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[en] The signing in January 2009 of the gas supply and transit contracts between Gazprom and Naftogaz marked a turning point in Russian-Ukrainian gas relations: yearly intergovernmental, last minute and non-transparent winter deals were replaced by a predictable, long term commercial relationship. Naftogaz quickly turned into Gazprom's most profitable customer, taking the largest gas volumes at the Russian border and paying a higher price than German customers for example, while Naftogaz obtained a satisfying gas transit tariff. At least, the January 2009 gas crisis had resulted in this key improvement for the security of Ukrainian and European gas supplies. Yet almost ever since then, the contract terms had been disputed as the Ukrainian economy could no more afford the high gas prices, the high mandatory yearly purchase volumes and as transit volumes were below contract provisions especially when the Nord Stream pipeline was commissioned. Several temporary pricing or flexibility arrangements in the form of political or patronage-type concessions had been made under President Yanukovych. But following the 2014 regime change in Ukraine and payment arrears by Naftogaz, Gazprom sought to recover unpaid debts and the new reform and business-minded Naftogaz management filed a case at the Arbitration Institute of the Stockholm Chamber of Commerce (hereafter, the Institute) as the parties did not agree on a review of the contract terms. Claims and counter claims quickly reached sky high levels, leading to the most sensitive European gas arbitration involving Gazprom. Mutual claims amounted to about USD 125 billion and had the potential to bankrupt both Gazprom and Naftogaz. At the same time, Gazprom and Naftogaz proved responsible in agreeing to winter package agreements brokered by the European Commission that enabled continued temporary Russian gas exports to Ukraine and safe transit to Europe. Following four years of procedure, the Institute has finally made two landmark rulings: an initial ruling on the price and take or pay dimensions in December 2017 and on the transit contract end of February 2018. This analysis aims at briefly laying out the results of the arbitration and then at assessing its short and medium term implications
[en] As gas supplies through Ukraine and for European Union have been stopped in January 2009, the author comments this serious and complex crisis which encompasses commercial, economic and geopolitical challenges, and raises the questions of gas relationship with Russia, and of EU's energy security and stability with respect to its eastern neighbours, in a context of unclear relationships between Russia and Ukraine. The author first discusses the stake of the negotiation of December 2008 (about the normalisation of gas exchanges), and then analyses the emergence of the crisis due to issues of debt and gas price definition. He comments the disruption of gas supplies which he considers as unjustified, and tries to identify the actual Russian intentions by discussing the behaviour of the various actors. He notably outlines that Gazprom and the Russian hardly showed consideration for the EU and put the European energy security into question again
[en] When assessing the gas trade between Russia and the European Union, it appears that gas exports from Russia to the EU represent 70 per cent of Russian gas exports, 30 per cent of EU needs and 50 per cent of its imports, Gazprom being the main actor in this trade. This energy partnership mixes commercial, economic, political and strategic stakes, and the development of this gas trade has therefore created litigations and tensions during the 2000's. In this article, the author discusses why this trade raises problems, the related stakes, and perspectives of evolution.
[en] The author aims at highlighting geopolitical and economic challenges and stakes regarding the future of the French civil nuclear industry. He evokes the relationship between civil nuclear and global warming, and then evokes various challenges of the French nuclear industry: EPR standardisation, construction of a standard EPR within delay and budget, to assess cost and relevance of the development of an additional offer, to keep the control of the whole civil nuclear industrial sector, to maintain the nuclear fleet and to reduce the nuclear share, to process and store nuclear wastes, to face competition, and so on. Then, the author outlines the necessity of a strategic regain of control of the sector, of a rationalisation of the offer, and of the development of new partnerships
[en] Ten years after the January 2009 gas crisis, Russian-Ukrainian gas relations are at another turning point: the then concluded contracts are terminating on 31 December 2019. While trilateral talks brokered by the European Commission (EC) have started in July 2018, the real negotiations about the future of this relationship can be expected to start no earlier than in December, that is in the midst of the winter and a second to midnight. Crucial months lie ahead. Russia now asserts it wants to continue transiting gas through Ukraine if the route is safe and competitive, yet neither Ukraine nor Russia know exactly their cards for the December drama. After the second round of the Presidential election in Ukraine on 21 April, the Kremlin is certainly awaiting what government will result from the Parliamentary elections on 27 October 2019 (which could take time to be formed) and would obviously prefer to negotiate with a new EC -the latest proposals by Vice President Sefcovic, reportedly on 60 billion cubic meters per year (bcm/y) firm and 30 bcm/y flexible during ten years are considered unrealistic.1 And it faces a number of uncertainties related to Nord Stream 2 (NS2) and TurkStream (TS): will the United States (US) finally impose sanctions blocking NS2 construction? When will NS2 be operational given the difficulties with Denmark over the route? How will the latest amendment to the Gas directive, once it enters in force, affect its operation? And how quickly can Gazprom and their partners build and connect the pipeline system linking up TS's second line to Central Europe, knowing that legal hurdles could appear too? For Ukraine, there are uncertainties too: hopes that NS2 will be stopped are rather likely to be dashed than realized; and its ability to fill its own storages at high level for the next winter is also uncertain. Lastly, a new Ukrainian President, or government, may want to have a final say on the negotiations, and there have been tensions between the government and the Naftogaz management in past months. Meanwhile, Gazprom is a clear winner: this uncertainty is expected to drive demand for Russian gas in the coming months for maximum storage injections in Europe. (author)
[en] After having suggested that the Covid-19 crisis could be an opportunity to accelerate the decarbonization of road transport (situation, positive roles of the EU, member States and cities to promote the adoption of clean vehicles, impacts of the crisis on the automotive sector, strategies for a green recovery), this study discusses the perspectives of development of electric mobility (electric vehicle as the first alternative to the thermal vehicle for individual road mobility, a more opened game for road freight, recharge systems as essential condition of development of a mass market, issue of environmental impact of clean vehicles as the last obstacle to electro-mobility). The next part discusses the main geo-economic stakes of the development of a clean vehicle European industry (strategies of manufacturers and suppliers, towards a better control of the chain value of batteries, strategies of actors of the recharge sector, influence games about international standards). The report concludes with the proposition of three scenarios and recommendations for 2030.
[fr]Si les annees 2010 ont permis la mise en place des jalons de la decarbonation du secteur electrique dans l'Union europeenne (UE), les annees 2020 sont celles de la decarbonation acceleree du secteur du transport routier. La transition vers la mobilite routiere propre provoque ou accompagne des bouleversements societaux, technologiques et geo-economiques majeurs. C'est une immense opportunite de creation de nouvelles filieres industrielles et d'emplois, de transformation des villes et territoires ainsi que des systemes energetiques. La crise du COVID-19 joue ici un role d'accelerateur: le secteur automobile est tres affaibli mais sa transformation est aussi un des grands piliers de la strategie europeenne de relance verte. Les villes sont a la pointe du deploiement de la mobilite propre et de l'interdiction progressive des vehicules les plus polluants: les restrictions visant les vehicules thermiques vont se multiplier et les echeances de mise en conformite vont etre avancees. Grace au resserrement important des normes environnementales europeennes, a la baisse du cout des batteries ainsi qu'aux politiques publiques de soutien a l'achat de vehicules electriques (VE) et de developpement des infrastructures, la mobilite electrique connait deja un veritable boom qui s'est confirme malgre la crise du COVID-19. Ainsi, il est probable que les trajectoires optimistes de deploiement de VE dans l'UE a l'horizon 2030 soient confirmees, voire depassees: la part de marche des VE a atteint 7 pc en Europe au premier semestre 2020 (contre 3,25 pc en 2019) et devrait se situer autour de 12-15 pc des 2022, et de 35-45 pc a l'horizon 2030. La mobilite electrique devenant un marche de masse, l'UE doit desormais s'assurer de la soutenabilite de l'ensemble de la chaine de valeur des batteries. Des questions d'une grande complexite sont a instruire sur l'approvisionnement responsable en metaux, l'empreinte carbone de la fabrication des batteries, le cadre de developpement des batteries de seconde vie, la recyclabilite des composants ou encore le bon dimensionnement des capacites europeennes de recyclage. Le dynamisme des ventes de VE appelle egalement un deploiement accelere des infrastructures de recharge. Toutefois, l'enjeu de la recharge ne doit pas etre analyse selon les criteres de la mobilite thermique. La qualite de la recharge compte autant, voire davantage, que la quantite de bornes publiques mises a disposition. Il faudra en outre veiller a l'interoperabilite des infrastructures et s'assurer que les obstacles vecus dans l'industrie des telecoms par exemple, ne soient pas repetes. L'UE deploie une strategie industrielle pour la fabrication de cellules de batterie qui a desormais toutes les chances d'etre un succes, les constructeurs europeens ayant finalement decide de remonter progressivement en amont de la chaine de valeur du VE. Si l'UE accueille aujourd'hui moins de 3 pc des capacites mondiales de production de cellules de batteries, ce chiffre devrait avoisiner les 15 pc a l'horizon 2024. C'est aussi un succes en termes de souverainete technologique et, avec une capacite de production pouvant atteindre les 350 gigawatts-heure (GWh) par an d'ici 2025, de 35 000 a 50 000 emplois pourraient etre crees. Des strategies en amont de souverainete minerale et en aval de recyclage doivent encore completer le dispositif, sous peine d'entrainer des serieuses incertitudes. Les politiques publiques ne peuvent pas etre fragmentees, sous peine d'entrainer un gaspillage important de fonds publics. Un choix technologique coordonne doit etre effectue a ce stade: vu les defis financiers des constructeurs, la mobilite individuelle sera electrique ces dix prochaines annees. Pour les bus et les poids lourds, les choix technologiques sont plus ouverts: l'electrification a encore une marge de progression mais l'hydrogene propre, ou le bioGNV presentent des atouts indeniables. Il faut une coherence des choix des villes et territoires pour eviter un gonflement des couts d'ensemble et une complexite d'usage
[en] The low-carbon energy transition in France, the European Union (EU) and the world is today taking place unevenly and too slowly to preserve the climate and biodiversity. CO2 emissions are continuing to rise, while governments' commitments are insufficient: in the long-term, the world is set to see temperatures increase by +3 deg. C. Efforts to fund adaptation measures still need to be strengthened considerably. The geopolitical and geo-economic issues related to energy and climate policies are becoming more complex. They are expanding and reinforcing themselves. New rivalries are emerging on top of issues related to supply security in fossil fuels which remain acute (Ukraine-Russia, Iran-Saudi Arabia, maritime straits and terrorism). They follow from new risks and even threats that are geopolitical and geo-economic, linked to the energy transition. These include: critical metals, technologies, innovation and value chains, market access and the control of strategic assets, the establishment and spread of standards, which can be instrumentalized to shape the dominant technological choices and serve industrial interests. Controlling the value chains of low-carbon technologies is crucial for competitiveness, economic development, energy sovereignty and security. Strategic technologies in the energy transition include: nuclear power; onshore and offshore wind turbines and their magnets; the next generation of photovoltaic cells and inverters; cars with highly-efficient combustion engines; batteries (especially 4. generation) for mobility and stationary storage; hydrogen mobility for rail, buses and freight; electricity storage systems using hydrogen; smart grids and demand response solutions; recycling technologies; and even technologies for protection against cyber risks. France and the EU do not master the extraction and enrichment of most critical metals. Photovoltaic cells are Chinese, even if more than half of the value chain is European and local. Neither France nor the EU have technological advantages in onshore wind power, nor in 3. generation battery cells, of which 50% are Chinese. By contrast, France and the EU have an advantage in solar panel inverters, in floating or fixed offshore wind turbines as well as potential in 4. generation solid batteries or flow batteries. They also have the capacity to make breakthroughs in new generations of photovoltaic cells, as well as in recycling. Finally, the EU has solid capacities in nuclear power, energy efficiency, hydrogen, while also having an important car industry which is progressively shifting to electrification. The EU also has cyber capacities. The bloc should draw on these advantages to build strategic industrial sectors, create jobs and value added in Europe, and to avoid technological dependence. At the European level, the energy transition is about to reach a milestone. The EU is on track to meet the 20-20-20 objectives (although emissions are likely to be above targets in Germany for sectors not covered by the carbon market, and despite the recent slowdown in energy efficiency efforts). In 2018, tougher targets have agreed for 2030 and discussions have opened on objectives and strategies for 2050. To be on a pathway consistent with the +2 deg. C temperature limit, and ideally with the +1.5 deg. C limit, Europe's efforts need to be accelerated and deepened in order to complete a new, more difficult and complex phase. Systematic transformations in governance and public policies, company strategies and citizens' behavior are required. These transformations need to be grounded in the broadest consensus possible. Indeed, European policies concerning energy and climate change were established in a context and with objectives that do not correspond to deep decarbonization and were largely focusing on market integration and supply security. The challenge now is to adapt them to this profound transformation. France and the EU are on the threshold of an unprecedented phase in decarbonization. It will involve strategic thinking, veracity and responsibility for objectives, technological choices, costs and technical constraints, opportunities and decarbonization pathways because major, complex decisions about the future need to be made. Although France and Germany have fundamental differences over nuclear power, they have a key role to play in pushing forward global and European governance over energy, and must encourage other willing European partners to join them. The two countries deserve betting on a Franco-German climate union which would take small and big steps in terms of bilateral cooperation, within the EU and at the global scale. (authors)
[en] French stakeholders in civilian nuclear energy are making a full diagnosis of the industry in order to cope with disappointments and lay down the conditions for re-launching programs for building reactors. This is the time to envision this industry's strategic dimension. Given global technological warfare and bi-polarization (United States vs. China), France and the European Union must work out a strategy for controlling value chains in all forms of low-carbon technology. A key component is civilian nuclear energy. The risk is that China, Russia and, to a lesser extent, the United States come to dominate exportation markets and lock out other countries. France and the EU might lose influence over the world governance of this sector and the nonproliferation of nuclear weapons. Meanwhile, several countries want to acquire nuclear technology, which is now oriented toward small modular reactors. (author)
[en] In this second instalment in the series Futuribles is devoting to climate and energy questions, we reproduce here an extract from the study 'The Strategic Dimension of the Energy Transition: Challenges and Responses for France, Germany and the European Union' by Marc-Antoine Eyl-Mazzega and Carole Mathieu. This piece seems to us particularly informative on the European value chains for low-carbon technologies. After reminding us of the urgent need for energy transition and the uneven progress made on this so far, the authors show how closely energy and climate policies are connected with major geopolitical and geo-economic issues today. In particular, this piece reveals the relative weakness of the EU with respect to China and the USA, on the one hand because of its dependence on foreign sources for its supplies of critical metals and, on the other, because of its position in low-carbon technology value chains, which play an essential role in the roll out of renewable energies. (authors)
[en] On 22 June 2018, 'OPEC+' oil Ministers (Organisation of Petroleum Exporting Countries members and an ad hoc alliance with several non-OPEC producers, notably with Russia, Kazakhstan and Azerbaijan) will gather in Vienna to discuss the status and future of their production limitation agreement which was initiated in November 2016 and runs until the end of December 2018. This landmark agreement has been a game changer for oil markets, as Saudi Arabia agreed to cut production (and implicitly exports) and Russia agreed to postpone the increase of its record high and steadily rising liquids output. This analysis highlights the extent to which ten producers under scrutiny have been economically hit by lower prices and will want to cash in on present price rises, possibly seeking to ramp up production and exports where possible, especially since the fall in Venezuelan output is now larger than the Saudi production cut. Another challenge is that continuing the current production cuts carries risks as market developments have surpassed these producers' expectations: oil prices have topped $80 per barrel (bbl), way above what they hoped to achieve, and global stock levels have decreased, as they were planning. With the unforeseen and uncertain developments in Iran and Venezuela, prices may increase to $90/bbl. Russia and Saudi Arabia will be tested as short and long term strategists, based on how they will transform their ad hoc alliance, to make it more operational and consistent with the recent market developments. Such higher prices risk slowing down the global economy and oil demand growth, but also accelerating the growth of non-OPEC supply: the United-States (US) already added 700 thousand (kilo) barrels per day (kb/d) to liquids production in 2017, de facto compensating for Saudi's supply cut, and is expected to add much more supply in 2018 and to ramp up its exports further. In 2018, the growth in non-OPEC supplies is expected to be higher than the growth in demand, but geopolitical tensions are strong and push prices up. OPEC's total liquids output de facto only decreased by around 400 kb/d in 2017 versus 2016, due to the surge in output from Libya and Iraq. This also highlights the extent to which the production levels chosen as the baseline for the cut were high. With the return of US sanctions, Iran's 2.5 million barrels per day (mb/d) exports could slightly decline but it is expected that China, India, possibly also Russia and others, will find ways to access most of this oil, possibly at some discount, given that there will not be strong discipline to respect unilateral US sanctions. In Venezuela, production has fallen by 700 kb/d to below 1.5 mb/d in the past 18 months and could fall by another 300 kb/d, given the magnitude of its economic and political crisis and the risk of more US sanctions being introduced. Keeping the current deal unchanged would put OPEC in a more-entrenched defensive position and potentially make it harder to agree and effectively influence oil markets in the future: this would require notably cutting production further (unless Venezuela's dip continues), loosing revenues and market shares and risking lower compliance from several key members or allies. By contrast, raising OPEC + output in the second part of 2018 could help avoid accelerating the weakening of OPEC's market position, which should be a serious issue for consideration. It remains to be seen how Saudi Arabia will accommodate these realities with its planned Aramco Initial Public Offering (IPO) for which it needs a high oil price, and with the concerns expressed by President Trump as his voters will face higher gasoline prices this summer ahead of the mid-term elections.