasonC.Moyer:OptimismfortheEuropeanUnioninthefaceofcrises.WilsonCenter,2March,2023.[2]ThomasWright:TheopeningofEurope’sOvertonwindow.PolicyBrief,ForeignPolicyatBrookings,2019.[3]CommunicationfromtheCommission…TheEuropeanGreenDeal.COM/2019/640final.Brussels,11.12.2019.[4]ProgressReport:TheGlasgowFinancialAllianceforNetZero.(Ourprogressandplantowardsanet-zeroglobaleconomy).OliverWymanpublication:November,2021.[5]MultilingualDigitalPlatformoftheConferenceontheFutureofEuropeFinalReport.May,2022.[6]Eurobarometer:EuropeansapproveEU’sresponsetothewarinUkraine.Brussels,5May,2022.[7]CommunicationfromtheCommission…COM/2022/230final.Brussels,18May,2022.[8]SimonFlowers,TomEllacottandLukeParker:HowthewarisshapingBigOil’stransitionstrategy.WoodMackenzie,TheEdge,9March,2023.[9]SpecialAddressbyUrsulavonderLeyen,PresidentoftheEuropeanCommission:WorldEconomicForumAnnualMeeting,17January,2023.[10]SEEElectricityandGasMarketAnalysis:No240IENE.Athens,February,2023.[11]CommunicationfromtheCommission…COM/2022/230final.ChapteronSMARTFinancing.Brussels,18May,2022.[12]NoraBuli:Norway’sEquinortosupplyEUgasprocurementscheme.Reuters,17March,2023.[13]MelanyBrusseler:RecoveryReport,E3G,31March2023.[14]CommissionStaffWorkingDocument.ImplementingtheREPowerEUactionplan:investmentneeds,hydrogenacceleratorandachievingthebio-methanetargets.SWD(2022)230final.Brussels,18May,2022.[15]EuropeanCleanHydrogenAllianceNewsletter,Volume12:March,2023.[16]CharlieCurrie:Europeanlawtodeployhydrogenrefuellinginfrastructureagreed.H2View,28March,2023.[17]LeighCollins:GreenhydrogenimportedtoEuropewouldbecost-competitivewithlocallyproducedH2by2030:analyst,HydrogenNewsandIntelligence,McKinsey,26January,2023.[18]IEA.Renewables2022:Analysisandforecastto2027,December,2022.[19]TheEuropeanCommission:ReformoftheEUelectricitymarketdesign.Pressrelease.Strasbourg,14March,2023.[20]SofiaNicolai:AEuropeandistributeddata-sharinginfrastructureforenablinginnovativeenergyservices.FlorenceSchoolofRegulation,27February,2023.[21]EuropeanCommission:ProposalforaRegulation…onestablishingaframeworkofmeasuresforstrengtheningEurope’snet-zerotechnologyproductsmanufacturingecosystem(Net-ZeroIndustryAct).COM(2023)161final2023/0081(COD).Brussels,16March,2023.[22]OAE’sCOP28Leader:FightClimateChange,NotEachOther,AssociatedPress,February14,2023.[23]NicolasCamutandStuartLauauthoringtwoseparatereportsinPolitico.eu.31and30March,2023.[24]AdamTooze:Europe’senergycrisisthatisn’t.ForeignPolicy,6April,2023.62OILMARKETSAFTERTHEINVASIONOFUKRAINE:MOVINGTOWARDSSTRATEGICCOMPETITIONIrinaPatrahauandLuciavanGeuns,TheHagueCenterforStrategicStudies(HCSS)IntroductionEurope’sdecouplingfromRussiaasaresultofthewarinUkrainehasacceleratedglobalstrategiccompetition,blocformingandprotectionisminstrategicsectors.Themoveawayfrommultilateralcooperationandopentraderelationsintoisolationistpoliciesismirroredbyenergymarkets.Thispaperanalysestheinfluenceofcentralgeopoliticalandeconomicdevelopmentsonglobaloilmarketsintheshort(2-3years)andlongterm(10-15years).Intheshortterm,globaloilmarketswillremainvolatileassuppliersandconsumersaresettlingintoapost-sanctionsworld.AstheEuropeanUnion(EU)istryingtosecuresuppliesfromalternativeproducers,Russiaisfindingnewenergymarkets.TheEUisrelyingontheUnitedStates(US),NorwayandtheOrganisationoftheOilExportingCountries(OPEC+,excludingRussia)tofillthegapleftbyRussianoil.52RussianrelationswithChina,IndiaandTurkeyareintensifying.Atthesametime,uncertaintyregardingtheglobalpositionandstrategyofkeymarketplayersremains.IstheUSemergingasthemainenergysuperpower?HowareOPEC+producersnavigatingthechangingbalanceofpower?CanSaudiArabiamaintainitsroleasamarketbalancer,orisitprimarilyself-interestthatmotivatescutsinoilproduction?Strategiccompetitionisalsoimpactingtheenergytransitioninthelongterm.Decisiveandacceleratedactionisneededforanorderlyenergytransition,butcurrentenergydevelopmentspointtoisolationism,nationalismandthereforeamorechaoticexitoffossilfuelsfromtheEuropeanenergysystem.TheenergycrisisthatfollowedtheinvasionofUkraineledtosignificantgovernmentalinvolvementinoilandgasmarkets.Securingcriticalmineralsandgreentechnologiesfortheenergytransitionhasbecomeapriorityaswell,codifiedinplansliketheUSInflationReductionActandtheEU’sCriticalRawMaterialsActandNetZeroIndustryAct.ThisisanupdateofthepaperpreviouslyreleasedinAugust2022,“FromtheWarinUkrainetotheEnergyTransition:SearchingforaNewBalanceintheOilMarket”publishedbyTheHagueCentreforStrategicStudies.5352Eurostat.‘EUImportsofEnergyProducts-RecentDevelopments’,2023.https://ec.europa.eu/eurostat/statistics-explained/index.php?title=EU_imports_of_energy_products_-_recent_developments;Eurostat.‘CrudeOilImportsbyFieldofProduction-MonthlyData’.Accessed13April2023.https://ec.europa.eu/eurostat/databrowser/view/NRG_TI_COIFPM__custom_5710917/default/table?lang=en.53IrinaPatrahau,LuciaVanGeuns,andJillesVandenBeukel.‘FromtheWarinUkrainetotheEnergyTransition:SearchingforaNewBalanceintheOilMarket’.TheHagueCentreforStrategicStudies,2022.https://hcss.nl/report/searching-for-new-balance-in-the-oil-market/.63Context:NavigatingtheenergycrisisTheRussianinvasionofUkraineinFebruary2022placedpressureonaglobalenergysystemthatwasalreadystrugglingtomanagevolatilityeversincetheCovid-19pandemic.TheCovid-19pandemicresultedinoneofthesharpestdeclinesinglobaloilconsumptioninhistory,asoildemanddeclinedfrom99millionbarrelsaday(mb/d)in2019to90mb/din2020.54Thiswascausedbyworkingfromhomemandatesandthesignificantreductioninairtransport,pairedwiththeslow-downinindustrialactivityandmanufacturing,andre-shoringofsupplychains.55ThetumultuousperiodatthebeginningoftheCovid-19lockdownledglobalpricestoplummetandreachunprecedentedlevelsinApril2020.Oilproducerswerestrugglingtofindsufficientstoragecapacityforthesurplusofoilthatcouldnotbesoldduetothedropindemand,withoilstocksreachingall-timehighlevelsinJune2020.56In2021,pandemicmeasuresweregraduallyeased,resultingintherecoveryofglobaloildemand.Demandaveraged96mb/din2021.57By2022,globaloildemandhadreturnedto2019levels.Therapidpost-pandemicrecovery,characterizedbyasharpincreaseinroadtransport,aviation,andshipping,wasnotmetbyanequallyfastincreaseinoilproduction.ProductionoutagescausedbyweathereventslikeHurricaneIdaintheUS,combinedwithfiresatfacilitiesinMexicoandRussia,aswellasoperationalissuesinNigeria,LibyaandKazakhstan,ledtocontinuedissuesforsupplierstomeetdemand.58ThelargestoilproducersinOPEC,particularlySaudiArabiaandtheUnitedArabEmirates,couldraisetheirproductionbutmadeachoicenottodoso.Therecordlevelsofoilinventoriesin2020werefollowedbyasharpdeclineinstocksthatlastedalmosttwoyears.Highoilprices,tightsupplyandgeopoliticalinstabilityledtoanumberofcoordinatedreleasesofstrategicreservesfromOECDcountries.59Wheninventoriesandsparecapacitiesarelow,theabilityofmarketplayerstostabilizeoilpricesbecomesveryweak.Theoilpricethereforebecomeshighlysusceptibletoexternalfactorsandvolatilitydominatesthemarket.Inthefirstweeksafterthewarerupted,governmentsstartedsanctioningRussiancompanies.TheUnitedStatesandCanadaquicklyimposedbansonimportsofRussianoil.60AstheirdependencyonRussianoilwasminimal,thesemeasureswerepolitically54IEA.‘OilMarketReport’,December2021.https://iea.blob.core.dows.net/assets/0921d7d0-7a36-4f15-b920-efcbbff2038b/-14DEC2021_OilMarketReport.pdf.55DanKleinandMarkMozur.‘MovingMountains:COVID-19andPeakOilDemand’,2020.https://www.spglobal.com/en/research-insights/featured/moving-mountains-covid-19-and-peak-oil-demand.56IEA.‘OilMarketReport’,August2020.https://www.iea.org/reports/oil-market-report-august-2020.57IEA.‘OilMarketReport’,June2022.https://www.iea.org/reports/oil-market-report-june-2022.58IEA.‘OilMarketReport’,September2021.https://iea.blob.core.windows.net/assets/0921d7d0-7a36-4f15-b920-efcbbff2038b/-14DEC2021_OilMarketReport.pdf.59IEA.‘OilMarketReport’,June2022,50.60Reuters.‘TrackingSanctionsagainstRussia’,31May2022.https://graphics.reuters.com/UKRAINE-CRISIS/SANCTIONS/byvrjenzmve/.64motivatedandhadlimiteddirecteconomicimpact.FortheEU,thelargestmarketforRussianoilandnaturalgas,imposingsuchabanwasamoreproblematicdecisionfromaneconomicperspective.Still,theEU’sdecouplingfromRussianenergywasvirtuallycompletedbytheendof2022,withafewexceptionssuchasoilflowingthroughtheDruzhbapipeline,liquefiednaturalgas(LNG)importsandlimitednaturalgaspipelineimports.TheEUboycottonmaritimeimportsofRussianoilwasannouncedinJune2022andenteredintoforceinDecember2022forcrudeandFebruary2023forproducts.TheboycottwaspairedwithaG7agreeduponpricecapforcrudeandproducts.ItwasmetbyretaliatoryactionsbytheKremlin,cuttingpipelineexportsofnaturalgastoEurope.ThemostsevereincreasesinEUoilpricetookplacerightafterthesanctionsonRussianoilwereannounced,inthesummerof2022(Figure1).Theuncertaintyinglobaloilmarketsledtosignificantpriceincreases,compoundedbysuddendisruptionsinRussiangasexportstoEurope.EUeffortstobringinsuppliesfromothersourcesledtopricecompetitionwithotherconsumers,thusdisruptingsupplychainsworldwideandcausingsharpincreasesininflationlevels.Figure1BrentoilpricedevelopmentEvenafterthebanoncrudeoilcameintoplaceinDecember2022,theEUremainedRussia’smainexportmarketforoilproductsinDecember2022,inpreparationforthebaninFebruary2023.61Morethan8millionbarrelsofRussiandieselwereimportedbyEuropeancountriesinthefirsttwoweeksofJanuary2023.62Alargepartofitwasplacedinstorage.Whensanctionscameintoforce,theimpactswerelessseverethananticipatedforEUconsumers.ThepriceofBrentremainedunder90USD/barrelsincetheendofNovember2022untiltheendofMarch2023(Figure1).63Companieshadalreadyfilledstrategicreserves61CREA.‘EUOilBanandPriceCapAreCostingRussiaEUR160Mn/Day,butFurtherStepsCanMultiplytheImpact’,11January2023.https://energyandcleanair.org/wp/wp-content/uploads/2023/01/CREA_Press-release_EU-oil-ban-and-price-cap-are-costing-Russia-EUR-160-mn_day-but-further-steps-can-multiply-the-impact.pdf.62AnnaCooban.‘Europe’sBanonRussianDieselCouldSendPumpPricesEvenHigher’.CNN,17January2023.https://www.cnn.com/2023/01/17/energy/russia-diesel-ban-prices/index.html.63U.S.EnergyInformationAdministration.‘EuropeBrentSpotPriceFOB(DollarsperBarrel)’,13April2023.https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RBRTE&f=M.65andcommercialinventorieswithRussianoil.Tomakeupforthegap,additionaloilsuppliesweresourcedfromSaudiArabia,Angola,IraqandtheUS.64DuetothehighoilpricesandEuropeancompanies’rushtofillstorageunitswithRussianoilbeforetheboycottcameintoforce,theimmediateimpactofsanctionsonRussia’soilrevenueswaslimited.In2021,oilandnaturalgasrevenuesaccountedfor45%ofRussia’sfederalbudget.65Thisisahigherproportionthanthe35-36%reportedinpreviousyears.66Sincethebeginningofthewar,RussiaearnedEUR325billionfromexportingfossilfuels,theEUhavingaccountedforEUR149billionofthatsum.67Shortterm:VolatileoilmarketsGlobaloilpricesremainedrelativelystablesincethesanctionsandpricecapforRussianexportscameintoforce.Yettheoilmarketisundergoingcriticalshiftswithdirectconsequencesforthegeopoliticalorder.RussiaisbolsteringrelationswithChinaandIndia,twooftheworld’slargestoilconsumers.TheUSisbecomingEurope’smainoilsupplierandcompetingforglobalmarketdominancewithSaudiArabiaandOPEC+.Untilanewenergysystemisestablishedandanewbalanceisfound,priceswillremainsusceptibletomarketshocksandgeopoliticalevents.Russia:ClosertieswithChinaandIndiaAftertheoilboycottcameintoforceinFebruary2023,Russianoilfounditswaytoalternativeconsumers.China,TurkeyandIndiaareRussia’smainnewpartners(Figure2).Figure2Russiandailyexportsofcrudeoil,inthousandtonnes.Source:CREA,20236864Eurostat.‘EUImportsofEnergyProducts-RecentDevelopments’.65IEA.‘EnergyFactSheet:WhyDoesRussianOilandGasMatter?’March2022.https://www.iea.org/articles/energy-fact-sheet-why-does-russian-oil-and-gas-matter.66OECDInventoryofSupportMeasuresforFossilFuels:CountryNotes.‘RussianFederation’,2022.https://www.oecd-ilibrary.org/sites/23fe599b-en/index.html?itemId=/content/component/23fe599b-en#:~:text=Oil%20and%20gas%20revenues%20contributed,federal%20budget%20decreased%20to%2028%25.67CREA.‘RussiaFossilTracker–PaymentstoRussiaforFossilFuelssince24February2022’.Accessed13April2023.https://www.russiafossiltracker.com/.68CREA.‘RussiaFossilTracker–PaymentstoRussiaforFossilFuelssince24February2022’.66IndianimportsofRussianoilhavesurgedsincethewarinUkraine,despitethecountrybarelyhavingpurchasedanyRussianoilinthefirsttwomonthsof2022.69IndianrefinershavebeentakingadvantageofdiscountedRussiancrudeoil.AlargepartoftherefinedoilproductsisbelievedtobesentontoEurope,makingIndiathedefactorefininghubforbannedRussianoil.70TheenergyrelationsbetweenChinaandRussiahavefurthertightenedaswell,givenChina’sreluctancetopubliclydenounceandimposesanctionsonRussiafollowingthewar.ChinahasbecomethelargestconsumerofRussiancrudeandoilproductssincetheEUboycott(Figure2),makinguseoftheEasternSiberia-PacificOcean(ESPO)andtheKazakhAtasu-Alashankoucrudeoilpipelines,aswellasmaritimeshipments.71AsChinahasnotimposedanysanctionsonRussia,thepriceofRussianoilsoldtoChinathroughtheESPOpipelinehoversabovetheEU/G7pricecaplevel,around70USD/barrel.72EventhoughalargepartofRussianoilhasfoundnewmarkets,theimpactofsanctionsisbecomingincreasinglyvisible.Whileoilproductionremainedrelativelystablecomparedto2021,Russianoilexportsdecreasedby500kb/daccordingtotheInternationalEnergyAgency.73Russia’soilrevenuesdecreasedby48%inFebruary2023year-on-yearduetothemuchlowerpricethatitissoldfor.74TheUralscrudeoilspotpricehasfluctuatedbetween50-60USD/barrelbutremainedunderthepricecaplevelsof60USD/barrel.75WhileRussiandeliveriesofoiltoEuropeweremadeovershortdistancesandtookbetweentwoandthreeweekstoreachdestination,tankershavetotravelmuchlongerdistancestoChinaandIndia.76Russia’smaritimeoilexportsarenowreliantonanoldmaritimefleetandship-to-shiptransfersoffshoreEuropeanports.69ShrutiMenon.‘UkraineCrisis:WhyIsIndiaBuyingRussianOil?’BBCNews,10June2022.https://www.bbc.com/news/world-asia-india-60783874.70WilliamWatts.‘WhyIndiaIstheBigWinnerasEU’sRussiaOilBanRedrawsEnergyTradeMap’.MarketWatch,31May2022.https://www.marketwatch.com/story/why-india-is-set-to-win-big-as-eu-bans-russian-oil-imports-11654021874.71CarolZhu.‘RussianCrudeOilPipelineCapabilitiestoMainlandChina-TheESPOCrudeOilPipeline’.S&PGlobal,1April2022.https://www.spglobal.com/commodityinsights/en/ci/research-analysis/espo-crude-oil-pipeline.html;‘RussianGovtApproves10-YearExtensionofAgreementwithKazakhstanonTransittoChinaofupto10MlnTonnesofOilperYear’.Interfax,December2022.https://interfax.com/newsroom/top-stories/86654/.72MeriPukarinen.‘WeeklySnapshot-RussianFossilFuels13to19March2023’.CentreforResearchonEnergyandCleanAir,23March2023.https://energyandcleanair.org/weekly-snapshot-russian-fossil-fuels-13-to-19-march-2023/;OilPrice.com.‘OilPriceCharts’.Accessed11April2023.https://oilprice.com/oil-price-charts/.73IEA.‘OilMarketReport-March2023’,March2023.https://www.iea.rg/reports/oil-market-report-march-2023.74BloombergNews.‘Russia’sRevenueFromOilandGasAlmostHalvedinFebruary-Bloomberg’.Bloomberg,3March2023.https://www.bloomberg.com/news/articles/2023-03-03/russia-s-revenue-from-oil-and-gas-almost-halved-in-february#xj4y7vzkg.75TradingEconomics.‘UralsOil-2023Data-2012-2022Historical-2024Forecast’.Accessed11April2023.https://tradingeconomics.com/commodity/urals-oil.76TsvetanaParaskova.‘TheBiggestReshuffleOfOilFlowsSinceThe1970s’.OilPrice.com,7June2022.https://oilprice.com/Energy/Energy-General/The-Biggest-Reshuffle-Of-Oil-Flows-Since-The-1970s.html.67Still,over60%ofRussianoiltankersareinsuredbycompaniesintheEU,G7orNorway,aslightdeclinefrom75-80%in2021.77OPEC+:MountingtensionswiththeUSFordecades,OPECplayedacentralroleinstabilizingtheoilmarketthroughconcerteddecisionstoscaleupproductionwhendemandishighandtheotherwayaround.In2016,OPECexpandedintoabroaderalliancethatincludes(amongothers)RussiaandKazakhstan,usuallyreferredtoasOPEC+.SaudiArabiahasthelargestspareproductioncapacityoutofthegroup,andovertimeithasuseditstrategicallytomaintainthestatusquointheoilmarket.WhilethisabilityhasbeenchallengedbytheUSinthelastdecade,SaudiArabiaremainsanimportantbalancerinthemarket.TheOPEC+responsetothewarinUkrainehasbeencontroversial,mainlybecauseRussiaisoneofthelargestmembersofOPEC+.SinceFebruary2022,OPEC+andWesterncountries,primarilyledbytheUS,havehadseveraldisagreementsregardingthestabilityofglobaloilmarkets.Specifically,US-Saudirelationshavebeenseveredbymistrustandmisalignment.Thedevelopmentofthisrelationshipwillhavedirectconsequencesforglobalenergymarkets.Despitethespikeinpricesfollowingthewar,OPEC+wasnotwillingtoincreaseproduction,blamingthepricecrisisongeopoliticaltensionsratherthanfundamentalsorissueswiththephysicalsupplyofoil.78ThefactthatRussiaispartofOPEC+furtheredcomplicatedthebloc’sresponsetotheglobalenergycrisis.Incontrast,alotofcountries,ledbytheUS,releasedstrategicreservesinordertodecreaseglobalprices.USPresidentBideninparticularhaspubliclyrequestedSaudiArabiaandotherstoincreaseoutputandmitigatesomeofthemarketpressure.79InApril2023,theconflictbetweentheUSandOPEC+wasreignitedbythelatter’sdecisiontocutoiloutput.Inanefforttoincreaseoilprices,OPEC+announcedinApril2023adecreaseinoutputby1.16mb/d.80ThelargestdropinproductionwillcomefromSaudiArabia,whichaccountsfor500kb/d,followedbyIraq,UAEandKuwait.81ThiscomesafterthedecisioninOctober2022todecreaseoutputby2mb/d.AstherelationsbetweenSaudiArabiaandtheUSarecoolingdown,Chinaissteppingin.InMarch2023,ChinabrokeredameetingbetweenIranianandSaudirepresentatives,whichendedinanagreementtonormalizerelationsfollowingyears77ConallHeussaffetal.‘RussianCrudeOilTracker’.Bruegel,13March2023.https://www.bruegel.org/dataset/russian-crude-oil-tracker.78SameerHashmi.‘Oil-ProducingNationsSticktoTheirPlandespiteUkraine’.BBCNews,3March2022,sec.Business.https://www.bbc.com/news/business-60591107.79DerekBrowerandDavidSheppard.‘OpecAgreestoAccelerateOilProductionFollowingUSPressure’.FinancialTimes,2June2022.80MichelleToh,MohammedTawfeeq,andAnnaCooban.‘OilPricesSurgeafterOPEC+ProducersAnnounceSurpriseCutsCNNBusiness’.CNN,2April2023.https://www.cnn.com/2023/04/02/business/opec-production-cuts/index.html.81Toh,Tawfeeq,andCooban.68oftensions.82ChinahasbeenexpandingitspoliticalandeconomicinfluenceintheregionthroughmassiveinvestmentsandbilateralStrategicPartnerships.TheMiddleEasthasbeenanintegralpartofitsBeltandRoadInitiative,givenChina’srelianceon–amongothers–SaudicrudeoilandQatariLNG.83TheescalationintensionsbetweenSaudiArabiaandIranontheonehand,andtheUSontheother,isgivingChinaawindowofopportunitytoconsolidateitspositionintheMiddleEast.US:Becomingtheenergysuperpower?Overtime,theboomingshaleindustryhasbroughtgreatbenefitstotheUSgovernment,botheconomicandgeopolitical.Thecountryhasbecomevirtuallyenergyindependentandalsothelargestgasexporterintheworld.TheenergycrisisfollowingtheCovid-19pandemicandinvasionofUkraineisallowingtheUStoleadthewayintoanewlyemergingenergysystem,asRussiaisnolongeratrustworthyoilandgasproducerforthewesternworld,andOPEC+countries,withafewexceptionslikeSaudiArabia,arefacingtroublestomaintaintheirproductionlevels.EventhoughtheUSisthelargestoilproducerintheworld,thecountryisalsothelargestoilconsumer.Assuch,asignificantpartofitsoilhashistoricallybeenuseddomestically.84YettheUShasbeenexpandingitscrudeoilexportingcapacityoverthelastdecade.InJanuary2023,itbecametheEU’slargestoilsupplier,followedcloselybyNorwayandKazakhstan.85Despitesomeissuesdiscussedbelow,itseemsliketheUScouldleavethiscrisisinamuchbettergeopoliticalsituationthanafewyearsago.TheproductionofshaleoilintheUShasnotyetreachedpre-pandemiclevels,partlybecauseofinsufficientfinancingandpartlybecauseofissuesinglobalsupplychainspreventingproducersfromgettingtherightequipment.86TheshaleindustryregisteredanegativecashflowofUSD300billionsince2010andsawalmost200bankruptcies.87Mostofthegeneratedrevenuewasreinvestedinnewproduction.Despitetheenormousboom,investorshaveforalongtimebeendisillusionedwithUSshaleoilandtheCovid-19pandemicenhancedthefinancialissuesoftheshaleindustry.Thishasonlyrecentlychangedandoverthelasttwoyearscashflowhasbecomepositive.Reinvestmentratesplummetedduringthepandemicandinstead82MariaFantappieandValiNasr.‘ANewOrderintheMiddleEast?’ForeignAffairs,22March2023.https://www.foreignaffairs.com/china/iran-saudi-arabia-middle-east-relations.83CamilleLonsetal.‘China’sGreatGameintheMiddleEast–EuropeanCouncilonForeignRelations’.ECFR(blog),21October2019.https://ecfr.eu/publication/china_great_game_middle_east/.84EnergyInformationAdministration.‘HowMuchoftheCrudeOilProducedintheUnitedStatesIsConsumedintheUnitedStates?’Accessed13April2023.https://www.eia.gov/tools/faqs/faq.php.85Eurostat.‘CrudeOilImportsbyFieldofProduction-MonthlyData’.86DavidMessler.‘TheU.S.ShalePatchIsFacingAPlethoraOfProblems’.OilPrice.com,2May2022.https://oilprice.com/Energy/Energy-General/The-US-Shale-Patch-Is-Facing-A-Plethora-Of-Problems.html.87Deloitte.‘TheGreatCompression:ImplicationsofCOVID-19fortheUSShaleIndustry’,2020.https://www2.deloitte.com/us/en/pages/energy-and-resources/articles/covid-19-implications-for-us-shale-industry.html.69generatedfreecashflowsforinvestors.88Sometimeisneededtofixtheindustry’slongtimeloomingproblems.Now,shaleoilcompaniesaretryingtorampupproductionafteralmosttwoyearsofunderinvestment.Theglobalmarketpressureislikelydrivinganincreaseinoutput.Whileitisuncertainwhetherandhowlongitwouldtakefortheshaleindustrytorecover,conditionsseemtobefavourablefortheUStoconsolidateitspositionastheworld’senergysuperpower.Outlook:Aturbulentenergytransition?Intheshortterm,theenergycrisisandpricevolatilityaretakingawayattentionfromclimategoals.Butinthenext10-20years,theenergytransitionwillbringaboutconsiderablechanges.Howwillthetransitionunfold?Willitbeorderly,characterizedbyinternationalcooperationandasimultaneousdecreaseinfossilfuelconsumptionandproduction?Orwillitbemoreturbulentascountriesremaincompetitive,focusonprotectionistpoliciesandeconomicgains,andclimateactionisleftbehind?By2030,Europeisaimingatadecreaseingreenhousegasemissionsof55%.89ThedemandfordieselandgasolineisexpectedtodecreaseacrossallOECDcountries,asroadtransportrapidlymovestowardelectrification.90However,chemicalproduction,shippingandaviationwillremainhighlydependentonoilproducts–naphtha,fueloilandjet/kerosene,respectively–giventhelackofmaturelowcarbonalternativesinthesesectors.91If2030goalsaretobeachieved,acceleratedactionwillhavetobetakeninalleconomicsectors.Thisrequiressignificantlifestylechangesfromconsumersallovertheworld–lessairtravel,lessmeatconsumption,lessplasticsdemanded.TowhatextentareEuropeansreadytomakesuchdisruptivelifestylechanges?Sofar,theEuropeanconsumptionoffossilfuelshasnotdecreasedasfastasexpected.Willrealchangebeseenby2030,orwillbusiness-as-usualcontinue?ThewarinUkrainewasawake-upcallforAmericanandEuropeanpolicymakersthatenergysecurityforbothfossilfuelsandgreentechnologiesisamatterofnationalinterest.Theenergysectorwitnessedashiftfromaliberalmarketsystemto88RystadEnergy.‘ShaleGettingStingy?ReinvestmentRatesintheUSHitHistoricLowsinQ3ShapingRecordFreeCashFlow’,22November2021.https://www.rystadenergy.com/newsevents/news/press-releases/shale-getting-stingy-reinvestment-rates-in-the-US-hit-historic-lows-in-Q3-shaping-record-free-cash-flow/.89EuropeanCommission.‘“Fitfor55”:DeliveringtheEU’s2030ClimateTargetontheWaytoClimateNeutrality’,14July2021.https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021DC0550.90IEA.‘Oil2021’(Paris:IEA,2021),31.https://www.iea.org/reports/oil-2021.91EuropeanCommission.‘ProposalforaRegulationonEnsuringaLevelPlayingFieldforSustainableAirTransport’,14July2021.https://ec.europa.eu/info/sites/default/files/refueleu_aviation_-_sustainable_aviation_fuels.pdf;EuropeanCommission.‘ProposalforaRegulationontheUseofRenewableandLow-CarbonFuelsinMaritimeTransportandAmendingDirective2009/16/EC’.Brussels,14July2021.https://ec.europa.eu/info/sites/default/files/fueleu_maritime_-_green_european_maritime_space.pdf.70significantlymoregovernmentalinvolvement.TheUSInflationReductionAct92wasintroducedasawayofencouragingdomesticcompaniestoexpandtheiractivityinthemineralsandgreentechnologysectors,ultimatelyreducingdependenceonforeignsupplychains.TheEUrespondedwiththeCriticalRawMaterialsAct93(CRMA)andNetZeroIndustryAct94(NZIA),tocounternotjustthedominanceofChinesecompaniesintheenergytransition,butalsooftheUS.Themovetowardre-shoringandprotectionismintheenergysectorisasymptomofthebroadergeopoliticaltrendofstrategiccompetition.TheUS-Chinapowerstrugglehasacceleratedoverthelastfiveyearsasshownbythetradedisputesin2018-2019.95RecognizingitsowninterestinmaintainingrelationswithboththeUSandChina,theEUsoughtstrategicautonomyratherthanjoiningonesideoftheconflict.96FacedwithsupplychaindisruptionsduringtheCovid-19pandemicandwarinUkraine,theEUtookalargersteptowardincreasingself-sufficiencyinstrategicsectorsandpursuingcompetitiveadvantagesforgreentechnologies.Achievinganorderlyenergytransitionrequiresincrementalbutdecisiveactiontoreduceenergydemand,increasesupplyofrenewables,andbuildinfrastructure.Italsorequirescooperationbetweenstates,forknowledgeandtechnologicaltransfer,aswellasforkeepingtheold,fossilfuelsmarketstable.However,currentdevelopmentsseemtopointtoamoredisorderlytransition,characterizedbyprotectionism,strategiccompetitionandstronggovernmentalinvolvement.ConclusionTheinternationaloilmarketisundergoingsignificantchanges.Thecentralthemefortheoilmarketupto2024-2025willbevolatility.Astheworldisstrugglingtofindanewpowerbalance,supplychainsremainvulnerabletomarketshocks.ThesupplychainsthattheEUisnowreliantonforcrudeandoilproductshaveexpandedgiventhelongergeographicaldistancesbetweentheEUanditssuppliers.RussianexportsarenowdeliveredtoChina,IndiaandTurkey,boththroughpipelinesandtankers.Thesesupplychainsaremorevulnerabletogeopoliticalandeconomicshocks,weathereventsandcyberandlogisticaldisruptions.TheUSandSaudiArabia(togetherwithitsOPEC+partners)arecompetingforglobaloilmarketdominance.TheUnitedStatesiswellpositionedtobecometheglobalenergyleader,duetoitspromisingshaleoilindustry,fallofRussiaasanenergy92TheWhiteHouse.‘InflationReductionActGuidebookCleanEnergy’Accessed5April2023.https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook/.93EuropeanCommission.‘CriticalRawMaterialsAct’,2022.https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_22_5523.94EuropeanCommission.‘NetZeroIndustryAct’,16March2023.https://single-market-economy.ec.europa.eu/publications/net-zero-industry-act_en.95CouncilonForeignRelations.‘Timeline:U.S.-ChinaRelations’.Accessed13April2023.https://www.cfr.org/timeline/us-china-relations.96MarioDamen.‘EUStrategicAutonomy2013-2023:FromConcepttoCapacity’.EuropeanParliamentaryResearchService,July2022.https://www.europarl.europa.eu/RegData/etudes/BRIE/2022/733589/EPRS_BRI(2022)733589_EN.pdf.71superpowerandissueswithinOPEC+.SaudiArabia’shistoricalroleasamarketbalancerisallowingittoimposeproductioncutsandstronglyinfluenceglobalprices.ItsincreasinglystrongeralliancewithChinaisreplacingUSinfluenceintheMiddleEast.Inthemid-tolong-term,theenergytransitionwillbethedrivingforceintheglobaloilmarket.Themainquestioniswhetherthetransitioncantakeplaceinanorderly,cooperativeway,orifitwillbeturbulent,characterizedbyisolationismandnationalistgains.AlthoughEurope(andotherOECDcountries)areexpectedtochangetheirenergysystemmostdramaticallyby2030,sofarprogresshasbeenlimitedandsignsarepointingtowardadisorderlyexitoffossilfuels.IrinaPatrahauisaStrategicAnalystatHCSS,contributingtoourEnergyandRawMaterialsInitiativeandClimateandSecurityProgramme.Sheisinterestedinthegeopoliticsandgeo-economicsofenergy,rawmaterialsandclimatesecurity.Irinacontributestoprojectsregardingglobaloilandnaturalgasmarkettrendsandenergysecurity.Herexpertisefurtherextendstoissuesofcriticalmineralsandgreentechnologies(wind,solar,electricvehicles),specificallyfocusingonthenovelgeopoliticalrelationsthatareemergingasaresultoftheenergytransition.IrinaholdsaBScdegree(cumlaude)inPoliticalSciencewithaspecializationinInternationalRelationsfromLeidenUniversityandaminorinGeo-ResourcesfortheFutureattheTUDelft.SheattainedherMScdegree(cumlaude)inPoliticalEconomyfromUniversityofAmsterdam,whereshestudiedtheenergyrelationsbetweenChinaandEasternEuropeinthecontextoftheenergytransition.PriortojoiningHCSS,shewasaninternatKaramaEurope,anNGOsupportingwomen’srightsactivistgroupsintheMiddleEastandNorthAfrica.LuciavanGeunsisanexperiencedenergyprofessionalwhoheldresearchpositionsattheNetherlandsOrganisationforAppliedScientificResearch(TNO)andtheClingendaelInternationalEnergyProgramme(CIEP)afteracareerwithRoyalDutchShell(1980-2002).Shehasabackgroundingeoscience,petroleumengineering,economics&planning.Herresearchfocusesoninternationalenergymarketdevelopments,energytransitionissuesandclimatechangepolicies.Inherpresentrole,sheisafrequentspeakeron(international)energymarketsforvariouspublicandprivatestakeholders.Ms.VanGeunsholdsaMaster’sdegreeinEarthSciencesfromtheUniversityofLeiden.ShewasalsopresidentoftheRoyalGeologicalandMiningSocietyoftheNetherlands(KNGMG)from2013-2019.BIBLIOGRAPHYBloombergNews.‘Russia’sRevenueFromOilandGasAlmostHalvedinFebru-ary-Bloomberg’.Bloomberg,3March2023.https://www.bloomberg.com/news/arti-cles/2023-03-03/russia-s-revenue-from-oil-and-gas-almost-halved-in-february#xj4y7vzkg.Brower,Derek,andDavidSheppard.‘OpecAgreestoAccelerateOilProductionFollow-ingUSPressure’.FinancialTimes,2June2022.Cooban,Anna.‘Europe’sBanonRussianDieselCouldSendPumpPricesEvenHigher’.CNN,17January2023.https://www.cnn.com/2023/01/17/energy/russia-diesel-ban-prices/index.html.CouncilonForeignRelations.‘Timeline:U.S.-ChinaRelations’.Accessed13April2023.https://www.cfr.org/timeline/us-china-relations.CREA.‘EUOilBanandPriceCapAreCostingRussiaEUR160Mn/Day,butFur-therStepsCanMultiplytheImpact’,11January2023.https://energyandcleanair.org/wp/wp-content/uploads/2023/01/CREA_Press-release_EU-oil-ban-and-price-cap-are-cost-ing-Russia-EUR-160-mn_day-but-further-steps-can-multiply-the-impact.pdf.———.‘RussiaFossilTracker–PaymentstoRussiaforFossilFuelssince24February2022’.Accessed13April2023.https://www.russiafossiltracker.com/.Damen,Mario.‘EUStrategicAutonomy2013-2023:FromConcepttoCapacity’.Euro-peanParliamentaryResearchService,July2022.https://www.europarl.europa.eu/RegDa-ta/etudes/BRIE/2022/733589/EPRS_BRI(2022)733589_EN.pdf.Deloitte.‘TheGreatCompression:ImplicationsofCOVID-19fortheUSS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s-in-Q3-shaping-record-free-cash-flow/.TheWhiteHouse.‘InflationReductionActGuidebookCleanEnergy’.Accessed5April2023.https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook/.Toh,Michelle,MohammedTawfeeq,andAnnaCooban.‘OilPricesSurgeafterOPEC+ProducersAnnounceSurpriseCutsCNNBusiness’.CNN,2April2023.https://www.cnn.com/2023/04/02/business/opec-production-cuts/index.html.TradingEconomics.‘UralsOil-2023Data-2012-2022Historical-2024Forecast’.Ac-cessed11April2023.https://tradingeconomics.com/commodity/urals-oil.U.S.EnergyInformationAdministration.‘EuropeBrentSpotPriceFOB(DollarsperBarrel)’,15June2022.https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=R-BRTE&f=M.Watts,William.‘WhyIndiaIstheBigWinnerasEU’sRussiaOilBanRedrawsEnergyTradeMap’.MarketWatch,31May2022.https://www.marketwatch.com/story/why-india-is-set-to-win-big-as-eu-bans-russian-oil-imports-11654021874.Zhu,Carol.‘RussianCrudeOilPipelineCapabilitiestoMainlandChina-TheESPOCrudeOilPipeline’.S&PGlobal,1April2022.https://www.spglobal.com/commodityin-sights/en/ci/research-analysis/espo-crude-oil-pipeline.html.75LOSS&DAMAGEFINANCEANDMITIGATIONPLEDGES:PRIORITIESFORCLIMATEDIPLOMACYIN2023MarianFeistandOliverGedenClimatediplomacyin2022wasmarkedbymultiplecrisesandtheshak-enconfidenceofdevelopingcountriesinthemultilateralprocess.Sinceanagreementwasreachedonthecriticalissueoflossanddamageatthe27thConferenceoftheParties(COP27)totheUnitedNationsFrameworkCon-ventiononClimateChange(UNFCCC)inSharmel-Sheikh,Egypt,thefocusisnowonworkingoutthecriticaldetails.Withregardtoemissionreduc-tions,thereisacredibilitycrisisthatthreatenstoworsen,notonlybecausepoliticalprioritieshaveshiftedfollowingRussia’sattackonUkraine.Inordertostrengtheninternationalclimatecooperationin2023andbeyond,itwillbecrucialtohonourexistingcommitments,adheretoagreedprocesses,andshowdiplomatictactindealingwithpartnercountries.Energy-supplyinsecurity,highinflationrates,andgeopoliticaltensions–Rus-sia’swaragainstUkrainehasaffectedshort-termprioritiesinmanycountries.Thishashadconsequencesforinternationalclimatepolitics,notonlywithregardtotheavailabilityoffiscalresources.TheGermangovernmenthasdelayeditscoalphase-outandseenitnecessarytocourtnewgassupplierstomeetitsenergyneeds.InthepoliticalcontextoftheUNFCCC,countriesintheGlobalSouthseesuchmeasuresaslackingcoherenceandcredibility.Inaddition,therewasaconsiderabledegreeoffrustrationthathadaccruedintherun-uptoCOP27amongthedevelopingcountriesthatareparticularlyaffectedbyclimatechange.Despiteoldandnewcommitments,multilateralnegotiationshadyieldedhardlyanyprogressonimportantissues.Atthe2009climatesummitinCopenhagen(COP15),developedcountrieshadpledgedtomobiliseUS$100billioninannualfundingforclimatechangemitigationandadaptationby2020.Actualfinanceflowsfellshort97ofthistargetbyalmostUS$17billionandarenowexpectedtoreachUS$100billionin2023.Fundingforclimatechangeadaptationisespeciallyinsufficientwhenmeasuredagainstestimatedneeds.98Discrepanciesbetweenpledgesandactualsupportarehardlyanewissue.ButthesituationhasreachedacriticalpointformanyrepresentativesoftheGlobalSouth.AstheBaha-mianPrimeMinister,PhilipDavis,putit,“Wearecommitment-fatiguedandwearepledge-fatigued.”9997OECD,“AggregateTrendsofClimateFinanceProvidedandMobilisedbyDevelopedCountriesin2013-2020,”2022.98UNEP,“AdaptationGapReport2022,”2022.99JasperWard,“CaribbeannationsshouldpushforclimatefinanceatCOP27,BahamasPMsays,”Reuters,2022,https://www.reuters.com/business/environment/caribbean-nations-should-push-climate-finance-cop27-bahamas-pm-says-2022-08-16/.76Lossanddamage:AnimportantfirststepGrowingfrustrationwasalsoprevalentwithregardtolossanddamage,whichwasexpectedtobecomeamajorissueatCOP27.Countriesthathavecontributedlittletoclimatechangebutaredisproportionatelyimpactedbyitseffectshave,sincetheearly1990s,beencallingforfinancialsupportinresponsetoclimate-relateddamages,forexampleduetorisingsealevelsorextremeweatherevents.AnewdialogueonlossanddamagewaslaunchedatCOP26inGlasgowin2021,andthenewGermangovernmentshowedsensitivitytotheimportanceoftheissuefordevelopingcountries.InJuly2022,theforeignministertravelledtoPalautosignalsolidaritywiththosesmallislanddevelopingstatesthatareparticularlyaffectedbyclimatechange.ThegovernmentsofScotlandandDenmarkmadefinancialannouncementsintherun-uptoCOP27thatweretakenasasignthatthepositionofdevelopedcountrieswasbeginningtochange.Ontheotherhand,theGlasgowDialoguehadnotmadeanysignificantprogressintheintersessionalnegotiationsinBonninJune2022.Againstthisbackdrop,itwasessentialforCOP27toproduceatangibleoutcomeonlossanddamageandrestoreconfidenceinthemultilateralprocess.Lossanddamagehadalreadybeenontheagendainpreviousnegotiationrounds,forexampleinthecontextoftheWarsawMechanism,whichemergedfromCOP19(2013).100Financialsupport,however,wasexplicitlyputontheagendaforthefirsttimeinSharmel-Sheikh.Thiskindofsupportisnotaboutadaptingtoenvironmentalchange,butaboutprovidingfinanceinresponsetothedestructionbroughtonbyclimatechange.Developedcountrieshavebeenopposedtothisideaduetoconcernsaboutthelegalimplicationsthatanyformalrecognitionofresponsibilitycouldhave.TheUnitedStates,inparticular,hashistoricallybeeninstrongoppositiontolossanddamageproposals.ItaccountsforalargeshareoftheglobalgreenhousegasesemittedsincethebeginningoftheIndustrialRevolution.Immensefinancialobligationscouldpotentiallybederivedfromsuchproposals.InlinewiththelogicalreadyassertedbytheUSgovernmentwhilenegotiatingtheParisAgreement,compensationandliabilitywerethereforeexplicitlyexcludedfromthenegotiationsatCOP27.Instead,thecoredemandofthedevelopingcountrieswastocreateadedicatedfundforlossanddamagefromwhicheligiblestatescouldreceivepayments.Germanyplayedaprominentroleinthenegotiations.TheGermanSpecialEnvoyforInternationalClimateAction,JenniferMorgan,chairedthelossanddamagefinancenegotiationstogetherwithChileanEnvironmentMinisterMaisaRojas.GermanyhadalreadylaunchedtheideaofaGlobalShieldasaninsurancesolutionforlossanddamageaspartofaG7cooperationwiththeVulnerable20(V20),agroupofcountriesparticularlyaffectedbyclimatechange.ThisGlobal100JonathanGewirtzmanetal.,“Financinglossanddamage:ReviewingoptionsundertheWarsawInternationalMechanism,”ClimatePolicy18,no.8(2018).77Shieldwasintendedasaworkablesolutionfortheshorttomediumterm.Butthepoliticaleffectsofthisproposalhadbeenunderestimated.Fromtheperspectiveofmanydevelopingcountries,theinitiativeseemedlikeanattempttotakethewindoutofthesailsofthosedemandingadedicatedUNFCCCfund.Asexpected,thelossanddamagenegotiationsatCOP27proveddifficult.Akeypointofcontention,whichtheEuropeanUnion(EU)raisedinunusualclarity,waswhetherChinacouldstillbeclassifiedasadevelopingcountryorwhetheritshouldbeobligated–asthelargestcurrentgreenhousegasemitter–tocontributetolossanddamagefinance.Despitetremendousdissimilaritiesinlevelsofeconomicstrengthandemissionsamongcountries,theyarestillcommonlydividedintodevelopedanddevelopingcountries,accordingtoaprincipleestablishedintheUNFCCCin1992.WhilethisequatescountriessuchasBurkinaFasoorTuvaluwithChina,SouthKorea,orSaudiArabia,thedichotomyisstillverymuchacentralprincipleoftheUNFCCC’sinternalorganisation(e.g.,forthecompositionofcommittees),anditoftenreflectskeypoliticalcleavages.InSharmel-Sheikh,Chinawasonlywillingtomakevoluntarycontributions,asithasbeeninotherareasofinternationalclimatefinance.TheUnitedStatesandtheEUrelentedratherlate,butultimatelytheysignalledtheirwillingnesstoagreetoadedicatedfundforlossanddamage.101Initiallyintendedasabargainingmove,thisconcessionturnedouttobeanessentialsteptowardsrestoringthetrustofsomeofthedevelopingcountriesinthemultilateralprocess.AlthoughmanyWesterncountrieswouldhavepreferredadifferentsolution,thedecisiontocreateafundforparticularlyvulnerabledevelopingcountrieswasacrucialconcessionwithgreatsymbolicsignificance.ATransitionalCommittee,consistingof14delegatesfromdevelopingand10fromdevelopedcountrieshasbeenformedtodeliberateonthedetailsofhowthisfundisgoingtooperate.Atthesepost-agreementnegotiations,anumberoffundamentalissuesstillneedtoberesolved.ThewordingagreedinSharmel-Sheikh102isvagueonkeypoints–atypicalexampleoftheuseofconstructiveambiguityinUNclimatenegotiations.Excludingcontentiousissuesmayservetofacilitateaninitialagreement,butimportantdetailsnowremaintobenegotiated.Forexample,thefundaimstosupportdevelopingcountriesthatareparticularlyaffectedbythenegativeimpactsofclimatechange.Exactlywhichcountriesareeligibleforsupport,however,wasleftundecided,aswaswhowillcontributetothefundorwhichfinancialinstrumentswillbeused.103101SveaKoch,NilsKeijzer,andSteffenBauer,“TheEUinSharm-El-Sheikh:GoodcopatabadCOP?,”GermanInstituteofDevelopmentandSustainability,2022,https://blogs.idos-research.de/2022/11/24/the-eu-in-sharm-el-sheikh-good-cop-at-a-bad-cop/.102UNFCCC,“Fundingarrangementsforrespondingtolossanddamageassociatedwiththeadverseeffectsofclimatechange,includingafocusonaddressinglossanddamage,”2022,https://unfccc.int/documents/624440.103AdelineStuart-Watt,“WhyCOP27willberememberedastheLossandDamageCOPandwhattoexpectnext,”GranthamResearchInstituteonClimateChangeandtheEnvironment,2022,https://www.lse.ac.uk/granthaminstitute/news/why-cop27-will-be-remembered-as-the-loss-and-damage-cop-and-what-to-expect-next/.78ThisisreminiscentoftheGreenClimateFund(GCF).OperationalisingtheGCFaftertheinitialdecisiontoestablishitprovedalengthyprocess.104ThefundwasconceivedatCOP15inCopenhagenin2009andagreeduponayearlaterinCancún.Butittookuntil2015beforethefirstprojectscouldbefinanced.TheGCF’skeyguidingdocumenthadleftmanycriticalquestionsunanswered,suchashowtherequiredbalancebetweenfundingformitigationandadaptationwouldbeinterpreted.Themuch-anticipatedupcoming2015Parisclimatesummit(COP21)generatedpoliticalpressureandlikelyspedthingsup.ImportantquestionsabouttheGCF’sinstitutionaldesignwerenonethelessdeferreduntilwellafteritslaunch.Thenewlossanddamagefundnowfacesasimilarlydifficultandcumbersomeprocessofoperationalisation.Whilethereisaconsiderabledealofmomentumtoestablishthefund,keyissues,likewhatkindsoflossesanddamagesarecoveredandwhetherthecontributorbaseshouldbebroadenedtoincludecountrieslikeChina,arestillmajorpoliticalstumblingblocksthatneedtobeovercome.AtitsfirstmeetinginMarch2023,theTransitionalCommitteegaveitselfanambitiousworkplanandisexpectedtopresentinitialresultsbythisyear’sCOP28inDubai.105Emissionreductions:AnincreasingcredibilitygapTheso-calledcoverdecisionofCOP26,theGlasgowClimatePact106,wasgenerallywellreceivedbyobservers.Afterall,itseemedtocontainthepromisethatpartieswouldsubmitupdatesoftheirNationallyDeterminedContributions(NDCs)for2030aheadofCOP27,rampinguptheirmitigationpledges.Bycontrast,theSharmel-SheikhImplementationPlanwasmetwithalmostunanimouscriticism,despitethefactthatthewordinginbothcoverdecisionsdoesnotsignificantlydiffer.Thischangeinperceptioncanbeattributedtotwomainfactors:first,thedevelopmentsinclimateandenergypolicysinceCOP26,andsecond,theextraordinarilycumbersomenegotiationsattheconferenceinEgypt.Multiplecrises,whichbecamevirulentwithRussia’sattackonUkraine,haveshiftedtheshort-termprioritiesofmanyofEurope’sclimatepolicypioneers.Ger-manyisbyfarnottheonlycountrywherethefocusisnowmoreonthesecurityofenergysupplyandenergyprices.Unsurprisingly,theimportanceofclimatepolicyhasdiminished,atleasttemporarily,inviewoftheenormousenergysecuritychal-lenges.Itisdoubtful,however,astowhetherthelackofprogresssinceCOP26104MarianFeist,“AcrisisofconfidenceattheGreenClimateFund?,”GranthamResearchInstituteonClimateChangeandtheEnvironment,2018,https://www.lse.ac.uk/granthaminstitute/news/crisis-confidence-at-green-climate-fund/.105LianeSchalatek,“TheTCNeedsaBitofLuckandaLotofPoliticalWilltoDeliveraLossandDamageFundThatCanSoar,”HeinrichBöllFoundation,2023,https://us.boell.org/en/2023/04/11/transitional-committee-needs-bit-luck-and-lot-political-will,accessedApril2023.106UNFCCC,“ReportoftheConferenceofthePartiesservingasthemeetingofthePartiestotheParisAgreementonitsthirdsession,heldinGlasgowfrom31Octoberto13November2021:Addendum,parttwo:ActiontakenbytheConferenceofthePartiesservingasthemeetingofthePartiestotheParisAgreementatitsthirdsession,”2022,https://unfccc.int/sites/default/files/resource/cma2021_10_add1_adv.pdf.79canbesufficientlyexplainedbytheintensificationofcrises.NumerousG20mem-bers,includingtheEU,hadalreadysignalledshortlyaftertheGlasgowclimatesummitthattheywouldnotaddmorestringentreductiontargetstotheirNDCsin2022.107TheonlysignificantincreaseinambitionthataG20memberhasan-nouncedfor2030wasmadebyAustralia–adirectconsequenceofachangeofgovernmentinMay2022.Therewasnotmuchconfidenceeitherthatthedevelopedcountrieswouldactu-allyachievetheirnationalemissionreductiontargets,whatevertheirlevel.Globalgreenhousegasemissionshavenowreturnedto2019levels,thelastyearbeforetheoutbreakoftheCovidpandemic.Butemissionswouldneedtofallby43percentbetween2019and2030tobringtheworldontoa1.5°Cpath,accordingtothelatestreportfromtheIntergovernmentalPanelonClimateChange(IPCC).108,109WithitsInflationReductionActofAugust2022,theBidenadministrationunex-pectedlysucceededingettingacomprehensiveclimatepolicypackagethroughCongress.Asthispackageisbasedonsubsidiesforclimate-friendlytechnologies–asopposedtocarbonpricingorevenlimitingemissions–itseffectcannotyetbepreciselyquantified.However,itisparticularlyirritatingfordevelopingcountriesthat,ontheEuropeanside,therehasbeenashiftfromnaturalgastocoalinelec-tricityproductionandthatnewinfrastructuresandsupplyrelationshipsarebeingcreatedforgasandoil.Evenifthemedium-tolong-termlock-ineffectswithintheEUshouldturnouttobelimited–duetotheemissionstradingsystemandaccom-panyingmeasures–Europe,whichishighlydependentonfossilenergy,isactingfarmorepragmaticallyherethanithassofarconcededtodevelopingcountries.AtCOP26,GermanyandotherEUMemberStatespledgedtoendstateco-financingofcoal,oil,andnaturalgasprojectsabroadbytheendof2022.TheElmauG7summitinJune2022indicatedachangeofcourse.State-backedinvestmentsinthegassectorshould,accordingtotheleaders’communiqué,be“implementedinamannerconsistentwithourclimateobjectivesandwithoutcreatinglock-inef-fects”.110Thiswouldnotbefeasibleinthemuch-discussedcaseofexploringnewgasfieldsindevelopingcountriessuchasSenegal.AsthepoliticalfocusofCOP27wasundoubtedlyonlossanddamage,therewaslittleprogressinthenegotiationsonmitigation,withpositionsevenhardening.Thisappliesbothtotheimplementationofinternationalcooperationmechanisms107SusanneDrögeandOliverGeden,“NextCOPahead:Europehasworktodo,”SWPComment2022/C02,2022.108IPCC,“ClimateChange2022–MitigationofClimateChange–SummaryforPolicymakers:WorkingGroupIIIcontributiontotheSixthAssessmentReportoftheIntergovernmentalPanelonClimateChange,”2022,https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_SummaryForPolicymakers.pdf.109IPCC,“ClimateChange2023:SynthesisReport:AReportoftheIntergovernmentalPanelonClimateChange.ContributionofWorkingGroupsI,IIandIIItotheSixthAssessmentReportoftheIntergovernmentalPanelonClimateChange,”[CoreWritingTeam,H.LeeandJ.Romero(eds.)],2023,https://www.ipcc.ch/report/ar6/syr/.110G7,“G7Leaders’Communiqué,”2022,https://www.g7germany.de/resource/blob/974430/2062292/fbdb2c7e996205aee402386aae057c5e/2022-07-14-leaders-communique-data.pdf?download=1.80(underArticle6oftheParisAgreement)andtotheMitigationWorkProgrammeagreedinGlasgow.ThelatterwasintendednotleasttosupportandrevitalisetheongoingglobalstocktakingofprogressundertheParisAgreement.ThefactthatthefinalcoverdecisionofCOP27essentiallyrepeatstheGlasgowresolutionsonmitigationcanbeconsideredasuccessinviewofthecourseofnegotiations.IncontrasttoCOP26,Sharmel-Sheikhdidnotserveasastageforlaunchingnewsector-specificinitiativesbeyondtheUNFCCCprocess.AttheG20summitinBali,heldinparallelwithCOP27,aJustEnergyTransitionPartnership(JETP)wasannouncedbyanumberofdevelopedcountrieswithIndonesia,followingasimilaragreementwithSouthAfrica.InDecembertherewasanotherJETPconcludedwithVietnam.Inallthreecases,groupsofdonorcountries–eachofwhichincludesGermany–aimtosupportcoal-dependentemergingeconomieswithdecarbonis-ingtheirenergysectors.TakingstockofParisThefirstGlobalStocktake(GST)canbeconsideredthelitmustestfortheUNclimateregime’sabilitytotriggernetemissionreductionsthatareconsistentwithachievingthe1.5°Ctarget.Thefive-yearlyprocesswaslaunchedatthe2022intersessionalnegotiationsinBonn.Itspurposeistoassesscollectiveprogressintheareasofmitigation,adaptation,andfinanceandtoassessitagainstParis-compatiblebenchmarks.Sofar,however,theprocesshasnotprogressedbeyondtechnicalexpertdi-alogues.ItisexpectedtoconcludeatCOP28inDubaiandprovideanimpetustosignificantlyincreasetheambitionofNDCsbythenextdeadlinein2025.Ifthelargestemittersfailtoannouncemassivelyramped-upreductiontargetsfor2030and2035inthenextround,thepledge-and-reviewprocesslegallycodifiedinthe2015ParisAgreementwillinevitablyfaceadeepcredibilitycrisis–andinternation-alclimatediplomacywithit.Asimilaroutcome,albeitdelayed,canbeexpectedifthedevelopedcountriesfailtoactuallymeettheir2030pledgesoriftherecentlyannouncedJETPsdonotfulfilthehopesplacedinthem.EuropehasworktodoTheEUiscomparativelywell-placedintermsoftargetformulationandimplementation.Withanetreductiontargetof55percentby2030(baseyear1990),itsNDCissurpassedbyhardlyanydevelopedcountry.ButthecompletionoftheFit-for-55package,expectedinthecourseof2023,isevenmoreimportant,asitwillactuallyimplementtheoverallEUtargetthroughmorethanadozendirectivesandregulations.Tougheremissionstradingcouldnotonlylimittheimpactofthecrisis-inducedshiftfromnaturalgastocoal.DuringthefirstweekofCOP27,theCounciloftheEUandParliamentagreedtoincreasetheamountofnetCO281removalfromlanduse,land-usechangeandforestry(LULUCF).ThisenabledViceCommissionPresidentFransTimmermanstoannounceinSharmel-SheikhthattheEU’sambitionlevelwouldbeincreasedto57percentby2030–astepnotyetformallyagreeduponbyMemberStatesintheCounciloftheEuropeanUnion.Theapproachingdebateonthetargetsfor2035and2040willbefarmorecon-tentiouswithintheEU.TheEuropeanClimateLawprovidesthatnetzerogreen-housegasemissionsbeachievedby2050.Tosetinterimtargets,thelawrequirestheCommissiontosubmitconcreteproposalsforthepathtoclimateneutrality,atthelatestwithinsixmonthsaftertheconclusionofeachGST.Adecisioncanbeexpectedin2024,theyearoftheEuropeanelections.Witheachfive-yearstep,thequestionofinternalEUburden-sharingwillbecomemorevexing–notonlybecauseambitionlevelsinCentralandSoutheastEuropearestillrelativelylow,butalsobecausetheclimateneutralitytargetfor2050concernstheEUasawhole,thatis,itdoesnotnecessarilyhavetobeachievedbyeverysingleMemberState,providedthatotherMemberStatesexceedthistarget.Thenetemissionreductiontargetof110percentby2050,announcedbyDenmark’snewgovernmentafewweeksafterCOP27,couldbeasignificantstephere.Nationalnet-negativeemissiontargetsfor2050notonlyexpandthescopefornegotiationswithintheEU,takingintoaccountmacroeconomicconditionsinMem-berStateswithGDPpercapitasignificantlybelowtheEUaverage(e.g.,BulgariaandRomania)orthesectoralstructureinMemberStateswithveryhighlevelsofhard-to-abateagriculturalemissions(e.g.,Ireland).Suchtargetsalsosignalthat,inthelongterm,climatepolicypioneerscanbeexpectedtoremovemoreCO2fromtheatmosphereeachyearthantheyemit.MethodsforthisincludeafforestationorthecaptureofCO2fromambientairwithsubsequentgeologicalstorage(DirectAirCarbonCaptureandStorage,DACCS).111ThelatestreportsoftheIPCCshowthatnet-negativeemissionpathwaysareindispensableforreachingthe1.5°Cmarkbytheendofthe21stcenturyaftertemporarilyexceedingthethresholdfromthe2030sonwards(overshoot).CooperationwithdiplomatictactBecauseglobalemissionsarestillnotfalling,despitetheParisAgreement,dealingwiththeconsequencesofclimatechangeisbecominganincreasinglypressingpoliticalissue–evenintheoptimisticscenariothatglobalwarmingcanbehaltedbymid-century.Ifthe1.5°Cthresholdissignificantlyexceeded,problemswillbecomeevenmoreacute.ThepoliticaldimensionoftheenormousphysicalimpactsofclimatechangebecameveryclearatCOP27.Owingtocurrentprioritiesinthemultilateralprocess,therewasastrongfocusonlossanddamage.Bycontrast,adaptationtoclimate-relatedenvironmentalchangeaswellasinternationalclimatefinanceforadaptationhavefallenshort.Thepledgetoprovide111OliverGedenandFelixSchenuit,“Unconventionalmitigation:CarbonDioxideRemovalasaNewApproachinEUClimatePolicy,”SWPResearchPaper2020/RP08,2020.82US$100billionannuallyininternationalclimatefinancewillonlybefulfilledafteradelayofseveralyears.Moreover,theestimatedfundingneedsforadaptationarenotbeingmet.Meanwhile,delegatescontinuetostruggletoagreeonasingledefinitionofinternationalclimatefinancefortheUNFCCC.AnewCollectiveQuantifiedGoalonClimateFinance(NCQG)isbeingnegotiated.BasedonthepreviousUS$100billiontarget,itistobeadoptedby2024.Boththesizeofthenewtarget–literallyaquestionbetweenbillionsortrillions–andthepotentialsourcesoffundingareontheagenda.Whereasadaptationfinanceisoftennotviablewithoutgovernmentsupportandthereforerequirespublicsourcesoffunding,developedcountriesin-sistoninvolvingprivateinvestorstoaconsiderableextentinviewoftheamountsrequired.Inthiscontext,thereisalsotheabovementionedconflictoverwhethercountriessuchasChinashouldbeobligatedtomakecontributions,comparabletothosefromdevelopedcountries.Thesenegotiations–aswellasthoseforaGlobalGoalonAdaptation(GGA)–madelittleprogressinSharmel-Sheikh.Addressingclimateimpactsisthereforeanissuethatwillcontinuetoputincreasingpressureontheinternationalcommunity,bothmateriallyandpolitically.Inviewofthispressure,thelossofconfidenceonthepartofdevelopingcoun-tries,andthe–atleastintheshortterm–conflictinggoalsbetweenenergysecu-rityandclimatechangemitigation,diplomatictactwillberequiredtocontinuethemultilateralprocesseffectivelyin2023andbeyond.TheGermangovernmenthasrepeatedlymadeassurancesthatitseffortstoreplacegasimportsfromRussiainnowayrepresentastepbackwardsinGermany’sambitiontoreduceemissions.However,theveryfactthatcountriesoftheGlobalSouthperceivealackofcoher-enceinviewofthe–albeittemporary–measureshasemergedasaproblemforGermany’sclimatediplomacy.WiththeG7climateclub112andtheGlobalShield,Germanyhasproventobequiteresourcefulandflexiblewhenitcomestonewinitiativesandformsofcoop-eration.However,itwillbeimportanttoalsostrategicallyanticipatetheproceduralchallengesthatneedtobeovercomeinordertoreachanagreementonsuchinitiativeswithspecificpartners.ThelossanddamagenegotiationsinSharmel-Sheikhhaveshownthisveryclearly.Firstpublishedas:MarianFeist,OliverGeden,“ClimateNegotia-tionsinTimesofMultipleCrises.CredibilityandtrustininternationalclimatepoliticsafterCOP27,”SWPComment2023/C10,17.02.2023,doi:10.18449/2023C10(©StiftungWissenschaftundPolitik,Berlin,2023).112SusanneDrögeandMarianFeist,“TheG7Summit:Advancinginternationalclimatecooperation?,”SWPResearchPaper022/C34,2022.83DrMarianFeistisaSeniorResearchFellowattheHertieSchool’sCentreforSustainability.HewaspreviouslybasedattheGermanInstituteforInternationalandSecurityAffairs(SWP),theUnitedNationsUniversity,andtheGermanDevelopmentInstitute.HeholdsaPhDinInternationalRelationsfromtheLondonSchoolofEconomicsandPoliticalScience.DrOliverGedenisHeadoftheResearchClusterClimatePolicyandPoliticsattheGermanInstituteforInternationalandSecurityAffairs(SWP)andaResearchAssociateattheUniversityofOxford’sInstituteforScience,InnovationandSociety(InSIS).HeservedasleadauthorfortheSixthAssessmentReportoftheIntergovernmentalPanelonClimateChange(AR6WorkingGroupIIIonmitigation)aswellasamemberoftheCoreWritingTeamfortheupcomingIPCCAR6SynthesisReport.84BIBLIOGRAPHYDröge,Susanne,andFeist,Marian.“TheG7Summit:Advancinginternationalclimatecooperation?,”SWPResearchPaper022/C34,2022.Dröge,Susanne,andGeden,Oliver.“NextCOPahead:Europehasworktodo.”SWPComment2022/C02,2022.Feist,Marian.“AcrisisofconfidenceattheGreenClimateFund?,”GranthamResearchInstituteonClimateChangeandtheEnvironment,2018.https://www.lse.ac.uk/granth-aminstitute/news/crisis-confidence-at-green-climate-fund/.G7.“G7Leaders’Communiqué.”2022.https://www.g7germany.de/resource/blob/974430/2062292/fbdb2c7e996205aee402386aae057c5e/2022-07-14-leaders-com-munique-data.pdf?download=1.Geden,Oliver,andSchenuit,Felix.“Unconventionalmitigation:CarbonDioxideRe-movalasaNewApproachinEUClimatePolicy.”SWPResearchPaper2020/RP08,2020.Gewirtzman,Jonathan,Natson,Sujay,Richards,Julie-Anne,Hoffmeister,Victoria,Du-rand,Alexis,Weikmans,Romain,Huq,Saleemul,andRoberts,J.Timmons.“Financinglossanddamage:ReviewingoptionsundertheWarsawInternationalMechanism.”ClimatePolicy18,no.8(2018):1076–1086.IPCC.“ClimateChange2022–MitigationofClimateChange–SummaryforPolicymak-ers:WorkingGroupIIIcontributiontotheSixthAssessmentReportoftheIntergovernmen-talPanelonClimateChange.”2022.https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_SummaryForPolicymakers.pdf.IPCC.“ClimateChange2023:SynthesisReport:AReportoftheIntergovernmentalPanelonClimateChange.ContributionofWorkingGroupsI,IIandIIItotheSixthAssess-mentReportoftheIntergovernmentalPanelonClimateChange.”[CoreWritingTeam,H.LeeandJ.Romero(eds.)],2023.https://www.ipcc.ch/report/ar6/syr/.Koch,Svea,Keijzer,Nils,andBauer,Steffen.“TheEUinSharm-El-Sheikh:GoodcopatabadCOP?,”GermanInstituteofDevelopmentandSustainability,2022.https://blogs.idos-research.de/2022/11/24/the-eu-in-sharm-el-sheikh-good-cop-at-a-bad-cop/.OECD.“AggregateTrendsofClimateFinanceProvidedandMobilisedbyDevelopedCountriesin2013-2020.”2022.Schalatek,Liane.“TheTCNeedsaBitofLuckandaLotofPoliticalWilltoDeliveraLossandDamageFundThatCanSoar.”HeinrichBöllFoundation,2023.https://us.boell.org/en/2023/04/11/transitional-committee-needs-bit-luck-and-lot-political-will,accessedApril2023.Stuart-Watt,Adeline.“WhyCOP27willberememberedastheLossandDamageCOPandwhattoexpectnext.”GranthamResearchInstituteonClimateChangeandtheEn-vironment,2022.https://www.lse.ac.uk/granthaminstitute/news/why-cop27-will-be-remem-bered-as-the-loss-and-damage-cop-and-what-to-expect-next/.UNEP.“AdaptationGapReport2022.”2022.UNFCCC.“Fundingarrangementsforrespondingtolossanddamageassociatedwiththeadverseeffectsofclimatechange,includingafocusonaddressinglossanddamage.”2022.https://unfccc.int/documents/624440.UNFCCC.“ReportoftheConferenceofthePartiesservingasthemeetingofthePartiestotheParisAgreementonitsthirdsession,heldinGlasgowfrom31Octoberto13Novem-ber2021:Addendum,parttwo:ActiontakenbytheConferenceofthePartiesservingasthemeetingofthePartiestotheParisAgreementatitsthirdsession.”2022.https://unfccc.int/sites/default/files/resource/cma2021_10_add1_adv.pdf.Ward,Jasper.“CaribbeannationsshouldpushforclimatefinanceatCOP27,BahamasPMsays.”Reuters,2022.https://www.reuters.com/business/environment/caribbean-nati-ons-should-push-climate-finance-cop27-bahamas-pm-says-2022-08-16/.85THEIMPACTOFTHEENERGYTRANSITIONANDTHEGLOBALENERGYCRISISONEUTECHNOLOGYLEADERSHIPPOLICYYankoYanakiev,PhDTheworldiswitnessingfundamentalshiftsintheglobalenergylandscapethathavebroadeconomic,social,technological,politicalandgeopoliticalimplicationsasaresultoftheglobalenergytransition113linkedtotheneedtoavertclimateca-tastropheandleadingtoalowcarbonfuture.Thecurrentenergytransitionrepresentsagradualandlarge-scaleindustrialtransformationoftheenergyfoundationsoftheglobaleconomy(amountingtoUSD100trillion),characterizedbyachangeinenergyusepracticesandanin-creaseintherelativeshareofrenewableenergysources(RES),innovationanddeploymentofarangeoflow-carbontechnologies,allmotivatedbytheobjectiveofreducinggreenhousegasemissions.Structuralchangesareunderwaytoshapeglobalenergydemandandtheneedfornew,greenerwaysofproducingenergy,leadingtofundamentalchangesinthestructureoftheenergycomplexofindividu-alcountriesaroundtheworld.Theenergytransitionencompassesalllevelsandstagesoftheenergyproduc-tionchain,thebalancebetweensupplyanddemandinglobalandregionalenergymarkets,actorsandtheirbehavior,financialmodelsandbusinessmodels,existingpolicies,regulatoryframework,etc.Itseriouslyaltersexistingeconomicandtradepatternsandaffectstheinterstatebalanceofpower,inevitablyleadingtochang-esintheconfigurationofexistingpolitical,economicandtradealliancesandtheemergenceofnewones.Besides,itformsnon-linearanddynamicinterrelation-shipsbetweengeopolitics,nationalsecuritystrategies,foreignpolicy,energyandclimatediplomacy.Theissueofenergytransitioniswidelydebated,butthecontradictionsandcon-flictsbothwithinandbetweencountrieshaveyettodeepenandconcernthenatureofthetransition,itsdevelopmentandthetimingofitsimplementation.Lastbutnotleast,andextremelyimportant,aretheanswerstothequestions:Howmuchwillitcost?Whowillpay?ThefirstglobalenergycrisisandtheenergytransitionAlthoughthereissomecontroversy,thefirstglobalenergycrisisdidnotbeginwithRussia’smilitaryaggressioninUkraineinFebruary2022,butinthesummer113Theenergytransitionisanatural,long-term,multidimensionaltransformationprocess,wherebyoneormoreenergyresourcesaredisplacedandnewonesaremorewidelyusedundertheinfluenceofscientificandtechnologicalprogressandthecomplexdevelopmentofnewtechnologies.Asaresult,profoundandfundamentalchangesaretakingplaceinthecourseofindustrialtransformationofthewholesocietyandchangesinthewholesocialsystem,inawiderangeofdifferentfieldsinindustry,technology,economyandpolitics.SeealsoYanakiev,Y.,EnergyTransition–GeopoliticsandEnergydiplomacy,S.,UniversityforNationalandWorldEconomy,2022.,p.56.86of2021.Thecrisisisdeterminedbythemutualinfluenceofmanyfactors,ofwhichthefollowingshouldbehighlighted:-AsharpincreaseindemandforenergyresourcesinresponsetoincreasedglobalenergyconsumptionduetothefastereconomicrecoveryfollowingtheCOVID-19pandemic.Inthemiddleof2021,theoil,naturalgasandcoalmarketsgavethefirstsignsofsupply-demandbalanceproblems,pushingupprices.Ineffect,demandhascollidedwithanalreadyevidentsupplyshortage.Assumptionsandattitudesaboutaglobalpeakinenergydemandbetween2019and2020haveprovedtobeverywrong.InNovember2021,theUSannouncedlarge-scaleoilsalesfromthecountry’sstrategicreserve114;-Insufficientinvestmenttoexploreanddevelopnewoilandgasfieldsandtoproduceinadequatequantities.Thisfollowsearlierdecisionsbyoilandgascom-paniestoreduceinvestmentinnewsupply,givenlowenergypricesin2014-15andthrough2020andlowreturns,uncertaintyoffuturedemand,andpressurefrominvestorsandfinancialintermediariestoreturnmorevaluetoshareholders.Manymajoroilandnaturalgasproducershavefailedtoincreasesupplyin2021tomeetrisingdemand,evenwiththeincentiveofhighprices.Underinvestmentisalsoduetogovernmentpolicyandregulation;investorsupportforenvironmental,socialandgovernance(ESG)factors;andthelackofsufficientalternativestooilandnaturalgasthatwereexpectedtoalreadybeavailable;-Europe’shighlevelofdependenceonRussianenergysources.TheshareofRussiannaturalgasinEUconsumptionhasincreasedfromanaverageof30%in2005-2010toreach40%in2015-2020.ThisdependencehaslongbeenidentifiedasastrategicweaknessoftheEU.Overthelasttenyears,infrastructurehasbeenbuilttodiversifyimportsources,butRussianvolumeshaveremainedhigh;-Thefragilebalancebetweenenergysupplyanddemandhasbeendis-ruptedbysupplyconstraints.ThemoststrikingexampleofthiswasRussia’sdeliberateactioninautumn2021torestrictitsnaturalgassuppliestoEurope,monthsbeforetheinvasionofUkraine.Therewasalsoanuncharacteristicre-ductioninRussiannaturalgassuppliestoEuropeinJanuary2022,whichrais-esthequestionofwhetherthiswaseconomicallyjustifiedorwhetherRussiawasaimingtobringtensiontotheEuropeangasmarketbeforetheaggressioninUkraine;-Policiesofself-restraintandaforcedtransitiontoacarbon-neutraleconomybasedonthehastyabandonmentoftraditionalenergysourcesandatransitiontointermittentrenewablesources.Thisshowsunequivocallythatnotransformationoftheenergysectorcantakeplacewithoutsufficientreliableandcost-effectivebaseloadgenerationcapacity.ThecoexistenceoffossilfuelswithRESandalter-114PresidentBidenAnnouncesReleasefromtheStrategicPetroleumReserveAsPartofOngoingEffortstoLowerPricesandAddressLackofSupplyAroundtheWorld,https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/23/president-biden-announces-release-from-the-strategic-petroleum-reserve-as-part-of-ongoing-efforts-to-lower-prices-and-address-lack-of-supply-around-the-world/87nativegreenfuelsisinevitablenotonlyintheshorttermbutalsointhelongterm115.Thecumulativeimpactoftheseandotherfactorshasledtosignificantpriceincreasesforcoal,oil,naturalgas,andelectricity,respectively,inthesummerandfallof2021.Thesituationescalatedintoafull-scaleglobalenergycrisisfollowingRussia’smilitaryaggressioninUkraineinFebruary2022.Thewarhasaccelerat-edtheriseinenergyprices,withthepriceofnaturalgasreachingrecordhighs,directlyaffectingelectricitypricesinsomemarkets.Oilpriceshavereachedtheirhighestlevelsince2008.Theglobalenergycrisisintheperiod2021-2022isofunprecedenteddepthandcomplexity,andishighlymultifacetedwithmajorimplicationsformarkets,pol-iciesandeconomiesworldwide.Therearecertaincommonalitiesbetweenthefirstglobalenergycrisisandtheoilshocksofthe1970s,buttherearealsoimportantdifferences.TheoilshockswereaconsequenceoftheAraboilembargoandwerelargelyconfinedtooilandatatimewhentheworldeconomywasmuchmoredependentonoilandlessonnaturalgas.Certainpoliticalactsandactionsthenledtogeopoliticalconfrontationbetweenparticularblocksofcountries(theWestversustheArabstates),whichprimarilyaffectedregionalenergymarketsintheUSandWesterncountries.Thecurrentenergycrisisisall-encompassingbecauseithasmultipledimensions:fossilcarbonresources–oil,naturalgas,coal–aswellaselectricityandclimate.Ithasledtotoomuchdisruptionintheglobalmarketandkeyregionalenergymarkets,giventhehighlyinterconnectednatureoftheglobalizedworldeconomy.Perhapsoneofthemostcriticalfactorsunderlyingthecurrentenergycrisisisthereinforcement,verycloselinkageandinteractionwiththeglobalgeopoliticalcrisis,asaresultoftheincreasedpoliticalcontradictions,simmeringandopenconfrontationsandconflicts,includingmilitaryones.Manycountrieswerealsofacingafoodsecuritycrisisandincreasinglyvisibleimpactsofclimatechange.Inthissense,theworldhaswitnessedthegeneration,mutualinfluenceandaccumulationofenergy,market,economicandgeopoliticalcrises.TheRussianmilitaryaggressioninUkraine,aswellasthedefacto‘secondfront’openedinEurope’sgasmarkets,havetriggeredareassessmentofenergypoliciesandpriorities,aswellasquestionedtheviabilityofinfrastructureandin-vestmentsolutions,profoundlyreorientinginternationalenergytrade.Ithasalsodiscreditedoneofthemainpillarsoftheinternationalenergy,economicorderandenergysecurityofthelast70years,namelythebeliefthattheintensificationofinternationaltradecanconsolidateandguaranteesecurityofsupply.ThewarinUkrainehasbecomethatbifurcationpointatwhichtheenergycrisisin-tersectswiththatofaglobalgeopoliticalcrisisinwhichtheuncertaintyandunsustain-abilityoftheworld’sfutureenergy,economicandpoliticaldevelopmentisgrowing.ItiscomplementedbythedecisionsoftheEUandtheUStoimposeanumberofsanctionsonMoscow,aswellastoinitiallyrestrictandthencompletelyrefusetheimportofallfossilfuelsfromRussia.Thesepolicydecisionshaveledtoasignificantreshufflingand115Yanakiev,Y.,EnergyTransition–GeopoliticsandEnergydiplomacy,S.,UniversityforNationalandWorldEconomy,2022.,p.12.88restructuringofenergymarkets.Subsequently,theEU’sactionstoreplaceRussiannaturalgaswithsignificantvolumesofLNGhavecausedadiversionofsuppliesawayfromtraditionalLNGcustomersinAsia,leadingtopriceincreasesforUS,AustralianandQatariLNGandveryhighspotpricesatgashubsinEuropeandtheFarEast,andevenatHenryHubsintheUS.TheenergycrisisinEuropehasbecometheimpetusformajormarketandgeopoliticalreconfigurationsonaglobalscale.Althoughthefirstglobalenergycrisiscreatedeconomicandgeopoliticalun-certaintyitdidnotunderminepoliticalandpublicsupportfortheenergytransition.Atpresent,thereislittlelikelihoodthattheglobalenergycrisiswilldetertheWestandotherpoliticallyandeconomicallyleadingcountriesfrombackingawayfromcommitmentsalreadymadeonenergytransitionandclimate.The“EnergyTrilemma”116andtheRelationshipbetweenEnergyTransitionandEnergySecurityOverthelastdecade,the“EnergyTrilemma”hasbeenacentralelementofenergypolicyphilosophy.Indevelopedeconomies,growingconcernsabouttheimpactoftheenergyeconomyonthenaturalenvironmentmeanthatsustainabilityisincreasinglyaleadingpriority(especiallysincetheParisAgreementatCOP21in2015)and,togetherwithaffordability,arebecomingproblematicfortheglobalenergytransition.Energysecurityhaslargelybeenleftinthebackgroundthankstotheavailabilityofdiversifiedsupplies.Conversely,thetrendinmanydevelopingeconomieshasbeentoplaceenergysecurityandequityabovesustainability.Climateneutralitypoliciesandactionshavebecomeamajormacroeconomicchallenge.Trendsinenergymarketsandsoaringenergyprices,theensuingeco-nomicdifficulties,Russia’smilitaryaggressioninUkraineandgeopoliticalconflictshaveputenergysecurityatthetopofcountries’agendas.Theseeventshavealsochangedtheperceptionoftherelativeimportanceandurgencyofthethreevectorsofthe‘energytrilemma’,highlightingtheurgentneedforsecureandaffordableenergysupplies.Thishasplacedenergysecurityastheoverridingglobalpriority,downplayingtherelativeimportanceofsustainability.Thedramaticrevisionofthisprioritizationalsohighlightsthedifferenceinperceptionsofthe‘energytrilemma’indifferentregionsoftheworld.Theclaimthatonlyonegoalofthetrilemmamattersandallothersaresubordinateorcanbeachievedasancillaryandsideactivitieshaveratherideologicaldimensionsandisarecipefordeception.116AconceptdevelopedbytheWorldEnergyCouncil(WEC)toimplementsustainableenergyprojects.Itfocusesonthreemainvectorsforenergydevelopment:energysecurity,energyaffordabilityandenvironmentalsustainability.Energysecurity:theefficientorganizationofprimaryenergysupplyfromdomesticandforeignsources,thereliabilityofenergyinfrastructureandtheabilityofenergysupplierstomeetthedemandsofcurrentandfuturedemand.Energyaffordability:availabilityandaccessibilityofenergyforthepopulation,economicdevelopmentandinclusiveeconomicgrowth.Environmentalsustainability:determinestheefficiencyofenergysupplyanddemandaswellasthedevelopmentofrenewableandotherlowcarbonsources.SeealsoYanakiev,Y.,EnergyTransition–GeopoliticsandEnergydiplomacy,S.,UniversityforNationalandWorldEconomy,2022.,p.19.89Theargumentthatthefirstglobalenergycrisisandenergysecurityhadadeter-renteffectondecarbonizationandenergytransitionisalsocontroversial.Rather,thechallengesofenergysecurity,atthisstage,pointtothewrongtrajectoryoftheglobalenergytransitionintermsofunevenpaceandregionaldisparities,andintermsoffossilfuels,whichstillsupplyabout80%oftheworld’sprimaryenergy.Reducingdependenceonthemrequiresanenergytransitionthatensuresacon-tinuousandsecureenergysupply.Ifthenewrealitycreatedbythesymbiosisofaglobalenergyandgeopoliticalcrisisallowsthemyriadscenariosofrapidandcom-pletedecarbonizationtobeforgotten,thiswillbeastepforward,butitwouldbeamistaketoconcludethattheenergytransitionceasestobeapriority.In2022,ashiftinenergypolicyprioritiesfromenvironmentalissuestoenergysecurityandaffordabilitywasclearlynoted.Thegapbetweenshort-termchalleng-es,suchastacklinginflationandunemploymentandsecuringfoodandfuel,andthelong-termgoalofachievingaclimate-neutraleconomyhasneverbeengreater.Energysecurityisnowanissueformanygovernments,whichhavebeenforcedtorethinktheirstrategiesandtakeshort-termpolicymeasuresrelatedtoensuringthefunctioningofenergysystems,fuelsubstitution,marketinterventionsandfiscalpolicy,includingenergycompensationmeasuresforthepopulationandbusinesses.Onthisground,ongoinggeopoliticalturmoil,persistentinflationandmacroeconomicproblems,andtheworseningphysicalimpactsofclimatechangeareexpectedtocreatenewtensionsandconflictsbetweenmanagingshort-termrisksandmakingmeaningfulprogressonlonger-termdecarbonizationandenergytransitiongoals.Therearecurrentlytwomainissuesrelatedtotheimpactofthe‘energytri-lemma’rebalancingprocessandtheuncertaintysurroundingit.Thefirstisthatitincreasestheriskofstrandedassets–ashort-termfocusonsecuringneededadditionalvolumesofcarbon-intensivefossilfuels(includingtoreplaceRussianimports)couldleadtothedevelopmentofnewresourcesthathavelimitedsupplyiftheelementsofthetrilemmaarerebalancedinthenearterm.Thisleadstothesecondissueandakeycommercialriskforcompanies–thepracticalquestionishowwilltheybalanceshort-termenergysecurityneedswithlonger-termrequirementsforaloworzerocarbonenvironment?!Theexpectationisthattheywillseektodevelopallkindsofenergyresources,includingfossilfuels,aslowcarbonaspossible,butintheneartermto2025thiswillbeseverelytestedbythecompetinginterestsofenergyconsumers,environmentalNGOs,demandingshareholdersandespeciallypoliticianswithmultiplevestedinterests.Thus,thereisaneedforapublicexpertdebateonhowtobalancenewinvestmentinfossilcarbongenerationwithcommitmentstoclimateneutrality.Thegrowingfocusonzero-andlow-carbonenergyiscreatingawholenewdimensiontoenergygeopolitics,linkedtosupplychainsforcriticalmineralsneededsuchascomponentsforbatteries,electricmotors,windturbines,electrolyzersandsolarpanels.Plansandprioritiesdependongeopolitics,investmentdecisionsandeconomicdevelopmentimperatives,suggest-ingthatpragmatism,flexibility,ambitionandsynergieswillbeneeded.90Policiestopursuethegoalsofthetrilemmaelementsintheshorttermrequiretrade-offs,whichisaprerequisiteforformulatingcredibleandsensibleenergypoli-cies.Thereisaneedtostrikeabalancebetweensecurity,affordabilityandsustain-abilityassecurityandclimatecompeteasprioritiesforgovernments,companiesandsociety.Thesetrendshighlightthedelicatebalancingactthatweseeinterest-edcountriesfaceandmanage,weighingdifferentandsometimesopposingforces.Theshort-termbalancingactofthe‘energytrilemma’towardsenergysecuritymayevenbringenvironmentalbenefitsinthelongerterm,giventhedesireofmanycountriestoreducefossilfuelconsumption.Inthemediumandlongterm,achievingclimategoals,ensuringeconomicgrowthandajustenergytransitionforallareparamount,astheworldeconomyisexpectedtodoubleby2050andtheworld’spopulationissettoincreaseby2billionpeople.Long-termenergytransitiongoalswillbeweighedalongsidemoreimmediatecon-siderationssuchasenergyaffordabilityandsecurity.Improvingsecurityofsupplywhilereducingemissionsispossible,butrequireshugeinvestmentinallareascom-binedwithareductioninenergydemand.Thenetresultinaggregateeconomictermsisthatinvestmentneedstoincreaseandenergyconsumptionneedstobereduced.Thisisnoteasytoachieveineconomiesthataremainlydrivenbycon-sumerdemand.Sustainabilityshouldbepragmaticandpractical,andbalancingthe‘energytrilemma’ispossible,butwilltaketimeandwillcertainlyrequirecooperationandsharedinnovationbetweeneverypartoftheenergyindustry.Thereisaneedforadeeperanalysisofthemacroeconomicimplicationsofsuchalargeandradicalen-ergytransition.Policyandpublicdiscussionsrequiremethodicalexpertassessmentofthepotentialcostsandbenefitsofalternativeactionplans.TheglobalenergytransitionandthestrugglefortechnologicalleadershipTheworldiscurrentlyenteringanewphaseoftechnologicalcompetitioninthecontextoftheglobalenergyandgeopoliticalcrisis.Renewableandlow-carbonener-gytechnologiesareattheforefrontoftheindustrialandinvestmentstrategiesoftheworld’smajoreconomicpowersandhaveanimportantroletoplayinasuccessfulenergytransitionandinachievingaclimate-neutraleconomy.Thesetechnologiesunderpinthedevelopmentofanewindustrialbaseandareattheheartofmodernindustrialpoliciesandstrategies.Asaresultofcontinuedinvestment,improvementsthroughlearningcurvesandsupportivegovernmentpolicies,lowcarbontechnolo-giesarebecomingcheaper,morelocal,providemorejobs,emitmuchlesscarbonandprovidemoreenergyoptionsforthefuture117.Investmentsinrenewableandlow-carbonenergytechnologiespayoffnotonlythroughclimatechangemitigation,117IEAEnergyTechnologyPerspectives2023showsthatemploymentinnewenergytechnologiesalreadyaccountsfor55%ofglobalenergyjobsandcontinuestogrow.TheIEAprojectsemploymentinnewtechnologiestogrowbyabout1.5millionperyearthrough2030asfossilfueljobsdeclineby0.5millionperyear–anetincreaseof1millionjobsperyearinamoreefficientsystem.91butalsothroughjobsandtechnologicalleadership.Thecombinationofmorejobsandloweremissionsisthestartingpointofanewgenerationofindustrialbaseandpolicyinbothdevelopedanddevelopingeconomies.Thereisalreadyafiercearmsraceinrenewableandlow-carbonenergytechnologies,withleadingcountriesandblocksseekingtogainacompetitiveedgeinthistechnologicalarea.Industrialpolicyiscurrentlyundergoinganewrenaissance,upendingglobalsupplychains,reshapingindustriesfromsemiconductorstosolarpanels,andin-creasingthenon-linearityandindeterminacyofglobalgeopoliticalandcommercialperspectives.Large-scaleindustrialpolicy118isagainhighontheagendaofpolicy-makersintheworld’sthreelargesteconomies:theUS,ChinaandtheEU.Atthecenterofthiscurrentwavearerenewableandlow-carbonenergytechnologiesandassociatedsupplychains.Theimplicationsofthisneweraofindustrialpolicyareexpectedtobeprofoundandmoresignificant,particularlyinfourinterrelatedareas:geopolitics,energytransition,tradeandsustainability.ThecurrentnewwaveofindustrialpolicyhasitsoriginsinChinain2015,whenBeijinginitiateditsMadeinChina2025plan()119,andin2018launcheditsChinaStandards2035strategy()120.Thetwoprogramsincludeabroadsetofpolicymeasuresthatfocusonnewtechnologyindustries,cleanenergyandthedigitaleconomy.Theyarecenteredaroundlargedirectgov-ernmentinvestmentsandarehighlymotivatedtodevelopstrategictechnologicalautonomy.Throughthem,Beijingaimsnotonlytolimititsdependenceontheworld’sadvancedeconomiesandtechnologyleaders,butalsotohaveleadingChi-nesetechnologycompaniessetglobalstandardsforemergingtechnologiessuchas5G,theInternetofThings(IoT)andartificialintelligence(AI).AsChinapursuesthegoalsoftheseagendas,ithasincreaseditsinfluencethroughlargestateinvestment,protectionistpolicies,anincreasinglyintegrateddomesticmarketandlowlaborcosts.Startingin2020,Chineseinvestmentincleanmanufacturingisacceleratingdramatically,asin2022BeijinginvestedoverUSD500billioningreenindustries(about3%ofitsGDP).Chinahasbecomethelarg-estproducerandexporteroflow-carbonrenewableenergytechnologiesandalsothelargestinvestorincleanenergyprojectsworldwide.Thecountryhasatleast60%oftheworld’smanufacturingcapacityfortechnologiessuchassolar,windandbatteries,40%oftheproductionofelectrolyzers,anddominatestheelectricvehiclemanufacturingsector121.Thankstoverticalintegration,economiesofscale118Industrialpolicyisdefinedasgovernmentpolicyinterventionintheprivatesectortostrengthendomesticstrategicindustriesthroughacombinationofsubsidies,tradepromotion,protectionismandregulatoryintervention.119MadeinChina2025,https://english.www.gov.cn/2016special/madeinchina2025/120ChinaStandards2035,https://cset.georgetown.edu/wp-content/uploads/t0406_standar-dization_outline_EN.pdf121IEAEnergyTechnologyPerspectives2023,https://iea.blob.core.windows.net/assets/a86b480e-2b03-4e25-bae1-da1395e0b620/EnergyTechnologyPerspectives2023.pdf.Chinesecompanieshavea73%shareofglobalproduction(downstream)forlithium-ionbatteries,72%forsolarmodules,66%forpolysilicon,78%forsolarcellsand58%forwindturbines.Intermsofrawmaterialsandminerals,Chinahasaconcentrationofdepositsandsolidresourcesofrareearths,butwithoutamonopolyonanycriticalmineral.MIC2025中国制造2025中国标准203592andlonglearningcurves,China’sbatteryindustryisnowcompetitiveevenwithoutnationalpolicysupport.ChangestoindustrialpolicyintheUSbeganunderPresidentJosephBiden(inofficefromJanuary2021).Intheperiod2021-2022,undertheimpactoftheeconomicshockoftheCOVID-19pandemicandtheenergytransition,thepresidentialadministrationtookstepsintermsofpromotinganewUSindustrialpolicy.Threekeylawshavebeenpassed:theInfrastructureInvestmentandJobsAct(November2021)122,theCreatingHelpfulIncentivestoProduceSemiconductorsandScienceActof2022(CHIPSAct)(August2022)123andtheInflationReductionActof2022(IRA)(August2022)124.FollowingthearticulateddomesticandinternationalresponsetoChina’stech-nologicalrisein2018underPresidentDonaldTrump,thecompetitionfortechno-logicalleadershipbetweentheUSandChinatookanewturn,giventhegatheringmomentumintheracetosubsidiestheirindustries.Withthepassageofthelarg-estdomesticclimatepackagewiththe“triplewhammy”ofinnovation,investmentandindustrialpolicy,itcouldunlockuptoUSD3.5trillionininvestmentoverthenextdecade.TheIRAconsistsofacombinationofgrants,taxincentivesandloanguarantees,butalsofocusesonvalueadded.IRAscanprovideupfrontinvestmenttaxcreditsofupto70%oftheinvestmentcostofrenewableenergytechnologiesandcutthecostofonshorewindandsolargenerationinhalf.Bybasingitsindus-trialpolicyonashareoftotalprojectcosts,theUSseekstocapturehigh-valuesegmentsratherthanbuildanentiresupplychain.Althoughprotectionist,thisstillallowsUStradingpartnerstoprovideothercomponentsorsubcomponents.TheIRAwilldramaticallychangetheeconomicsofcleanenergyandelectricve-hicletechnologiesintheUSandtherestoftheworld.ItaimstousherUSindustrialpolicyintoanewera,thephilosophyofwhichisbasedonmovingtheUSeconomyawayfromfossilfuelsandtowardstheuseoflow-carbonenergytechnologies,alow-er-emissionsenergymixandamodernizedelectricpowersystem.TheIRAalsoaimstoaddressdecadesofChineseand,toalesserextent,Europeandominanceinfiveindustries:electricvehicles(EVs),batteries,wind,solar,andemergingtechnologiessuchasgreenhydrogenproductionandcarboncapture.Ontheotherhand,thismas-sivespendingpackagewillallowtheUStoincreaseitsshareofexportsofgreentech-nologiesandclimate-neutralproduction,aswellaschangecleanglobalvaluechains.EUpolicyfortechnologicalleadershiponrenewableandlow-carbonen-ergytechnologiesFormorethantenyears,theEUhasestablisheditselfasagloballeaderintak-122H.R.3684–InfrastructureInvestmentandJobsAct,https://www.congress.gov/bill/117th-congress/house-bill/3684/text123H.R.4346–ChipsandScienceAct,TheCreatingHelpfulIncentivestoProduceSemiconductorsandScienceActof2022(CHIPSAct),signedintolawonAugust9,2022,https://www.congress.gov/bill/117th-congress/house-bill/4346/text124H.R.5376–InflationReductionActof2022,https://www.congress.gov/bill/117th-congress/house-bill/5376/text93ingambitiousclimateactionandsettingpoliciestoreducegreenhousegasemis-sions.Nevertheless,theEU’sgreenindustriesareincreasinglysqueezedbytheindustrialmightoftheUSandChina,whichisaconsequenceofadistortionofthelevelplayingfieldinkeytechnologiesandcriticalrawmaterialsrelatedtotheenergytransition.Intheglobalraceforsustainabletechnologies,theEUhassofarbenefitedfromthemostdevelopedsetofclimateregulationsandcarbonpricingintheworld,introducingcarbonpricingin2005throughtheimplementationofitsEmissionsTradingScheme(ETS).Theblockhasoneofthehighestcarbonpricesintheworldandisreadytointroducetheworld’sfirstbordertaxoncarbonemis-sions125.Asaresultofthisconsistentpolicy,theEUisbenefitingfromaccelerateddeploymentofrenewableenergycomparedtootherdevelopedeconomies.TheCOVID-19pandemicandtheglobalenergycrisishaveshownhowtheover-concentrationofvaluechainshasledtoEUdependenceoncertaincountriesnotonlyforcriticalrawmaterialsandkeytechnologiesbutevenforcommonprod-ucts.ThesedependenciescanhaveseriousconsequencesfortheEU’seconomicprosperitywhenglobalmarketsareunabletomeetalldemandsatalltimes.Inthe2019-2023period,theindustrialpolicyrenaissancehasalsoreturnedtotheEUamidgeopoliticalriftsovertheroleoffreetradeandthesecurityofsupplychains.Inresponsetothesenewchallenges,majorpolicyplans,programsandpackagesoflawshavebeenconsistentlyinitiatedintheEU.TheEuropeanGreenDeal(December2019)126isavisionformakingEuropeaclimate-neutralcontinentby2050throughthesupplyofclean,affordableandsecureenergy.InDecember2020,theEuropeanCouncilreaffirmeditscommitmenttotheEU’senergytransitionforanetdomesticreductioningreenhousegasemissionsofatleast55%by2030.TheNextGenerationEU(December2020)127isadirectre-sponsetotheeconomicdamagecausedbyCovid-19andincludeda“RecoveryandResilienceFund”(RRF)thatallocatedaroundEUR250billiontogreeninvestments.Fitfor55:deliveringtheEU’s2030ClimateTargetonthewaytoclimateneutrality(July2021)128,thepackageisasetofproposalsandinitiativesaimedatrevisingandupdatingEUlegislationtoalignitwith2030and2050climatetargets.OnApril25,2023,theCounciloftheEUadoptedfivelawsthatwillenabletheEUtocutgreenhousegasemissionswithinthemainsectorsoftheeconomy,whilemakingsurethatthemostvulnerablecitizensandmicro-enterprises,aswellasthesectorsexposedtocarbonleakage,areeffectivelysupportedintheclimatetransition129.125InDecember2022,theEUreachedafinalagreementontheimplementationofCBAM,aregulatorymechanismaimedatcombatingcarbonleakage.126COM/2022/230final,TheEuropeanGreenDeal,https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2022%3A230%3AFIN&qid=1653033742483127NextGenerationEU,COUNCILREGULATION(EU)2020/2094of14December2020,https://eur-lex.europa.eu/eli/reg/2020/2094/oj128COM(2021)550final,Fitfor55:deliveringtheEU’s2030ClimateTargetonthewaytoclimateneutrality,https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A52021AE5481129Fitfor55’:Counciladoptskeypiecesoflegislationdeliveringon2030climatetargetshttps://www.consilium.europa.eu/en/press/press-releases/2023/04/25/fit-for-55-council-adopts-key-pieces-of-legislation-delivering-on-2030-climate-targets/94REPowerEU(March2022)130isaresponsetoRussia’saggressioninUkraineandthesubsequentenergycrisis.TheaimistoaccelerateEurope’sgreentran-sitioninthecriticalfightagainstclimatechange,butalsotoendtheEU’sover-dependenceonRussiaandonfossilfuelsingeneral,whoseimportsaretiedtoever-increasingcosts.Sinceearly2023,theEUclean-techsectorshavebeensupportedbyamajorGreenDealIndustrialPlanfortheNet-ZeroAge(GDIP)(February2023)131andtwoproposedlegislativeacts–theNetZeroIndustryAct(NZIA)132andtheEuropeanCriticalRawMaterialsAct(CRMA)133.TheGDIPanditscomplementaryEUlawsaimtochangethefundamentalsoftheEuropeaneconomyandindustrialmodel,protecttheblockfromexternalgeopoliticalpressuresandmitigatetheeffectsofclimatechange.Theyfillthemissingingredientofsubsidiesandgovernmentsup-port,wherebytheUnionlagssignificantlybehindChinaandtheUS.Thenextlog-icalstepisfortheEUtobuildalong-terminvestmentplanthatlooksattheeffectsoflarge-scaleinvestment,ensuringlong-termpredictabilityandusingsimpletoolstocomplementtheotherpartsofEurope’sindustrialclimateneutralitypuzzle.GDIPshouldprovideamorefavorableenvironmenttoincreasetheEU’spro-ductioncapacityfornet-zerotechnologiesandproducts,enhancethecompetitive-nessofEuropeanindustryandsupporttherapidtransitiontowardsclimateneu-trality.ItbuildsonpreviousinitiativesandonthestrengthsoftheEUsinglemarket,complementingongoingeffortsundertheEuropeanGreenDealandREPowerEU.NZIAshouldpromotetheuseofcleantechnologieswithintheEUandaccel-eratethetransitiontocleanenergy.Theregulationwillprovidebetterconditionsforcreatingnet-zeroprojectsinEuropeandattractinginvestment.PositiveeffectsareexpectedfromacceleratingprogresstowardstheEU’s2030climateanden-ergytargets,movingtowardsclimateneutrality,boostingthecompetitivenessofEUindustry,creatingqualityjobsandsupportingtheEU’seffortstobeenergyindependent.TheimplementationoftheNZIAaimstoexpandtheEUcleantech-nologyindustryandtomeetatleast40%oftheEU’sannualdeploymentneedsforstrategicnet-zerotechnologiesby2030.Thesestrategictechnologiesinclude:solar,wind,batteryandstorage,heatpumpsandgeothermal,electrolyzersandfuelcells,biogas/biomethane,carboncaptureandstorageandgridtechnologies.CRMAsetstargetsfortheproduction,refiningandrecyclingofcriticalrawma-terials(CRMs),whichareoftenindispensabletostrategicsectorsincludingrenew-ableenergy,digital,space,defenseandhealthcare.TheseCRMsofteninvolveahighlevelofsupplyriskandcanalsobeassociatedwithnegativeenvironmental130COM/2022/230final,REPowerEUPlan,https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2022%3A230%3AFIN&qid=1653033742483131COM(2023)62final,AGreenDealIndustrialPlanfortheNet-ZeroAge,https://commission.europa.eu/system/files/2023-02/COM_2023_62_2_EN_ACT_A%20Green%20Deal%20Industrial%20Plan%20for%20the%20Net-Zero%20Age.pdf132COM(2023)161,SWD(2023)68,NetZeroIndustryAct,https://single-market-economy.ec.europa.eu/publications/net-zero-industry-act_en133TheEuropeanCriticalRawMaterialsAct,https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/critical-raw-materials-act_en95impactsdependingonextractionmethodsandprocesses.TheCRMAaimstopro-videtheEUwithsecurityofsupplyofCRMsneededforgreentechnologies.Inparticular,theCRMAshouldstimulatedomesticproductionintheEUbydirectingsupplychainsawayfromthirdcountries(includingChina).Throughthesenewinitiatives,theEUismakingastrongbidtoplayanimportantroleintheglobalraceforcleantechnologies,andtobecomeatechnologyhubforcleanenergy.Brusselsisdemonstratingthatitwillnottoleratepoliciesfromcoun-triesthatseektogivetheirownindustriesanunfairadvantage.AtatimewhentheEUisseekingtodiversifyitssupplies,thefearofde-industrializationinEuropeandtheflightofinvestmentcapitaland‘brains’hasbeenfurtherfueledbytheIRA.TheIRAhasposedmultiplechallengestotheEU’sgreenindustrialpolicyandenergytransitionapproach,forcingBrusselstorespondinaneffectivewaytomaintainandstrengthenitsleadershipingreentechnologies,toaddressthepotentiallossofcompetitivenessandtheriskofrelocationofenergy-intensiveindustries,therebypromotingitsfutureeconomicprosperity.GDIPisahighlysophisticatedpoliticalapproachwiththeaimofdevelopinggreenvaluechainsintheEU,tostrengthentheEU’sindustrialbaseforprosperityandincreaseEurope’sresilienceagainstglobaltradedisruptions.ThispackageshowsacertainparadigmshiftfortheEU.TheUnionhasacontributiontomakeinbuildingaglobaleconomicsystem,openandrules-basedtrade,insistingonre-spectingandadvancingsocialandenvironmentalsustainabilitystandards.WhiletheEUremainsfullycommittedtothesevalues,theweakeningoftheWTOandtheincreasing‘weaponization’oftradeforcestheEUtohaveindustrialpolicyin-strumentstorestorea‘levelplayingfield’andreduceexcessivedependenciesthatcanbeusedtoexertpressure.Undoubtedly,thelegislativepackagehasmajorimplicationsforEuropeanfor-eignpolicy,energyandclimatediplomacy.GiventheEU’sheavyrelianceonim-portsforcertaincriticaltechnologiesandrawmaterials,thesechangeswillaffectitspartners.Europeanambitionsforanenergytransitionandnetzero,andambitionstoreduceover-dependence,shouldnotbeseenasaformof‘greenprotectionism’or‘regulatoryimperialism’.TheGDIPdoesnottargetanyparticularcountry,onthecontraryitoffersnewopportunitiesforEuropeanpartners.Globally,theneteffectofthesemeasurescanbeexpectedtobeanaccelerationoftheoverallenergytransitionandanincreaseininvestmentincleantechnologiesandrenewables,whichhavealreadyreceivedasignificantboostfromtheUS’sIRA.However,Europeanactsalsoriskcontributingtorisingclimateprotectionism,potentiallydamaginggreenindustriesindevelopingcountriesandexacerbatingtradetensions.IndiaandChinahavealreadyvoicedstrongobjectionstotheEU’scarboncapadjustmentmechanism.96ConclusionTheglobalenergycrisisposesfundamentallynewchallengesandtasksfortheworldenergyindustryandforthepoliticalandbusinesscommunitythatcannotbesolvedwithintheoldparadigm,witholdtechnologies,methodsandmeans.Manytraditionalideas,conceptsandnotionsareinfactobsolete,havingacquiredcompletelynewcontent.Whatisneededisanoptimallong-termpragmaticplanthatreconcilesclimateobjectivesandeconomicdevelopmentwithoutputtingkeysocial,energyandeconomicbalancestothetest.Thisbecomesevenmoreurgenttodayasclimatechangeisturningtobethenewglobalmegatrend,afactoringlob-alcompetitionforresources,knowledgeandtechnology,aswellasforeconomic,technologicalandgeopoliticalleadership.TherearesignificantchallengesforEuropeanindustrialpolicyinthestrugglefortechnologicalleadershipintermsofmarketrationality,stateaidregimes,geopoliticalcompetitionandthefuturepartnershipwiththeUSinthisarea.Withouttransatlan-ticcoordination,WashingtonandBrusselscouldbecomeboggeddowninatradewar,leavingthemvulnerableonbothclimatepoliciesandtheirenergyandclimatediplomacyundertheglobaldecarbonizationconsensus.Atransatlanticapproachtocooperativecompetitioncouldfacilitateavirtuouscycleintheclimate-tradenexus,evolvingintoaneconomicblockthatcancompetemoreeffectivelywithChinaandstrengthentransatlanticpowerduringtheglobalenergytransition.YankoYanakiev,PhD,isanexpertinenergyandeconomicdiplomacy,andingeopoliticalandgeoeconomicanalysis.HehassignificantexpertiseingeopoliticalandgeoeconomicprocessesinRussia,theCIScountries,theBlackSea-CaspianregionandthecountriesoftheSouthCaucasus.Long-termemployeeoftheMinistryofEconomyandEnergyandtheMinistryofForeignAffairs.HehasprofessionalexperienceindiplomacyandinternationalrelationsasHeadoftheTradeandEconomicAffairsOfficeattheBulgarianEmbassyinMoscow(RussianFederation),aswellasEconomicAdviserandChargésd’affairesa.i.oftheBulgarianEmbassyinBaku,Azerbaijan.HeisdirectlyresponsibleintheembassiesforthebilateralenergycooperationwithRussiaandAzerbaijan.ParticipatedinthenegotiatingteamsatthestateandexpertlevelontheSouthStreamgaspipeline,BeleneNPPandBurgas-Alexandroupolisoilpipeline,IGBandtheSouthernGasCorridor,theSOCARprojectforinvestmentsintheBulgariangasmarketandinthegasificationofBulgaria.Authorofthebook‘EnergyTransition–GeopoliticsandEnergyDiplomacy’,publishedin2022.Maintainsachannelonenergytransition,energydiplomacyandgeopoliticsonYouTube/@yankoyanakiev;#YankoYanakiev.97BIBLIOGRAPHY1.Yanakiev,Y.,EnergyTransition–GeopoliticsandEnergydiplomacy,UniversityforNationalandWorldEconomy,S.,2022.2.Yergin,D.,TheNewMap:Energy,Climate,andtheClashofNations,PenguinPress,2020.3.IEAEnergyTechnologyPerspectives2023,https://iea.blob.core.windows.net/assets/a86b480e-2b03-4e25-bae1-da1395e0b620/EnergyTechnologyPerspectives2023.pdf5.WorldEconomicForum,GlobalRisksReport2023,www3.weforum.org/docs/WEF_Global_Risks_Report_2023.pdf5.IEAWorldEnergyOutlook2022,www.iea.org/reports/world-energy-outlook-20226.IEA,IstheEuropeanUnionontracktomeetitsREPowerEUgoals?,https://www.iea.org/reports/is-the-european-union-on-track-to-meet-its-repowereu-goals7.Racetothetoponcleanenergy–TheUSandEUresponsetoChina’sdominance,www.unpri.org/download?ac=178248.ShellGlobal,TheEnergySecurityScenarios,www.shell.com/energy-and-innovation/the-energy-future/scenarios/the-energy-security-scenarios.html98ONTHEFOSSILGASFUTUREOFTHEEUROPEANENERGYMIXSvetoslavIvanov,CEOofOvergasInc.ADIntroductionFormillennia,mankindhasbeensearchingforundiscovered“panaceas”.Inthiscontext,thenaturaldriveforsurvivalforcespeopletoactpragmatically,dreamingoftheundiscoveredbutlivingwiththeknown.ThisistherationalapproachoftheLeadersofmodernhumansociety,standingfirmlyontheirownfeet…Oratleastitshouldbe.FewEuropeansrememberwhentheconceptofthe“GreenDeal”cameintocirculation.Itwasintendedtobebothgreenandadeal.Itwasanagreementbetweenthefutureandthepresent,arationalcompromisebetweentheconventionalandtheunconventional.However,thesituationtodaylooksquitedifferent:-2021wasarecordyearforcoaluseglobally;sowhereisthegreenelementhere?-2022beatthe2021record134;-Alldataindicatethat2023willcementthe“recordafterrecord”trend.Thus,itseemspeoplearemovingawayfromthegreencolourofthedeal,ifthereeverwasone…Theabovefactsareproofthatjustafewyearsafteritsannouncement,theoutcomeoftheGreenDealisthatwhathasbeenachievedissubstantiallyatoddswiththeintentionsexpressedasargumentsforitsstructuringandadoption.Itseemsthatgasisabouttobereplacedbycoalinsteadoftheotherwayround.Inessence,theanathemaofalltypesofconventionalandfossilenergyaspartofacommonandequally“dirty”fossilfamily,whileinparalleldeclaringrenewableenergytobetheonlygreenpanacea,isthereasonforthedisconnectbetweenintentionsandoutcome.Peopleknowwellwhathappenstoeageryoungsterswhogetbehindthewheelofapowerfulcarwithouthavingadrivinglicenceandwithoutbeingpreparedfortheheavytrafficontheroads.Soonerorlater,theycrash–andunfortunatelyinmostcasestheycausefatalconsequencesforotherroadusers,notjustthemselves.Thesamehappensasaresultofpoliticalimpatiencefollowedbyunreasonablehasteandtheartificialimpositionofnewirrationalnormsinenergyeconomiesthatareintolerableformodernhumansociety.Therefore,ifthesocietydoesnotwanttheconsequencesfortheEuropeaneconomytobeliketheaftermathofanunwise“energy”driftbyaninexperienceddriver,thepolicydecision-makersshouldbebroughttoreasonassoonaspossible,usingobjectivefactsandarationalapproach.Atleastthisishowthingslooklikewithregardtonaturalgas.134IEA:TheWorld’sCoalConsumptionIsSettoReachaNewHighin2022astheEnergyCrisisShakesMarkets.99THEFACTSABOUTNATURALGAS:Historically,forourcivilizationgasisanenergyteenagerwithuntappedcapacity.Humancivilizationhasbeenusingcoalforindustrialpurposesformorethan300years.Petroleumproductshavebeenamassrealityinindustrialproductionforover200years.Comparedtothishistoricalreality,naturalgasisanenergy“teenager”:modernindustryhasbeenextensivelyusingitforonly65years.Thisfactalonesuggestshowgreattheuntappedpotentialofthebluefuelis.Infact,aphilosophicallookatthe“aggregateevolution”oftheworld’senergyindustryprovesthelogicofitsdevelopmentsofar.Thereisnothingstrangeinthefactthathumanshavebeenabletomasterthesolid,liquidandgaseousstatesofenergyexactlyinthissequence.Technologiesandscientificdiscoveriesformasteringthedifferentaggregatestatesofmatterhavedevelopedalongasimilartrendcurve;NaturalgasisthecleanestfossilENDenergy,which–whenreplacingcoal-generatedelectricity–completelyeliminatesthelatter’scarbonfootprint.AccordingtodatabytheMinistryofEnvironmentandWater,theCO2emissionfactorofnaturalgasisnearly2.5timeslowerthanthatofelectricity135.Anobjectivecost-benefitanalysisoftheprocessofreplacingelectricalenergywithnaturalgasasfinalenergyclearlydemonstratesthatthebenefits,inadditiontobeingmanytimesgreaterthantheeffortandresourcesrequiredforthistransition,arealsosustainable.Thereisalotofevidencethatthisprocesssavesasignificantamountofprimaryenergy,greenhousegasesandotherharmfulemissions,andthatjobsintheenergysectorincreasequantitatively,whilethedemandforhighly-skilledandwell-paidhumanresourcesincreasessharply.Itisclearthatinsuchaprocessproductivityrisessharply,guaranteeinganeconomicgrowth.Theaforementionedhighlightshavesignificanteconomicbutalsogeopoliticalsignificance–specificallyatEuropeanlevel.Theeventsofthelast10yearsclearlyconfirmthattheEuropeanUnionisnotahomogeneousunionofcountrieswithcommonvalues.ThemainreasonisthedifferentreadinesswithwhicheachMemberStatehassubscribedtothepoliticalideaoftheEU.ThedifferentdevelopmentstatusoftheenergysectorsintheindividualMemberStatesguaranteesthedifferentoutcomeofapplyingthesamepolicies,treatingthemasalready“broughtunderacommondenominator”.Theysimplyarenotandhaveneverbeen(andperhapswillneverbe)atthesamestageintheirdevelopment.Itisforthisreasonthattheapplicationofuniformpoliciesinthefieldofenergycannotfailtogiveadifferentresult–unfortunatelydifferentbothinabsolutevalueandindirection(positiveornegative).135MinistryofEnvironmentandWater:CalculationandForecastoftheEmissionFactorofGreenhouseGasesfortheNationalElectricityNetworkoftheRepublicofBulgariaforthePeriod2017-2025,p.79.100Andthiscausesrisks–themainreasonforthemisnotduetothelackofanalysesthatmightstatetheobvioussituation.Therearesuchanalyses,buttheproblemliesinthelackofself-criticalinsightatthelocallevel.Infact,thelackofanobjectiveviewfromwithinguaranteesmissedopportunitiesandtheexistenceofahugeuntappedpotential.Operationally,thisisbackedbytherefusaltounderstandtheenergysector’srealitieswithitsobjectivethreatsandweaknessesforeachindividualMemberState,withaviewtodesigningandimplementingaspecificenergypolicy,whichisrespectivelyappropriate.Onecancomparesuchsituationswith,e.g.,asimilarapproachinclinicaltrials–therearecaseswhereallpatientsaretreatedwiththesamemedication,butforsomeofthemtheoutcomeisfatal.Certainly,themedicalassessmentofthesuccessrateinthefieldofclinicalresearch,calledacceptablemortality,isnotapplicableinmodernEuropeanenergypolicy–inreality,itaffectsentirenationalenergyindustriesand,respectively,entireEuropeannations.By2020,naturalgasoccupiesashareinthestructureofprimaryandfinalenergyconsumptionbetweenzeroand70%intheenergysystemsofthevariousEUMemberStates.TheshareofnaturalgasinthefinalenergyconsumptionintheEUisonaverage32%,andinBulgariaitis4%136.Thisinitselfsuggeststhat,duetotheirenergypolicies,someMemberStateshaveallowedthebluefueltomakesubstantialinroadsintotheirenergysystems,therebyeliminatingtothemaximumextentthenegativeimpactof“dirty”fossilsolidandliquidfuelsmanyyearsago.Insuchconditions,thanksmostlytothecumulativeeffectoftheabove-mentionedsubstitution,thetransitiontocarbon-neutralenergyindustryappearstobeaforegoneconclusion,includingtheroleofnaturalgas.Inmanycountries,thereplacementofgas-basedenergywithenergyproducedbyRESisanaturaldevelopmentandanupgradeonthestatusquo.Thus,thebluefuelwillreduceitsrelativeshare,butwillremainanessentialbackboneoftheenergyindustryformanydecadestocome.However,countrieswitharelativelysmallshareofgasintheirenergymixhaveexploiteditspotentialasacleanandhighlyefficientfossilfueltoaverysmallextent.TheabovefactswarranttheconclusionthatthebluefuelstillhassignificantuntappedpotentialintheEuropeanenergymix.Therefore,voluntarilyrefusingtoexploititsfurtherusageiscertainlynotarationalactionthatcanbeheldupasausefulexampleorgoodpractice.TheapplicationofacommonaggressiveEuropeanpolicy,treatingallfossilfuelsintheterritoryofcountriesthatarenothomogeneousintheirdegreeofdevelopment(suchasthe27EUMemberStates)inoneandthesameway,caninrealitybeevenharmful.Failuretotakeintoaccounttheobjectivedifferencesbetweentheindividualimpactofthistypeoffuelsontheclimate,aswellastheirspecificroleintheeconomiesofindividualMemberStates,degeneratesintothereversalofnaturalprogression.Themostdangerousmanifestationofsuchnegativedevelopmentisthereplacementofthemostecologicallycleanandefficientfossilenergy–naturalgas–withenergyproducedfromcoalandothersoliddirtyfuels.Suchaphenomenoniscertainlya136Eurostat:FinalEnergyConsumptioninHouseholdsbyTypeofFuel.101stepbackinthedevelopmentofhumancivilizationwithsubstantialeconomicandenvironmentalconsequences.AnillustrationinrelationtotheabovemightbethecaseofBulgaria.TheuseoftheapproachdescribedaboveandtheresultsachievedintheBulgarianenergysectorisasuitableexampleofsuchillogicaldevelopmentatnationallevel.Theineffectiveoutcomeisbasedonapplyingacommonpolicyonenergysectorsofdifferentstatus,withouttakingintoaccountalllocalspecificitiesanduntappedpotential.40%oftheelectricityforheating,cookingandhotwaterusedbytheBulgarianpopulationisproducedfromlow-calorificandseriouslypollutingcoal137.Duetothislocalfeature,everyownerofanelectriccarinBulgariadoesnotcontributetoreducingthecarbonfootprintoftransport,butonthecontrary–contributestoincreasingit.Theoverallefficiencyofthisold-fashionedelectricityproductionchainis20%.Inotherwords,withnearlyfour-fifthsoftheprimaryenergyusedtogenerateelectricityfromcoal,theBulgariancoal-basedelectricityindustryiswarmingtheairandsenselesslyemittingcarbondioxideandothergreenhousegasesandharmfulemissions.ReplacingeverykWhoffinalelectricitywithnaturalgasdirectlyattheendconsumerseliminatesasubstantialportionofallgreenhousegasesandallotherharmfulelementsemittedwhencoalisburnedforelectricityproduction.Thisnatural,efficientandbeneficialprocessforsocietyhasbeensloweddownbytheblindapplicationofasingleaggressivepolicyagainstnaturalgasandinthedirectionofsupportingelectrificationwithouttakingintoaccountthenegativeeffectsofitsproductionfromcoal(asdescribedabove).ThePricesPricesshouldreflecttheobjectivesupply-demandrelationshipsasthisistheonlywaytomakeanobjectivechoicebasedonarealcomparisonofthecharacteristicsofthedifferenttypesoffinalenergy.Asustainablefunctionalrealenergymarketrequiresthattheproductioncostsforthedifferenttypesofenergyareobjectivelyreflected.Inthiscontext,itshouldbeunderlinedthatmodernhumancivilizationdoesnotknowrichsocietieswithunreasonablylowprices;certainly,itisalsotruethatrichsocietiesarenotrichjustbecausetheirpricesarerelativelyhigh.Market-basedpricesareanecessary(evenobligatory)butinsufficientcondition,i.e.,theyareonlyaprerequisiteforsustainabledevelopment.Unfortunately,modernpoliticiansoftenwinovertheelectoratewithpopulistapproachesinvolvingartificiallylowpricesasatool.Inparallel,richsocieties,however,arenotrichbecausetheirpricesarehigh,butbecausetheyarehighlyefficient.Highpricesareonlyaprerequisitefortheefficientuseofallresources,andwhenasufficientlyhighlevelofefficiencyisachieved,itistimetorememberEinstein’smaximthateverythingisrelative,includingprices.Beyondphilosophicalreasoning,boththepricesofenergyresources,thatare137EWRC:AnnualReportfortheEuropeanCommission,July2022,pp.27-28.102artificiallykeptlow,andthepoliciesthatimposethemhaveextremelynegativeconsequencesinthelongrun.Overthelast10years,Europeancountrieshaveimplementedratherleft-wingpoliciesinallareasoftheeconomy,andenergyisnoexceptioninthisrespect.Seekingtowinelectoralsupportatanycostisthemostdirectroutetopopulism.Inrecentyears,thishasfoundexpressionindifferentformats,e.g.,theimpositionofpricecaps,restrictiveprofitmeasuresandtheintroductionofartificialtermswithvaguecontent,suchas“excessprofits”,etc.Thesemeasuresdirectlyaffectnegativelyratherthanpositivelythedevelopmentoftheenergymarketsinalltheiraspectsandmightincreasetheconfusion–thus,e.g.,afterthedefinitionoftheconceptofexcessprofits,shouldoneexpectasanextsteptheintroductionoftheconceptof“excesslosses”?Andifso,whatwillthepoliticianscomeupwithtohedgesuchanevent…InvestmentsItismorethanclearthatwithoutinvestmentthereisnosustainabilityandpredictability.Europeanpoliciesatthebeginningofthe21stcenturyhavetriedtoenforcethecoercivemodelofenergysavingbyintroducingdirectandindirectadditionalcomponentsinthecostofenergy–oneofthekeypretextswasthatthispenalisespollutersandsavestheplanet.Inreality,suchpolicyapproachhasdivertedasubstantialpartofthecashflowsfromtheproducersofenergyandenergyresourcestopolicymakers.Theresultwasnotlongincoming.AccordingtosomeInternationalEnergyAgencydata,initsnormalcourseofdevelopment,theglobaloilandgasindustryinvestednearlyUSD900billion138annuallyprimarilyinbuildinggasinfrastructurewithalongeconomicandphysicallifetime.Thelatterensuredthelong-termlevelofgasproductioninallitsformssothatthecostoftheenergyteenagerwasatfamiliarlevels–significantlylowerthanevenconventionalelectricityandfossilliquidfuels.Themodern“greenpolicy”describedabove,coupledwiththepoliticalaggressiontowardthebluefuel,wereperceivedassubstantialrisktonewinvestments.Thus,investorswhohavetraditionallyinvestedmoneyinnaturalgasextraction,processingandtransportationreactedrightlybyevaluatingtheserisksandtheyreactedquitenaturally–theeffectwasthattheinterestininvestmentsintheabove-mentionedactivitiesandrespectivelyintheuseofnaturalgashasdeclinedsharply.Theresult–globalnewinvestmentlevelsinthegasandoilupstreambusinessdroppedtoUSD420billionperyear139,andthisinturnforeshadowedalong-termandsustaineddeclineinnaturalgassupply.Inpracticalterms,thecause-effectrelationshipwasmorethanclear–adeclineininvestmentledtoadeclineinsupply,anddemandcontinuedtogrowdespiteaggressivepoliciesagainsttheplaceofgasinmoderneconomies.Objectively,thereisnosolutiontothisequationotherthanahighprice.138Hacquard,Simoën,Hache:IstheOilIndustryAbletoSupportaWorldThatConsumes105MillionBarrelsofOilperDayin2025?139Ibid.103Gashasbecomeapoliticalweaponthankstothosewhoweretooquicktodeclarerenewableenergyapanacea.ThewarinUkrainehasonlyhastenedtheinevitablemanifestationoftherisksposedbythedependenciescreatedbypoliticalshort-sightedness.ThegeographicallocationoftheEuropeancontinent,aswellasthehighdensityofitsgrossdomesticproduct,measuredinmillioneurospersquarekilometre,areidealprerequisitesforatleastthefollowingrationalmeasures:-Achievingtheidealinfrastructureconnectivitybetweenthecountrieswithminimalandhighlyefficientinvestmentsinenergyinfrastructure;-Guaranteeddiversificationofsourcesofprimaryenergyresources,includingnaturalgas,whichalsoinvolveswithhigheffectivenessofinvestmentsininfrastructure;-Optimalandbalancedratiobetweenknowntechnologiesforextraction,processingandtransportofnaturalgas;-Highlevelofflexibilityinsubstitutionofdifferentprimaryenergysources,includingnaturalgas;-Preservingnaturalgasdemandwiththehelpofnaturalresourcesandnewtechnologiesinanoptimalcombination;thisalsorequiresadequateeffectivenessoftheinvestments;-Implementationofahigh-efficiency“green”gasrevolutionconsistingofthereplacementofdirtyprimaryenergieswithnaturalgas,etc.Certainly,allthesestepsshouldbereasonablycombinedwithrenewableenergyinasustainableandwellanalysedmanner.Ongroundsoftheabove,itcanbeconcludedthattheEuropeansocietyhasallthenecessaryprerequisitesandopportunitiesthatcanhelpittoestablishitselfastherichestandmostprosperoussocietyontheplanetandsustainablymaintainthisplaceinthe21stcentury–andnaturalgascanbeamajorcontributorinthisprocessInstead,Europeseemstobepermanentlyinferiortotheeconomiesoftheothercontinentsinallcompetitivedirections.Theemanationofthewrongpoliciesappliedsincetheendofthe20thcenturyandcontinuedinthefirstdecadesofthe21stcenturyisthewarthatstartedinearly2022ontheterritoryofUkraine.TheresultofallaccumulatedmistakesismanifestedintheobstructionofthepossibilitiestoexploitthegreatpotentialofthecombinationofnaturalgasandtheobjectivecharacteristicsoftheEuropeancontinent.Suchmistakeshaveallowedgastobeturnedfromacivilizationalopportunityforaccelerateddevelopmentintoadangerousgood,consideredatfirstaspoliticalandlateronasmilitaryweapon.ThepoliticiansattemptedtosimultaneouslyopenwidetheBrandenburgGate,theTriumphalArchandalltheothersymbolicgatessothatgascanquickly“getout”,withtheideathatitsplacewouldbequicklyoccupiedsolelybyrenewables.Inreality,thisapproachhascausedanunprecedentedcommotionintheEuropeanUnion.104However,thereisalsogoodnews–naturalgasisstillasolution,notaproblem,andthatisinspiteofpoliciesandnotbecauseofthem.Thisshowsonceagaintheresilienceofthe“teenageaggregatestateofenergy”inthefaceofirrationalityinpoliticaldecisions.GasinEuropedoesnothaveits“own”lobby…Fornow.ThemainreasonisthatontheterritoryoftheEuropeancontinent,wherethegasdemandisheavilyconcentrated,localextractionhasnotbeensufficientlyessential.Inotherwords,atthisstagetherearenotenoughcashflowsgeneratedfromdomesticnaturalgasproductiontojustifysuchadvocacyforit.Soonerorlater,thislackof“advocacy”willbefilledinasthedemand-drivenbusinessinterestwillcompensateforthelackofbusinessinterestfromproducers.TheonlywaytostopsuchrationaldevelopmentfortheplaceofnaturalgasintheEuropeanenergymixisanartificialreductioninnaturalgasdemandinfavourofRESenergy.Againstthisbackground,akeyquestionoccurs–whatinfactisthedrivingfactorbehindtheverystrongandrapidlygrowinglobbyinfavourofRESenergy?!Asmentionedabove,substantialcashflowsareaprerequisiteforthedevelopmentofanykindofadvocacytoimprovetheenvironmentforonetypeofactivityoranother.ThespecialthingaboutRESisthatcashflowsintheformoffinancialsupportsourcedfromtheEUbudgetpresupposestronglobbyingintheirfavour.Certainly,RESenergydeservessupportbecauseithasnoalternativeintermsofitspotentialtoreducetheenergycarbonfootprint.Ontheotherhand,however,itsartificialimpositionshouldnotberushed–thedangerofhaltingprogressbyexhaustingtoomuchoftheavailablepotentialisreal.Inreality,thefactsshowthatcoalandoilarethosethatprofitthemostfromtheconflictthatexiststodaybetweengasandRES;whileinfacttheyhavehugepotentialforpartnershipandsynergy.SUMMARYAsoberrationalviewofthesituationshowsthatmankind,oratleastthepartofitthatinhabitsEurope,canexceeditscarbonneutralitytargetsbyusinggas–andthepositiveeffectswouldbevisiblewithlittleeffort,inashorttimeandatamuchlowercost.HereareafewexamplesonanationalandEuropeanlevelthatillustratethepossibilities:A)Replacingtheelectricityusedforheating,cookingandhotwater(e.g.,in1millionBulgarianhouseholds)withnaturalgaswillreducebyseveraltimesthecarbonfootprintofthesehouseholdsfromthefinalenergytheyusetoday,includingelectricity,liquidandsolidfuels;B)AccordingtodataofReady4H2initiative,currently1,151,000kmofpipelines105ofmembersoftheinitiativearereadyforconversion,whichrepresents96%ofthetotalnetwork.Thereadinessofcomponents(connections,valves,meteringequipment,compressors,etc.)isunderevaluation.Two-thirdsofReady4H2membersexpecttobefullyreadyfor100%hydrogenby2040,withpartsoftheirnetworksabletoconvertsooner140.InBulgaria,nearly98%ofthegasdistributionnetworksaremadeofnon-metallicmaterials(mainlyPE-HDandPE100).AccordingtoReady4H2data,naturalgasmixedwithupto20%hydrogencanbetransportedinsuchnetworkswithoutanyadditionalinvestment.Thiswouldsolvetheproblemoftherestofgreenhousegasesemittedintotheenvironment.Thisishownaturalgascanbepartofthetoolstoachievecarbonneutralitygoals.For150years,humancivilizationhasusedpetroleumproductsincombinationwithcoal,believingthatitwasmovingclosertoanenergysystemlessandlessdependentonsolidfuels.Today’srealityonlyprovesthatthisassumptionwasunrealistic.Isitreasonableandpossibletotrytoreplacegastogetherwithotherfossilfuelsinadecadeortwowithasyetunknowntechnologies?!Doweknowwellenoughalltherisksofidentifyingcarbonneutralwithfossilfree?!Theanswerstothesequestionsarecontainedinthecitedfacts,andweshouldnotforgetthatamistakeisforgivableonlyonce.Philosopherscalltherepetitionofanalreadyknownmistakestupidity,andtomakeitthriceisamatterofchoice.CONCLUSIONSNaturalgasandRESinabalancedcombinationwithnewtechnologies(e.g.,forhydrogenproduction)equalsrational,balanced,carbon-neutralandsustainableenergyindustry.Europe’senergyfutureisundoubtedlycarbon-neutral,butitcannotbefossil-free.Transformationispossible,butnotwithoutnaturalgas.Atleastfornow.AndherearesomeconcreteproposalsatEuropeanandnationallevel,whichshouldbequicklyconsidered:-Recognitionofthestatusofnaturalgasnotasatransitionalfuelbutaspartofthetoolstoachievecarbonneutralitygoals,whereitisaneffectivetooltoreplaceenergyproducedfromcoalandpetroleumproducts;-EqualtreatmentofnaturalgaswiththatofRES,especiallyintechnologicalsolutionswherethesetwotypesofenergyachievesynergy;-FortheterritoryofBulgariathesolutioniseasyandthereforeitsnon-applicationisevenmorepuzzling.TheNationalProgrammeforAcceleratedGasificationofBulgariashouldbeupdatedandimplemented.Thisprogrammedocumentcontains,inadditiontoacost-benefitanalysis,allthestepsnecessaryfortherapiddevelopmentoflocalgasdistributioninfrastructure.ThiswillenabletheBulgarianenergyconsumertotakeadvantageofthecountry’sgeopoliticalposition,socleverlyusedonlyforthetransitofnaturalgastothirdcountries.140Ready4H2:Europe’sLocalHydrogenNetworks–Part1:Localgasnetworksaregettingreadytoconvert.106SvetoslavIvanovisanexpertwith30yearsofexperienceinthegasmarketinSoutheastEurope.HewastheCEOofthelargestgasdistributioncompanyinBulgaria.HeiscurrentlyCEOofOvergasInc.ADandChairmanoftheManagementBoardoftheBulgarianNaturalGasAssociation.(http://www.naturalgas.bg/).SvetoslavIvanovisregognizedwithintheBulgariangascommunityas:-ThepublicfaceoftheOvergasGroupwithmorethan30yearsofexperienceandarepresentativeoftheOvergasGroupintherelationswithDGEnergyandDGCompetitionoftheECandinanumberofinternationalandnationalindustryorganizationsandNGOs;-InitiatorandoneoftheDevelopersofseveraleditionsofaNationalProgramforAcceleratedGasification;-Authorofnumerouspublicationsandstudies;-ParticipantindozensofpublicandcloseddiscussionsonenergyinBulgaria.HeholdsMAinIndustrialManagement(GermanFacultyofEngineeringEducationandIndustrialManagement,TechnicalUniversityofBraunschweig)aswellasinPowerdriveAutomation(TechnicalUniversityofSofia).107BIBLIOGRAPHYAnnualReportfortheEuropeanCommission.EnergyandWaterRegulatoryCommission(EWRC),July2022,https://www.dker.bg/uploads/2022/EWRC%20report_EC_2022_bg.pdf.CalculationandForecastoftheEmissionFactorofGreenhouseGasesfortheNationalElectricityNetworkoftheRepublicofBulgariaforthePeriod2017-2025.MinistryofEnvironmentandWater(MOEW),2020,https://www.moew.government.bg/bg/izchislenie-i-prognoza-za-emisionniya-faktor-na-parnikovite-gazove-za-nacionalnata-elektricheska-mreja-na-republika-bulgariya-za-perioda-2017-2025-g/.“Europe’sLocalHydrogenNetworks.”Ready4H2,www.ready4h2.com/_files/ugd/597932_0d67d1d9fd3e467ea03d941fcbb6a645.pdf.Hacquard,Pierre,etal.“IstheOilIndustryAbletoSupportaWorldThatConsumes105MillionBarrelsofOilperDayin2025?”Oil&GasScienceandTechnology–Rev.IFPEnergiesNouvelles,vol.74,no.88,16Dec.2019,https://doi.org/https://doi.org/10.2516/ogst/2019061.“FinalEnergyConsumptioninHouseholdsbyTypeofFuel.”Eurostat,28Apr.2023,ec.europa.eu/eurostat/databrowser/view/TEN00125/default/table?lang=en.“TheWorld’sCoalConsumptionIsSettoReachaNewHighin2022astheEnergyCrisisShakesMarkets–News.”InternationalEnergyAgency(IAE),1Dec.2022,www.iea.org/news/the-world-s-coal-consumption-is-set-to-reach-a-new-high-in-2022-as-the-energy-crisis-shakes-markets.108THEARDUOUSPATHOFDECARBONISATIONINSOUTHEASTEUROPECostisStambolis,ChairmanandExecutiveDirectoroftheInstituteofEnergyforSouth-EastEurope(IENE)IntroductionLately,decarbonisationasaconceptandacoordinatedsetofactionshascometodominateEurope’scurrentandlong-term(i.e.,2030and2050)energystrategies.WhenconsideringtheenergypolicyinSEEurope,decarbonisationwillcometoplayanimportantroleasitaffectsthewholespectrumofenergy–frompowergenerationtotransport,building,industry,tradeandservicessectors(1).TheultimateobjectiveisthereductionofGreenhouseGas(GHG)emissions.Thepowersectorisexpectedtoplaycentralroleinthedecarbonisationprocess,asitisinapositiontodeliverfastandvisiblebenefits,giventhehighvolumeofgasesitproduces.Decarbonisationinthecaseofpowergenerationmeansreductionofthesector’scarbonintensity,whichinturnmeansdeclineoftheemissionsperunitofelectricitygenerated.Decarbonisationisofparticularimportanceforcoal-intensiveregions,suchasSEEurope,inordertotransitintoa“cleaner”energymix.Agradualdecarbonisationofthepowersectorcanbeachievedbyincreasingtheshareoflow-carbonenergysources,likerenewablesandnuclear,aswellasbycappingGHGemissionsfromfossilfuelpowerstationsthroughCarbonCaptureandStorage(CCS)technologyandCarbonCaptureandUtilisation(CCU).Ashiftfrom“dirtier”fossilfuels,likecoal(whichemitsonaverage900gCO2/kWh),toloweremissionsfuels,likegas(whichemitsabout400gCO2/kWh)andrenewables,canalsohelptoreducepowerplantemissions.(2)Reachingclimateneutralityby2050,asenvisionedbytheEuropeanCommission’sstrategiclong-termvision,requirestimelydecarbonisationoftheEuropeanenergysector,includingacompletephase-outofcoal(seeMap1).Thiswillparticularlyaffectregionswhicharedependentonthecoalsectorandotherhigh-carbonindustries,astheywillhavetofollowatransitionphasetolow-carboneconomiesinthecomingdecades.Thisbriefingoffersadeepdiveintothepositioningofkeystakeholdersaswellasopportunitiesandchallengesforatransitionawayfromcoalinthecoal-dependentSEEuropeanregion.MostgovernmentsinSEEurope,incontrasttotherestofEurope,remaincommittedtocontinuingcoaluse.GreeceisuntilnowtheonlycountryinSEEuropethatisexpectedtoshutdownallitslignite-firedpowerplantsby2028141,141InDecember2019,Greece’sPublicPowerCorporation(PPC)decidedtoceaseoperatingallbutoneofitsexistinglignite-firedpowerplantsby2023.Theonlylignite-firedpowerplantremaininguntil2028isPtolemaidaV,whichiscurrentlyunderconstruction.PPCisnowlookingforafuelconversionatthefacilityforlignite-freeoperationbeyond2028.Naturalgas,biomassandwaste-to-energyincineration,evenacombinationofallthreegenerationmethods,havebeenincludedaspossibleoptionsinstate-controlledPPC’snewbusinessplan.109whileNorthMacedonia’scoalphase-outplanisstillunderdiscussion142.BasedonIENE’sestimates,theshareofsolidfuelsforpowergenerationisanticipatedtoholditspresentpositionifnotincreaseinseveralcountriesoftheregion(mostnotablyinSerbia,Kosovo143,Croatia,BosniaandHerzegovina,MontenegroandTürkiye144)overthenext10-15years,asthesecountrieswillstruggletomeetincreasingenergydemand.Hence,theroadtowardsdecarbonisationandthetransitiontoa“greener”futureinSEEurope,withhigheruseofnaturalgasandrenewables(RES),appearsdifficult,ifnotuncertain,incomparisontotherestofEurope.OutliningtheFrameItseemsthatafarmorerealisticapproachtowardsdecarbonisationisrequiredinthecaseofSEEurope.Thenecessityforsuchanapproachisbasedonthefactthatreformsarenoteasilybeingimplemented,asthereisalackofsocialacceptanceorofpoliticalwill,orboth.TheParisagreement(2015)marksthelateststepintheevolutionoftheUNclimatechangeregime,whichoriginatedin1992withtheadoptionoftheUnitedNationsFrameworkConventiononClimateChange(UNFCCC).TheUNFCCCestablishedalong-termobjective,generalprinciples,commonanddifferentiatedcommitments,andabasicgovernancestructure,includinganannualConferenceoftheParties(COP).TheParisagreement(COP21)isprovingtobeanimportantreferencepointandanacceleratorforglobalenergytransformation.ThemainquestionarisingforthecountriesinSEEurope,includingtheWesternBalkanones,iswhethertheyarewillingtosubstitutecoalwithotherenergysources.SEEuropeasawholeisacarbon-intensiveregion,withtheexceptionofAlbaniawhoseenergysectorisremarkablylow-carbon,asitssystemreliesalmostfullyonhydropowerforelectricitygeneration.Albania’sgoalwillbetodiversifyitshydropower-dependentenergymixwithoutincreasingCO2emissions,whilepreservingbiodiversity.FortherestofthecountriesinSEEurope,richinsolidfuels,thechallengewillbehowtodiversifytheirenergymixprogressivelybyminimisingcoaluse.142InFebruary2020,NorthMacedoniaadoptedaground-breakingnewenergystrategy,makingitthefirstcountryintheWesternBalkanstonameconcretedateoptionsforacoalphase-out.Twoofthestrategy’sscenariosentailacoalexitby2025,withthethirddelayingclosureoftheBitolalignite-firedpowerplantuntil2040.Afinaldecisiononwhichpathwaytotakewillbemadein2021.143Thisdesignationiswithoutprejudicetopositionsonstatus,andisinlinewithUNSCR1244andtheICJOpinionontheKosovodeclarationofindependence.144Currently,alltheseSEEcountriesdonothaveanycoalphase-outplan.110Map1:CommitmentsofEuropeanCountriestoPhaseOutCoalSources:EuropeBeyondCoal,FinancialTimes(3)Anappropriateenergymixappearstobethebestvehicletowardsachievingdecarbonisation.Anditcanbeachievedonlythroughacombinationoflow-carbonenergysources(i.e.,renewablesandnuclear),aswellasbyusingCarbonCaptureStorageandCarbonCaptureUtilisationtechnologies.However,inacarbon-intensiveregionsuchasSEEurope,detailedstudies(currentlylacking)mustbeconductedinordertoidentifytheoptimumenergymix,takingintoconsiderationthepersistentuseofcoalintheyearsaheadunderabusiness-as-usualscenario.Inordertoachieveanoptimumenergymix,adetailedstrategyfortheentireSEEregionneedstobeworkedout,withshort-,medium-andlong-termtargets.ItisonlybyfollowingsuchstudiesthataclearroadmapforSEEurope’stransitiontoadecarbonisedstatecanbeestablished.AlthoughCCUSapplicationsinSEEuropehavemadelittleprogress,acomprehensiveoverviewofcurrentlyavailabletechniquesandtechnologiesisneededinordertobeabletoassesstheavailabilityandapplicabilityoftheCCUSoptionintheregion.TheCoalProblemInalmostalltheSEEcountries,localactorsaredrivingthetransitionwhilenationalgovernmentsremaincommittedtocoalasabasicenergysourceandmaintainclosetiestothecoalindustry.InGreece,localmayorsarelookingforalternativewaysforthecoal-richregionofWesternMacedoniatodevelop,whilein111Kosovoprotestshavetakenplaceinvillagesaffectedbytheexpansionofminingactivities.Whiletransitionstrategiesbenefitfrombeingdrivenbylocalstakeholders,guidanceandpolicyframeworksfromthenationallevelarekeyastheyprovidestabilityandenablelong-termplanning.Amongcivilsocietyvoices,labourunionstendtobevocalopponentsofmeasuresthatcouldimpactonthecoalsector.TheEUhasacentralroleinsupportingtransitionprocesses.Kosovo,NorthMacedoniaandothercountriesintheWesternBalkanssharetheaspirationofjoiningtheEUandaspartoftheEnergyCommunitytheyarealreadyinfluencedbytheUnion’sclimateandenergypolicy.TheEUsetstargetsfornationalclimateandenergypoliciesandthroughitsbudgethasapowerfultooltosupportthetransitionawayfromcoal.Largeamountsofindigenouscoalandlignitedeposits,whichproviderelativelycheapandeasilyaccessibleenergyformostcountriesintheregion,arepreventingadeterminedmovetowardsdecarbonisation.AsshowninthefollowingTable,mostcountriesinSEEuropehavewell-definedplansandongoingprojectsfornewcoal/lignite-firedpowerplants.Overthenext8-10yearstheseplantswilladdsome10GWofnewelectricitycapacity.Hence,theregion’sdependenceonsolidfuelsislikelytoincrease,notwithstandingcommitmentsforincreasedRESuse.Table:UnderConstructionandPlannedCoalPlantsinSEECountries(MW),asofJuly2020Note:Includesunits30MWandlargerSources:EndCoal(4),IENEInEurope,thereareinitiativestowardsa“greener”energyfuturesuchastheEU“CoalRegionsinTransitionPlatform”,launchedin2017andincludedasanon-legislativeelementofthe“CleanenergyforallEuropeanspackage”.Theplatformworksasanopenforum,gatheringallrelevantparties,local,regionalandnationalgovernments,businessesandtradeunions,NGOsandacademia.Itpromotesknowledge-sharingandexchangesofexperiencesbetweenEUcoalregions,andrepresentsauniquebottom-upapproachtoajusttransition,enabling112regionstoidentifyandrespondtotheirparticularcontextsandopportunities.Since2019,asecretariathasbeensetuptomanageplatformactivities,coveringevents,provisionofsupportmaterialsandtechnicalassistancetocoalregions,includingtheCzechRepublic,Germany,Poland,Slovakia,SpainandtheSEEuropeancountriesofGreece,RomaniaandSlovenia.InOctober2019,agroupof41mayorsfrom10coalregionsin9Europeancountrieslaunchedastatementsupportingajusttransitiontothepost-coalera.(5)Map2:SignatoriesDeclarationofMayorsonJustTransitionSource:WWFTheClimateDimensionOnMarch4,2020,theEuropeanCommissionadoptedtheEuropeanClimateLawproposal145,whichwillenshrineinEUlegislationtheEU’scommitmenttoachievenetzeroGHGemissionsby2050.The2050objectivereflectscommitmentsundertheParisAgreementandiscentraltotheEuropeanGreenDeal146,publishedinDecember2019,whichsetsouttheCommission’scommitmenttotacklingclimatechangeandenvironmentalchallenges.Todate,mostSEEcountrieshavereliedheavilyonconventionalgenerationtechnologies.However,overthenextdecade,countriesinthisregionwillhavetoreplacearound50%oftheirexistingcapacityforage-relatedreasons,accordingtoareportbyAgoraEnergiewende(6).However,renewableenergydevelopmentinSEEuropehasbeenlimiteduntilnow.Oneimpedimenttoscalinguprenewablesistheirhigherup-frontcapitalintensity,comparedtoinvestmentincoalornaturalgas.Thesecostsmakerenewableenergyinvestmentmoresensitivetopoliticalandregulatoryconditionsthanprojectswithlowerup-frontcapitalintensity.Andsinceprivateinvestors145https://ec.europa.eu/info/files/commission-proposal-regulation-european-climate-law_en146https://ec.europa.eu/info/files/communication-european-green-deal_en113typicallyconsiderventuresinSEEuroperiskierthaninvestmentinGermanyorFrance,thiskindofprojectintheregionfacesrelativelyhigherfinancingandcapitalcosts.The“riskpremiums”demandedbyinvestorshaveasignificanteffectonthepriceofrenewablepower.Pastresearchhasshownthathigherfinancingcostscouldrenderawindprojectin,forinstance,Croatia,twiceasexpensiveasthesameprojectwithsimilarresourceconditionsinGermany.Bloatedfinancingcoststhushavetwoeffects:(a)theysupporttheperceptionthatrenewablesarecostlytoconsumersandtaxpayers;and(b)theycanrenderrenewablesincapableofoutcompetingfossil-firedgeneration,evengivencheapersystemcosts.(7)PolicyInconsistenciesConcerningGasUseinSEEuropeIfonelooksattheEC’s2030energyandclimatepoliciesatfacevalue,itshouldbenotedthatthereisaclearprejudiceagainstanyfurtherinvestmentingasinfrastructureinviewofitsfullabandonmentoverthenext10-15yearsanditssubstitutionwithhydrogenandRES.Meanwhile,allcountriesinSEEuropehavefirmplansencouragingfurthergasuseforpowergeneration,industrialandcommercialuse,andfordomesticapplications.AlmostallgovernmentsinSEEuropeconsidergasasthefastestandmostefficientwayfordecarbonisation,anditsincreaseduseisalreadyevidentintheregion.Hence,astronginconsistencyinSEEuropeisbeingwitnessedbetweenpursuedEUpolicytargets–withtheEIBandEBRDalreadydecidingagainstnewgasinfrastructureprojects–andlocallyappliedenergypoliciesfavouringgasuse.Soonerorlater,theEUwillhavetoaddressthisseriouspolicydiscrepancyanddecideonstrategycorrectionandassociatedmedium-andlong-termactionplans.Inotherwords,towhatextentisBrusselswillingtoprohibitgasuseandwhatalternativefuelsisitreadytopropose?Inthiscontext,oneshouldmentionthatgasisnowincludedintheEUTaxonomyandthiswillfacilitatematterstopursueitsuseinSEEurope147.ItisnocoincidencethatlastMay,agroupofeightEUmembersfromtheBalkansandeasternEuropejoinedforcestodefendthe“roleofnaturalgasinaclimate-neutralEurope”(8).Inajointpaper,thegroupofeightcallsfor“combinedelectricity–gassolutions”inthetransitiontonet-zeroemissionsby2050.“AtransitionbasedsolelyonrenewableenergysourcesdoesnotconsidertheneedforadiversifiedenergymixintheEU,”saysthepaper.Thepaper–titled“Theroleofnaturalgasinaclimate-neutralEurope”–issignedbyacontiguousstackofcountries,includingsouthtonorth,Greece,Bulgaria,Romania,theCzechRepublic,Slovakia,Hungary,PolandandLithuania.Itmakesthecaseforgasinthetransitionawayfromcoalpower,whichisadominantformofelectricityinmanyeasternEUmemberstates.“Whenreplacingsolidfossilfuels,naturalgasandothergaseousfuelssuchasbio-methaneanddecarbonisedgasescanreduceemissionssignificantly,”thepaperargues.147https://finance.ec.europa.eu/publications/eu-taxonomy-complementary-climate-delegated-act-accelerate-decarbonisation_en114InlateJanuary2021,theEuropeanCommissionaskedadvisorstoreworktheEU’sgreenfinancetaxonomyrulesaftermemberstatesrejecteddraftimplementingguidelines,unhappyabouttheexclusionofgasasa“transition”activitytowardsnet-zeroemissions.(9)InearlyFebruary2021,EUofficialsannouncedthatthegrantsandloansprovidedtoEUcountriesunderthebloc’s€750billionRecoveryandResilienceFundwillnotautomaticallyexcludefundingforgasinfrastructureaslongastheseprojectsarepartofacoherentnationaldecarbonisationstrategywithclearmilestones.TheEuropeanCommissioniscurrentlypreparinga“guidancedocument”onhowtoapplytheso-calledDoNoSignificantHarm(DNSH)principle,whichappliestotheentireFund.Underthatrule,EUmoneywillbepreventedfromgoingtopollutingtechnologies.Theguidancedocumentwillexplain“whichkindsofconditionscanbeattachedtogasinvestments”andmakethem“compatiblewiththatprinciple”.(10)Amongtheconditionsareassurancesthatgasispartofawidertransitionplantorenewablesandguaranteesthatinvestmentsingasfacilitiesdonotcreatea“lock-in”effectintofossilfuels–forinstance,makingsurethatinfrastructureisalsosuitablefortheuseofcleangases.Allthesemustbepartofaveryclearandcredibleplanfordecarbonisation,withclearmilestonesanddeadlines,EUofficialsstressed.TheEuropeanCommissionreckonsthatcleanelectricitywillmeet53%ofthebloc’senergydemandby2050astheblocmovestowardsreducingemissionstonet-zero.Thatleavesatleast40%forotherenergycarrierssuchasgaseousfuelsthatBrusselssayswillhavetobefullydecarbonisedinordertoreachtheEU’sstatedgoalofbecomingclimate-neutralby2050.NaturalgashasbeenamajordriverofEurope’srapidtransitionawayfromcoalpowerandisalsoprovingabaseloadback-upforvariablerenewableelectricitygenerationfromwindandsolarpower.However,alongtheEUguidingrole,whenitcomestopracticalimplementation,thebilateralandtheregionalcooperationremainscrucial.Thefollowingaresomeexampleswhichillustratetheroleofthiscooperation.EnergyCooperationbetweenGreeceandBulgariaTowardsDecarbonisationGreeceandRomaniaarethemostactiveamongEUmemberstatesinSEEuropeonclimatechangeissues,whileBulgariaisstilltryingtocatchupwithmuchoftheEU,accordingtoareportontheimplementationoftheEuropeanGreenDealpublishedbytheEuropeanCouncilonForeignRelations(ECFR).(11)InitsrecommendationsonhowcountriescanaddvaluetotheimpactoftheEuropeanGreenDeal,theECFRsaysthatGreece,ifitwantstoestablishitselfasagreenchampion,shouldteamupwiththe“lessambitious”RomaniaandBulgaria,whichsharesomeofitsclimate-relatedchallenges.This,thereportsays,couldpushRomaniaandBulgariatoadoptbestgreentransitionpracticesandjoinGreeceinclimateinitiatives.Bulgaria,whichislikelytosustainitscoalsectorforthenext20-30years,115haspursuedaratherconservativeclimatestrategy,outoffearthegreenenergytransitioncouldadverselyaffecttheeconomy,jobsandcitizens.However,thankstotheopportunitiesofferedbytheEU’sResilienceandRecoveryFund,thecountry’spositionhasstartedtoshiftalittle,andnowitseekstoincreasetheuseofnuclearenergyandnaturalgas,whileitsintegratedenergyandclimateplanenvisagesdevelopingmorethan2.5GWofrenewablescapacityby2030.(12)InBulgaria’sNationalEnergyandClimatePlan(NECP)(13),theutilisationofnaturalgasby2030ispredictedtoremainatthecurrentlevelof3bcm/yearandtheremainingvolumeshouldcomefromrenewablegases.Bulgariawillimportsome1bcmofnaturalgasperyearfromtheShahDenizIIfieldinAzerbaijanforaperiodof25yearsunderacontractwiththeAzericompanySOCARandtalkstoincreasethevolumeareunderway.Furthermore,thecountry’sNECPdoesnotprimarilymentiontheuseanddevelopmentofbiomethane.Accordingtotheprojectionsofthereport,biogasandoff-gasescouldreachupto680GWhin2030.Projectionofthedevelopmentinrenewabletransporttechnologyshowsnouseofbiogasandconsequentlynobiomethane.BasedontheNECP,Bulgariaintendstoenabletheintegrationofhydrogeninitsenergyandtransport.Thecountryexpectsanannualfinalhydrogenconsumptionof32GWhinthetransportsectorby2030,whichwillbefacilitatedbytheplanneddeploymentofhydrogenrefuellingstations.Thehydrogenshouldbeproducedbyelectrolysisusingrenewableelectricity.AccordingtoBulgaria’sNECP,apilotprojectforhydrogenproductionwithatotalinstalledcapacityof20MWisplanned.ThereiscurrentlyalimitednumberofprojectsoperatinginthecountryandmostBulgarianhydrogenisfossil-fuelbased.AccordingtoBulgaria’sSustainableEnergyDevelopmentStrategy(14),thecountryintendstopreparekeygasinfrastructureforhydrogentransportby2030.Similarly,inGreece’sNECP(15),naturalgaswillcontinuetoplayasignificantroleinthecountry’sdemandby2030,especiallyindistrictheating.Thedecarbonisationfocuswillremainonthemorepollutingligniteplants.HydrogenproductioninGreece(mainlyviaelectrolysis)isexpectedtoreach0.8TWhin2030and12.8TWhin2040.Inaddition,Greeceisexpectedtobeanethydrogenexporterby2045(8.6TWhor2.4bcmH2),whilein2050thenetexportedvolumesareanticipatedtobeevenlarger(20.2TWhor5.7bcmH2).Also,thecountryplansthegradualblendingofbiomethaneintothegasnetworkanditsuseintheheating,transportandenergysectors.Tosuccessfullyfulfilthistarget,Greeceplanstocreateanewregulatoryframeworkthatwillenablethedevelopmentofbiomethaneproductionanditsuseingastransmissionandtransportationnetwork.TheNECPdoesnotprovideanyspecificpredictionsforbiomethaneproduction.However,itprovidespredictionsfortheuseofbiofuelsintransport,theconsumptionofwhichshouldreach4.3GWhin2030.GreecedeclaresinitsNECPthatitisnecessarytoconsidertheproductionofhydrogeninconnectionwiththedeploymentofrenewables.Further,itmentionsthe116potentialofhydrogenblendingintothegassystemandsectorcoupling.Accordingtogovernmentinstitutions,Greecemustparticipateinrelevantprogrammesthatdealinmoredetailwiththeapplicationofhydrogeninindividualsectors.BothGreeceandBulgariaalreadyhaveanenergycooperationinvariousenergyprojects,includingthecompletionandoperation(sinceOctober2022)oftheGasInterconnectionGreece-Bulgaria(IGB),whileadditionalgasquantitiesareexpectedtocomefromtheAlexandroupolisFSRU,currentlyunderconstruction,inwhichBulgariahasastake.Inaddition,BulgariacurrentlyhastwonuclearreactorsinKozloduy,producingaboutone-thirdofthecountry’selectricity.OfficialsinAthensandSofiaarealsodiscussingprospectsforabilateralagreementondeliveriesofnuclearpowerfromBulgariatoGreece.Greecehasnoplanstobuildnuclearfacilitiesbecauseoftheriskofearthquakesintheregion.TheGreekgovernmentaimstoconcludelong-termbilateralcontractswithBulgariathatwouldensureastablesupplyofenergyatverylowpricesandcontributetothecompetitivenessofthecountry’seconomy.GreecealreadyimportselectricityfromBulgaria,partofwhichcomesfromtheKozloduynuclearpowerplant.(16)ItisworthnotingthatGreeceandBulgariaintendtoexpandtheirexistingelectricityinterconnectionthroughtheconstructionofasecondlinebetweenNeaSantaandMaritsaEast,withacapacityof2GWandalengthof151kilometres.Thenew400kVlineisaEuropeanprojectofcommoninterest(PCI).Itisenvisagedtoincreasethetotalcapacityto1.4GWinthedirectiontowardsBulgariaandto1.7GWfromBulgariatowardsGreece.ConstructionhasbeencompletedontheBulgarianside,whileontheGreekpartoftheborderitisexpectedtobefinishedbytheendof2023.(17)Moreover,theGreekandBulgariangastransmissionandstoragesystemoperatorspresentedinApril2023twomajorhydrogenprojectstotheEuropeanUnion.TheEUhassetstrictrulesforthefutureroleofnaturalgas.Thegoalistodeveloptheinfrastructureinsuchawayastonotlockinitsusefordecadestocome.Theobviouswaytoachieveitistomakeanynewinfrastructurehydrogenreadyandcombinenaturalgaswithgreenhydrogen.ThisiswhycountrieslikeGreeceandBulgaria,whichaimatbecomingregionalnaturalgashubs,haveturnedtheirattentiontowardsbuildingpipelinesthatwouldtransferrenewablegassesaswellasfossilgas.Already,theaforementionedIGBisdesignedtotransferhydrogeninthefuture.AnothersuchendeavouristheGreece-NorthMacedoniagasinterconnector,theconstructionofwhichisexpectedtobeginthisyear.DiscussionThetransitiontodecarbonisedpowergenerationisnotaneasyregionalissue,sinceinmostoftheSEEcountrieselectricitygeneration,whichismainlybasedoncoalandlignite,supportsthousandsofjobswhileitformsthebasisofanextensive117industrialbase.AlthoughallcountriesintheregiontoagreaterorsmallerextentarecommittedtoRESandenergyefficiencyprogrammesandspecifictargets,theyarealsopursuingaparallelcarbonisationagendaasseveralcoal-firedpowerplantsareunderconstructionoratanadvancedplanningstage.Inshort,coal-basedpowergenerationisalsomovingahead,addingsubstantialcapacityfromnowuntil2025(1.5GWperyearforSEEuropeand2.5GWforTürkiye,i.e.,total4GWperyearoverthenext7-8years).NewREScapacityoverthelastthree-yearperiodislessthan500MWperyearofinstalledcapacityexcludingTürkiye,andapproximately1.5GWperyearincludingTürkiye.Asaresult,thereisasubstantialgapbetweennewcoal-firedpowerplantsandanticipatedRESinstallations.InadditiontothisRESsupplygap,wemustconsiderthelikelihoodofapowergenerationshortfallasearlyas2027.Ifthathappens,theregionwillbetransformedfromanexporterofelectricitytoanetimporter.Thiswilldriveupelectricityprices.Underinvestmenttodayandhigherelectricitypricesinthenearfuturewillactasabraketoeconomicgrowth,fulfillinglacklustreperformanceforecastsfortheregion.Theroadtodecarbonisationcanbeapproachedontwolevels:(a)throughpolicyaddressingtheenergymixandassessingtheoptimumrateofdecarbonisationandinvestmentineconomicterms;and(b)throughtechnology,whosepenetrationdependsonthepoliciestobeimplementedandcouldcontributesignificantlytowardsdecarbonisation.GoodexamplesaretheuseofCCS/CCUordual-fuelpowerplants,analysedbyIENEinits“SEEuropeEnergyOutlook2016-2017”study.(18)ThearduousandcomplexdecarbonisationprocessinSEEuropeisfurtherburdenedbyastrongcoal/lignitelegacyandseriousenergysecurityissues.RapidlyincreasingcarbonpricesandstricterEUregulationsonair-polluterswillbankruptoutdatedlignite-firedpowerplantsintheregionoverthenextdecade,makingthempoliticallyuntenable.Risingcarbonpriceswillrequireeverbiggerstatesubsidiesforpowerplants,whichisclearlynotsustainable.Withoutthesesubsidies,fossil-basedgenerationwillmakenoeconomicsense.Mr.CostisStambolisisExecutiveDirectoroftheInstituteforEnergyforSoutheastEurope(IENE).HehasabackgroundinPhysicsandArchitecturehavingstudiedattheUniversityofLondon,attheNorthEastLondonPolytechnic(NELP)andattheArchi-tecturalAssociationinLondonfromwhereheholdsaGraduateDiplomainArchitec-tureandEnergyStudies(AADip.Grad).HealsoholdsaprofessionalpracticelicensefromtheTechnicalChamberofGreece(TEE),andGraduateDiploma(Masters)fromtheSaidBusinessSchool,UniversityofOxford,wherehestudied“StrategyandInno-vation”.CostishascarriedoutnumerousstudiesandprojectsonRenewableEnergySourcesindevelopingcountrieswithemphasisonsolarenergy.HehasconsultedwidelyonsolarbuildingapplicationsinGreecebothforprivateandinstitutionalcli-ents.Hehasworkedasaconsultantonsolarenergy,naturalgas,oilmarketsanden-ergysecurityissuesforgovernments,largemultinationalcompaniesandinternationalorganizations.Hehasworkedasconsultantforanumberofinternationalcompanies,advisingthemonpolicy,energyinfrastructureandlicensingissues.118BIBLIOGRAPHY1.IENE(2022),“SEEuropeEnergyOutlook2021-2022”,https://www.iene.eu/en/congress/47/iene-study-see-energy-outlook-2021-20222.LondonSchoolofEconomics(2020),“Whatis“decarbonisation”ofthepowersec-tor?WhydoweneedtodecarbonisethepowersectorintheUK?”,http://www.lse.ac.uk/GranthamInstitute/faqs/what-is-decarbonisation-of-the-power-sector-why-do-we-need-to-decarbonise-the-power-sector-in-the-uk/3.Dempsey,H.(2019),“Europeancoalplantsforecasttolose€6.6bnin2019”,Fi-nancialTimes,https://www.ft.com/content/ba190c72-f590-11e9-b018-3ef8794b17c64.EndCoal(2020),“GlobalCoalPlantTracker”,https://endcoal.org/global-coal-plant-tracker/5.WWF(2019),“41Europeanmayorsdeclaresupportforajusttransitionfromcoal”,http://www.wwf.eu/?uNewsID=3543156.Buck,M.,Risteska,S.andRedl,C.(2018),“AClean-EnergyTransitioninSouth-eastEurope:Challenges,OptionsandPolicyPriorities”,AgoraEnergiewende,https://www.agora-energiewende.de/fileadmin2/Projekte/2018/Energiewendedialog_Suedosteuropa/Agora-Energiewende_Impulse_SEE_energy_transition_priorities.pdf7.Lütkehermöller,K.etal.(2019),“UnlockingLowCostRenewablesinSouthEastEurope”,AgoraEnergiewende,https://newclimate.org/wp-content/uploads/2019/10/Un-locking_SEE.pdf8.Simon,F.(2020),“EightEUstatesback‘naturalgas’innet-zerotransition”,Eurac-tiv,https://www.euractiv.com/section/energy-environment/news/exclusive-eight-eu-states-back-natural-gas-in-net-zero-transition/9.Simon,F.(2021a),“EUgreenfinanceadvisorsaskedtoclarify‘transition’tonet-ze-roclimategoal”,Euractiv,https://www.euractiv.com/section/energy-environment/news/eu-green-finance-advisors-asked-to-clarify-transition-to-net-zero-climate-goal/1560091/10.Simon,F.(2021b),“EUdoesnotexcludefundinggas,highwaysundergreenre-coveryplan”,Euractiv,https://www.euractiv.com/section/energy-environment/news/eu-does-not-exclude-funding-gas-highways-under-green-recovery-plan/11.Dennison,S.(2021),“Europe’sgreenmoment:Howtomeettheclimatechallenge”,https://ecfr.eu/publication/europes-green-moment-how-to-meet-the-climate-challenge/12.BalkanGreenEnergyNews(2021),“Greece,RomaniamostactiveinSoutheastEuropeintacklingclimatechallenge”,https://balkangreenenergynews.com/greece-roma-nia-most-active-in-southeast-europe-in-tackling-climate-challenge/13.Bulgaria’sMinistryofEnergyandMinistryoftheEnvironmentandWater(2019),“IntegratedEnergyandClimatePlanoftheRepublicofBulgaria–2021-2030”,https://en-ergy.ec.europa.eu/system/files/2020-06/bg_final_necp_main_en_0.pdf14.Bulgaria’sMinistryofEnvironmentandWater(2020),“StrategyForSustainableEn-ergyDevelopmentoftheRepublicofBulgariaUntil2030WithAHorizonUntil2050andaProjectoftheIntegratedNationalPlanintheFieldofEnergyandClimateoftheRepublicofBulgariaUntil2030”,https://www.moew.government.bg/bg/strategiya-za-ustojchivo-energijno-razvitie-na-republika-bulgariya-do-2030-g-s-horizont-do-2050-g-i-proekt-na-integriran-nacion-alen-plan-v-oblastta-na-energetikata-i-klimata-inpek-na-republika-bulgariya-do-2030-g/15.Greece’sMinistryoftheEnvironmentandEnergy(2019),“NationalEnergyandCli-matePlan”,https://energy.ec.europa.eu/system/files/2020-03/el_final_necp_main_en_0.pdf16.Vujasin,M.(2022),“BulgariaandGreeceintensifycooperationintheenergysector”,https://balkangreenenergynews.com/bulgaria-and-greece-to-intensify-coopera-tion-in-the-energy-sector/11917.BalkanGreenEnergyNews(2023),“Greece’sIPTOworkingoninterconnectionswithallneighboringcountries”,https://balkangreenenergynews.com/greeces-ipto-work-ing-on-interconnections-with-all-neighboring-countries/18.IENE(2017),“SEEuropeEnergyOutlook2016-2017”,https://www.iene.eu/SEEEO-2015-2016-Promotional%20Booklet-p2317.html120ELEMENTSOFCOOPERATIONINTHECOMMONPOLICYTOGUARANTEETHEENERGYSECURITYOFTHEREGIONOFSOUTHEASTEUROPEANDTHEEXAMPLEOFBULGARIAANDROMANIAChief.Asst.Prof.IvoTsekov,PhDTheBalkansandtheBlackSearegionasanintersectionofinterestsToday,energysecurityisastateofcomplexinterdependenceandinterconnectedness.Thesecurityofeachcountry–donor,transitoruserofenergyresources–directlydependsonthesecurityofthefunctioningoftheenergysectorinallothercountriesalongtheenergyroute.Inthissense,theenergyinfrastructureisincreasinglybecomingamultinationalnetwork,andthesecurityofitsoperationisequaltothevulnerabilityofitsweakestlink.Thus,deepeningoftheconflictsprovokedbytheenergysectorleadstoachangeintheconfigurationofinternationalrelationsandtoasignificantmodificationofthepreviouslyknownpolitical,economic,andculturalrelationsbetweencountries.ManyinternationalinterestsareintertwinedintheBalkanregiontoday.Asameansofmaintainingsecurityandstabilitytoimprovethestateoftheeconomyandinfrastructure,thedevelopmentofcooperationintheBalkansisapriorityforeverycountryhere,includingBulgaria.InitscapacityasanEUMemberState,BulgariastrivestoparticipateinallformsofregionalcooperationinSoutheastEurope,inaccordancewiththeeconomicandpoliticalimpactonitsnationalinterests.Bulgariacarefullytakesintoaccountthedynamicsandnewrealitiesofinternationalrelations,directingitsregionalpolicyintheBalkanstostrengtheningtrust,stability,security,andestablishingEuropeanstandardsintherelationsbetweenthecountriesoftheregion.TheCOVID-19pandemicandtheconflictinUkrainehavemadethenewrealitiesofthesecurityenvironmentandtheirimpactoncountriesintheregionpainfullyclear.OfparticularimportancearetherelationswithRomania,whichisanaturalpartnerandanintersectionofEuro-Atlanticpolitical,social,andeconomicvalues.InthestudiesdevotedtothesecurityanddevelopmentoftheBlackSearegion,aconflictbetweentwoapproachescanbedefinitelyobserved.ThefirsthaspronouncedgeopoliticalorgeostrategicnuancesandviewstheregionthroughtheprismoftherivalrybetweentheWestandRussia.Thesecondapproachplacestheemphasisoncooperation,commonbenefit,constructivediplomacy,andoverallregionaleconomicdevelopment,withtheembodimentoftheseideasbeingtheOrganizationforBlackSeaEconomicCooperation.Intermsoftheenergyissues,thereisdefinitelyaninterweavingofelementsofconfrontationandcooperation.Incertainperiods,effortstocreateaclimateofmutualconcessionsonenergyissuescometothefore.Atthesametime,however,RussiaisinterestedinmaintainingitsdominantpositionontheEuropeanenergymarket.Forthisreason,Russianenergydiplomacyinthe121regioncannotavoidbeingaimedatblockingEuropeanattemptstodiversifysuppliesandpushnewenergyroutesbypassingRussia.PlanstotakefullcontrolofenergychannelsinSoutheastEuropearesystematicallypursuedandarenotalwaysconcealedevenattheofficialpoliticallevel.TheemphasisonelementsofrivalryandcompetitionbetweentheWestandRussiahasevenledanumberofanalyststoidentifyenergyinfrastructureasanattributeofthenewundeclaredColdWar.148ThestudyofthepotentialoftheBlackSearegionasoneofthefactorsoftheEU’senergysecurityisbasedonconsideringitasaconnectinglinkbetweenCentralAsiaandtheCaucasus-Caspianregionontheonehand,andtheBalkansand–inabroadersense–Europeontheother.Thisroledefinestheregion’sever-increasingimportancetotheOldContinentasitsenergyartery.Undoubtedly,recentyearshavebeenmarkedbytheintensificationofeffortstobuildtheregion’snewpipelinearchitecture.Numerousprojectsweredeveloped,asmallpartofwhichwererealized,andtherestremainattheconceptuallevelorhavebeendiscontinued.Ifitisassumedthat,duetothenumberoflaunchedalternatives,theperiodofgeneratingnewproposalshasended,thenthecomplextaskofselectingthemostsuitableroutesandensuringtheirsupplywithrawmaterialscomestothefore.Predictionsofhowthisprocesswillproceedareextremelycontroversial.Accordingtomoreextremeopinions,thecompetitionbetweentheprojectswillincreaseregionaltensionsandturntheBlackSeaareaintoanarenaofrivalry.Somesaythemanydifferentoptionsfornewpipelines–supportedbyvariouscoalitionsofcountries–createstability,whileotherssaytheywillbuildanunsustainableenergyarchitecture.Inaddition,itiscurrentlyclearthatthedevelopedplansforthesupplyofenergyresourcesfromtheCaspianregionandCentralAsiaareseriouslyaheadoftheexporters’extractionpossibilities,sothateventhealreadybuiltfacilitiesarecurrentlyfacingtheproblemsoffillingthem.ResearchdevotedtotheBlackSearegionunanimouslyemphasizesitsenormousimportanceasanenergyhub,asabridgebetweentheEastandtheWest,andasanaturalwaterwaybetweenEuropeandAsia.Thisspaceisconsideredbyanalystsasanintersectionoffourgeopoliticalaxes:a)CaspianSea-BlackSea-MediterraneanSea;b)East-Westalongtheso-called“SilkRoad”,whererelationswithChinaandingeneralwiththeShanghaiCooperationOrganizationareofkeyimportance;c)EU’sWest-EastcorridorRhine-Main-Danube-BlackSea;d)North-SouthandtheconnectionbetweentheBalticandBlackSeas.Itisclearfromthisschemethattheregionshouldnotbelimitedtoonlythesixlittoralcountries(Bulgaria,Georgia,Romania,Russia,Turkey,Ukraine),butshouldbetreatedasan“extendedBlackSeaarea”.Theadoptionofthismodelallowstheidentificationofthisspaceasthesecond-largestproducerofoilandnaturalgasaftertheMiddleEast.148Yoneva,Elizabet.2010.“TheBlackSearegionandtheEUenergysecurity.”Avangard,p.103-111.122AlternativegasroutestostrengthentheenergysecurityoftheregionNaturalgaswillplayanimportantroleinEurope’senergydiversificationandtransitionefforts.Aslocalproductiondeclines,diversificationofimportroutesbecomesincreasinglyimportant.WhiletheEUhasmadesignificantprogressinbuildingnaturalgaspipelines,reverseflowinfrastructure,andLNGterminals,therearestillpartsofCentralandEasternEuropethatlackdiversenaturalgassupplyoptions.SeveralregionalprojectslistedbelowareexamplesofstrategicinfrastructurethatwillfurtherdevelopenergyindependenceinEurope.Accesstodiversenaturalgasroutesmeansafasterswitchfromcoaltogasinelectricityandheatingforcountriesreliantonfossilfuels.ProjectsinSoutheastEuropeareanopportunitytostrengthenenergysecurityandmarketcompetition.SoutheastEurope,andespeciallytheWesternBalkansregion,hasnotreceivedasmuchattentionastheCentralEuropeanregionindiscussionsofEuropeanenergysecurity.Thisregionisstillheavilydependentoncoal,Russiangas,andhydropower.ThereisahugeopportunitytobuildnaturalgasinfrastructureintheWesternBalkanstodiversifytheregion’senergymixandprovidealternativestogassuppliesfromRussiaandcoal-firedpowergeneration,whichisfueledprimarilybycoalminedintheBalkans.TheSouthernGasCorridorisoneofthemostcomplexenergyprojects,3,500kmlongandinvolving7countriesand11energycompanies.ItrunsfromBakutosouthernItalythroughGeorgia,Turkey,Greece,andAlbania.Anintegratedsystemofpipelines,whichalsoincludestheSouthCaucasianandTrans-Anatoliangaspipelines,itsthroughputis16billioncubicmeters(bcm),anditsmainsourceistheShahDenizfieldwithreservesof1.2trillioncubicmetersofgas.OnDecember31,2020,AzerbaijanbegancommercialgassuppliestoEuropethroughtheTrans-AdriaticPipeline,whichispartoftheSouthernGasCorridor.Itisplannedthatfor25yearstheAsiancountrywillannuallyexportmorethan10bcmofgastotheEuropeanmarket.Azerbaijandelivered7bcmofgasthroughtheTrans-AdriaticPipelinetoItalyin2021alone,withplanstoincreasevolumesin2023.149Bulgariaisanothercountryonthesouthernroutewithagreedquantitiesof1bcmperyear.IGBistheonlygaspipelinethatwilldirectlyconnecttheBulgariangasmarketwiththeSouthernGasCorridor.Thecapacityofthelinkis3bcm,withthepossibilityofgoingupto5bcm.ItisalreadyknownthatSerbiaisinterestedinimportingAzerigas,relyingforthisonthereversibleconnectorwithBulgariathatisbeingbuilt.InFebruary2022,RomaniaalsoexpresseditsdesiretoconnecttotheSouthernGasCorridorthroughaninterconnectorwithBulgariaandthroughtheBRUApipelineannouncedin2017,whichshouldprovideBulgaria,Romania,Hungary,andAustriawithBlackSeagas.149Karimli,Ilhan.2022.“AzerbaijanRanksThird-LargestNaturalGasSuppliertoItaly.”CaspianNews,March27,2022.https://caspiannews.com/news-detail/azerbaijan-ranks-third-largest-natural-gas-supplier-to-italy-2022-4-14-0/.123InNovember2021,BRUAwasincludedintheEuropeanCommission’slistofcriticalenergyinfrastructureforEurope.150Giventhenewgeopoliticalrealities,alllandlockedCentralAsiancountriesneedalternativeroutesformarketaccessaswellasforimportneeds.AnaturaloptionwouldbeIran,whichisneverthelessalsoundersanctions,andnotallCentralAsianactorswillfeelcomfortableusingthisroute.Inaddition,Iranstillhaslimitedtransitinfrastructure.ChinaisanalternativemarketthatwillremainimportantforCentralAsia,butitwillnotbeusefulfortransitduetodistancestothesea.ThereisasouthernoptionthroughPakistanportsviaAfghanistan,butthelackoftransitinfrastructure,especiallyforenergyresources,makesthisoptionlessviableuntilseriousinvestmentininfrastructuredevelopmentismade.Currently,stakeholdershaveauniqueopportunitytofocusseriouslyonthedevelopmentoftheMiddleCorridor.Theeconomicpotentialtoconnectresource-richbutlandlockedCentralAsiaandtheresource-hungrycountriesofCentralandEasternEuroperemainslargelyuntapped,whichcouldbringtogethertheeconomicinterestsofkeycountriessuchasTurkey,Bulgaria,Romania,Georgia,Azerbaijan,Kazakhstan,andUzbekistan.Ifhardandsoftinfrastructureelementscansupportincreasedtransitvolumetoreducetransportcosts,thentheMiddleCorridorwillplayagreaterroleintradebetweenAsiaandEurope.Expandingtrans-CaspianconnectivityandremovingthetransitbottleneckbetweentheeasternandwesternshoresoftheCaspianSeashouldbeatoppriority.ItisintheinterestofKazakhstan,Uzbekistan,andotherCentralAsiancountriestobuildlong-termstrategictieswithAzerbaijan,Georgia,Turkey,andBlackSeacountrieswithcommoninterestssuchasBulgariaandRomania,anditisalsointhegreatinterestofEuropetofacilitateandsupporttheseties.TheregionhassignificantpotentialtocontributetoEuropeanandglobalenergyandfoodsecurity,andEuropecanandshouldsupportthisprocessthroughgreaterengagementandparticipationintransitprojects,includingbyfocusingoncreativewaystoexpandtheThreeSeasinitiative.AddingtheCaspianSeatotheconsiderationofprojectsforeconomic,energy,digital,andwiderinfrastructureconnectivityinCentralandEasternEuropewillincreasethefocusofthebureaucracyinthisdirectionandstimulatetheengagementoftheprivatesector.AvectorofcooperationcanalsobesoughtinthedirectionofexpandingtheinterconnectionforgascomingtoBulgariafromGreece,whichcanallowourcountrytoplayanimportantroleinopeninganotheralternativesupplyroutetoRomania,thistimeforMediterraneanenergy.TheGreekcompanyCopelouzosGrouptookanimportantsteptowardstherealizationoftheprojectforelectricalconnectionbetweenGreeceandEgypt(GREGY–GreenEnergyInterconnector)bysubmittingafullapplicationforitsinclusionintheten-yearplanforthedevelopmentofEuropeanenergynetworks(TYNDP2022).ItsinclusioninTYNDP150Chirileasa,Andrei.2021.“ECincludessecondstageofBRUApipelineamongcriticallyimportantprojects.”RomaniaInsider,November22,2021.https://www.romania-insider.com/brua-second-stage-ec-imp-projects-nov-2021.1242022willbethefirstnecessarystepthatwillstarttheprocessofincludingthisambitiousprojectinthe6thlistofprojectsofcommoninterestoftheEuropeanUnion(PCI)inthecontextoftheinterconnectionofEuropeanenergynetworks.ProjectsincludedinthePCIlistareimportantcross-borderprojectsthatconnecttheenergysystemsofEUcountriesandthirdcountriesandhelptheEuropeanUnionachieveitsclimategoalsandimplementitsenergypolicybyprovidingsafe,affordable,andsustainableenergy.CopelouzosGroup’selectricityinterconnectionprojectwilltransfer100%clean,greenenergyproducedfromrenewableenergysources.ItwillbeimplementedinEgyptandwilloffersignificantbenefitsnotonlytoGreecebuttothewholeofEurope,contributingtoitsenergysecurityandhelpingitachievefasterdecarbonizationanditszerocarbontargets.EnergycooperationbetweenBulgariaandRomania:theRESvectorAnothervectorofcooperationanddiversificationcanbesoughtinthecontextoftheprojectfortheproduction,transport,anduseofgreenhydrogenforindustrialcustomersandthetransportsectorGreenHydrogen@BlueDanube.TheprojectisbeingdevelopedbyVerbund,Austria’slargestproducerofrenewableelectricity,andaimstocreateagreenhydrogenvaluechainconnectingrenewablecapacitiesinSoutheastEuropewiththegrowinginterestinhydrogeninWesternEurope.VerbundisdevelopingGreenHydrogen@BlueDanubetogetherwithpartnersandbuyersofgreenhydrogenwithintheframeworkoftheEuropeanCommission’sinitiativeforimportantprojectsofcommonEuropeaninterest.TheprojectiscoordinatedbyVerbundandinvolvesvariousstakeholdersalongthevaluechain,mainlyAustrianandGermancompaniessuchasBayernoil,Bosch,SiemensEnergy,andmanyothers.TheRomanianstate-ownedelectricitycompanyHidroelectricaisalsoinvolvedintheprojectasaco-investorinrenewableenergyandhydrogenproductioninSoutheastEurope.151Itisconsideringtheconstructionofa50MWgreenhydrogenproductionplantandaphotovoltaicparkwithenergystoragebatteriesontheDanubeRiverislandofOstrovuMare,locatedneartheIronGateIIhydropowerandnavigationsystem.Hidroelectricawantstostartproducingultra-high-puritygreenhydrogenatOstrovuMarein2026,aimingforaprocessefficiencyof75%,aminimumloadof10%,andproductionofatleast7,500tonsperyear.Thecompanyexpectstoreceivenomorethan€4perkilogramofH2andalsowantstoproducegreenhydrogenthroughahydrolyzerofatleast100MWontheOltRiverinaprojectthatalsoincludestheconstructionofaphotovoltaicparkwithaninstalledcapacityofatleast300MW.152Theaimistocreateatrans-Europeangreenhydrogenvaluechain–from151Szoke,Evelin.2020.“Romania‘sHidroelectricatakespartinmulti-stakeholderEuropeangreenhydrogenproject.”CEEEnergyNews,November19,2020.https://ceenergynews.com/hydrogen/romanias-hidroelectrica-takes-part-in-multi-stakeholder-european-green-hydrogen-project/.152HydrogenCentral.2021.“Romania–HidroelectricaPlansGreenHydrogenProductiononTheDanube.”December28,2021.https://hydrogen-central.com/romania-hidroelectrica-green-hydrogen-production-danube/.125productiontotransportandpurchasebyindustrialandmobilecustomers.ThefirstphaseoftheprojectfocusesontheproductionanduseofgreenhydrogeninAustriaandBavaria.ThesecondphasewillconnecthydrogenproducedfromrenewablesourcesinSoutheastEurope.ThehydrogenwillbetransportedviatheDanube,along-establishedtransportcorridor(TEN-T),tobuyersinAustriaandGermany.Futuredemandforgreenhydrogencanbemetonlypartiallybydomesticproduction.LikemostWesternEuropeancountries,Austriawillalsobemoredependentongreenhydrogenimportstomeetambitiousclimategoals.TheideaistoexpandthegreenelectricityvaluechainbycreatingahydrogenprojectwithaEuropeandimensiontouserenewableresourcesproducedinEuropethatcouldnototherwiseberealizedduetoalackofenergytransmissioncapacity.TheEuropeanhydrogeneconomyisalsogainingmomentumasaresultoftheCommission’snewhydrogenstrategyannouncedin2020,andthereisaclearintentiontoincreasehydrogencapacityandinparticulartostimulatecross-borderprojects.Atthebeginningof2022,Romaniaexpressedadesirefortheconstructionoftheso-called‘greenbridge’betweentheBlackandCaspianSeas.Tentativelycalledthe“GreenCorridor”,itsaimistoconnectwindfarmsalongthecoastofbothseaswithanunderseacablefromGeorgiatoRomania.ThiswillfacilitatetheexportofgreenenergyfromRomaniatotherestofEurope,includingatatimeofheightenedconcernsaboutthecontinent’senergysecurity.153Inthespringof2022,itbecameclearthatBulgariawillofferRomaniaaprojecttobuildajointoffshorewindfarminthewatersoftheBlackSea,asinvestorsfromDenmarkandGermany,whichhaveexperienceinthefield,showedinterestinasimilarproject.Bulgaria’smarineRESpotentialisestimatedat116GW,butprojectsfor26GWcouldberealizedinaccessibleareasandwithavailabletechnologies.FourkeyareasoftheBulgarianBlackSeacoasthavebeenidentifiedassuitableforoffshoreprojects.TheregionofShabla,closetotheseaborderwithRomania,isconsideredthemostpromisingforquickimplementation,anditislikelytobeproposedforajointoffshorewindfarmwithRomania.Thereispotentialfor3-4GWwithacapacityof45-48%andaveragecostsof€60-80permegawatthourinstalled.154ThewatersnearVarna,Obzor,andRezovoneartheseaborderwithTurkey,aretheotherareasthatcanturntheregionsofVarnaandBurgasintocentersfordecarbonizationoftheBulgarianeconomy,accordingtotheorganization’scalculations.InFebruary2022,Germanrenewableenergydeveloperwpdoffshorerevealedplanstobuildtwowindfarmstotaling1.9GWinRomanianBlackSeawaters.Amonthlater,wpdtoldmediaoutletsintheBulgariancapitalofSofiathatitwas153Shaban,Ilham.2022.“SouthernGasCorridor‘simportanceforEurope‘ssupplysecurityismorethaneverbefore.”CaspianBarrel,June28,2022.http://caspianbarrel.org/en/2022/06/southern-gas-corridor-s-importance-for-europe-s-supply-security-is-more-than-ever-before/.154CenterfortheStudyofDemocracy.2022.“TacklingtheenergyandclimatesecurityconundruminSoutheastEurope.”PolicyBrief,no.110,May,2022.https://csd.bg/fileadmin/user_upload/publications_library/files/2022_05/BRIEF_110_ENG.pdf.126planningtwowindfarmprojectstotaling75-100MWnearthecityofBalchikonBulgaria’snorthernBlackSeacoast.155TheEuropeanCommissionalreadyinautumn2020announcedtheEUStrategyonOffshoreRenewableEnergy,accordingtowhichthesecapacitiesshouldincreasefrom12GWtoatleast60GWby2030and300GWby2050.Inthedocument,theBlackSeahasbeenidentifiedasaplacewithhugepotentialforthedeploymentofoffshorewindplatforms–bothfixedtotheseabedandfloating,aswellasfortheuseofenergyfromwavesandtides.AccordingtotheECstrategyforoffshoreparks,theEuropeanCommission,theEuropeanInvestmentBank,andotherfinancialinstitutionswillworktogethertosupportinvestmentinsuchrenewablesources.Forthispurpose,theRecoveryandSustainabilityPlanoftheEC,theInvestEUandConnectedEuropeprogrammes,theRESfinancingmechanism,theInnovationFund,andotherfundswillbeused.Public-privatepartnershipssuchastheonewiththeSpanishcompanyEDPRenewables,whichisaworldleaderintheRESmarketandhasalreadyinvestedmorethan€750millioninRomania,canalsoenablethedevelopmentoflargegreenenergyprojects.IftheywanttousewindgeneratorsintheBlackSea–averyimportantsectorforbothRomaniaandBulgariaaswellasTurkey–SofiaandBucharestmustworktogetherbecausetheycannotdevelopindependentcapacities,as(althoughtheyhaveplansinthisarea)thisisjustnotefficient.Thefirststeptowardsthelaunchofoffshorewindenergyisadvanceplanning,especiallymarinespatialplanningandbilateralcooperationbetweenBulgariaandRomania.Neithercountrycurrentlyenvisagesthedeploymentofoffshorewindintheirnationalenergyandclimateplansfor2030.Thisshouldchangewhentheplansareupdatedin2023.Givingclearvisibilitytodesiredexpansionofoffshorewinduntil2030iscrucialforattractinginvestment.ItwouldbeevenbetterifBulgariaandRomaniacooperatedonajointoffshorewindprojectthatwouldqualifyasaflagshipEuropeaninitiativeundertheEUStrategyonOffshoreRenewableEnergy.Thesecondstepwouldbetoensurethatoffshorewindcancoexistwithothereconomicsectors.nationalmarinespatialplansarecrucialtothisend.Thedocumentcoversinternalmarinewaters,territorialsea,contiguouszone,continentalshelf,exclusiveeconomiczone,includingcoastalmarinewaters.Itshouldoutlinetheopportunitiesforthedeploymentofoffshorewindenergyforthenextsixyearsineachcountry.NeitherRomanianorBulgariahavelistedoffshoreareasasaprioritysectorintheirplanssofar,andthisneedstobechangedasamatterofpriority.Bothcountries’nationalrecoveryandresilienceplansshouldthendirectinvestmenttotherightprioritiesforoffshorewindexpansion.TheseplansoutlinehowEUMemberStatesplantoinvest€653billionfromtheEU’sRecoveryandResilienceFacility.156Bulgariaisbettingonthedigitalizationofelectricitygridsand155RenewablesNow.2022.“Bulgaria,Romaniatoexplorejointenergy,infrastructureprojects.”April29,2022.https://renewablesnow.com/news/bulgaria-romania-to-explore-joint-energy-infrastructure-projects-govt-782855/.156WindEurope.2021.“AretheoffshorewindsofchangecomingtotheBlackSeatoo?”March1,2021.https://windeurope.org/newsroom/news/are-the-offshore-winds-of-change-coming-to-the-black-sea-too/.127hydrogeninfrastructure,whileRomaniawantstofurtherstrengthenplanningtoexpandandstrengthenitselectricitygrid.Butbothplanscriticallymissinvestmentsinportinfrastructure,whichwillbekeytothedeploymentofoffshorewindandcouldprovetobecentralfundingpropositionsforbothcountries’plans.Theneedforarobustregulatoryframeworkforoffshorewindsystemsisevident.Alsoevidentisthatcontractsfordifference(CfD)wouldbethepreferredwaytofinanceoffshorewindpowerintheBlackSea.Thismodelischeapforgovernments:theypayandgetbackdependingonmarketprices.Itreducesfinancingcosts,whichmeanslowerbillsforenergyconsumers.Denmark,Poland,Ireland,France,Lithuania,UnitedKingdomalreadyoperatethatway.Lastbutnotleast,howBulgariaandRomaniadealwithbiodiversitywhendeployingoffshorewindenergyintheBlackSeaisalsoimportant.ThetwoneighborscouldusethebestpracticesputforwardbytheOffshoreCoalition,whichisacollaborationbetweenleadingEuropeanNGOsandtransmissionsystemoperators,todeployoffshorewindenergyinfullrespectofnatureconservationandhealthymarineecosystems.SoutheastEuropeandthespecialcaseofnuclearenergyAccordingtothelatestEurostatdata,the13EUcountriesthathavenuclearpowerplantsgenerated683,512GWhofnuclearpowerin2020.Thisrepresentsalmost25%ofthetotalEUpowergeneration.157Europeiscurrentlyreassessingitsapproachtonuclearpowerduetotheapproachingdeadlinesofclimateagreementsandtheunstablepoliticalenvironment.Whenproperlyoperated,nuclearpowerisabletoaddressvariouschallengesposedbytheloomingenergycrisisandtheneedfordiversification.First,subjecttothehighestsafetystandards,nuclearpowercanprovidethenecessaryamountsofelectricityforfutureelectrificationandisakeycomponentinfindingasolutiontoreducedependenceonfossilfuelimportsfromRussia.Next,consideringtheso-calledsystemcostsandthevalueofstability,nuclearpowerisacompetitiveenergysource,especiallywhenconsideringspecificfundingschemesforcapital-intensiveprojects.Regardingthemanagementofradioactivewaste,includingformedicalorindustrialapplications,disposaltechnologiesareavailable;forhighlyactivewaste,deepgeologicalrepositoriesarecurrentlyconsideredasuitableandsafesolution,andthetechnologyfortheirconstructionisalreadyavailable.Amidtheincreasingshareofwindandsolarpower,severalcountries,includingFranceandBritain,arelookingtoexpandtheirnuclearpowerprogrammes.Inmid-2022,Bulgariajoinedtheopinionof20tradeunionsfromBelgium,theCzechRepublic,Finland,France,Hungary,Lithuania,Romania,Slovakia,Slovenia,andCroatiainsupportofnuclearenergy.Inajointarticle,theparticipantsoftheinitiativecallontheEuropeanCommissiontoincludenuclearenergyinthepoliciesofthe157CenterfortheStudyofDemocracy.2022.“TacklingtheenergyandclimatesecurityconundruminSoutheastEurope.”PolicyBrief,no.110,May,2022.https://csd.bg/fileadmin/user_upload/publications_library/files/2022_05/BRIEF_110_ENG.pdf.128GreenDealandtheREPowerEUplan.Accordingtothem,theinclusionofnuclearpowerintheEUtaxonomyisvitaltotackleclimatechangeandincreaseenergyindependence.Thiswillprovideanopportunityforsustainablefinancingofnuclearenergyprojectsinthefuture.Participantsintheinitiativenotethat–alongsiderenewableenergysources–nuclearenergyhasthepotentialtoformthebasisofEurope’scarbon-freeenergysystem.TheargumentisthatwindandsolarpoweralonewillnotbeenoughtohelpcountriesmeetthetargetssetattheDecember2021UNclimatesummitinGlasgow.Thenuclearindustry’smaintrumpcardistechnologyinvolvingcompactplants,orsmallmodularreactors,whichproponentssayaresafe,cheap,andefficient.AccordingtoRolls-Royce,onereactorwouldhaveroughlyone-sevenththepowerofthelargestmodernnuclearplantsandcouldpoweronemillionhomes.158Criticsarguethatnuclearpowerishardlytheanswertoacceleratingthedrivetonetzeroemissions.NuScalereactors,whicharetobecomeoperationalfirstinRomania,arealsoplannedfordeploymentbyPoland,Bulgaria,andUkraine.ThelatterhasalreadyreceivedgrantsfromtheUSforthepreparationofpermitsandthesearchforsitesfortheconstructionofreactorunits.AttheendofOctober2021,BulgarianEnergyHoldingsignedamemorandumofcooperationwiththeAmericanFluorCorporation.ThecorporationisamajorityownerinNuScalePower,withwhichattheendof2020“KozloduyNPP-NewPowers”signedanagreementtoanalyzethepossibilityofinstallingitssmallmodularreactorsattheKozloduyNPPsite.Thedevelopmentofaspecificscheduleforpreparation,fabrication,deliveryofthemodulesandimplementationoftheproject,economicandengineeringanalyzes,andgivingaspecificpriceforaspecificprojectwerealsoplanned.TheUSisalsoexpectedtoassistwithlicensingandothermutuallyagreedactivitiesforthepotentialconstructionofaNuScaleprojectattheKozloduyNPP.159Objectivelyspeaking,however,thereareseveralfundamentalcircumstancesregardingthesubjectthatshouldbeexplicitlyemphasized.Foronething,newnuclearplants,evensmallones,willtakeuptoadecadeormoretocomeonline,inpartbecauseofregulatoryrequirements,whichisnowherenearfastenoughtoaddresstheclimateemergency.Foranother,afterthenuclearaccidents,safetyissuesremainunresolvedandatthecenterofpublicinterest.Thetopicofradioactivewastestorageisalsopainful.CroatiaopposesanuclearreactorprojectinSloveniathatwoulddumpsomeofthenuclearwasteneartheirborder.GermanyopposesaplannedPolishreactorthatGermany’sGreenPartysayswouldmostlikelypolluteGermanyintheeventofanaccident.160158Rolls-RoyceSmallModularReactors.https://www.rolls-royce.com/innovation/small-modular-reactors.aspx#/.159Nikolov,Daniel.2021.“RomaniatobuildamodularNPPwithtwelvereactorswithtechnologyfromtheUnitedStates.”BloombergTV,November2,2021.https://www.bloombergtv.bg/a/8-novini-ot-sveta/99729-rumaniya-shte-stroi-modulna-aets-s-dvanadeset-reaktora-s-tehnologiya-ot-sasht.160Sieradzka,Monika.2021.“GermanyalarmedoverPoland‘snuclearplans.”DeutscheWelle,February17,2021.https://www.dw.com/en/germany-concerned-about-polands-nuclear-energy-plans/a-56603782.129Inanycase,thesituationsurroundingthewarinUkrainemaychangetrendsandthinkingonthesubject.Itisverylikelythataftertheconflictcalmsdown,theinternationalinstitutionswillbeactivatedwithnew,evenstricterarrangementsfornuclearsafety.Recently,theissueofthereassessmentofthelevelofcarbonemissionsfromNPPsfromthepointofviewofthesourcematerialshasalsobeenraised.Ifthisapproachisadopted,however,itwillhavetobeimposedonsolarandwindturbinesaswell,anditismorelikelythatitwillnotberaisedforthetimebeing.161Anotherimportantconsequencemaybethatthebalanceonthenucleartechnologymarketwillchange.Itispossiblethat,despitesignificantprogressinthisarea,Russia’sRosatomwillfallintopartialisolation–partial,sinceanumberofplantsarebasedontheRussiantechnologyandwillrequiresupportfromtheirexperts.Suchprocessestakemonthsandyears.However,theEuropeaninstitutionsdonothavesuchalongperiodandhavetwooptions–eithertoadmitnuclearenergyintothetaxonomy,ortoextendtheenergytransitionbyatleastanother10years–until2060.ConclusionDuetothecurrentsecuritysituationinEurope,theneedforenergysecurityismoreevidentthanever.Urgenteffortsareneededtoeffectivelyreplacedependenceonimportedfossilfuels.Energyoptimizationandthetransitiontosustainableenergysourceswillhelpinattaininggreaterenergysecurity.Thiscanbeachievedbyincreasingtheuseofsustainableenergysources,electrictransport,sustainableindustrialheatprocesses,bioenergy,biogasandhydrogenfuelinsteadofcoalandoil,aswellasbyincreasingenergyefficiency.FindingalternativestoRussiangasisthemainproblemforEuropetoday.BasedontheviewthatBulgariahasaspecialroleintheenergysectoroftheBalkans,itshoulddistinguishitselfasanimportantintermediaryintherelationsbetweentheUS,Russia,China,andtheEU,aswellasintherelationswithEUMemberStatesRomaniaandGreeceandthecountriesfromtheWesternBalkans–Albania,NorthMacedonia,BosniaandHerzegovina,Montenegro,Croatia,Serbia,andKosovo.Despitethedifferentpoliticalpositions,provokedbytheeconomicinterestsrelatedtothetradeofenergyresources,thereisaunifyinglink,anditisbasedontheconvictionthatstabilityandsecuritymustbeachievedinorderfortheregiontodevelopandenergyprojectstobeprotected.TheroleofBulgariaintheenergysectorwillprogressivelyincrease.Thisisduebothtoitsgeographicallocationandtoitssustainablepolicyinthesector,where–whiletakingintoaccounttheinterestsofthemainactorssuchastheUS,Russia,China,andtheEU–Bulgariamanagestoalsocarryoutitsownpolicyinthesector:diversificationofsuppliers,increaseofthesecurityandcompetitiveness161Marinova,Galina.2021.“Nuclearenergy–sentimentsinEuropecontinuetobepolarized.”BloombergTV,December2,2021.https://www.bloombergtv.bg/a/8-novini-ot-sveta/100864-yadrena-energiya-razdelenieto-v-evropa-ostava-dostatachno-ostro.130oftheeconomy,creationofnewjobs,andensuringacceptablepricesfortheusersofenergyresources.However,moreeffortsareneededattheinternallevelbyallgovernmentalandnon-governmentalbodiesandorganizationsinvolvedindecision-making,monitoring,andcontrolprocessesinthesector,sothatobstaclescanbeovercomeinatimelymanner.InviewoftheincreasedinterestinBulgaria’senergysector,theprioritization,andrapidandunimpededexecutionofenergyprojectsthatareontheagenda–regardlessofwhethertheyarenationalorwithforeignparticipation–willbeofparticularimportance.Thisisnecessarypreciselybecausetheworldeconomyisexpectedtobeginaprocessofgradualandpermanenttransformationofenergyproductionandenergyconsumptioninthenearfuture,aprocesstowhichBulgaria,asacountrywithpositionsandopportunities,mustrespondadequately.IvoTsekov,PhDBorn1981inSofia,Bulgaria.GraduatedfromSofiaUniversitywithBachelor’sandMaster’sdegreesinInternationalRelations(2005)andaMaster’sdegreeinInternationalSecurity(2006).RecipientoftheWorldFederationofScientistsprojectaward(2008).ObtainedaPhDinInternationalLawandInternationalRelations(2010).HasparticipatedinanumberofinternationalforumsinGermany,Austria,Slovenia,Slovakia,Turkey,andNorthMacedonia.FormermemberoftheWorldBankCountryOfficeinBulgaria(2006-2016).Since2016,heisChiefAssistantProfessorattheDepartmentofInternationalLawandInternationalRelations,FacultyofLaw,SofiaUniversity“St.KlimentOhridski”.IvoisalsoAssociatememberoftheSofiaSecurityForum.Researchinterestsincludeinternationalsecurity,non-traditionalthreats,smartweaponsandAIweaponization.131ENERGYMODELLINGOFTHEELECTRICITYSYSTEMOFBULGARIAANDTHEGREENDEALGOALS–ANUPDATEOFTHESTORYLyubomiraGancheva,EnergyexpertIntroductionMakingEuropetheworld’sfirstclimate-neutralcontinentisamajorgoalsetandalreadyadoptedbytheEU.TheEuropeanGreenDealproposalsandstepsaimatpreparingallsectorsoftheEUeconomytomeetthe2050climatetargetsinafair,cost-effectiveandcompetitiveway.AchievingtheseambitiousEuropeanclimategoalsgoesthroughatransformationofthecurrentenergysystemandinevitablyleadstoserioussocio-economicconsequences.AsanEUmember,Bulgariamustalsoclearlystateitsgoalsinthisstrategicframeworkanddefinethemainprioritiesandthewaytoachievethem.Onthisground,thefocusofthecurrentanalysisistoprovideanup-to-datelookatthechallengestheGreenDealbringstotheelectricitysysteminBulgariaintheframeofitsnationaldimensionbutalsoconcerningtheregionalelectricityoutlook.EuropeanPoliciesandTargetsfor2050andTheirPracticalInfluenceinBulgariaIn2019,theEuropeanCommissionpresentedtheEuropeanGreenDeal162,anambitiouspackageofmeasuresthatenvisagestheEuropeanUniontobeclimateneutralin2050.TomeettheambitioustargetsoftheEuropeanGreenDeal,theEUhasdevelopedastrategicplan–“Fitfor55”(adoptedinFebruary2022),whichsets(1)theUnion’sincreasedbindingtargetofachievinganetgreenhousegas(GHG)reductionofatleast55%by2030,relativetothebaseyear1990;(2)increasingtheEU-leveltargetofatleast40%shareofenergyfromrenewableenergysources(RES)ingrossfinalenergyconsumptionin2030and(3)mandatoryreductionofenergyconsumptionby9%atEUlevel,comparedtothe2020referencescenario.ThisgeneralframeworkinfluencedsubstantiallythepolicystepsinBulgaria.Thus,theIntegratedEnergyandClimatePlanoftheRepublicofBulgaria2021-2030(NECP,thePlan)163,approvedbytheECon14.10.2020,hasbeendevelopedinaccordancewiththeEuropeanobjectivesandpoliciesaimedinthelongtermatachievingambitiouscommunitygoalsfortransitiontoalow-carboneconomy,consideringthespecifics,experienceandtraditionsintheenergysectoroftheRepublicofBulgaria.Itprovidesforthemaximumuseoftheexistingpotentialoflocalcoalinthecountryincompliancewithenvironmentalrequirements.By2030,162EuropeanGreenDeal,https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/delivering-european-green-deal_bg163TheIntegratedEnergyandClimatePlanoftheRepublicofBulgaria2021-2030,https://www.me.government.bg/files/useruploads/files/national_energy_and_climate_plan_bulgaria_clear_22.02.20.pdf132thetotalGHGemissionsgeneratedbytheenergysectorareexpectedtodecreasebyaround26%by2030,comparedtoGHGemissionsinthe2015baseline.164Atthesametime,theRecoveryandResiliencePlanoftheRepublicofBulgaria(RRP)165,adoptedbyCouncilofMinistersNo203/07.04.2022andapprovedbyaDecisionontheimplementationoftheCounciloftheEUapprovingtheassessmentoftheRRPofBulgariaNoCM2890/22of04.05.2022,providesforReform10:DecarbonizationoftheEnergySector(theReform).Itincludesareductionincarbonemissionsfromelectricitygenerationby40%,basedon2019baselines,tobeachievedin2025(measuredandconfirmedwithdatain2026).Additionally,thereisneedforupdatingthenationallegislationintheClimateChangeMitigationAct,includingatimetableforthephasingoutofcoal-firedpowerplantsandtheimplementationofaregulatorycapontheircarbondioxide(CO2)emissionsasof01.01.2026.Thereductionofcarbondioxideemissionsshouldbeachievedbythefollowingspecificcoal-burningplants:TPPMaritsa3EAD,TPPMaritsaEast2EAD,TPPBobovDolEAD,AESMaritsaEast1EOOD,TPPContourGlobalMaritsaEast3AD,TPPBrikelEAD,TPPRepubblica–Pernik,TPPRuseIztokandToplofikatsiaSlivenEAD(explicitlylistedintheRRPofBulgariainthedescriptionoftheReform10).KeystageshavebeenidentifiedtoensuretheimplementationoftheReform.Thefirstofthemwasforthefirstquarterof2023andprovidesfortheentryintoforceoflegislationlayingdownrulestoproduceelectricityfromcoal,whichshouldprovide:•Abanontheconstructionandoperationofnewcoal-firedpowergenerationandcoal-firedpowerplants,whichshallenterintoforcenolaterthan2038,includingamandatoryphasing-outschedule;•IntroductionofagenerallimitonthetotalannualamountofCO2emissions,asrecordedintheEUEmissionRegister(EUETS)forexistingcoal-firedpowerplants(‘emissioncap’).Theupperemissionlimitshallapplyfrom01.01.2026andshallbeimplementedthroughthemechanismprovidedforinkeystage116oftheRRP.Theupperlimitofemissionsensuresthattheannualemissionsfromallcoal-firedpowerplantsshouldnotexceed10,983,000tonsofCO2untilcoalisfullyphasedout.WhendiscussingtheRRP,theCommissionhasfurtherproposedthefollowingtimetableforagradualreductionofcarbondioxideemissionscomparedto2019levelsfromtheabove-mentionedcoal-firedpowerplants:•Bytheendof2022,adecreaseof8%;•Bytheendof2023,adecreaseof18%;•Bytheendof2024,adecreaseof28%from2019levels;•Bytheendof2025,adecreaseof40%.Onthegroundsoftheabove,someconclusionscanbesummarized.Thekey164BaseyearforNECPmodelling,(B)ESTmodel,E3Modelling165RRPforBulgaria,https://commission.europa.eu/business-economy-euro/economic-recovery/recovery-and-resilience-facility/recovery-and-resilience-plan-bulgaria_en133Nuclear33%TPP45%DistrictheatingTPP5%IndustrialTPP2%Hydro8%PV4%Wind3%Biomass1%oneisthatthegreatestambitionforthedecarbonizationoftheBulgarianenergysectorby2026,asdefinedinReform10oftheRRP,isunrealistictoachieve.Thisconclusionisbasedonthecurrentstateandtrendsinthedevelopmentofelectricitypricelevelsontheenergymarkets.Atthesametime,theproposedtimetableisacommitmentonlytotheRRP.Infact,thedocumentthatshoulddetailtheimplementationofthedecarbonizationtargetistheupdatedNECP,adraftofwhichshouldbesubmittedinJune2023.Fromtoday’sperspective,itseemsthatthereisenoughtimetoprepareanddefendbeforetheEuropeaninstitutionsaworkingplanfortherealachievementoftheEuropeanclimategoalsbyBulgaria.This,however,shouldnotthreatenthesecurityoftheelectricitysystemandcompromisethemonetaryproceedsfromelectricityexports.Inthecontextofthelatter,itisimportanttohaveanupdatedlookatthenationalelectricitysectorandthenplaceitintheregionalandtheEuropeanperspective.CurrentStatusoftheBulgarianElectricitySectorTheRepublicofBulgariahasacomplexenergyinfrastructureandadiverseelectricitygenerationmixthatensuresthesecurityofelectricitysupplytothecountryandtheregion.Thestructureofelectricityproductionisdominatedbycoal-firedthermalpowerplants,followedbytheKozloduynuclearpowerplant,withthepercentagedistributionbytypeofplantshowninthefollowingfigure.Figure1:Structureofelectricityproductionbytypeoftechnology(2022),%In2022,theamountofelectricityproducedincreasedby5.7%comparedtothepreviousyear.Thisgrowthcomesfromtheincreaseinelectricityproducedincondensingpowerplants(by4TWh),RES(0.3TWh)andhydropower(0.26TWh).Electricityproductionfacilitiesensureconsumptioninthecountryandenabletheexportofelectricity.Atpresent,theinstalledcapacityforelectricityproductioninSAESis13,247MWandtheavailablecapacityis10,771MW.134Figure2:Installedelectricitygenerationcapacitybytechnology(2022),%Figure3:GrosselectricityconsumptionofBulgaria(withoutpumps)(2012-2022),MWhNPPandTPParebasicenergycapacitiesthatensurethesecureoperationoftheSAESofthecountry,itsmanagementandbalancing,aswellasthesecurityofelectricitysupply.Theseplantsaretheleadingcomponentforthereliabilityofthesystem,respectivelyforthevitalityoftheelectricitymarket.Unliketheplantsinvolvedintheregulationoffrequencyandexchangecapacities,KozloduyNPPcannotprovideadditionalservicesfortechnologicalreasons,whichcreatescertaindifficultiesinbalancingthesecondaryfrequencyregulationintheperiodsofminimumloadandinthepresenceofforcedproductionbyhydropowerplantsandwindfarmsinthespring.Withtheacceleratedpenetrationofrenewableenergyandthelackofsignificantindustrialloadinthecountry,theneedtoforcetheoperatingcapacityofNPPsduringcertainperiodsoftheyearisyettoincrease.ThelossofmaneuverabilityandbalancingcapabilitiesofSAESshouldbecompensatedbycreatingandintroducingstorageinnovations,includingthedevelopmentoftechnologiesandprocessesfortheconversionofenergyintohydrogenandotheralternativegasestoallowenergystorageattimesofsurplus.AccordingtothePlanfortheDevelopmentoftheTransmissionElectricityNetworkoftheRepublicofBulgaria166,ifby2031thedesignedWindPowerPlantandPVareunregulatedwithatotalinstalledcapacityofover6,500MW,thebalancingcapacityoftheSAESwillbereduced.Therewillbearesidualavailabilityforproductionof7.8-9.7TWh/yearinBulgaria.166ESO10-YearNetworkDevelopmentPlan,https://www.dker.bg/uploads/_CGCalendar/2020/10_Year_Net_Dev_Plan_20-29.pdf377489373638130537069302379583743789027239138015386426303779388436723085386307653812803535000000360000003700000038000000390000004000000020122013201420152016201720182019202020212022135ItshouldbeborneinmindthatthisismainlyduetothephasedcommissioningoftheplannedgrowthofRES,especiallyinthecaseofPV.Powerbalancesshowadrasticdisproportioninthepossibilitiesofcoveringdomesticconsumptionandpossibleelectricityexports.Thelatterisnotonlyimpossibleinwinterconditions,butinsomeyearsevenimpliestheuseofallavailablesourcesofadditionalservicesand/orimportofelectricity.Evenmoreaggravatedisthesituationinthecombinationofprolongedextremewinterconditions,depletedprimaryenergyresourcesinhydropowerplantsandpowerplants,andincreasedemergencyinelectricityproductionfacilities,aswasthecaseinJanuary2017.BulgariaistraditionallyoneofthelargestexportersofelectricityinEurope,whichcontributestoincreasingsecurityandensuringelectricitysupplyinSoutheastEurope,especiallyintheconditionsofdeficitandincreaseddemandintheregion.Forthepastyear2022,arecordhighnetexportofnearly12.2TWhwasregistered.Thefollowingfiguregivestheexportofelectricityatbordersforthelast5years.Figure4:NetbalanceofBulgaria’sphysicalelectricityexchangeswithneighboringcountries(2018-2022),GWhTheillustratedfactsallowtounderlinethefactthatBulgariahasabalancedelectricitygenerationmixandwell-developedelectricityinfrastructure.Thismixisbasedmostlyondomesticenergyresourcesandensuresreliabilityatnationalandregionallevel.InviewofthetensegeopoliticalsituationandthefocusoftheREPowerEUplanonenergyindependence,oneofthemainstrategicgoalstowards2053istopreserveenergysovereigntybymaximizingtheuseoflocalenergyresources–availableandnewones.BulgariaandtheElectricityMarketinSEEandinEuropeInthefirsthalfof2022,Bulgariawasamongthetop3countriesintermsofnetelectricityexportsinEurope.TheEnAppSysResearchCenterenergydata167showthatfortheperiodunderreview,ourcountryexported33%ofitsdomesticelectricityconsumption,thusovertakingSpainandFrance.AgencyfortheCooperationofEnergyRegulators(ACER)dataonEUelectricityexportersandimportersalsoconfirmthatBulgariaisamongtheleadingnetexportersofelectricityin2022.167https://www.enappsys.com/sweden-overtakes-france-as-europes-biggest-net-power-exporter/136Accordingtoseveralresearchesandscenarios168,169,170,171,172,despiteplannedimprovementsintermsofenergyefficiency,electricitydemandinEuropeisexpectedtoincreasesignificantlyinthenext2decades,drivenbythefollowingdrivingfactors:1.Electrificationofindustryandtransport2.Newspecificusesforelectricity3.NewtypesofcapacityThecountriesoftheregionofSEEarecountingonBulgaria’sroleasasignificantnetexportertobemaintained.Greeceplanstophaseoutitscoalplantsandtoacceleratethedevelopmentofrenewables,aswellasexpandinterconnection,whichalsocreatesconditionstobecomeanetexporter.DuetothenatureoftheenergymixwithapredominanceofREScapacities,Bulgariacantakeadvantageofthistrendandworktowardsprovidingtransitservices,storageandarbitrage,andbalancingenergy.Romaniaisalsoworkingonthedecommissioningofcoalplantsandaccelerateddevelopmentofrenewablesbutfocusesonenergyindependencethroughthedevelopmentofproductionbasedonlocalgasandtheconstructionofsmallmodularnuclearreactors.Modernizationanddecommissioningoflow-efficiencycapacitiesareexpectedontheterritoryoftheWesternBalkans,whichdeterminestheneedfordevelopmentofelectricityinfrastructureandinvestmentsinthedirectionofimprovinglowinitialenergyefficiency.ThereispotentialforinvestmentbyBulgariaintechnologiesandknow-howinthefieldofmodernizationandenergyconnectivityandefficiency.TherestofSoutheastEuropeisatraditionalelectricityimporter.ThewarinUkrainecreatesaneedtoprovideelectricityandhelprestoreinfrastructureforthecountry.MoldovaandtheRepublicofKosovohavealsoexpressedinterestinimportingelectricityfromBulgaria.Overthepastfewyears,thecountry’selectricityexportshaveamountedto7-8TWhperyear.In2022,becauseofmaintainingelectricityproductionatthelevelof2021(47.6TWh),itwaspossibletoexportelectricityintheamountof12.24TWh,generatingapproximatelyBGN6.7billioninrevenue–andthis,accordingtothenationalstatistics,represents4.8%ofBulgaria’sGDP.Basedonthewindfallprofitsreceivedbyelectricityproducers,measureswereimplementedtosupport168IEA–ElectricityMarketReport2023,https://www.iea.org/reports/electricity-market-report-2023169Shell–ShellScenarios:Sky,MeetingtheGoalsoftheParisAgreement,https://www.shell.com/energy-and-innovation/the-energy-future/scenarios/what-are-the-previous-shell-scenarios/shell-scenario-sky/_jcr_content/root/main/section_136373495/simple_791089401/promo_773130804/links/item0.stream/1652204963894/eca19f7fc0d20adbe830d3b0b27bcc9ef72198f5/shell-scenario-sky.pdf170EnergyBrainpool–EUEnergyOutlook2060,https://energypost.eu/eu-energy-outlook-to-2060-how-will-power-prices-and-revenues-develop-for-wind-solar-gas-hydrogen-more/171EuropeanCommission–ACleanPlanetforall–AEuropeanstrategiclong-termvisionforaprosperous,modern,competitiveandclimateneutraleconomy,COM(2018)773final,https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2018:773:FIN172Eurelectric–DecarbonizationPathways,https://www.eurelectric.org/decarbonisation-pathways/137non-householdendcustomerstodealwiththeconsequencesofthesignificantandunfavorablefluctuationsofelectricitypricesin2022,andtheregulatedpricesforfinalhouseholdconsumersinthecountryweremaintained.Neighboringcountriesmightneedincreasedimportsofelectricityonseasonalbasis.ThesefactsshouldbeconsideredbothfromtheperspectiveoftheavailabilityofenoughelectricityaswellasfromtheperspectiveofthelevelofitspricewithinBulgaria.Anexampleofthisisthedroppingof1,000MWfromtheproduction(Unit6)ofKozloduyNPPinDecember2022,whichcausedanadditionalshortageofelectricityinthealreadyscarceregionofSoutheastEuropeandledtoimportsofabout1,500MWperdayfromneighboringcountries,aswellashigherpricesonthemarket.Tosummarize–Bulgariahastraditionallybeenanetexporterofelectricitytotheentireregionandamongthemainstrategicgoalstowards2053istomaintainandupgradethisrole.Theplansandforecastsofneighboringcountriesshowthatitisdifficulttorelyonthemforelectricityatpeakdemand.Moreover,thereareindicationsthatthesecountrieswillcontinuetoneedbothelectricityandstoragesystemsforsuchcapacitiesproducedbyrenewableenergy.NationalEnergySecurityandSustainableEnergyDevelopmentThesustainableshifttolow-carbonenergyrequiresalong-termvision,predictabilityandstagingsothatthesystemicadequacyofthecountry’selectricitysystem(SAES)isnotcompromised.EnsuringtheadequacyandsecurityoftheSAESoftheRepublicofBulgariaandbalancingandregulatingintheconditionsoftheGreenDealshouldbeensuredwithreliablelow-emissiontechnologiesthathavetheavailabilitytoensureconsumptioninthecountryandmaneuverabilitytoavoidbalanceproblems.Theexpectedpenetrationofelectromobilityandthedevelopmentofhydrogenproductiontechnologieswillcreateaneedtoincreasetheshareofgeneratingcapacitiesthathavehighavailability.Bulgariahastraditionallybeenanetexporterofelectricitytotheentireregionandinthissenseisabalanceroftheelectricitysystemsofitsneighbors.Arapidsignificantchangeintheenergymixmeansachangeofthispositionandtheneedtoprovideareserveforelectricityimports.Atthesametime,EUgreenpoliciesareimplementedbyneighboringMemberStates(GreeceandRomania);theEnergyCommunitycountries(includingSerbiaandNorthMacedonia)willalsobeforcedtoimplementthem.Inthissense,Bulgariacouldnotrelyonbasicelectricityfromtheregionbutshouldseekasolutiontoitsenergyandnationalsecurityonlyatnationallevel.Currently,theSAESofthecountryhasanenergymixofgeneratingsources,inwhichsecurityandsustainabilityareensuredonlybyconventionalpowerplantswithsynchronousgeneratorsofsystemicimportance.TheunitsofTPP“MaritsaEast2”,TPPAESGalabovo(ME1),TPP“ContourGlobalMaritsaEast3”,TPP138“Varna”andTPP“Bobovdol”,describedinReform10oftheRRP,haveatotalinstalledgrosscapacityof4,874MW.Outofthese,3,648MWarebasegeneratingcapacityand2,686MWareregulatedinround-the-clocksectionandusedasbaseorsub-peakgeneratingcapacity.Further,theyareusedfortheimplementationofthefollowingessentialandmandatorytasksperformedbythegeneratingcapacityofasingleintegratedelectricitysystem:•forprimaryfrequencycontrolwithintheENTSO-EContinentalEuropesynchronousarea;•forparticipationinthesecondaryregulationofthefrequencyandexchangecapacitiesoftheBulgarianSAES;•tomaintainthestresslevelsatthemainnodesoftheSAES;•tomaintainthestockofsustainabilityoftheSAES;•tomaintainthetotalinertiastockofthecountry’sSAES;•ToparticipateintheprotectionplanandtherecoveryplanoftheSAESaftersevereaccidents.TheGreenDealstepsverymuchonRES.However,duetodesignandtechnologicalfeatures,WindPowerPlants,PVs,ThermalPowerPlants,SmallHydropowerPlants,BiopowerPlantsandPlantTPPscanneitherprovideareserveforprimaryregulation,anautomaticreserveforautomaticfrequencycontrol,norparticipateinthe24-hourcentralizedvoltageregulationatthemainnodesoftheESAESES.Moreover,thecurrentlyusedwindandpowerplantshaveanegativeimpactonthedynamiccharacteristicsofthenetworkandanegativeeffectonthestabilityofthesystemininterferenceandpost-emergencymodes.Innormalmodes,thevariablenatureoftheprimaryresourceinHPPandPVprovokescontinuouschangesandfluctuationsoftheactivepowerflowsinthesystem.ItshouldbealsonotedthattheBulgarianelectricitysystemoperatessynchronouslywiththerestofcontinentalEurope,i.e.,anydisruptionoutsideitaffectsreal-timemanagement.Furthermore,marketcouplinginEuropeassumesthattheelectricityproducedisdistributedaccordingtothesupplyanddemandcurvebetweendifferentmarketareas,theonlylimitationbeingthetransmissioncapacityofinterconnections.In2022,inBulgaria,about45%(22.5TWh)ofgrosselectricityproductionisproducedbyplantsusingcoalasaprimaryenergyresource.Thus,thesustainableshifttolow-carbonenergyrequiresastep-by-stepandsmoothreplacementofcoalplantsbynewlow-emissiontechnologies,sothatsystemicadequacyisnotcompromised.RESplantscannotbeconsideredasanalternativeandcannotreplacetheusedbasiccoalcapacityinthecountry.Onthisground,itshouldbenotedthatmeetingthetargetsetinReform10oftheRRPtoreducecarbonemissionsby40%bytheendof2025,andthereducedoperationofligniteplants,putsatriskthesystemicadequacyofthecountry’selectricitysystem.Thepreservationofa35%rangeforregulatingthemaneuverabilityofthesystemisviolated.AdditionalSAESserviceswillbeprovided139bylimitedenergyresources,whichwillimposerestrictionsonactiveandreactivepower(duration,subsequentactivations,etc.).Thankstotheproductionofelectricityfromlignitethermalpowerplants,exportsaremadetotheneighboringcountriesoftheRepublicofBulgaria.TPPsmaintaintheinertiareserveinthesoutheastregionandparticipateintheregulationofthefrequencyofthecommonenergysystemincontinentalEuropeandinthesoutheastregion.Meetingthecommitmenttoa40%reductionincarbonemissionsby2026comparedtothoseemittedin2019createsaseriousriskofclosingconventionalbasegenerationcapacity,whichwouldjeopardiessystemicadequacy.InthecontinuingunstablesituationontheenergymarketsinEuropeandwarinUkraine,BulgariaandtheworkofourSAESisadeterminingfactorforthestableoperationoftheESAESESintheregionofsoutheastcontinentalEurope.WrapUpontheChallengesThefirstframechallengeislinkedtothelegalframework,whichshouldbeinlinewiththeGreenDealobjectivesandshouldsupporttheachievementofitsgoals.TheIntegratedEnergyandClimatePlanoftheRepublicofBulgaria2021-2030,whichhasbeenpreparedinimplementationofRegulation(EU)2018/1999ontheGovernanceoftheEnergyUnionandClimateAction,setsseverallong-termgoalsforthedevelopmentofthesectorinthecountry.ThefinalversionofthePlanwassubmittedtotheCommissionandpublishedinMarch2020,andinOctoberofthesameyeartheCommissionannounceditscommentsandassessmentofthedocument.However,itsupdateisupcomingin2023.Asof2020,thereisnoestablishedenergydevelopmentstrategyinBulgaria.Thelatestdraft‘StrategyforsustainableenergydevelopmentoftheRepublicofBulgariauntil2030,withahorizonof2050’173waspublishedonthewebsiteoftheNationalAssemblyandpresentedforpublicdiscussioninFebruary2021,butitwasnotadoptedbythelegislature.ThroughtheprismoftheEuropeanrequirementsfortransparencyandpredictabilityofnationalpolicies,forsecuringinvestmentsinthesectorandensuringsecurityofenergysupplyforthenextdecade,theNECPisafundamentaldocument.Nevertheless,thisdoesnotreducetheneedforanationalenergystrategyastheleadingnationaldocument,whichshouldoutlinetheindividualpathfortheenergydevelopmentofthecountryfortheperiod2023-2053,consideringthespecificsofthenationalenergysystem.BulgariaisindireneedofanationalenergystrategythatwillprovidemoreclarityandpredictabilityforthefuturedevelopmentofBulgarianenergyinthecontextofthetransitiontolowercarbonemissionsandprotectionofworkersinthesector.TheEuropeanGreenDealpresentedapackageofinitiativestoachieveEUclimateneutralityby2050,presentinganewstrategyforfairandprosperous173‚StrategyforsustainableenergydevelopmentoftheRepublicofBulgariauntil2030,withahorizonof2050‘,https://www.me.government.bg/uploads/manager/source/video_upload/Strategia.pdf140societaldevelopmentoftheEU.Thisisbasedonamodern,resource-efficientandcompetitiveeconomyinwhichtherewillbenonetgreenhousegasemissionsin2050andeconomicgrowthisnotdependentonresourceuse.Theprocessesofuncontrollablechangeinelectricityprices,observedinthesecondhalfof2021andthebeginningof2022,andtheforthcomingdeploymentofmorenuclearcapacityinEurope(inGermanyandFrance)raisesharplytheissueoftheavailabilityofbasicgenerationcapacitiesinEuropeinthemediumterm.ThemilitaryactionsontheterritoryofUkrainebringtotheforetheneedtopreserveBulgaria’senergysecurityandexpandtheopportunitiesforelectricityexportstotheregion.Bulgariahasabalancedelectricityproductionmixandawell-developedelectricityinfrastructure,whichrelyondomesticenergyresourcesandensurereliabilityatthenationalandregionallevel.InviewofthetensegeopoliticalsituationandtheemphasisoftheREPowerEUplanonenergyindependence,amongthemainstrategicgoalstowards2053isthepreservationofenergysovereigntythroughthemaximumuseoflocalenergyresources–availableandnewones.Thecountryhastraditionallybeenanetexporterofelectricityfortheentireregion,andoneofthemainstrategicgoalsfor2053istopreserveandupgradethisrole.Theplansandforecastsofneighboringcountriesshowthatwecanhardlyrelyonthemforelectricityatpeaktimesofconsumption.Moreover,thereareindicationsthattheywillcontinuetoneedbothelectricityandstoragesystemsproducedbyrenewableenergy.ThereisenoughtimetoprepareanddefendbeforetheEuropeaninstitutionsaworkingplanfortherealachievementoftheEuropeanclimategoalsbyBulgaria,whichdoesnotthreatenthesecurityoftheelectricitysystemanddoesnotcompromisethecashreceiptsfromtheexportofelectricity.However,thisdependstoaverybigextentonthepoliticalstabilityinthecountryandontheavailabilityofaclearstrategicvisionfortheenergysectordevelopments.LyubomiraGanchevaisamacroeconomistandanenergyprofessional,formerEnergyandIndustryAdvisortothePresidentoftheRepublicofBulgariaandHeadofthePoliticalCabinetoftheMinisterofEnergyoftheRepublicofBulgaria.Shehasaspecificfocusonenergymodelling,gasmarkets,nuclearknowledge,sustainableenergyandenergydiplomacy.Sheholdsabachelor’sdegreeinMacroeconomyandamaster’sinEnergymarketsandServices.CurrentlyapplyingforaPhDonthetopicofenergymodelsandthepossibilitiesofBulgariatoimplementtheGreenDeal.Sheisafrequentguestlectureratinternationalenergyandindustryforums.141GEOPOLITICALPROJECTIONSONTHEEUROPEANELECTRICITYMARKET,ANDTHEIRBULGARIANDIMENSIONSNedkoKosev,PhDStudentElectricitySector’sRoleinShapingGeopoliticalSpacesFundamentalpostulatesofgeopoliticsstipulatethatworldeconomydevelopmentresultsfrommatchingnaturalandpublicfactorsatglobalaswellascivilisationalandregionallevels.Emphasisisplacedonthecorrelationbetweenavailabilityofresourcesanddevelopmentofproductionregionsacrosstheworld,sectoraldevelopmentanddivisionoflabour,withdiverseinterstateeconomicrelationsensuingtherefrom(Roussev,2004).Thus,geopoliticsenablesexplainingeconomicandpoliticalprocessesthroughvariousgeographicvariablessuchascountrylocation,territorialsize,naturalresourceabundance,populationandeconomicalandtechnologicaldevelopment.Historically,countries’connectionintoacommonelectricitynetworkisalsocloselytiedtotheeconomicandnaturalspecificsofagivengeographicregion.Themaindriverforsuchaconnectionistheattempttomitigateelectricitysupplyrisksandtomanagesupplyanddemandmoreefficiently.Synchronisednetworksincreasethelikelihoodofcheaperelectricityimportfromneighbouringcountries,whichinturndoesnotnecessitatesubstantialinvestmentinnewlocalgenerationcapacity.Thisalsoassumesdevisingstandardsforthetechnologicalintegrationofelectricitynetworksforindividualcountries,whichinfacthasbeengoingonquiteextensivelyatEuropeanlevelinthelastfifteenyearsfollowingthesetupoftheEuropeanNetworkofTransmissionSystemOperators(ENTSO-E)174.Forthelasttwodecades,thedynamicsoftheelectricitysector’sdevelopmenthasattachedamulti-vectorgeopoliticalsignificancetoelectricity,turningitintothemaintoolforsupranationalmacro-regionsdesign.Thisisattributedtobroadeningthedenotationofthetermconnectivity(whichtodayisnotconfinedsolelytothetechnicalaspectoftheprocess)andtoestablishingnewstandardsforelectricitygenerationinthestrivetomeettheever-growingneedofexpandingelectricitynetworkstowardsgeographicalspacesconsidereduntilrecentlyasborderorperipheralareasofleadingeconomiccentres.Fromtheperspectiveofelectricity,Westphaletal.(2022)definesuchcentresasinfrastructurallyandindustriallydensespaceswhicharepoliticallyandnormativelyhomogeneous,andexertnumerouseconomicandsocialtransactions.Itisbelievedthatthedegreeofinfluenceanexternalgeopoliticalpowerexertsonsuchspacesislow.Ontheotherhand,peripheriestendtobelessindustrialisedandwithpoorinfrastructuralandsocialsettings,andexperiencequiteadynamicpoliticalenvironmentduetoweakpoliticalapparatusandhighpermeabilitytoexternalgeopoliticalpowers.AccordingtoHo(2020),infrastructuredevelopmentcreatespreconditionsforchange174Seewww.entsoe.eu.142inspaceconfigurationwithintheboundariesofthirdcountries,enablinganin-countrytransformationofeconomyandsociety.Inestablishingsupranationalelectricitynetworks,itisnotonlythecentre-peripherylinkthatisimportantbutalsothesetupofaninfrastructurisedspaceandlegalspace(Westphaletal.,2022).ConsiderationofonlyHVDC175electricitytransmissionlinesbetweentwocountriesisassociatedtotheanalysisofinfrastructurisedspaceswhichconnectdifferentgeographicregionsandjurisdictions.Themostimportantroleisheldbymarketplayersthatareabletocontrolandregulateelectricityflows,thusinfluencingotherplayerstherein.Legalspacebuildsontheinfrastructurebywayofenforcingvariousstandardsandrulesforelectricitymarketparticipationbutconfinesitsinfluenceonlytothespecificterritory.AnexampleofsuchaspaceistheintegratedelectricitynetworkoperatingsynchronouslywithintheinternalEUenergymarket.Suchamultifacetedeconomiccohesionisacoreelementinenergygeopoliticsbecauseitallowsforsharpalterationsinelectricityprices.Highpricespertaindirectlytolong-terminvestmentplanningofinternationalcompanieswhilediminishedvolatilityofenergymarketsservestheinterestsofbothimportersandexportersinthelongrun(Pascual&Zambetakis,2008).Processesofthistypecontributetodifferencesandbordersbetweeninfrastructurisedandlegalspacesfadingaway,andtothegradualdyingoutofthetermterritoriality.Networkcommunitiesarebeingformedbasedoncommonregulationsanddriversforamutualeconomicbenefitwhilesharingrisksassociatedwithnetworksecuritymaintenance.Scholten&Bosman(2016)notethatinasynchronisedelectricitynetwork,thebalanceofpowersisdistributedmoreevenlyamongstatesandtheriskofadeliberatesupplydisruptiontoacertaincountryisminimisedbecausethiswouldimpactnegativelynotonlytheentirenetworkcommunitybutalsotheparticularstateundertakingsuchanaction.Settingupenergynetworkcommunitiesisaprerequisiteforahighercountry-to-countrytradevolumeandforestablishingacompetitivetradingenvironment,andconsequently,forensuringaconstantelectricitysupplyataffordableprices176.Intheirstudyofelectricitysectorandgeopoliticscorrelation,Westphaletal.(2022)pointoutthatbuildingelectricityinterconnectionsmayrenderseveralasymmetricdependencieswhichneedtobetakenintoaccountwhenconsideringparticipationintheelectricitymarket.Amongthesedependenciesdistinguishableare:theuseoftechnicalandeconomicinfluenceofexternalgeopoliticalpowers,sustainabilityofelectricitygenerationmix,electricitycapacityofothercountriesandcreatingnewvaluechainsbasedondigitalandinformationtechnologies.Thisiswhyoneofthemainobjectivesofgeopoliticalcentresfocusesonabroader175High-voltagedirectcurrentinterconnection;atEUlevel,itisexpectedthatby2030,transmittedcapacitythroughHVDC-underwaterlineswillreach150GW,whichis16%ofthetotalelectricityconsumptioninEurope.176Atmicrolevel,therearedifferentmethodologiestodetermineelectricitycostaffordabilityforhouseholds.Byandlarge,theyusepercentagerateofhouseholdincomespentonenergy.Differentstatesemploydifferentthresholdsforpriceaffordability.143infrastructurisedandlegalbindingwithnewlyconnectedregionssomeofwhichhavefrequentlyremainedintheouteredgeoftheelectricitysector.EnergyTransitionasaGeopoliticalToolDevelopmentandmassdeploymentofrenewableenergysources(RES)intheelectricitygenerationmixisgaininganincreasinglyimportantroleinEUenergypolicy.Theychangeentirelytheperceptionsexistingcurrentlyaboutelectricitymarketfunctioninginvolvingenlargementoftheelectricitygrid.Ontheonehand,establishingdensernetworkcommunitiesencompassingbroadergeographicspacessupportsprompttransferofenvironmentally-friendly,economicandsocialeffects,andontheother–deepenstheabovementionedasymmetricdependencies.TheeffectisaugmentedbysomeadditionalRESsectorspecifics.Investmentsatsectorallevelareoftendrivenbynotonlyenvironmentalconsiderationsbutalsoinvestmentprofitsordesiretosecurecrucialeconomicpointsinproductchainswhereenergysupplytomanufacturingprocessesisessential.Thisimpliesthatcountriescapableofmanufacturinggoodsatalowerenergycostmayconcentratemorecapitaltofeedintodevelopmentoftechnicalinnovations,whilebearinginmindthatRESindustrystillremainsacapital-intensivesector.Forthisreason,somesubstantialdisproportionsinelectricitygenerationareobservedasregardsrenewablesources(RS)useatregionalandinternationallevel,withintermittentoverproductionorshortagebeingdetected.Theonlyremedytosuchdisproportionsistoreorganisetheelectricitytransmissionsystemsothatitcanbecapableofabsorbinganddistributingpickgenerationandrespondingtodemandattimeofshortage.BindinggenerationtodemandtoserveincreasinglylongerdistancescontributestoexacerbationofgeoeconomiccompetitioninEUneighbouringregionswhereregionalandglobalinterestscometoplay,witheconomicpowerspursuingenforcementoftheirviewsonconnectivitydevelopmentandtechnicalandtradestandards.Fromeconomicperspective,thecommonmarketandnetworkconnectivityallowactorstonotonlysharesomesystemicrisksbutalsostrengthentheirdependencyonexternaleconomicandpoliticalshocks.Behaviourofconsumersinremotegeographicpointsmayalsocauseunexpectedelectricitypricefluctuationsandcreatesocialtensionandeconomicdisproportionsinagivencountry.AsanexampletothisendmayservesupplychaindisruptionsandreducedinvestmentflowsaftertheCOVID-19pandemiconsetfollowedbyeconomicrecoverysincethesummerof2021.Thisexogenouseconomicshockimpacteddirectlyconsumerbehaviourandcausedunexpectedfluctuationsinenergyprices.Inturn,in-statesocialtensionandeconomicdisproportionsmaterialisedandfurtherintensifiedafterFebruary2022withthebreakoutofthewarinUkraine177.177BruegelanalysisofEuropeancountries’aidtohouseholdsandbusinessesfollowingthesurgeinenergyexpenditure(includingelectricity)sinceSeptember2022;amountsarenearlyEUR800billion.ThelargestpercapitaexpenditureisheldbyLuxemburg,DenmarkandGermany,thelatter’saidamountingtoapproximatelyEUR270billion.144ThetraditionallyvariableRESelectricitygenerationaddstosalientpricevolatility.Duetothestrongnetworkconnectivityandgenerationintermittencyincertaingeographicregions,thepricesignalssentaffecttheentirecommonmarket178.Theyarecapableofpromptingelectricitypriceriseevenincountrieswithlowproductioncosts.Thepossibilitytoexertpoliticalinfluenceoninterconnectionsandcommercialunionssetupoutsideaspecificgeopoliticalcentre(duetoenvironmentalstandardsimposedonelectricitygeneration)alsobecomesapparent.Thisisimportantfromthestandpointoftheleadingeconomicunionorblockpursuingadoptionoftheirpreferredregulatoryframework.However,thiscanalsobringtheRESsectorclosertothepetrolandnaturalgasmarketswhereeconomiclogicisfrequentlyconcedingtopoliticalconsiderations.Scholten&Bosman(2016)indicatethatcountrieswithfavourableRESgenerationconditions(semi-dryandcoastalareas,mountainousregionswithsubstantialhydropowerresources,regionssituatedovertectonicfaults)willholdarelativeadvantageinRESenergytrade.Marketswillbeevenmoreorientedtowardssupplythandemand(whichrepresentsthecurrentstructureusingbasicandreservecapacities).Incombinationwithenvironmentalrequirementsimposed,thisresultsingenerateorpurchasebecomingthepre-eminentprinciple.Apartfromproducers,largeconsumersandcountriescapableofofferingbalancingserviceswillhaveaninfluenceonelectricitymarketsandpricesbecauseelectricitystorageoptionshaveverydistinctgeographictraits.Thisiswhythecountries’strategicinterestshiftstowardselectricityinfrastructureandmarketstieduptoit–producers,consumersandtransitcountrieswillfavouracquisitionofphysicalassetsinelectricitytransmissionnetworksandusethemtoexerciseinfluenceoncommercialflows.Centre-PeripheryRelationsfromthePerspectiveofPolicyintheElectricitySectorTheEUstrivestoacceleratetheoveralleconomicandenvironmentalintegrationandtofacilitateandmaketheinclusionofregionstothecommonEuropeanmarketworthwhileviagraduallyexpandingtheelectricitymarketandtransmissionnetworks,andmodernisingthetransportandcommunicationssectors.Thisissupplementedbythewilltoestablishvariousenvironmentalstandardssuchastheso-calledcarbontaxongoodsimport.Suchapolicyaffectstheoverallinternationalmarketstructure,aswellasChina(PRC)whichisthelargestexporterofgoodstotheEU.ThisiswhyinthelastdecadePRCforeigntradestrategyhastargetedgeopoliticallyvulnerableregionswithapotentialtoplayanimportantroleintheEuropeanenergytransition;PRCinvestmentexpansioninthecriticalinfrastructure178AnopinionoftheEuropeanEconomicandSocialCommitteeonthegeopoliticalimpactofenergytransition(item3.8)notesthatenergytransformationwillbeaccompaniedbyasubstantialelectricitypricevolatilityandwillposeageopoliticalchallenge;alsonotedistheneedtoundertakeactionstoavoidexacerbationofexistingsocialinequalities.145ofEUneighbouringcountriessuchasMoroccoandIsraelisbecomingincreasinglytangible.Yiwei(2021)remarksthatthemainpurposeistouseaccumulatedcapitalresourcestoparticipateanddevelopmarketswhereChinamaysetthestandarditrequires.Forthisreason,PRCisfocusingonahigh-speedrailtransportandelectricitytransmissionnetworkswhichimplement‘Chinesestandards’andallowshiftingfrommediumtohighclassintheindustrialchain.Currently,Chinaisaleadingexportcountry,butnonetheless,itcannotsettheinternationaltraderulesandproductqualitystandardsandqualifications;thatiswhyitisveryactiveinbuildingenergynetworksindevelopingcountrieswithintherealmofperipheral/bordergeopoliticalspaces.Addedtothelatteristheexperiencegainedinconstructingthecountry’sdomestictransmissionnetwork,whichduetolocalgeographicparticularitiesandurbanspecificshastotransmitgeneratedelectricitytoremoteeconomiccentres(asperthedefinitionofWestphaletal.,2022).Chinapositionsitselfasaleaderinstandardsforanewgenerationoftransmissionnetworks(UHVDC),withavoltageofover500kVandbetween1%and3%lossregisteredover1,000km;thisisanareawhereseveralothercountriescannotachievesatisfactoryresultsandstillremainattheexperimentalstage.China’selectricitysectorexperience,inparallelwiththecountry’sperceptionofeconomyasanetworksystemratherthanahierarchicalstructure,isinfacttranslatedintovariousprojectsunderthe‘OneBelt,OneRoad’initiative179.Theseprojectsaimatachievingamulti-vectorconnectivityofthebasicinfrastructure,portinfrastructure,energyinfrastructure,cross-borderopticnetworkandInternetbackboneconnections.Inthiscontext,renewableenergybecomesacrucialcomponentofthiseconomicinitiative.In2020,morethanhalfoftheinvestments(57%)werepurposedtothissectorandamountedtoUSD11billion.Tagotra(2022)emphasisesthatChina’sinvestmentpolicyinAfrica180aimstobreedmulti-vectorcollaborationwithdevelopingregionsnotonlyintheNorth-SouthlinebutalsointheSouth-Southgeopoliticalline,whichwouldfacilitateelectricitynetworkconnectivityundertheChinesemodel.RatherseriousappearstobethepossibilityofChinesegeopoliticalpressureexertedbymeansofRESgenerationtechnologiessinceChinacontrolsthenecessarymanufacturingcomponents.Inthismanner,theREStechnologymarketmayturnouttobeamarketofsellerswithanear-monopolycontrol,evenbiggerthanthecontroloverthepetrolmarket181.Themulti-vectorChinesepolicycollidesdirectlywithEUinterestsinNorthAfrica,incountriessuchasMorocco,TunisiaandEgypt.TheEUisincreasinglypursuingcontractsforRESenergypurchaseandexpansionoftheEuropean179Seehttps://www.ebrd.com/what-we-do/belt-and-road/overview.html.180Chinaimplementsover40projectstobuildregionalenergynetworksinAfricaalone.181Chinacontrolscloseto70%ofthegloballithiumproduction,securingitviadevelopingitsowndepositsandviaitssharesincompaniesoperatinginothercountriesrichinrare-earthmetaldeposits.Chinesecompaniesholdabout80%oftheglobalsolarcellmanufacturingcapacity.TheCriticalMaterialsStrategy(U.S.DepartmentofEnergy)of2010stipulatedthatthekeytolow-carbontransitionwasheldbyChina.146network.Leonardetal.(2021)pointoutthatinthecomingdecadesthemaindriverforenergytransitionsuccesswillbenotonlyenhancedelectrificationbutalsoincreasedimportofelectricityfromPVandwindpowerstationslocatedalongMorocco’sAtlanticcoastlineuptoEgypt’sRedSeacoastline.ImplementationprospectsofsuchanendeavouropenroomforEUgeographicallyneighbouringregionsthatpossessoptimalconditionsforRESelectricitygenerationtomakeuseoftheglobaldynamicsinthepoliticalarenaandimplementtheirconceptsforelectricitysectordevelopment,andhence,tobuildtheirownareasofinfluence.Thismeansthatcentre-peripheryeconomicrelationswillbereformattedbecausecontrolovercriticalinfrastructurewillbecometherivalrygroundforbigglobalandseveralregionalplayers.EgyptandMoroccohaveestablishedveryclearregionalforeignpolicyplans.However,theabovementionedappliesthemosttoTurkiye,whichsimilarlytoChinaistryingtoexertalarge-scaleinfluenceonEuropeanenergymarkets.Turkiyemayserveasanexampleofthepoliticaldimensionassociatedwithasynchronisedelectricitynetwork.DespitetheformalcompletionofTurkiye’snationalgridsynchronisationwiththeEUnetworkin2015,integrationstrengtheningseemstobeputtoahalt.ThismaybearrelevancetothedefactosuspendedTurkiye-EUpre-accessionprocesses.Itappearsthatinthiscase,tradinginelectricityremainstobeposthoc.Usingitsmulti-vectoreconomicandhistoriclinkswiththeneighbouringCaucus,MiddleEastandNorthAfrica,TurkiyecansynchroniseitselectricitynetworksandbecomeanimportanttransitcountryforelectricitygeneratedintheseRES-favourableclimateregions.RatherimportantareTurkiye’srelationswithGeorgia,whichfallsintotheEUenlargementconceptwithplanstobecomeanindependentelectricityhub,exportingelectricitytoEuropeancountriesviaTurkiye’selectricitynetwork.TheEU’sfailuretoinvestsubstantiallyininfrastructureandexploitationoffossilfuelandnaturalgasdepositsincentivisesTurkiyetotakeadvantageofthevacuumcreated.Itallowsthecountrytopositionitselfasthemainnaturalgasdistributionhubfedfromvariousgascorridors,whichinturnprovidesthecountrywithatwo-dimensionalpotentialtoinfluenceEuropeanenergymarkets.ShouldacrisisinnaturalgassupplythroughTurkiyeoccur,Europeanindustrialandhouseholddemandwillincreaseandwillbringaboutasurgeinpricessimilartotheonefacedinthesummerandfallof2021182.ThesituationwillbeaggravatedfurtherwiththeconstructionoftheAkkuyu183NPP(builtwithRussianinvolvement),whichwillexpandthecountry’sbase-loadpowercapacity.ThiswillopenthedoorforaprincipalgeopoliticalrivaloftheEUtogaininfluence.ThescenariolooksfeasiblenotonlybecauseoftheRussianFederationstillholdingconsiderableinfluenceovertheCaucusregionbutalso182Tothisend,infrastructuralandeconomicrecoveryaftertheearthquakeinTurkiyeandSyriacouldalsoaffectenergymarketsandbesubjectoffutureanalyses.183Turkiyeplanstobuildthreenuclearpowerplants.AkkuyuNPPisbuiltbyRosatom,aRussiancompany.IntenttoconstructthesecondNPP,intheSinopprovince,hasbeenstatedbySouthKorean,JapaneseandCanadiancompanies.ThethirdNPPisplannedtobebuiltattheBlackSeashoreclosetotheBulgarian-Turkiyeborder.147becauseofthecomplexityofpoliticalconfrontationdwellingintheMediterraneanareawiththeinvolvementofTurkiye,Greece,Cyprus,LibyaandIsrael.Thedisputesovermaritimebordersaffectboththeeconomicdimensionsandsovereigntyofthesestates.Ontheotherhand,long-termEuropeanpoliciesoncarbon-neutraleconomyfacilitatethecohesionofRussia,ChinaandTurkiye.ImposingtradeandfinancialsanctionsandlimitingimportofRussianenergyresourcesfollowingthewarinUkrainehavecatalysedtheseprocesses.BothChinaandTurkiyearetakingfulladvantageofthesituationandsetevenlowerpricesforRussianexportofhydrocarbons,whichdisfavoursEuropeancompaniestradingoninternationalmarkets.BulgarianElectricitySector–GeopoliticalOpportunitiesandRisksBulgaria’simportantgeographiclocationalongwiththemulti-vectorgeopoliticalinterestsofglobalandregionalpowersbringsaboutnumerousquestionsregardingthefutureoftheelectricitysectoratnationallevel.AmongthemajorrisksfacedbytheBulgarianeconomyisitsstrongvulnerabilitytosharpfluctuationsinelectricityprices.Inmostcases,thesearecausedbyexternalfactorsaffectingseriouslythelocalmarket.AnessentialexternalfactoristheelectricitydeficitinthemajorityofEuropeancountries,whichtriggersanaveragepriceriseinternationally.Fromdomesticperspective,thevalueofelectricitygeneratedatrelativelylowcostsisalsoontheupturn,andthemaincommercialflowsaredirectedtowardsmoreprospectivetradingareas.ThisprocessaffectstheoveralleconomicdevelopmentofthecountrybecauseBulgariacontinuestoholdastrongenergy-intensiveprofile184,andexports185rawmaterialsandmaterialsforfurtherprocessinginsteadofinnovativegoodsofhighvalueadded.Theimpactofinternationaldemandbecomesevenharderduetodomesticmarketdesignspecifics–electricityistradedinthemostvolatileexchangesegment,namely,DayAhead.Thereisnooptionforindustrialproducerstohavelong-termcontractsataffordableprices.ThisisanexampleofhowelectricitynetworkconnectivityprovestobeofmajorimportanceforBulgariadespitehavingexcessofelectricity,incontrasttoothercountriesintheEUandtheregion.TheexportprofileoftheBulgarianelectricitysectorcameaboutbecausethelargestindustrialconsumersofenergywererestructuredorcloseddowninthecourseofthetransitiontomarketeconomy.Incombinationwithadiminishingpopulation,thisadditionallyincentiviseselectricityexporttodenserspacesasregardsinfrastructure,industryanddemography,andwhich,bymeansofnetworkcommunities,pursuetradeexpansionandcompetitive184Energyintensityofagiveneconomyisaparameterwhichmeasuresthequantityofenergynecessarytomanufactureaunitofeconomicproduce.Itiscalculatedastheratiobetweengrossavailableenergy(intonnesofoilequivalent;toe)andGDP.In2020,thevalueforBulgariawas405.17toeperGDPofEUR1,000,beingoneofthelargestvaluesinboththeEUandtheBalkanpeninsula.185See,MinistryofEconomyofRepublicofBulgaria,ForeignTradeofBulgaria.ExportstructurebyCustomsStatisticssectionsandchapters:https://www.sme.government.bg/?p=10168.148andliquidityenvironmentsenablingconstantaccesstoelectricityataffordableprices.DuetothecontinuingconflictinUkraine,BulgarianeconomywillfeelmoretangiblytheeffectofCentralandEasternEuropeelectricitymarketpricelevels.Daysafterthewarbroke,theUkrainianelectricitygridwassynchronisedwiththeEUnetwork,therebycompletingaprolongedprocessthatstartedin2005.Inrecentyears,evenRESenergyandgreenhydrogenexporttothecommonEuropeanmarkethadbeenconsidered,owingtothecountry’ssignificantinvestmentpotentialinthisarea.FollowingenergysystemdestructionandRussiancontrolbeingestablishedovercrucialelectricityfacilities,Ukrainefacespowershortage.Thismeansthatinthefutureanitemintheagendawillnotbeelectricityexport186butratherelectricityimportfromtheEU.TheproblemisfurtherexacerbatedbytheMoldavskayaGRES,situatedintheunrecognisedseparatistregionofTransnistria,whichuntilrecentlyhasnotonlycoveredMoldova’spowerneeds187buthasexportedelectricitytoRomaniabecauseofitsfrequentdeficienciescausedbyRESmasspenetrationinthecountry’selectricitymix.InEasternEurope,thethreatofRussiangeopoliticalinfluenceviatheelectricitysectoracquiresanevenmoreapparentshapeduenotonlytothewarbutalsotoHungary’sPaks-2NPP,builtwithRussianinvolvementandsupplyofnuclearfuel.ThisisanissueoftopicalimportanceforBulgaria,whichhasnotyetdiversifieditsRussiansupplies.AgainstthebackdropofthesedynamicgeopoliticalprocessesoccurringinEasternEurope,theBulgariandomesticmarketmodelneedsrethinking.Otherwise,theseprocesseswillassignanevenmoreambivalentroleofBulgarianexporttoEUcountries,whichareexperiencingincreasinglystrongerelectricityshortages.Inthecomingyears,additionaldomesticandregionalelectricityimbalancesmaybecausedbyarapidtransitiontolow-carboneconomyandclosureoftheMaritsabasincoal-firedpowerplants.ThisscenariocarriesanimportanteconomicdimensionforthecountrysincethereisnoclearviewaboutbuildingRES-basedreplacementcapacitiesorothertechnologiestallyingwellwiththeconceptofasuccessfulenergytransition.EconomicriskscausedbythewarinUkrainemayserveasastrongargumentwhentimelinesforclosureofcoal-firedpowerplantsandbuildingasecondNPPbasedonwesterntechnologiesareconsidered.Germany’smovetoreopenitscoal-firedpowerplantsclosedinthepast,andtorethinkitsviewsonnuclearpowerplantsinordertomeetdomesticmarketelectricityneeds,comesinconfirmationofthenecessitytorevisitsuchanoption.Despitethesenegativetrends,Bulgaria’shighintegrationwiththecommonEuropeanelectricitymarketandthewell-balancedgenerationfacilitiesavailablecurrently,willallowthecountrytoplayamoreactiveroleattheregionallevel.186Beforethewar,UkraineexportedelectricitytoneighbouringcountriesviatheBurshtynenergy-island,withBurshtynTPP,whosenetworkwassynchronisedwiththeEuropeanenergysystem.187Inthepast,MoldavskayaGRESexportedelectricitytoBulgariaaswell.149Electricityexportopportunitiesmaybeexpandedwhencross-borderinfrastructureprojectsofcommoninterestareimplemented.ThesewillprovideconnectivityfortheWesternBalkans188andwillofferoptionstobuildonandsupportfurthereffortstowardsregionalenergytransitionsetinmotionundertheBerlinProcess,followingtheEC-WesternBalkansSummitinSofiain2020.ThiswillmakeBulgariaanintermediaryinenforcingEUtechnicalandregulatoryruleswhichshapethefoundationofanoveralleconomicconvergenceofthecountriesintheregionstrivingforEUmembership.ConsideringtheSouthdestination,thereisanopportunityforBulgariaarisingfromtheaggravateddiplomaticrelationsbetweenTurkiyeandGreece.Duetoitsimportantgeographiclocation189,thecountrymaybecomealinkingandbalancingelementbetweenthecommonEuropeanmarketandtheCaucusregion,providedEU’sandTurkiye’selectricitynetworksachievestrongersynchronicity.Thiswillrequireexpandingexistingphysicalinfrastructure190becauseevenwithoutaccountingforTurkiye’sambitiouslarge-scaleplansfornewgenerationcapacities(with24/7accessibility),theregionwillexperienceasignificantimpact.IncreasingtransitflowsintheEast-WestdirectionmayturntheBulgarian-TurkiyeborderandtheBulgarian-Serbianborderintobottlenecks,limitingelectricitytrading.ThesameoutcomewouldbeobservedincasetheMaritsabasinfacilitiesareclosed.Inthiscontext,restoringChairaPSHPPoperationswouldalsohaveanimportantgeopoliticaleffectbecause,asmentionedabove,inthenearfutureoptionsforRESenergybalancingandstoragewouldallowforamoretangibleimpactonanelectricitymarketwhichwouldincreasinglytendtoapplythegenerateorpurchaseprinciple.ConclusionTheelectricitysector’simportanceinestablishingnetworkcommunitieswhichapplycommonelectricitystandardsandregulationsmakeselectricityanessentialgeopoliticalvariable.Inthecomingyears,itssignificancewillonlygrowhigher.InEUborderregions,cuesofanenhancedgeopoliticalconfrontationregardingthisparticularsectorhavealreadybeendetected.Anintegralpartofsuchashowdownisthewillofglobalandregionalpowerstoshapeneweconomicunionsandgravitationalcentres.Inthatrespect,ChineseinfluenceviainvestmentsinelectricitytransmissionnetworksinseveralcountriesandthepossibilityforChinatotransformtheREStechnologymarketintoacompletelymonopolisedoneprovestobeofeconomicandpoliticalimportancefortheEU.Thismaybecome188Anew,secondinterconnectorisexpectedtobebuiltbetweenBulgarianandSerbiaafter2030.189BecauseofBulgaria’simportantgeographicallocationandtheexpectedincreasedinterestintransitingelectricityviathenationaltransmissionnetwork,theEChasrecognisedprojectsonbuildingnewpowerlinesof400kVbetweenMaritsaIztok–NeaSanta(Greece)substations,Plovdiv–MaritsaIztoksubstationsandaBurgas–VarnasubstationasprojectsofcommoninterestundertherequirementsofRegulation(EU)347/2013oftheEuropeanParliamentandtheCouncilon17April2013.190Alsoafter2030,athirdinterconnectorbetweenBulgariaandTurkiyeisexpectedtobebuild.150adestabilisingfactorinsuccessfullyrealisingEuropeanambitionsforanenergytransitionwhilebearinginmindthatinthefutureEuropemaybecomeanRES-generatedelectricityimporterfromcountriesoutsidetheEU.GeopoliticalprocessesoutlinedhereinindicatethattheEUhastobeproactiveinbroadeningitspoliticalandeconomicrelationswithcountriesknowntoberichinrare-earthmetaldepositsandhavingthepotentialtobecomekeyplayersintheRESsector.TheEUneedstoapplyamorecoordinatedandtargetedforeignpolicytowardsneighbouringgeographicareasbutalsowithLatinAmerica,AfricaorAustralia,assomeofthesecountriesareparticularlyrichinrare-earthelements.ThewarinUkrainereaffirmsthenotionthatelectricitynetworksynchronisationisprobablythefirsttraitofconvergencetowardsaneconomicandpoliticalunion.ThatiswhytheEUshouldnottolerateanydelayinelectricitysectorintegrationprocesses(asithappenedwithUkraine)andbeevenmoreactiveinsecuringtheconnectionoftheBalticcountriestothecommonpan-Europeanelectricitynetwork.ProvidedtheEUfailstoundertakesuchaproactiveapproach,RussiawillnothesitatetoimposeitsstronginfluenceonthesectorinEasternEuropebymeansofbothphysicalinfrastructureandnuclearfuelsupply.EnforcingEuropeanstandardstoRESelectricitygenerationandtrade,andtofinancialisationoftheelectricitysector,turnsouttobeakeyfactorforanadequateresponsetoChineseinvestmentexpansion.Forthispurpose,itispossibletousetheEuropeanInvestmentBank,todevelopagreenbondsmarketortoestablishanewindependentfinancialentitysuchastheEuropeanClimateandSustainableDevelopmentBank191.Bulgariaisnotremainingontheside-linesofmulti-vectorgeopoliticalprocessestranspiringontheOldContinent.BeingpartoftheEuropeanelectricityandeconomicnetworkconnectivity,itsharesallprobableasymmetricrisksatsectorallevel.Turkiye’splanstosetitsownareaofinfluenceintheEasternMediterraneanandtheCaucusregions,alongwiththecountry’sproximitytothemilitaryconflictinUkraine,positionitasaborderingbutbindingunittoseveralgeopoliticalcentres.Pricefluctuationswillcontinuetoimpactseriouslytheenergy-intensiveBulgarianeconomy.Thiscallsforrevisionofthedomesticmarketmodelsothatitcanensurelong-termaffordableelectricitypricesforthelocalindustryandconsumersratherthantargetingonlythehigh-liquiditythoughfluidandexport-orientedDayAheadsegment.ThereareprerequisitesforthewarinUkrainetoinduceasurgeinelectricityshortagesinEasternEurope.However,Turkiye’spushtowardsbuildingnewbasecapacitiesmaycauseimbalanceinSoutheastEurope.TheseprocessesrequirepursuingpreservationofthebalancedBulgarianelectricitymix,extensiveinvestmentsinnewtransmissioninfrastructurewithEUsupportandproactivemediationinthepre-accessioncourseofWesternBalkancountries.RegulationandstandardisationatsupranationallevelbringsforwardtheneedtoperceivetheelectricitysectorinthecontextoftheoverallEUeconomicandpoliticalparadigm.ByputtinginplaceinstitutionslikeENTSO-E,ACERand191SeeLeonard,M.,Pisani-Ferry,J.,Shapiro,J.,Tagliapietra,S.,Wolff,G.(2021),ThegeopoliticsoftheEuropeanGreenDeal,PolicyContribution,Issue04/21.151IRENA192,statecontroloverthesectorgiveswaytothefreemarketwhilesecurityofsupplyrestsnolongerinthenationalbutinthecollectivefocus.TechnicalandregulatoryconvergenceisvitalforadeepereconomiccohesionandmembershipintheEU.Thisprovidesanewwayofbindingeconomiccentresandperipheries.Insomecases,thelattermayacquirehigherimportancedependingonhowwell-endowedtheyarewithregardtoelectricitygeneration.NedkoKosevholdsanMAinEconomicsandFinanceatSofiaUniversity“St.KlimentOhridski”.Since2020heisPhDstudentatSofiaUniversity“St.KlimentOhridski”,doctoralprogram“EconomicsandEconomicPolicy”.HisfieldofresearchisinternationaltradeinelectricityinSoutheastEurope.192ENTSO-E,ACER(AgencyforCooperationofElectricityRegulators)andIRENA(InternationalRenewableEnergyAgency)havebeenestablishedbetween2009-2011.152BIBLIOGRAPHYИуей,У.(2021),Глобализацияпокитайски.„Единпояс,единпът“:светътезавсички,Издателство„Изток-Запад“[Yiwei,W.(2021),GlobalisationChineseStyle.OneBelt,OneRoad:It’saFreeWorld,East-WestPublishingHouse]Русев,М.(2004),Пространственасъщностнаглобалниямодел„център-периферия“отгледнаточканадифузиянанововъведенията,сп.Геополитика,бр.3[Roussev,M.(2004),SpatialNatureofCentre-PeripheryGlobalModelfromthePerspectiveofNoveltiesDiffusion,GeopolitikaJournal,issue3]GeopoliticalImpactofEnergyTransition(2022),EESCopinion,Геополитическотовъздействиенаенергийнияпреход(2022),Rapporteur:TomaszAndrzejWróblewski(GRI/Poland);Co-rapporteur:IoannisVardakastanis(GRIII/Greece),Source:https://eur-lex.europa.eu/legal-content/BG/TXT/PDF/?uri=CELEX:52022AE1398&from=ENCamposA.,Fernandes,P.(2017),TheGeopoliticsofEnergy,Book:GeopoliticsofEnergyandEnergySecurity,PartI,pp.23-40,InstitutodaDefesaNacionalFeldhaus,L.,Westphal,K.,&Zachmann,G.(2021),ConnectingUkrainetoEurope’selectricitygrid:technicaldetailsandhardgeopolitics,(SWPComment,57/2021),Berlin:StiftungWissenschaftundPolitik-SWP-DeutschesInstitutfürInternationalePolitikundSicherheit,https://doi.org/10.18449/2021C57Ho,S.(2020),InfrastructureandChinesePower,InternationalAffairs96,№6:1461-85(1468)Leonard,M.,Pisani-Ferry,J.,Shapiro,J.,Tagliapietra,S.,Wolff,G.(2021),ThegeopoliticsoftheEuropeanGreenDeal,PolicyContribution,Issue04/21Pascual.C.,Zambetakis,E.(2008),TheGeopoliticsofEnergy.FromSecuritytoSurvival,Chapterone,TheBrookingsInstitution,Washington,DC,https://www.brookings.edu/wp-content/uploads/2016/07/energysecurity_chapter.pdfPastukhova,M.,PepeJ.andWestphalK.(2020),BeyondtheGreenDeal:UpgradingtheEU’sEnergyDiplomacyforaNewEra,GermanInstituteforInternationalandSecurityAffairs,Source:https://www.energiewende-global.com/fileadmin/user_upload/giz-website/Media_Library/Erneuerbare_Energien/Beyond_the_Green_Deal_Upgrading_the_EUs_Energy_Diplomacy_for_a_New_Era.pdfScholten,D.,&Bosman,R.(2016),Thegeopoliticsofrenewables;exploringthepoliticalimplicationsofrenewableenergysystems.TechnologicalForecastingandSocialChange,103,273-283,https://doi.org/10.1016/j.techfore.2015.10.014TagotraN.(2022),TheGeopoliticsofRenewableEnergy,June25,2022,Source:https://www.nbr.org/publication/the-geopolitics-of-renewable-energy/Westphal,K.,Pastukhova,M.,MariaPepe,J.(2022),GeopoliticsofElectricity:Grids,Spaceand(political)Power,GermanInstituteforInternationalandSecurityAffairs,SWPResearch,Paper6,Berlin153FROMPOLITICSTOPRACTICE:THECRITICALROLEOFHUMANCAPITALINACHIEVINGTHERENEWABLEENERGYTRANSFORMATIONVeselinTodorov,PhD,Eng,ChairmanoftheSolarAcademyBulgariaAssociationScopeandSummaryThetransitiontoalow-carbon,renewableenergyfutureisoneofthemostpressingglobalchallengesofourtime.Thesuccessofthistransitionwilldependontheavailabilityofaskilledandcompetentworkforcecapableofdrivingthedeploymentandintegrationofrenewableenergytechnologies.Despitetherapidgrowthoftherenewableenergysector,theindustryisfacingasignificantskillsgap,whichthreatenstolimitthepaceandscaleoftheenergytransformation.Thearticlepresentstheargumentthatthecriticalroleofhumancapitalinachievingasuccessfulenergytransitionhasbeenlargelyoverlookedinpolicyandacademicdiscussions.Inordertoovercometheskillsgapandbuildasustainableenergyfuture,thereisurgentneedtoprioritizeworkforcedevelopmentinrenewableenergy.Onthisground,arealisticoverviewofthecurrentstateoftherenewableenergysectorandthechallengesfacedbytheindustryintermsofworkforcedevelopmentismorethannecessary.Thus,aseriesofrecommendationsforaddressingtheskillsgapispointedout,includinginteraliatheneedfor:•Aconcertedefforttoprioritizeworkforcedevelopmentalongtheenergypolicy;•Investmentinrenewableenergyeducationandtrainingprograms;•Thecreationofindustry-academiapartnershipstodriveinnovationandthetransferofknowledge;•Encouragementofdiversityandinclusivenessintherenewableenergysectorastoensurethatthebenefitsoftheenergytransitionaresharedbyall,etc.Theenergytransformationisacriticalissuethatrequirestheinvolvementofmultiplestakeholders,includingthepoliticalsector.However,theultimatesuccessofthistransformationdependsheavilyonthehumancapitalinvolved.Skilledworkers,knowledgeableexperts,andefficientmanagersplayavitalroleinthedesign,implementation,andmaintenanceofenergy-efficientsystemsandtechnologies.Withoutanadequatepoolofhumancapital,theenergytransformationwouldlikelybehinderedbyalackofexpertiseandtechnicalknow-how.Itiscrucialforgovernmentsandorganizationstoinvestinthedevelopmentofhumancapitalintheenergysector,througheducation,training,andcapacity-buildinginitiatives.Thisinvestmentwillnotonlyhelptoachievetheenergytransformationbutalsocreateeconomicopportunitiesandsupportsustainabledevelopment.154IntroductionTheworldisfacinganexistentialthreatduetoclimatechange.Theincreasingglobaltemperature,extremeweatherconditions,andrisingsealevelsaresomeofthemostsignificantconsequencesofthisproblem.Tocombatthisissue,theworldneedstoreduceitscarbonfootprintandtransitiontowardsalow-carbon,renewableenergyfuture.Thetransitiontorenewableenergysourcesisoneofthemostpressingglobalchallengesofourtime,asitisessentialtoensureasustainablefuturefortheplanetandallitsinhabitants.Renewableenergytechnologiessuchassolar,wind,andhydropowerarerapidlygrowingandhavethepotentialtoreplacetraditionalfossilfuel-basedenergysources.However,thistransitionisnotwithoutitschallenges.Oneofthemostsignificantchallengesistheavailabilityofaskilledandcompetentworkforcethatcandrivethedeploymentandintegrationofrenewableenergytechnologies.Despitetherapidgrowthoftherenewableenergysector,theindustryisfacingasignificantskillsgap,whichthreatenstolimitthepaceandscaleoftheenergytransformation.Basedonaninternationallyestablishedframe,whichwasalsoexplicitlydevelopedatEUlevel,governmentsandorganizationsworldwidehaverecognizedtheneedtopromoterenewableenergyandreducegreenhousegasemissions.Thesehaveadoptedvariouspoliciesandproposalsaimedatpromotingrenewableenergy,suchasrenewableenergytargets,feed-intariffs,carbonpricing,andenergyefficiencystandards.Nonetheless,thecriticalroleofhumancapitalinachievingasuccessfulenergytransitionhasbeenlargelyoverlookedinpolicyandacademicdiscussions.Whilethesepoliciesareessential,theymaynotbeenoughtoachievethedesiredoutcomeswithoutanadequatepoolofskilledandcompetentprofessionalsintherenewableenergysector.AconcertedefforttoprioritizeworkforcedevelopmentintheenergyrelatedcontextAconcertedefforttoprioritizeworkforcedevelopmentintheframeoftheenergypolicyisessentialtoensurethattherenewableenergysectorhasthehumancapitalneededtodrivetheenergytransformation.Policiesthatpromoteworkforcedevelopmentcantakemanyforms,fromfundingforeducationandtrainingprogramstotaxincentivesforbusinessesthatinvestinemployeeskillsandknowledge.TheEuropeanCommissionhasrecognizedtheimportanceofworkforcedevelopmentinachievingasustainableenergyfuture.TheCommissionlaunchedtheEuropeanGreenDealinDecember2019asasetofpolicyproposalsbasedontheconceptformakingtheEU’seconomysustainableandreducingitsgreenhousegasemissions.155TheGreenDealincludesaspecificfocusonthehumancapitalneededtoachievethesegoals,includingproposalsfor:•TheEuropeanSkillsAgendaforsustainablecompetitiveness,socialfairness,andresilienceThispolicyinitiativeaimstoensurethatpeopledeveloptherightskillsforthegreenanddigitaltransition.TheAgendasetsoutanumberofactions,suchasupskillingandreskillingpeople,toimprovetheemployabilityofworkersandensureasustainable,fair,andresilientrecoveryfromtheCOVID-19pandemic;193•TheEuropeanEducationAreaThisinitiativeaimstoensurethateveryonehasaccesstohigh-qualityeducationandtrainingthroughouttheirlives.Itfocusesonkeycompetences,suchasdigitalandgreenskills,andaimstoincreasetheattractivenessofvocationaleducationandtraining.194•TheEuropeanClimateLawThislegislationsetstheframeworkforEUclimatepolicyandsetsatargetofnet-zerogreenhousegasemissionsby2050.Itrecognizestheneedforaskilledworkforcetoachievethistargetandcallsforthedevelopmentofa“justtransition”forworkersinsectorsaffectedbytheenergytransformation.195Inadditiontothesepolicyproposals,theEuropeanCommissionhasalsosupportedfundingforeducationandtrainingprogramsthroughitsHorizonEuroperesearchandinnovationprogram.Theprogramprovidesfundingforresearchandinnovationprojectsthataimtoaddresssocietalchallenges,includingtheenergytransition.Overall,aconcertedefforttoprioritizeworkforcedevelopmentintheframeofcoherentenergypolicyapproachiscrucialforachievingasustainableenergyfuture.ThepoliciesoftheEuropeanCommission,suchastheEuropeanSkillsAgendaandtheEuropeanEducationArea,provideastrongframeworkforachievingthisgoal.Byinvestinginhumancapitalandensuringthatworkershavetheskillsandknowledgeneededtodrivetheenergytransformation,wecancreateamoresustainable,fair,andresilientfutureforall.Inadditiontoprioritizingworkforcedevelopment,itisimportanttoconsidertherelationshipbetweentheapproachoftheEuropeanUnion(EU)andtheroleofitsmembercountriesintrainingandthehumanfactoringeneral.WhiletheEUprovidesastrongframeworkforachievingworkforcedevelopmentgoals,itisultimatelyuptothemembercountriestotaketheleadinimplementingthesepoliciesandprograms.Eachcountryhasitsownuniqueenergylandscapeandworkforce,andthereforerequirestailoredsolutionstoaddresstheskillsgapintherenewableenergysector.TheEUcanplayaroleinfacilitatingcollaborationand193EuropeanCommission.“TheEuropeanGreenDeal.”https://ec.europa.eu/social/main.jsp?catId=89&langId=en&pubId=8284.194EuropeanCommission.2020.“EuropeanEducationArea.”https://ec.europa.eu/education/education-in-the-eu/european-education-area_en.195EuropeanCommission.2020.“TheEuropeanGreenDeal.”https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en.156knowledge-sharingamongmembercountriestopromotebestpracticesandensureacohesiveapproachtoworkforcedevelopment.However,itisuptoindividualcountriestotaketheleadindesigningandimplementingeducationandtrainingprogramsthatmeetthespecificneedsoftheirworkforce.Bydoingso,membercountriescanensurethattheirworkershavetheskillsandknowledgenecessarytocontributetotheenergytransition.InvestmentinrenewableenergyeducationandtrainingprogramsTheseinvestmentsareacriticalcomponentinbuildingaskilledandcompetentworkforcecapableofdrivingthedeploymentandintegrationofrenewableenergytechnologies.Thedevelopmentofarobustworkforceisessentialinensuringthesuccessofthetransitiontoalow-carbon,renewableenergyfuture.Oneofthekeywaystopromoteinvestmentinrenewableenergyeducationandtrainingprogramsisthroughadequateandsystematicgovernmentalpoliciesandinitiatives.Infact,theseshouldbeanalyzedbothindividuallyandintheframeofthestepsattheEUpolicylevelinthesedirections.TheEuropeanCommissionhasbeenattheforefrontofpromotingrenewableenergyandreducinggreenhousegasemissionsthroughvariousstepsconcretelyinthesphereofeducationandtraining.OneofthemostsignificantinitiativesistheEuropeanGreenDeal,whichaimstomakeEuropetheworld’sfirstclimate-neutralcontinentby2050.Aspartofthisinitiative,theCommissionhassetatargetofproducingatleast32%oftheEU’senergyfromrenewablesourcesby2030.196ToachievetheGreenDealtargetsfortheroleofRES,theEuropeanCommissionhasputforwardanumberofpoliciesandmeasuresaimedatpromotinginvestmentinrenewableenergyeducationandtrainingprograms.OnesuchpolicyformatistheEuropeanStrategicEnergyTechnologyPlan(SETPlan),whichaimstoacceleratethedevelopmentanddeploymentoflow-carbontechnologies,includingrenewableenergytechnologies,throughresearch,innovation,andeducation.197AnotherconcreteformatistheEuropeanUnion’sHorizon2020program,whichisthelargestresearchandinnovationprogramintheworld,withabudgetof€80billion.198Itprovidesfundingforrenewableenergyresearchanddevelopment,includingeducationandtrainingprograms,tosupportthetransitiontoalow-carbon,renewableenergyfuture.TheCommissionhasalsoestablishedtheEuropeanEnergyUnion,whichaimstoprovidesecure,affordable,andsustainableenergyforallEuropeans.TheEnergyUnionincludes,interalia,measuresaimedatpromotinginvestmentinrenewableenergyeducationandtrainingprogramsto196EuropeanCommission.“Renewableenergydirective.”https://energy.ec.europa.eu/topics/renewable-energy/renewable-energy-directive-targets-and-rules/renewable-energy-directive_en.197Magagna,D.,Shtjefni,D.,Peteves,E.,Tzimas,E.,DeFelice,M.,Tarvydas,D.,andRuehringer,M.2020.“ImplementingtheSETPlan.”MendesPinheiroAndre,S.ed.PublicationsOfficeoftheEuropeanUnion.Luxembourg.ISBN978-92-76-25345-7,doi:10.2760/927963,JRC122587.https://publications.jrc.ec.europa.eu/repository/handle/JRC122587.198EuropeanCommission.“WhatwasHorizon2020?”https://research-and-innovation.ec.europa.eu/funding/funding-opportunities/funding-programmes-and-open-calls/horizon-2020_en.157developaskilledandcompetentworkforcecapableofdrivingthedeploymentandintegrationofrenewableenergytechnologies.199Inadditiontogovernmentpoliciesandinitiatives,therearealsogoodpracticesthatcanbesuggestedtopromoteinvestmentinrenewableenergyeducationandtrainingprograms.Onesuchpracticeisthecreationofpublic-privatepartnershipstofundsuchprograms.Bypartneringwiththeprivatesector,governmentscanleverageadditionalfundingandexpertisetodevelopeducationandtrainingprogramsthataretailoredtotheneedsoftherenewableenergyindustry.Forexample,theEuropeanRenewableEnergyResearchCentresAgency(EUREC)offersapostgraduateprograminrenewableenergythatisdesignedincollaborationwithleadingresearchcentersandindustrypartnersacrossEurope.Theprogramprovidesstudentswithhands-onexperienceinrenewableenergytechnologies,aswellasastrongtheoreticalfoundationinrenewableenergypolicyandmanagement.Bycollaboratingwithindustrypartners,EURECisabletoensurethattheprogramisalignedwithindustryneedsandtrends,providinggraduateswiththeskillsandknowledgeneededtosucceedintherenewableenergyindustry.200Anothergoodpracticeistheestablishmentofcentersofexcellenceinrenewableenergyeducationandtraining.Thesecenterscanprovidearangeofeducationandtrainingprograms,frombasictrainingforentry-levelworkerstoadvancedtrainingforexpertsinthefield.Bycreatinganetworkofcentersofexcellence,governmentscanensurethattherenewableenergyindustryhasaccesstoaskilledandcompetentworkforce.OneexampleofacenterofexcellenceinrenewableenergyeducationandtraininginEuropeistheRenewableEnergyResearchInstitute(RERI)201attheUniversityofAppliedSciencesandArtsWesternSwitzerland.RERIoffersarangeofprograms,includingaMaster’sdegreeinEnergyandEnvironmentalScienceswithaspecializationinrenewableenergy.Theinstitutealsoprovidescontinuingeducationprogramsandresearchopportunitiesinrenewableenergytechnologies,policy,andmanagement.RERI’sprogramsaredesignedtoprovidestudentswithastrongtheoreticalfoundationaswellaspracticalskillsinrenewableenergy,ensuringthattheyareequippedtosucceedintheindustry.Thecreationofindustry-academiapartnershipstodriveinnovationandthetransferofknowledgeIndustry-academiapartnershipsarecrucialindrivinginnovationandthetransferofknowledgeintherenewableenergysector.Thesepartnershipsbringtogetheracademicinstitutionsandprivatesectorcompaniestocollaborateonresearchanddevelopmentprojects,allowingfortheexchangeofexpertiseandresources.Thebenefitsofsuchpartnershipsarenumerous,includingthedevelopmentof199EuropeanCommission.“Energyunion.”https://energy.ec.europa.eu/topics/energy-strategy/energy-union_en.200EUREC.“Europeanmasterinrenewableenergy.”https://master.eurec.be/about/objectives/.201RenewablesandEnvironmentalRegulatoryInstitute.https://www.reri.org.rs/en/home/.158newtechnologies,theidentificationofnewmarkets,andthecreationofnewjobopportunities.Onereasonwhyindustry-academiapartnershipsareimportantisthattheyhelptobridgethegapbetweentheoreticalresearchandpracticalapplications.Academicinstitutionshaveawealthofknowledgeandexpertiseinrenewableenergy,butmaynothavetheresourcesorinfrastructuretobringtheirresearchtomarket.Privatesectorcompanies,ontheotherhand,havetheresourcesandinfrastructuretocommercializenewtechnologies,butmaylackthenecessaryresearchexpertise.Byworkingtogether,academicinstitutionsandprivatesectorcompaniescanleverageeachother’sstrengthstodevelopnewproductsandtechnologiesthataremoreefficient,effective,andsustainable.Moreover,industry-academiapartnershipscanacceleratethepaceofinnovationintherenewableenergysector.Therapidgrowthofrenewableenergytechnologiesrequiresconstantinnovationtokeeppacewithchangingmarketdemandsandtechnologicaladvancements.Collaboratingwithacademicinstitutionsallowsprivatesectorcompaniestoaccessthelatestresearchandtechnologicaladvancements,andtoincorporatethesedevelopmentsintotheirproductsandservices.Inthisway,industry-academiapartnershipscanhelptodrivethedevelopmentofnewandmoreefficientrenewableenergytechnologies.Thereareseveralgoodpracticesthatcanbesuggestedtofostersuccessfulindustry-academiapartnershipsintherenewableenergysector.Onesuchpracticeistoestablishclearandopenlinesofcommunicationbetweenacademicinstitutionsandprivatesectorcompanies.Thiscanhelptoensurethatresearchgoalsandtimelinesarealigned,andthatbothpartiesareabletobenefitfromthepartnership.Anothergoodpracticeistoestablishclearexpectationsandmetricsforsuccess.Thiscanhelptoensurethatbothpartiesareworkingtowardsthesamegoals,andcanhelptoidentifyanyissuesthatmayariseearlyoninthepartnership.Itisalsoimportanttoensurethatintellectualpropertyrightsareclearlydefinedandprotected,toavoidanypotentialconflictsbetweenacademicinstitutionsandprivatesectorcompanies.TheEuropeanCommissionhasrecognizedtheimportanceofindustry-academiapartnershipsindrivinginnovationandcompetitivenessintherenewableenergysector.TheHorizonEuropeprogram,forexample,includesfundingopportunitiesforresearchandinnovationpartnershipsbetweenacademia,industry,andotherstakeholders.TheEuropeanCommissionhasalsolaunchedinitiativestopromoteindustry-academiapartnerships,suchastheEuropeanInstituteofInnovationandTechnology’sKnowledgeandInnovationCommunities.202EncouragementofdiversityandinclusivenessintherenewableenergysectorTherenewableenergysectorhasthepotentialtocreatesignificanteconomicandenvironmentalbenefits,includingthecreationofnewjobsandthereductionof202EuropeanInstituteofInnovation&Technology.“Activities.”https://eit.europa.eu/our-activities.159greenhousegasemissions.However,itisimportanttoensurethatthebenefitsoftheenergytransitionaresharedbyallmembersofsociety,regardlessofgender,race,orsocio-economicstatus.Therefore,encouragingdiversityandinclusivenessintherenewableenergysectoriscriticaltoachievingthisgoal.Thereareseveralreasonswhydiversityandinclusivenessareimportantintherenewableenergysector.Firstly,itcanhelptopromoteinnovationandcreativity.Studieshaveshownthatdiverseteamsaremorelikelytocomeupwithinnovativesolutionsandideas.Bypromotingdiversityandinclusivenessintherenewableenergysector,onecanharnessthefullpotentialoftheworkforceanddriveinnovationinthesector.Anexampleofthisisthe“InnovationThroughDiversity”study203–aresearcheffortthataimstoinvestigatetherelationshipbetweenworkplacediversityandinnovation.Thestudyincludesresearchfromvariousorganizationsandconsultingfirms,suchasBostonConsultingGroupandMcKinsey&Company,whichhavefoundcompellingevidencethatdiversityunlocksinnovationanddrivesmarketgrowth.Theresearchsuggeststhatcompanieswithdiverseteamsaremorelikelytodevelopnewideas,improvecollaboration,andbemoresuccessful.Secondly,promotingdiversityandinclusivenesscanhelptoaddresssocialandeconomicinequalities.Therenewableenergysectorhasthepotentialtocreatenewjobsandeconomicopportunities.However,iftheseopportunitiesarenotaccessibletoallmembersofsociety,thenthebenefitsoftheenergytransitionwillnotbefullyrealized.Bypromotingdiversityandinclusivenessintherenewableenergysector,governmentscanhelptoensurethatallmembersofsocietyhaveaccesstotheeconomicopportunitiescreatedbythesector.Finally,promotingdiversityandinclusivenessissimplytherightthingtodo.Everyoneshouldhavetheopportunitytoparticipateinandbenefitfromtherenewableenergysector,regardlessoftheirbackgroundoridentity.Thereareseveralwaysinwhichdiversityandinclusivenesscanbepromotedintherenewableenergysector.Oneapproachistodeveloptargetedrecruitmentandtrainingprogramstoencouragetheparticipationofunderrepresentedgroupsinthesector.Forexample,initiativescouldbedevelopedtoencouragewomen,minorities,andlow-incomeindividualstopursuecareersinrenewableenergy.Forexample,theEuropeanPlatformforWomeninEnergy(WONY)isaninitiativeaimedatpromotinggenderdiversityandequalopportunitiesintheenergysectoracrossEurope.204Itwasestablishedtoprovideanetworkingandmentoringplatformforwomenworkingorinterestedinworkingintheenergysector,andtoorganizeeventsandtrainingsessionstosupporttheirprofessionaldevelopment.OneofEPWE’smaingoalsistoincreasetheparticipationofwomenintheenergysector,particularlyinleadershippositions.Toachievethisgoal,theplatformprovidesarangeofservicesandresources,includingmentorshipprograms,networking203BostonConsultingGroup.“InnovationThroughDiversity.”https://www.bcg.com/publications/2017/people-organization-leadership-talent-innovation-through-diversity-mix-that-matters.204Womeninenergy.https://www.womeninenergy.eu/events/.160events,andprofessionaldevelopmentopportunities.Theseresourceshelptoequipwomenwiththeskillsandknowledgetheyneedtosucceedintheenergysector,andtobuildstrongnetworksofsupportandcollaboration.Inadditiontoprovidingsupportforindividualwomen,EPWEalsoworkstopromotediversityandinclusivenessintheenergysectorasawhole.Theplatformhaspartnershipswithindustry,government,andeducationproviderstopromotediversityandinclusivenessintheworkforce.Thesepartnershipshelptocreateamoresupportiveandinclusiveworkenvironment,andtoensurethatunderrepresentedgroupshaveequalopportunitiestoparticipateintheenergysector.Overall,EPWEisanimportantinitiativethatishelpingtopromotegenderdiversityandequalopportunitiesintheenergysectoracrossEurope.Byprovidingsupportforwomenandpromotingdiversityandinclusivenessintheworkforce,theplatformishelpingtocreateamoresustainableandequitableenergysectorforeveryone.Anotherapproachistocreateasupportiveandinclusiveworkplaceculture.Thiscaninvolveimplementingpoliciesandpracticesthatpromotediversityandinclusiveness,suchasflexibleworkingarrangements,mentoringprograms,andbiastraining.Furthermore,industryleadersandpolicymakerscanworktogethertocreateamorediverseandinclusiverenewableenergysector.Thiscouldinvolvesettingdiversitytargetsandtrackingprogress,aswellaspromotingtheparticipationofunderrepresentedgroupsindecision-makingprocesses.ConclusionBeyondanydoubt,thesuccessoftheenergytransitionisdependentontheavailabilityofaskilledandcompetentworkforcecapableofdrivingthedeploymentandintegrationofrenewableenergytechnologies.Theskillsgap205currentlyfacedbytherenewableenergysectorthreatenstolimitthepaceandscaleoftheenergytransformation.Itisthereforecriticalthatgovernmentsandorganizationsprioritizeworkforcedevelopmentinenergypolicytoovercomethisskillsgap.Investmentinrenewableenergyeducationandtrainingprogramsisakeycomponentofworkforcedevelopment.Theseprogramscanprovideworkerswiththeskillsandknowledgenecessarytodesign,implement,andmaintainenergy-efficientsystemsandtechnologies.TheEuropeanCommissionhasrecognizedtheimportanceoftheseprogramsandhasinvestedsignificantresourcesinthedevelopmentofrenewableenergyeducationandtraininginitiatives.GoodpracticessuchastheErasmus+program206haveenabledstudentsandprofessionalstogaininternationalexperienceanddeveloptheskillsnecessarytocontributetotheenergytransition.TheEuropeanCommissionhasrecognizedtheimportanceofdiversityand205InternationalEnergyAgency(IEA).2020.“EnergyTechnologyPerspectives2020.”https://www.iea.org/reports/energy-technology-perspectives-2020.206EuropeanCommission.2021-2027.“Erasmus+”https://www.eacea.ec.europa.eu/grants/2021-2027/erasmus_en.161inclusivenessintherenewableenergysectorandhasadoptedpoliciesandinitiativestopromotegenderbalance,socialinclusion,andequalopportunities.Theenergytransitionisacriticalissuethatrequirestheinvolvementofmultiplestakeholders,includingthepoliticalsector.Thesuccessoftheenergytransitiondependsheavilyonthehumancapitalinvolved.Skilledworkers,knowledgeableexperts,andefficientmanagersplayavitalroleinthedesign,implementation,andmaintenanceofenergy-efficientsystemsandtechnologies.Withoutanadequatepoolofhumancapital,theenergytransformationwouldlikelybehinderedbyalackofexpertiseandtechnicalknow-how.Thus,itiscrucialforgovernmentsandorganizationstoinvestinthedevelopmentofhumancapitalintheenergysector,througheducation,training,andcapacity-buildinginitiatives.Thisinvestmentwillnotonlyhelptoachievetheenergytransformationbutalsocreateeconomicopportunitiesandsupportsustainabledevelopment.Inconclusion,thesuccessoftheenergytransitiondependsontheavailabilityofaskilledanddiverseworkforce.TheEU’spoliciesandinitiativestopromoteworkforcedevelopmentanddiversityintherenewableenergysectorarecrucialforachievingasustainableenergyfuture.Theinvestmentinrenewableenergyeducationandtrainingprogramsisakeycomponentofworkforcedevelopmentandshouldbeprioritizedbygovernmentsandorganizations.Itiscrucialforthemembercountriestoleadthiseffortbyinvestinginhumancapitalthrougheducation,training,andcapacity-buildinginitiatives.Thisinvestmentwillnotonlyhelptoachievetheenergytransformationbutalsocreateeconomicopportunitiesandsupportsustainabledevelopment.VeselinTodorov,PhD,Eng,isthefounderofVVTEngineeringLtd,chairmanandfounderoftheSolarAcademyBulgariaAssociation,engineerandlecturerattheUniversityofMiningandGeology,Departmentof“ElectricitySupplyandElectricalEquipment”.Hisscientificinterestsarefocusedonthefieldofrenewableenergyandonexploringnewandemergingtechnologiesintheenergysector.Additionally,hehasakeeninterestintheintegrationofrenewableenergysourceswiththepowergrid,energystoragesystems,andsmartgridtechnologies.Hisresearchintheseareasaimstocontributetotheadvancementoftherenewableenergyindustryandthedevelopmentofsustainableenergysolutions.162IDENTIFYINGTHELINKSBETWEENPOLICYANDPROSUMERS;WHYISTRANSFORMATIONLATEANDWHATLEDTOTHISCRISIS?LyubomirGrozdanov,BusinessDevelopmentexpertattheIndependentBulgarianEnergyExchange(IBEX)IntroductionTheEU’senergypolicytowardprosumersisimplementedthroughtheRenewableEnergyandInternalEnergyMarketDirectives,mostrecentlyamendedwiththeCleanEnergyPackage,whichhasbeenineffectsince2021207.Thesedocumentsregulatetheexistenceofprosumersandorganizationsthatconsumerscanbeinvolvedwith,takingadvantageofopportunitiestosharerenewableenergyphysicallyorvirtuallyonamarketbasisorviatariffs208.Thefocusisontherightofconsumerstocooperateindifferentlegalandorganizationalforms,tobuildandoperateenergyfacilities,andtohaveguaranteedaccesstoexistinginfrastructure,allofwhichshouldbedefinedinthelegislationofindividualEUMemberStates.Thedirectivesalsostatethattobringprosumersintothesystem,market-basedmechanismsshouldbedeveloped.TheRenewableEnergyDirectiveisquotedverbatim,withoutspecifyingtherules(abillforamendingandsupplementing209theEnergyfromRenewableSourcesAct,availableonlyinBulgarianlanguage)intheBulgarianlegislation,withtheexpectationofextendingtherelevantregulatoryframeworktoincludeadditionallocalmarketsandaccesstothegrid.Pleaserefertothecitedresearchformoreinformationonthedefinitionsofprosumersanddifferenttypesofsharingorganizations210.Prosumersareconsumersstrategicallyandoperationallyinvolvedintheenergymarket,proactivelysecuringtheirownconsumption.Theseenergysystemactorscandecidewhethertoinvestandhowbesttouseenergyassets,consideringthepriceofenergyresourcesintheenergymarket,whichisafunctionofsupplyanddemand.Thepricedependsonthecurrentandfuturestateoftheenergysystem.Thismeansthatashortageofenergyresourcesduetosupplychannelsinterruptionsorotherfactorsthatinfluencethelimitedsupply(orincreaseddemand)wouldresultinincreasingthepricetomatchtheneedofmeetingenergydemands.Therefore,long-termandshort-termpriceforecastingisnecessaryforassessing207Article21.https://energy.ec.europa.eu/topics/renewable-energy/renewable-energy-directive-targets-and-rules/renewable-energy-directive_en.208Alshehri,Khaled,SubhonmeshBose,andTamerBaşar.“CentralizedVolatilityReductionforElectricityMarkets.”InternationalJournalofElectricalPower&EnergySystems133(December1,2021):107101.https://doi.org/10.1016/j.ijepes.2021.107101.209Page19,§22.https://parliament.bg/bg/bills/ID/164715.210deAlmeida,LucilaandKlausmann,NikolasandvanSoest,HenriandCappelli,Viola.“Peer-to-PeerTradingandEnergyCommunityintheElectricityMarket–AnalysingtheLiteratureonLawandRegulationandLookingAheadtoFutureChallenges.”RobertSchumanCentreforAdvancedStudies(March2021)ResearchPaperNo.RSCAS2021/35.https://ssrn.com/abstract=3821689orhttp://dx.doi.org/10.2139/ssrn.3821689.163investmentsinenergyfacilitiesbyprosumersandisonlypossibleinafunctioningmarket,whichisakeyobjectiveofenergypolicies.Consideringtheexistinglegalframeworkandtheexperiencesofar,itcanbeinferredthattheprosumerdomainstillcallsformorequestionsratherthanprovidinganswers.Itisproposedasnecessaryinviewofthefollowingaspects:•Definingtheroleofenergypolicyformarketformation;•Descriptionofthelinkbetweenmarketsignalsandenergyinfrastructure;•Determiningthenecessarymarketsignalswhenmakinginvestmentandoperationaldecisions;•Identifyingmissinginformationandguidelinesforquantitativeresearch.OnenergypolicyandprosumersEnergypolicyaimstoensurethefunctioningofthemarketandthesecurityofsupply,andtopromotetheefficientuseofresources.Failureofthemeasurestoachievetheabove-statedobjectivesmeanstheenergypolicyhasfailed.Themainfactorscontributingtosuchfailuresarelackofconsistency,delayinimplementation,unclearresponsibilities,andthestructureoftheinstitutionalorganization211.Theenergysystemtransformation,whereprosumerswillplayanincreasinglyimportantrole,isinlinewithinternationalenvironmentaltreatiesandistobeimplementedwiththeEU’sdecarbonizationpolicies.Adecentralizedconversionofenergyresourcesclosetothepointofconsumptionispartofthetransformation;thisisanewtypeofenergysystemmanagement(insteadofcentralizedmanagement).Inthatcontext,thetargetenergymarketmodelanticipatestrading(exchange)betweenmultiplesmall-scaleparticipants(prosumers)closetotherealdeliverytime.Smartgridsaretheconduit,allowingabidirectionalflowofinformation(aboutsystemstatus)andenergy,whereprosumerscandecidetheamountofenergy(commodity)emitted,stored,orconsumedbythemastheresultofpricesignals.Partoftheincentivesthatleadtoconsumers’conversionintoprosumersistheircommitmenttosocietyandtheenvironment,aswellasmonetaryincentives212.Therehavebeenvariousstudiesbasedonscenariosandsystemmodelsthataimatassessingtheeffectsoftransformationatamacroeconomiclevel.Theexpectationisbasedonforecastsoftechnologicalandsocialinnovationandpoliciesthatincentivizethem213.Themaintechnologicalinnovationsintheenergysectorrefertotheconversionofrenewableenergyintousefulenergyanditsassociatedsupportsystems,consideringtheirunpredictability.Socially,consumerbehavioris211MaciejM.Sokołowski,andRaphaelJ.Heffron.“DefiningandConceptualisingEnergyPolicyFailure:TheWhen,Where,Why,andHow.”EnergyPolicy161(February1,2022):112745.https://doi.org/10.1016/j.enpol.2021.112745.212EuniceEspe,VidyasagarPotdar,andElizabethChang.“ProsumerCommunitiesandRelationshipsinSmartGrids:ALiteratureReview,EvolutionandFutureDirections.”Energies11,no.10(2018).https://doi.org/10.3390/en11102528.213KarloHainschetal.“EnergyTransitionScenarios:WhatPolicies,SocietalAttitudes,andTechnologyDevelopmentsWillRealizetheEUGreenDeal?”Energy239(January15,2022):122067.https://doi.org/10.1016/j.energy.2021.122067.164expectedtoshiftfrompassivetoproactive,ortheso-calledprosumption.Infact,proactivebehaviorcomprisesinvestmentsinenergyfacilities,activeparticipationintheenergymarket,andsomeformofcooperationwithotherconsumers.Theeconomicincentivesforprosumers,however,remainthekeyfactorsthatareessentialtoachievetransformationbyleveragingtheirflexibility214–thisflexibilityrepresentsadegreeofreactiontonewinformation.Therefore,informationsystemsarethebasisofthetransformation.Inpractice,alleconomicandbusinessmodelsthatrefertoprosumersincludesmartorganizations,whicharebasedonITandhardware,includingcooperativesandlocalmarkets,microgrids215,andsmartcities216.TheLocalEnergyMarket(LEM)playsanimportantroleinthedevelopmentofprosumersasasocialandeconomicphenomenon.LEMisameansforcoordinationoftheexchangeinfrontoftheelectricitymeter,whichmeansprosumersusethepublicgridforsharing.ThreetypesofLEMaredifferentiatedintheexistingliterature:-peer-to-peerenergytrading(P2P)forelectricitytradingwithoutintermedi-ariesandwithoutgeographicalrestrictions;-collectiveself-consumption,whereenergyissharedbetweenconsumersinthesamelocalethroughacommonagent;and-atransactiveenergymarket,forsystembalancing,usingmarketsignals.Thethreetypesofenergyexchangearedistinguishedbythegoals,whichwillbeachievedthroughanorganizationofsharing,suchasresourceoptimizationforthetransactiveLEM,sharingincentivefortheP2PLEM,orcooperativewelfareimprovementforcollectiveself-consumption217.Inallthreeorganizationsofthemarket,theexchangeisdoneonacertifiedelectronicRESsharingplatform,withautomaticorderingandtransactionsettlementbetweenparticipants.Thisenablesprosumerstoformamicromarketforsharingenergyinexcessoftheirself-consumption.Dependingonthetype,itexistsatadifferentgridlevel.Itcanfunctioninparallel,subordinateto,orasasubstitutefortheexistingmarket.Inthiscase,prosumersshouldonlyuseaninformationplatformandgridinfrastructuretoshareenergyamongthemselves.Unfortunately,theCleanEnergyPackagedoesnotprovideguidanceonthe214AlirezaNourietal.“IdentificationofGapsandBarriersinRegulations,Standards,andNetworkCodestoEnergyCitizenParticipationintheEnergyTransition.”Energies15,no.3(2022).https://doi.org/10.3390/en15030856.215MartaCastellinietal.“PhotovoltaicSmartGridsintheProsumersInvestmentDecisions:ARealOptionModel.”Investment,EnergyandGreenEconomy126(May1,2021):103988.https://doi.org/10.1016/j.jedc.2020.103988.216Ana-MariaI.Şanta.“Prosumers–ANewMindsetforCitizensinSmartCities.”SmartCities5,no.4(2022):1409-20.https://doi.org/10.3390/smartcities5040072.217Capper,Timothy,AnnaGorbatcheva,MustafaA.Mustafa,MohamedBahloul,JanMarcSchwidtal,RuzannaChitchyan,MerlindaAndonietal.“Peer-to-Peer,CommunitySelf-Consumption,andTransactiveEnergy:ASystematicLiteratureReviewofLocalEnergyMarketModels.”RenewableandSustainableEnergyReviews162(July1,2022):112403.https://doi.org/10.1016/j.rser.2022.112403.165mainaspectsrelatedtothecommoninformationplatform.Itremainsunclearwhatthefinancialconditionsregardingaccesstotheelectronicplatformandthegridwouldbe,otherthanthefactthatthedirectivesrequirecost-orientedandnon-discriminatoryaccess.Thelocalenergymarkethastheobjectiveofprovidingmultipleparticipantswiththerighttoactassuppliersforotherparticipants.IfwereviewthenationalpracticeinBulgaria,forexample,thisisevidentlyimpededbytheexistingretailmodel,whereaselectsupplierisresponsibleforthesupplyand/orthebalancing,fortheaggregation,andforthepricing.Intermsofpricing,thepracticeinBulgariaistoindexthepricetotheday-aheadwholesalemarketprice.Thisisanhourlyprice,anditreflectsthestatusofthehigh-voltagegrid,connectingmajorconsumersandproducers,thedistributiongrids,andtheadjacentmarketareas.Thispricedoesnotreflecttheconditionofthemediumvoltageandlowvoltagegrid,whichiswhereprosumersare.Otherthanthefactthatresourceavailabilityisdifferentatthissystemlevel,pricingforgridconstraintsisalsorequired,forexample,usingtherentcollectionmodelwithtransmissioncapacityconstraintbetweentwomarketareas.Thepriceshouldalsoincludesystembalancing,whichiscarriedoutbynetworkoperatorsorthroughadditionalsupplycontracts218.Tosummarize,energypolicyattheEuropeanlevelsetstheobjectivesandthemeasuresforachievingthem.Therefore,regardingtransformationtowardaprosumer-basedenergysystem,effortsneedtobefocusedprimarilyontherightofconsumerstoactivelyparticipateinthemarket.Thenationalframeworkmustclarifyconditionsforconnectingtothegrid,conditionsforsurplussharingwiththeotherparticipantsinthesystem,andforguaranteeingenergysupply,ifneeded.Becausethegridisamonopoly,regulatingitshouldallowtariffstoactasasharingincentiveforprosumers,coveringalloperationalanddevelopmentcostsofthesystem.Energyshouldbepaidatapricethatreflectsenergysupplyanddemandatthelevelofdistributiongrids,whichiswhereprosumersare.Therefore,effortstocreateadditionalmarketsareneededinthepoliciesoftheEuropeanUnionandeveryEUMemberState.Theabsenceoftheseadditionalmarketsisaprerequisiteforaninequitabledistributionofresources.Synchronizingnationallegislations,delayedimplementation,andunclearresponsibilitiesforthegovernanceofthesemarketshaveresultedindelayedtransformation,becausethenecessarymarketsignalsforinvestmentsandoperationofenergyfacilitiesforprosumersdonotexist.Theshiftofpowersystemmanagementfromacentralizedtoadecentralizedmanagementmodelalsodependsonthesesignals,bothforbalancingandinfrastructuredevelopment.218Koirala,BinodPrasad,EltaKoliou,JonasFriege,RudiA.Hakvoort,andPaulienM.Herder.“EnergeticCommunitiesforCommunityEnergy:AReviewofKeyIssuesandTrendsShapingIntegratedCommunityEnergySystems.”RenewableandSustainableEnergyReviews56(April1,2016):722-44.https://doi.org/10.1016/j.rser.2015.11.080.166Onthepredictabilityoftheenergysystem,themarket,andtheactivitiesofprosumersTheenergymarketlinksthesupplyanddemandforenergyresources;henceitalsolinksthemanagementofthesystem.Commoditypricesareafunctionofthetime,location,andproduct,andthiscanresultinsubstantialdifferencesinenergypricesatasinglemomentintimeindifferentpartsofthesamecountry.Thechangeinoneofthethreecommodityparametersisatthecoreoftherealinfrastructurepayoff219.Ifprosumers’utilitycanbeincreasedafterenergytransformation,prosumersshouldinvestinenergyassets.Utilitycouldmeanhigherincome,lowercosts,orimprovedsecurityofsupply.Improvedsatisfactionisaconsequenceoftheoptionfortransformationatanytimeduringthelifecycleoffacilities.Localenergymarketsaresimilartoexistingwholesalemarkets,theonlydifferencebeingthescaleandgridlevel.Localenergymarketsallowprosumerstouseinformationdisclosurerules,whereinbilateraltradeimpliesproprietaryinformationthatisonlyknowntotheregulatoryauthoritiesandthepartiestothetransaction.Theproductisnotstandardizedforbilateraltrading,whichmeansitcannotbebenchmarkedagainstanothercontract,andtherequiredstatisticaldatacannotbeobtained.Oneofthemaintasksinshapingtheenergymarketisachievingsecurityofsupplyintheshortandlongterm.Securityisthedynamicresponseofthesystemtounexpecteddisruptions,andresilienceistheabilitytoregainbalanceafteradisruption,whichdependsontheflexibilityofthesystem.Themarket,therefore,mustbestructuredtoallowevaluationandtradingwithdifferenttypesofflexibilityoptions.Forprosumers,thismeansthatifthesystemexperiencesanenergyshortage,prosumersmustbeabletorelyontheirownstorageandgenerationsystems,ortheyhavetoreducetheirconsumption.Ifthesystemexperiencesanenergysurplus,prosumersshouldbeabletotakeadvantageofthis–bystoringsomeoftheenergy,forexample.Toparaphrase,theirresponsetoaninterruptionispossibleifpricesignalsexistandtheirresponseislimitedbytheirtechnologicalcapabilities.Anyresponseshouldprovideprosumerswithapayoff,dependingontheircontributionandthemagnitudeofthedisruption.Asanexample,ifthesystemexperiencesashortageataparticularlocation,thegridenergysupplyisusefulandshouldbeevaluatedinaccordancewiththemagnitudeoftheshortage.Conversely,whenthesystemexperiencesasurplus,storagesystemsareuseful,andshouldalsogeneraterevenue.Againstthisbackdrop,prosumersshouldsetthepriceforpoweratalevelhigherthantheexpectedspotprice,andthisshouldbereflectedinalocalfuturesmarketand/oroptionsmarket.ThisisbecauseoftheactivepenetrationofRESinthemediumvoltagegridandtheintermittentandweather-dependentgeneration219Secomandi,Nicola,andSeppi,DuaneJ.“EnergyRealOptions:ValuationandOperations.”(February26,2016).“ManagingEnergyPriceRisk.”Chapter13,449-477.V.Kaminski,ed.RiskBooks,4-thEdition,2016.https://ssrn.com/abstract=2856430.167byRES,alongwithotherfactorswhichinfluencethefuturestateofthesystem.Asanincreasingnumberofstoragesystemsisintroducedandgiventheavailabletechnologicalconversioncapabilities,prosumersshouldassesstheriskbylookingatthebenefitsoftheiravailablecapacity.Additionally,fromtheperspectiveofthelocalenergymarketpreviouslyreferredto,investmentinRESwilldependonmanyotherfactors,suchascurrentenergyprices,whichreflectthecurrentsupplyanddemandinthedistributiongrid;thefutureprice,whichreflectstheinformationabouttheplannedinvestmentsinRESandenergystoragesystems;expectedconsumptionincrease;andmultipleotherfactors.Alltheseaspectshavedirectrelevancetothefunctioningofprosumers,becauseinsteadofbeinglefttothespotmarket,whereanydisruptioncouldresultinapriceincrease,prosumerscanguaranteeapricecapforaportionoftheirownpower.Factorsthathaveapronouncedadverseeffectontheenergysystemoverallandrespectivelyontheoperationoftheprosumersmayvary;however,geopoliticalevents,politicalstability,andpredictability,especiallyatthenationallevel,playaspecialrole.Thisisimportantforpriceforecastingbyprosumersandtheoptionstheyhaveattheirdisposaltomeettheirownconsumptiondemandsandtorealizetheenergysurplusandthebenefitofinvestmentsinenergyfacilities.InvestmentandoperationalsolutionsTheprimaryquestionsprosumersmustanswerarewhethertoinvestinenergyfacilitiesandhowtousethemasbestaspossibleconsideringthetransformationconditionsandthemarketsituation.Theirmainbusinessobjectiveistogetthemaximumbenefitfromtheinvestedassets.Intheenergymarket,prosumersarepracticallyinterestedinmarketriskmanagement,sotheyarelookingforanalternativetoinsuringthemselvesagainstfutureadversesystemstates,i.e.,predominantlythepriceofenergy220.Anoptionforconsumersistotakeactiontobuildinfrastructure,whichwillguaranteeаmaximumpricecapinthelongterm,aswellassecurityofsupply.Infrastructuremayconsistofgeneration,storage,andconsumptionfacilities,aswellasnetworkandITinfrastructure.Facilitiescanbeconsideredeitherindividuallyorasaportfolio.Fromthepointofviewofprosumers,investmentsinenergyfacilitiescanbevaluedasanoperationalcompoundoption,whichrepresentsthevalueoftheinvestments.Theissuehereisanevaluationoftheoptions,whichdependontheexistingmarketinstrumentsandtheoptimizationapproachfortheoptimaluseoftheassets.Marketinstrumentsprovideinformationabouttheoptionsforsubstitutionofoneoftheparametersoftheresourceand,giventhetechnicallimitations,prosumersneedtobeabletooptimizetheirbehaviorwithintheenergysystem.220P.U.Shinde,andS.R.Deshmukh.“RiskManagementinElectricityMarketbyPortfolioOptimization.”2014AnnualIEEEIndiaConference(INDICON),2014,1-6.https://doi.org/10.1109/INDICON.2014.7030542.168LegalregulationofprosumersinBulgariaAtthetimeofthissubmission,theCleanEnergyPackageDirectiveshavenotbeenfullytransposed,therefore,formaldefinitionsforprosumersandtheirrightsforaccesstothegriddonotexist,withtheexceptionofself-consumptioncases(EnergyfromRenewableSourcesAct,amendedandsupplementedinSG,issue11,dated2February2023221).Furthermore,thelegislationisyettoincorporateexcessenergyconsumptionrules.Thismeanseffortsbytheacademiaareneededtostudytheopportunitiesandpromotionofaprosumer-basedlocalenergysystem,butalsopoliticalmeasuresdirectedatspecificobjectivesforimplementationofsharingplatformsandguaranteeingnon-discriminatoryaccessconditionstoprosumergrids,connectedatthemediumandlowvoltagelevel.Ontheotherhand,throughtheIndustrialParksAct222,Bulgarianlegislationhasanticipatedtherightsofindustrialparkstodevelopandmanagetheirowngrids,whichisagoodopportunityforpilotprojectsrelatedtothedevelopmentofsmartgridsandlocalenergymarkets.SummaryRecentgeopoliticaleventshavedrivenECtoproposearoundofpublicdiscussionsregardingmeasuresforchangingmarketmodelsforenergytrading223.Themainobjectivestobeachievedthroughthenewmodelwouldbe:(i)creatinginvestmentincentives;and(ii)protectingconsumers.ThisshowsthattheapproachtocreatingmarketstoguaranteetheobjectivesaboveisnotyetclearattheEClevel.TheaboveleadstotheconclusionthattheintenttoincludeconsumersintheenergymarketintheircapacityasprosumersshouldbeachievedthroughactivedevelopmentandintroductionofspecificadditionalpoliciesbothonaEuropeanandnationallevel.Suchpoliciesshouldaimatthecreationofsynchronizedmarketinstrumentsforallstakeholders,whichwouldrespectivelyprovidetherequisitepricesignals,directedmostlytowardpriceguaranteesandconsumerdeliveries,butalsoatpreventinggriddisruptions,whichwouldinfluencethesecurityofsupply.OtherthananadequateregulatoryframeworkatEuropeanandnationallevels,thesuccessfuldevelopmentofprosumersalsoimpliestheneedfordetailedstudyoftherelationshipbetweenthepriceonexistingwholesalephysicaldeliverymarketsandthepriceoffinancialinstruments.Thespecificbenefitofintroducinglocalmarketsshouldbeassessedonthisbasis,consideringthetechnicalandlegislativeconstraints.221Article25-27.Renewableenergylaw.https://lex.bg/laws/ldoc/2135728864%20%D0%92%D0%98%D0%96%20.222Chapter4–FunctioningandDevelopmentofanIndustrialPark.https://dv.parliament.bg/DVWeb/showMaterialDV.jsp?idMat=156334.223Glachant,Jean-Michel.“ReformingtheEUinternalelectricitymarketinthemiddleofahugeenergycrisis:anabsoluteshort-termemergencyorpreparationforthefuture?”FlorenceSchoolofRegulation,EUIRSC,2023/03.https://hdl.handle.net/1814/75239.169TheoutstandingkeyquestionishowthelegislativeframeworkforEUenergymarketswillchangetoallowprosumerstoappreciatethebenefitsofproactiveparticipationthroughinvestmentintheirownfacilities.DespitetheECguidelines224,however,thenationalapproachonthissubjectwillstillbetheleadingapproach,becauseoftheparticularsoftheenergysystemsofeachMemberState.LyubomirGrozdanovisaPost-GraduateStudentattheDepartmentofEconomicsandManagementofIndustries,FacultyofEconomics,SofiaUniversity“St.KlimentOhridski”,withresearchsupervisorAssociateProfessorAtanasGeorgiev,PhD.HeholdsaGraduateDegreeinElectricalEngineering,withadditionalspecializationintheEnergySectorManagementprogramwithTechnicalUniversity–Sofia.Inhiscurrentrole,heisaBusinessDevelopmentexpertattheIndependentBulgarianEnergyExchange(IBEX),whereheisinvolvedinprojectsregardingtheSDAC/SIDCcooperationsanddevelopmentoflocalmarketsandproducts.Hehasmorethan10yearsofexperienceintheenergysector,havingworkedinUtilitiesMagazine,ToplofikaciaSofia(thecapital’sdistrictsystem),etc.224Article19a,COM/2023/148final.https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023PC0148&qid=1679410882233.170MOREABOUTTHEBULGARIANDIPLOMATICINSTITUTETheBulgarianDiplomaticInstitute(BDI)wascreatedon23September,2003,pursuanttoaDecreeoftheCouncilofMinisters.ItsstatusandfunctionswereregulatedbytheDiplomaticServiceActadoptedbytheNationalAssemblyon13September,2007.ItsworkmeetsthehighdemandsandprofessionalexpectationspursuanttoBulgaria’smembershipinEUandNATO,anddisplayscontinuitythatallowstheBulgariandiplomaticprofessiontohavetheplaceitdeservesinthelargeEuro-Atlanticfamily.Ourmissionisto:-Guaranteethehigh-levelexpertiseandskillsofthediplomaticstaffandthepublicadministrationbyapplyingup-to-dateprofessionalstandardsoftraining;-EnhancecontinuityintheBulgarianForeignServicebypromotingexchangeofexperienceandgoodpracticesamonggenerationsofdiplomats;-PromotethediplomaticprofessionandBulgaria’sforeignpolicybyreachingouttothegeneralpublic;-Provokeexchangeofexpertiseonforeignpolicyissuesbyprovidingaplatformfordebateamonggovernmentandnon-governmentactors;-Supportthediplomaticprofessionandtheforeignpolicydebatebyresearchandpublications;-Developnationalandinternationalcooperationbyimplementingjointprojects.TRAININGPROGRAMMESWeprovidetrainingsforbothBulgarianandforeigndiplomatsandgovernmentofficials,aswellasexpertsfromtheNGOandprivatesector.Theymeetalldemandsofmoderndiplomacyandusethegoodpracticesofourcounterpartsfromallovertheworld.Torespondtotheneedofhigh-qualitytraining,wefocusoninteractiveandpracticalsessionsandhaveastrainersBulgarianandforeigndiplomats,universityprofessorsandotherhighlyqualifiedexperts,providingthebenefitofabroadrangeofopinionsandapproaches.AmongourmajortrainingprogrammesarethecoursesfortheMFAtraineeattachesandconsularstaff,foreignlanguagetraining,coursesfordiplomats,representativesofthepublicadministrationandoftheNGOandprivatesectorinthefieldofregionalissuesandsecurity,energydiplomacy,economicdiplomacy,environment,publicdiplomacy,diplomaticprotocol,aswellastailor-madetrainingsforforeigndiplomatsandourtraditionalWinterSchoolofDiplomacy.PUBLICPOLICYANDCOOPERATIONToprovokepublicinterestanddebateoncurrentforeignpolicyissues,weholdpubliclecturesbyprominentpublicfigures,leadingpoliticiansanddiplomats.171Wealsoorganizeconferencesandround-tablediscussionswithBulgarianandforeignexperts,tocontributetotheexchangeofexpertiseandtotheforeignpolicytheoryandpractice.Weinteractactivelywiththeyoungpublicbyorganizingessaycompetitionsonforeignpolicytopics,visitsofschoolanduniversitystudentswithinour“OpenDoors”programme,andbyimplementingacoherentinternshipprogramme.Toenhanceourpublicoutreach,weaimatstrongmediaanddigitalpresence,andmaintainourownradiobroadcast,awebpageinBulgarian,EnglishandFrench,FacebookandTwitteraccount.TheInstitute’snationalandinternationalpartnershipswithgovernment,research,NGOandacademicinstitutionsisvisibleintheimplementationofjointprojectsandexchangeinthefieldoftraining,researchandpublicactivitiesandEUpolicies.RESEARCHANDPUBLICATIONSAstrategictaskoftheBDIistoprovidecomprehensiveanalysesbyinternalandoutsideexpertsoninternationaltopicstomeettheneedsoftheMFAandtoenhancetheexpertiseinforeignpolicytheoryandpractice.Asof2013theInstitutealsoholdsnationalcontestsforappliedresearchprojects.Amongourpublications,inBulgarianand/orEnglish,aretheForeignPolicyResearchPapersseries,theEnergyandClimateDiplomacycollectionofjournals,booksandtextbooksonEUmatters,securityandenvironmentissues,diplomaticskillsandpractice,aswellasthelong-establishedDiplomacyJournalwhichhasalreadygrownintoanonlineplatformforforeignpolicyanalysisandresearch.Toassistitsactivitiesandprogrammes,theBDImanagesalibraryofover65000titlesinover20languages,inthefieldofinternationalrelations,EuropeanStudies,security,internationalorganizations,diplomacy,law,history,sociology,politicalsciences,economy,etc.172MOREABOUTTHEBULGARIANCO-OPERATIONANDHUMANITARIANAIDDevelopmentco-operationandhumanitarianaidareanintegralpartoftheforeignpolicyofRepublicofBulgariaandcontributetotheachievementofitsgoals.Throughdevelopmentcooperation,Bulgariacontributestoamorebalancedandequitableglobaldevelopment,takingitsshareofresponsibilityintheeffortstoeradicatepovertyandachievesustainabledevelopment.Asaresponsibleandactivememberoftheinternationalcommunity,togetherwithitspartnersitstrivestoprotecthumandignityandensureasustainable,just,inclusive,safeandprosperousfutureforall.Thepurposeofthehumanitarianaidistosavelives,toprotecthumandignityduringandasaresultofcrises,tohelppreventsuchsituationsandtoincreasepreparednessforthem.Bulgariahasbeenadevelopmentco-operationactorsincejoiningtheEuropeanUnionin2007.WithitsaccessiontotheEU,ithasmadeimportantcommitmentstoparticipateintheUnion’sCommonForeignPolicy,includingdevelopmentpolicyasitsimportanceforthesecurityisgrowing.BulgariandevelopmentassistanceandhumanitarianaidsuccessfullycomplementsourparticipationintheEU’scommonexternalactioninstrumentstoassistneighbouringcountriesandregions,developingcountries,andtoprovidehumanitarianassistance.Bulgaria,justastherestofthenewMemberStateswhichjoinedafter2002,isexpectedtostrivetoreachatargetof0.33%ofgrossnationalincomeforOfficialDevelopmentAssistance(ODA/GNI)withinthetimeframesetbythe2030AgendaforSustainableDevelopmentfortheachievementoftheSDGs.Bulgaria’sODAincreasedsignificantlyin2022toUSD240million(preliminarydata),representing0.27%ofGNI.Bulgariandevelopmentpolicyisbasedontheprinciplesofeffectiveness,transparency,coherence,partnership,membership,concentrationandnon-discrimination.Twoobjectivesshapeitsvisionofdevelopmentco-operation:1)itsmultilateralcommitmentstoassistdevelopingcountriesandpromotesustainabledevelopmentglobally;and2)itsregionalcommitmenttocontributetothedevelopmentoftransitioncountriesinitsneighbourhood,includingthroughsharingitsownexperience.Bulgariandevelopmentaidalsoincludeshumanitarianassistance,throughwhichBulgariaexpressesitssolidaritywiththeaffectedcountriesandpersonsfacingemergencysituationsasaresultoflarge-scalenaturalandotherdisastersorarmedconflicts.Bulgaria’shumanitarianactionisledbytheuniversalhumanitarianprinciplesofhumanity,neutrality,independenceandimpartiality.Around20%oftheoverallbudgetfordevelopmentcooperationfor2022isdedicatedtohumanitarianaid.Toguidetheimplementationofitspolicyframework,BulgariadevelopsMid-TermProgramsfordevelopmentassistanceandhumanitarianaidsettingoutgeographicalandthematicpriorities.Bulgaria’seffortsaremainlygearedtowards173sharingitsexperiencefromtheprocessoftransitiontodemocracyandmarket-orientedeconomywiththecountriesfromtheWesternBalkansandtheEasternPartnership.ThecurrentMid-TermProgramfortheperiod2020-2024furtherdevelopsandenrichesthegeographicalandsectoralprioritiesandexpandsthecircleofparticipants.Itisaproofthatfromaprimarilyrecipientofdevelopmentaid,Bulgariacountryisincreasinglyestablishingitselfasadonoractivelypreparingfortheimplementationofoneofitsmostimportantforeignpolicytasks-membershipintheOrganisationforEconomicCo-operationandDevelopment(OECD).Since2018BulgariahasaparticipantstatusintheOECDDevelopmentAssistanceCommittee(DAC).174Editor-in-chief:SlavtchoNeykovEditor:GrigorMonovskiPrepressandPrint:St.GeorgePublishingLtd.GraphicDesignandCover:St.GeorgePublishingLtd.ISSN2815-4878(Online)ISSN2815-4878(Online)