Regional cooperation, 3SI, RES development and nuclear consent. How can CEE achieve climate and security goals together?

Building regional energy connections, development of renewable energy sources and increased share of the nuclear energy, closer cooperation with business, fighting in the EU arena for flexibility for Member States in the path to climate neutrality, and support for the poorest in the energy transition – these are just some of the many conclusions for becoming independent from Russian fossil fuels and building energy security in CEE that were made on 28^th of November 2023 at the conference of the Jagiellonian Club’s Centre for Analysis, the Polska z Natury Foundation and the Conservative Environment Network, Energy Security in Central and Eastern Europe. Achieving our Climate and Security Goals Together.

A landmark moment for the region

The international event began with speeches by representatives of the organisers – Paweł Musiałek, President of the Jagiellonian Club, and Sam Hall, Director of the Conservative Environment Network (CEN). The former highlighted the changes in approach and narrative regarding the green transition since the announcement of the European Grean Deal – from initial full-blown optimism, the path to climate neutrality has become more winding, including as a result of the pandemic and Russia’s invasion of Ukraine.

The CEN director drew attention to the halving of the UK’s emissions under the Conservative government, and highlighted the important role of market mechanisms in the successful delivery of a green transition.

The floor was then taken by the former Minister for Climate and Environment of Poland, Michał Kurtyka, who pointed out the importance of the moment we are currently in – ahead of next year’s European Parliament elections and the change of the European Commission. In Kurtyka’s view, Central and Eastern Europe should take advantage of the EU’s unification of perspectives in the face of the Russian threat and create a regional common action plan to make the energy security dimension more visible in the European Green Deal.

Participants at the Warsaw conference were also joined remotely by Ukrainian MP Oleksiy Goncharenko, who recalled that the war in Ukraine is still ongoing and while we should care about RES development and environmental protection, the world order must be protected first, without which pro-climate measures may not be implemented.

He stressed that for Russia 'everything is a weapon’ and today’s uncertainty in the energy market is also a consequence of the NordStream 2 project following the 2014 Russian invasion of Ukraine. He pointed out that Europe must not be dependent on „unclean states” – not only in the context of those countries that extract fossil fuels, but also non-democratic, imperial states.

The Ukrainian MP said that 'clean energy’ was a solution that had worked well in the current war – a more decentralised energy system proved harder to paralyse through military attacks. On the other hand, he stressed the great importance of nuclear energy for the energy security of Europe as a whole and expressed Ukraine’s willingness to cooperate in the context of the development of this sector. Finally, he noted that what is important in conservatism is pragmatism and not mindlessly applying the brakes to inevitable changes in the energy context.

Becoming independent of Russian energy sources

In the first panel on the role of CEE in building energy security and becoming independent from Russian fossil fuels, the speed of change was emphasised by the Latvian Ambassador Juris Poikāns, presenting the Latvian example of declining independence from 90% of Latvia’s gas imports as early as 2021.

Ambassador Poikāns said that energy connections with its neighbours, including Lithuania and its LNG terminal in Klaipeda, and a large gas storage facility play an important role in Latvia’s security. The Latvian ambassador also highlighted the clear role of the Baltic Pipe gas pipeline for Latvia, as well as important plans for a new electricity connection between Lithuania and Poland (Harmony Link). Poikāns also spoke about the need for flexibility in Brussels in the context of allowing diverging national energy mixes on the road to common aim of climate neutrality.

The gas connection between Norway and Poland (Baltic Pipe) was also mentioned by the former Minister for Climate and Environment, Michał Kurtyka, who recalled the turbulent history of its creation, which had already been in the Polish plans since 2001. At the time, this idea was met with criticism due to the higher cost of Norwegian gas and only at the third attempt was it achieved.

Supporting the Latvian ambassador’s voice, Kurtyka warned against dictating a single way within the EU for member states to ensure energy security. According to the former minister, nuclear energy should not be politically excluded. Michal Kurtyka highlighted the urgent need to develop the production of RES components in the EU, to intensify the building of energy links between countries in the region and to translate nuclear-friendly energy speeches into reality.

The need to develop more than just RES

In the second panel on the role of RES and the atom in the green transformation of CEE, conference participants could hear enthusiastic words from the current Deputy Minister of Climate and Environment of Poland, Adam Guibourgé-Czetwertyński, about the development of nuclear power in Poland, especially as it will play a more important role in the new EU climate policy.

Gabriel Gorbačevski, energy attaché at the Lithuanian Embassy in Poland, emphasised his country’s aspirations for climate neutrality and energy independence through the development of SMRs, wind power plants, energy storage facilities and energy interconnections. Furthermore, he stated that investments in green hydrogen and synthetic fuels are an attractive direction for Baltic Sea cooperation from Lithuania’s perspective. Concluding, Gorbačevski pointed out the importance of initiatives of regional gas transmission operators cooperating in the creation of a corridor for green hydrogen transmission in CEE.

Further on, the former Minister of the Environment of Poland and Director of the Green Economy Institute, Marcin Korolec, pointed out that Poland needs to decarbonise the economy in order to maintain its competitiveness.

Korolec pointed out that we need local energy security, which can be achieved through energy decentralisation, including the development of onshore wind power, which was blocked for political reasons in the last years. In the opinion of the former Minister of the Environment, the direction written in the coalition agreement of the new parliamentary majority to allocate 100% of the revenue from the Emissions Trading Scheme (EU ETS) to the energy transition is the right way to go.

In the debate, the former head of strategy of the PGE Group, Monika Morawiecka, emphasised the key role of offshore wind energy, transnational energy connections and increasing energy storage capacity.

The panel also raised the issue of decarbonising heating so that it is also affordable for poorer sections of society. Monika Morawiecka said that in this sector, hydrogen is not the right answer – according to the former CEO of PGE Baltica, it will always be about six times less energy efficient, and therefore more expensive, than using heat pumps. Also in the context of passenger cars, hydrogen is, in her opinion, set to lose out on efficiency to 'electrics’. According to Morawiecka, we should first use hydrogen produced from renewable sources where there is already a grey equivalent in use – mostly in industry.

The power of energy market

The third panel at the conference addressed the liberalisation of the energy market and the future of state interventionism in the sector. The discussion was opened by Jerzy Dudek, Jagiellonski Club Center for Analysis’s energy associate, with a thesis on the proper functioning of the market during the energy crisis, which increased the supply of energy (through increased imports of LNG into the EU) and reduced the demand for energy by increasing prices. Unfortunately, this came at a great cost to consumers, hence the huge intervention of EU states to protect citizens and businesses.

Sam Richards, former energy advisor to Boris Johnson, spoke about how energy liberalism is not dead at all after 2022. In his view, the liberal approach allows for greater energy security through faster development of low-cost RES, which business wants to invest in but often faces administrative barriers.

Dominika Taranko, director of the Energy and Climate Forum of the Union of Entrepreneurs and Employers (ZPP), stressed that the free market alone will not allow for effective climate policy, as citizens have no influence over large corporations. ‘There is no policy without energy,’ she said, and vice versa – there is a need to assess the effects of actions and respond to them also through policy.

The ZPP representative stated that the development of legislation has a big role to play in order for the consumers to be energy producers. However, at the same time, she pointed out that states were often too interfering in the past in the transformation – it was the state that decided to save the mines in Poland.

According to Taranko, the problem in Poland is the lack of adequate capital, which means that the state has a greater role to play in terms of scaling up new technologies. The private sector will be particularly important once the technological solutions in question are mature and viable.

Piotr Palutkiewicz, Vice President of the Warsaw Enterprise Institute, also spoke about the potentially harmful consequences of overly extensive state interventionism, citing as an example the huge subsidies for photovoltaics in Poland, which have distorted the market and fuelled problems with balancing the electricity system.

In turn, Reinis Āboltiņš, an energy market analyst from Latvia, stated that there is no worse long-term policy than the state’s massive subsidisation of the energy sector, which does not allow the true price of energy to be known. As Āboltiņš stressed, it is thanks to the market that electricity prices have fallen in recent months. He pointed out that there is no single technological solution that will guarantee us energy security – this can only be provided by a hybrid system.

A fairer green transition

The fourth panel highlighted the need for a fair and inclusive green transition, including the fight against energy poverty, which affects up to 20% of households in Poland. National Fund for Environmental Protection and Water Management (NFOŚiGW) Vice-President Paweł Mirowski emphasised the crucial importance of the Clean Air Programme in the fight against energy poverty in Poland, including through the implementation of thermo-modernisation and energy audits. He pointed out that pilot programmes are also currently underway to introduce technical assistance through appropriate representatives, the institution of so-called 'municipal energy officers’, for poor households in the implementation of complex investments related to increasing the energy efficiency of residential buildings .

Jana Šandlová Vlčkováz from the Czech IKDP pointed out that although the statistics for the Czech Republic in terms of heat maintenance problems are positive, as many as 58% of the country’s citizens fear for their energy security and the majority were saving energy for this reason. Vlčková emphasised the role of the creation of energy cooperatives in lowering local energy prices, as well as other dimensions of civil society in the Czech Republic, where the importance of NGOs in educating and building fields of dialogue for a just transition was identified as crucial.

Joanna Mazurkiewicz of the Institute of Structural Research said that an aspect that is forgotten in the discussion on popularising low-carbon solutions is the influence of local leaders on the immediate environment. In the economist’s opinion, the solutions related to the green transition so far have been successfully used by the well-off, and now mechanisms need to be created to focus on the poorer strata so that they too can reap the fruits of state programmes. Mazurkiewicz also highlighted problems in the comparative analysis of fuel poverty between countries due to national contexts and difference in measurement.

Aleksandra Krugły of the Habitat for Humanity Poland Foundation stressed that civil society is key to solving the problem of fuel poverty. Krugły said that with the entry of the Emission Trading Scheme for Buildings and Road Transport (ETS II) and the implementation of the Social Climate Fund, it is necessary to look even more closely at helping the poor. This will be necessary in order to be able to take full advantage of the available EU envelope, which will be conditional on the proper preparation of the Social Climate Plan by the Member States.

Three Seas Initiative needed more than before

The fifth panel discussed the context of cooperation in CEE, including through the Three Seas Initiative. Gediminas Varvuolis, Ambassador for Connectivity and the Three Seas Initiative at the Lithuanian Ministry of Foreign Affairs, emphasised the foresight of the region in betting as early as eight years ago on North-South connectivity, which the Three Seas Initiative was a manifestation of. According to Varvoulis, this initiative should be used for business cooperation in the field of energy and lobbying the region in Brussels.

As the next host of the Three Seas Initiative Summit, Lithuania will, according to the ambassador, focus on increasing the region’s resilience, cooperation with Ukraine (especially in the context of transport), and linking projects within the format to global trends.

Maciej Kubicki, Head of the Three Seas Initiative Secretariat in the Office of International Policy in the Chancellery of the President of the Republic of Poland, stressed that for CEE, energy is not a matter of convenience but of sovereignty, and it is the interconnections between countries in the region that are the way to ensure the region’s resilience against energy blackmail. Kubicki also believes that Russia’s invasion of Ukraine has increased the importance of CEE and the Trilateral.

Konrad Poplawski, coordinator of the 'Economic Links in the Region’ project at the Centre for Eastern Studies, also urged that the Three Seas Initiative members build a framework for private capital to enter the initiative. Poplawski echoed Varvoulis, speaking of the need for joint regional projects and lobbying for them together in Brussels, and pointed to people as a huge potential of CEE. Also, Anežka Konvalinova from Masaryk University said that countries should work together to overcome regional challenges particularly related to EU goals and agenda.

Marcin Chruściel, Director of the Office of the Government Plenipotentiary for Polish-Ukrainian Development Cooperation, pointed out that the Three Seas Initiative was never meant to be a competition for the EU – it cannot be fully joined without EU membership. Chruściel stated that our region played a big role in favour of Ukraine’s EU candidacy. Ukraine, according to the Director of the Office of the Government Plenipotentiary for Polish-Ukrainian Development Cooperation, has great development potential and the region can help to rebuild the country in the future. However, while cheering for Ukraine, we have to be realistic – integration into EU structures and later into the Three Seas Initiative of such a large country will be a huge challenge for the organisation.

CEE cannot just be a brake on green transformation

In the final, sixth panel, the panellists tackled the topic of the region’s approach to EU goals and the implementation of the Fit for 55 package.

Juham Parts, former Prime Minister of Estonia, emphasised in his first speech that there are still no long-term solutions to achieve climate neutrality. He stated that too often we forget when estimating the cost of RES investments the needed investment in reserve capacity of stable energy sources.

Konrad Szymański, former EU minister, said that CEE too often plays a defensive role in negotiations related to the green transition. In Szymański’s opinion, the time for such an strategy is over and the subject now needs to be approached more ambitiously especially in Poland, where EU funds and available private capital need to be used to drive decarbonisation. According to the deputy director of the Polish Economic Institute, despite internal differences of interest, CEE can cooperate on specific issues, such as the EU taxonomy, where the region has been successful.

According to the former EU minister of Poland, another initiative where CEE has converging interests is the emissions trading system for buildings and road transport (EU ETS II). Szymański emphasised that our region has the most to lose as a result of the entry of EU ETS II with too little (compared to the costs) negotiated compensation in the form of the Social Climate Fund.

Wojciech Jakóbik, editor-in-chief of the BiznesAlert portal, drew attention to the importance of the National Recovery Plan (from the RRF) in Poland’s green transition, the absence of which has already had a real negative impact on planned investments, such as the Polish port for the development of offshore wind energy installations in the Baltic Sea. Jakóbik said that we should not fight against already set targets, but rather focus on guaranteeing flexibility for member states to reach these targets, for example by accepting nuclear or negotiating specific sectoral temporary concessions.

Paweł Musiałek, president of Jagiellonian Club (KJ), called for a multidimensional approach to EU goals – implement what is within our reach, but also openly oppose Brussels’ initiatives that are clearly not in our interest. The KJ president highlighted CEE’s inferior starting point in the race to climate neutrality vis-à-vis the West and the potholes created when hundreds of billions of euros are spent in the EU to protect energy consumers, which will thus not be used for the green transition.

Sam Williams of the Energy and Climate Policy and Innovation Council noted that a serious but less frequently addressed issue is the transformation of the heating industry towards neutrality, while highlighting the challenge of decarbonising energy-intensive industries, a large EU proportion of which are located in CEE.

More about conference 'Energy Security in Central and Eastern Europe. Achieving our Climate and Security Goals Together’ that took place in Warsaw on 28.11.2023 can be found here.

Other articles published in the project:

Author of the photo: Ewa Witak / fotograficznie.pl

The article is published in a project partnership with the Poland from Nature [Polska z Naturą] Foundation, which is part of the Our Common Home network.