Transcript Energy – Next Steps for Poland

Lights Out?
The Outlook for Energy in
Eastern Europe and Central Asia
Sustainable Development Department
Europe and Central Asia Region
The World Bank
The World Bank
MAJOR FINDINGS

The countries of Eastern Europe and Central Asia region could face an energy
crunch within the next five to six years
 The financial crisis has created some breathing room and a window of
opportunity to mitigate the impact of the anticipated crisis

Mitigating actions are required both in the demand and supply side. Significant
investments will be required (3% of cumulative GDP over 2010-2030) and the
public sector alone won’t be able to provide this level of investments
 Countries need to take actions now to create a climate that is attractive for
investments in the sector
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The World Bank
The Region’s Transition and The Current Economic Crisis
Changes in Real Output
(Index: 1990 = 100)
Central and South-East Europe
(CSE)
180
160
CSE/CIS Region
140
120
CIS
100
80
60
40
20
Annual average
GDP Growth
(%)
3
-5.5
+1.1
+6.0
2009p
2008e
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
-5.6
The World Bank
Amply Endowed with Energy Resources and Oversized
Infrastructure, the CIS/ CSE Region is a Key Primary
Energy Exporter
Production reduced by 30% in 2000, but recovered by 2008
Million Tons of Oil Equivalent (Mtoe)
2,000
1,800
Consumption
stood at 80% of
1990 levels
1,600
1,400
1,200
Hydro
1,000
Nuclear
800
Coal
600
Gas
400
Oil
200
-
1990
4
2000
2008 (e)
The World Bank
By 2008 Energy Supply Became a Constraint to
Growth
Increase: 2005-2008
(%)
Percentage of Firms that Consider Electricity a Problem in Doing Business
(%)
21
CIS South
+30
51
9
CIS North
58
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Southeastern
Europe
+22
48
11
EU-10 (Central
Europe)
+30
41
17
Europe and Central
Asia Region
+30
47
0
10
BEEPS 2005
20
30
40
50
60
BEEPS 2008
Source: World Bank and 2005 and 2008
5
+49
The World Bank
The Economic Crisis Eased Some of These Concerns,
But Respite is Only Temporary
Average Annual GDP, Electricity Consumption, and Primary Fuel Consumption Growth
Rate in the CIS/CSE Region, 2005–30
(%)
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2001-05
2006-10
2011-15
2016-20
2021-30
GDP
4.4 %
Electricity Consumption
3.1 %
Primary Fuel Consumption
1.9 %
Source: World Bank staff calculations.
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The World Bank
Where will These Additional Supplies Come From?
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The World Bank
The Russian Federation Plays a Key Role Meeting
Natural Gas Needs of the EU and Will Continue To Do So
Gas Imports by the EU in 2008
(billion cubic meters)
350
45
300
50
250
93
200
150
100
127
Russia’s role in the EU gas sector:
Gas piped from
Russia
 40% of import requirements
50
 25% of overall demand
0
Gas piped
from Russia
8
Gas piped
from Norway
Liquefied
Natural Gas
Gas piped from
Algeria & Libya
The World Bank
Russia has Significant Potential to Increase its Production
But Investments are Still Below the Required Levels
Actual and Projected Scenarios for Natural Gas
Production
(billion cubic meters)
1,000
Required Investments Vs. Historical Investments
for Upstream Gas Exploration and Development
(billion USD a year)
Optimistic
20
900
20
800
Baseline
700
15
600
500
Pessimistic
10
400
15
300
200
8.6
100
4.5
-
2005
2010
2015
2020
Source: World Bank staff calculations.
9
5
2025
2030
0
Required
Investments
Average Investments
2001-2008
Investments
2008
Source: World Bank staff calculations and
Gazprom’s financial statements
The World Bank
Absent Significant Investments or Actions to Limit
Demand Growth…
Actual and Projected Gas Exports from CIS/CSE region 2005-2030
(billion cubic meters)
500
400
300
200
100
0
-100
2005
2010
2015
Imports of OECD Europe (non-CIS/CSE)
2020
2025
2030
Net CIS/CSE exports, base case
Net CIS/CSE exports, optimistic case
Source: World Bank staff calculations.
The region could become a net importer of oil and gas
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The World Bank
And the Outlook for Electricity Supply is of Even
Greater Concern
Projected Generating Capacity Additions, Rehabilitations and Retirements
in CIS/CSE region 2005-20
(GW)
250
200
150
100
50
0
-50
-100
2006-10
2011-15
Additions
2016-20
Rehabilitation
2021-25
2026-30
Retirements
Source: World Bank staff calculations
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The World Bank
The Region will Face Significant Investment Needs
Over the Next Two Decades
Projected Energy Sector Investment Needed in the CIS/CSE region by 2030
(USD billion)
Sector
Amount Required
Electricity
1,500
Crude Oil
900
Heating
500
Gas
230
Coal
150
Refining
20
Total
3,300
Source: World Bank staff calculations.
Estimated investments in the Energy Sector amount
3%
of cumulative GDP
Although the public sector will need to finance a portion of these investments, it will
not be able to do it alone, the financial depth and technical know-how of the private
sector and energy companies will be required
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The World Bank
Countries Will Need to Create a Competitive
Investment Climate by Adhering to 10 Key Principles
DO’s
1. Do introduce an acceptable legal framework.
Electricity
2. Do provide supporting regulations
administered by an independent and
impartial regulator.
3. Do create an environment that facilitates
assured nondiscriminatory access to
markets.
4. Do honor internationally accepted standards.
Don’ts
1. Don’t impose a punitive or regressive tax
regime.
2. Don’t interfere with the functioning of the
market place.
5. Do abide by contractual undertakings and
preclude the use of an administrative
bureaucracy to constrain investor activities
6. Do prevent monopoly abuses.
3. Don’t discriminate among investors.
7. Do ensure that the sector is kept free of
corruption
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The World Bank
One of the Most Critical Elements is Ensuring the
Financial and Commercial Viability of the Sector
Weighted average electricity tariffs for residential consumers in 2008
US$ cents / KWh
25
20
15
10
Hungary
Slovakia
Poland
Turkey
Latvia
Romania
Croatia
Montenegro
Moldova
Lithuania
Albania
Bulgaria
Estonia
Georgia
Serbia
UNMIK Kosovo
Armenia
FYR Macedonia
Azerbaijan
Russia
Kazakhstan
Ukraine
Kyrgyz Republic
0
Bosnia and…
5
Source: ERRA Tariff Database
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The World Bank
…And Countries will Need to Ensure that They Will Act
in an Environmentally Responsible Fashion
Carbon emissions in the CIS/CSE region in 2005
18
GDP per Capita in Thousands US$
Slovenia
16
14
Czech Republic
High carbon emissions
reflect the region’s:
12
Hungary
10
Slovak Republic
Croatia
8
 Reliance on abundant
domestic coal
Estonia
Poland
Lithuania
 Low energy efficiency
Latvia
6
Romania
Russia
Turkey
 Outdated infrastructure
Bulgaria Serbia and
Montenegro
Albania FYR Macedonia
4
Belarus
Armenia
2
Moldova
Azerbaijan
Kyrgyz Republic
0
0
Tajikistan
2
4
Ukraine
Kazakhstan
Turkmenistan
Uzbekistan
6
8
10
12
14
16
18
CO2 per Capita in Tons
Source: World Bank World Development Indicators
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The World Bank
Focused Efforts are Required if the Region is to
Meet its Emissions Targets
Actual and projected CO2 emission in CIS/CSE region
(million tons of CO2)
6,000
Other
5,000
Residential
CO2 emissions in 1990
4,000
Transport
EU Target : 80% of 1990
levels by 2020
3,000
2,000
Manuf. and
Construct.
1,000
Electricity
and Heat
0
1990
2005
2010
2015
2020
2025
2030
Source: World Bank staff calculations.
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The World Bank
Energy – Next Steps for Poland
•Primary Energy Supply Concerns
•Energy Efficiency
•Diversify Supply Options
•Improve Prospects for Trade
•Investment Needs
•New Investments, Retire or Rehab Existing Assets
•Environmental Impact
•High Efficiency Plant, Low Carbon Fuels
•Cost Impacts
The World Bank
Poland’s Energy Strategy
• Implement the Energy Strategy to 2030
• Simplify Legislation Consistent with Strategy
• Improve Trade Capacity to:
– Enable Low Cost Imports
– Facilitate Profitable Exports
• Develop New Technologies (e.g.,Smart Grids)
• Accelerate Use of Cogeneration
The World Bank
Climate Change Issues
• Carbon Reduction Primarily from:
– Energy Efficiency
– Nuclear Power
– Renewable Energy
– Carbon Capture and Storage
• Impacts of Options on Growth, Jobs, Trade
• Government Role in R&D and Standards
The World Bank
Energy Efficiency – Supply Side
• Promote the Use of New Technologies
• Rehabilitate and Retire Older Plants
• Incentivize Cogeneration and Renewables
• Network Loss Reduction Using Smart Grids
The World Bank
Energy Efficiency – Demand Side
• Improve incentives to shift peak demand
• Commit public sector to exemplary role
• Create a comprehensive approach to EE
investment support
• Designate a Lead Energy Efficiency Agency
• Make energy performance certificates mandatory
when selling/renting buildings and apartments
• Support R & D for new solutions and technologies
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The World Bank
The Way Forward
• Implement/Develop New Technologies
–
–
–
–
IGCC with CCS
Coal bed methane capture and use
Electric Vehicles
Underground coal gasification
• Make Energy Markets Work
– Finish/Update the Reforms Program
– Integrate Supply and Demand
• Implement Renewable Energy Options
• Urbanization – Good Urban Planning
The World Bank
Possible Questions to be Addressed
1.
2.
3.
4.
5.
How Do You Delink Carbon and Growth?
The Future for Coal if CCS Doesn’t Work?
Will Nuclear Power be Accepted?
The Long-Term Costs of Nuclear Power?
If EE is so Cheap, why doesn’t it Happen?
The World Bank
Thank-you
Gary Stuggins
[email protected]
www.worldbank.org/eca/energyreport
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The World Bank