Exclusive! Borchardt (EU Commission) | From the latest Madrid Forum to the next Gas Package

Exclusive! Borchardt (EU Commission) | From the latest Madrid Forum to the next Gas Package


good morning Ilaria Conti from the
Florence School of Regulation here today in Brussels with the Director of DG energy
Mr. Klaus-Dieter Borchardt thank you very much for accepting our invitation my pleasure today we are going to discuss a few issues after the Madrid forum which took place in October this year the last Madrid forum was a
truly peculiar one the discussion went beyond the usual regulatory issues on
gas and focused on new elements new perspectives for the energy
sector it was the Madrid forum of power to gas
the de-carbonisation sector coupling how far do you think we are from the real
achievement of what truly decarbonised European gas sector I can say that the
decarbonisation of our energy system is advancing well I think quite recently we
have made quite some progress I refer here notably to the compromises that
have been found under the Clean Energy Package for all Europeans we have a new
framework for energy efficiency and as you know we said for the decarbonisation
energy efficiency first we have a new framework for renewable in
electricity we are about to finalise actually tomorrow we all hope the market
design for the electricity market which will cater also for the integration of
renewables so this if you like will set the broader framework towards
decarbonisation here of course for the time horizon 2030 all these
measures are developed for reaching the objective 2030 minus 40 percent a co2
emissions 32 percent share of renewables and the electricity
consumption and 32 and a half percent improvement of energy efficiency and
then of course and you have seen that recently in the debate
the 2050 targets 80 to 95 percent of decarbonisation of our economy is back
on the table and in the discussion you have seen that the Commission has
published communication where we develop a bit the instruments and tools that we
see to be applied in order to get to that target and just yesterday we had
the rulebook decided on the COP24 so that’s the second and important part for
the implementation of the Paris agreement this altogether also means
that we will also go towards a 2050 target and that means that we are
leaving a bit the decarbonisation of the energy system and we have to take in
also other sectors which then leads to what we call the sector integration so
energy should help – decarbonised energy systems – should help industries transport
sector building sector to decarbonise as well and all together can then reach the
2050 targets sure and its thank you very much for being this clear it’s a very
clear path towards the decarbonisation in two steps if I may say so and what’s the
role of gas in all of this as you know also the Commission does not believe
that we can do the transition towards decarbonised economy just relying on one
single energy source it will not be cost efficient and technologically it will be
impossible to do it just with renewable electricity let’s be precise here so
therefore we see a very important role also for gas but as we have also said it
should be renewable and low-carbon that of course means biogas biomethane
hydrogen or decarbonised natural gas at the same
Madrid forum the European Commission announced the launch of a number of
studies seven if I’m right and also some other initiatives involving the
stakeholders could you briefly give us an update on all of these initiatives
yeah was pleasure but before I do that because you have mentioned now the
Madrid forum and I would also like before I come to the studies point out
that at the Madrid forum I think we have changed last time a bit our working
method because this time first we discussed of course the issue future
role of gas sector coupling and in this context for the first time we made
conclusions where we have allocated very precise tasks to organisations
participating organisations and these organisations then should organise
workshops and also link up with stakeholders in order to develop the
issues that we have identified and here you have issues like the potential of
CCS and CCU IOGP will do that the gas quality issue when you are blending
natural gas with hydrogen for instance here then will do the work the gas
storage aspects also when it comes to renewable gases hydrogen storage here
its GSE doing a part we have also what I call the sector integration the
cross-sectoral flexibility markets here if check will highlight how can we
better link the energy system with the industrial policies we will also tackle
the fugitive methane emission as an issue here GIE and marco gas will do and
the ENTSO’S and ENTSO-E and ENTSO-G they will also develop an interlink model how
they can bring together the infrastructure from the power grid
and the gas grid together for the 10 year network development plan and then
we have identified but not yet allocated two issues in my view very important
issues the first is the guarantee of origin and the second is to find
definition uniform definitions on what do we mean by renewable gas low-carbon
gas and this kind of thing so I’m looking forward to the next forum in
June where we will then take in the results of of this and let me be also
clear yes we have or are about to launch studies but the discussions with all the
stakeholders in the Madrid forum are as important as the studies that we are
conducting now so what are those studies the first studied is on sector coupling
so sector coupling is how to bring together the gas sector and electricity
sector mainly also on the infrastructure and in this study we want to assess and
analyse the regulatory barriers and the gaps that are still existing to bring
these two sectors closer to each other and this study has been launched and we
are expecting the results in April 2019 the second study is what we call
tailor-made regulation here we want to develop indicators that can give an
objective picture on the situation of the different markets in the Member
State or in a region so that we can identify underperforming markets and
then address these markets with targeted measures in order to bring them up to
full speed so this is for me a very interesting exercise and that we will
then work together with member states and
regions third study is about liquidity of the gas market this is not new it is
also coming out of the Kaveri study here we are looking into possible designs of
release programs but also to be clear this is not a measure that will be
applied in all markets but only those that are still foreclosed where it is no
competition for the moment and gas release or capacity release
programs are the best tool to help opening up the markets so that’s the
third one another project that we have is on tariffs I mean then people are
already very nervous so to be clear also here this is not an exercise where we
want now to do the next step in harmonising transmission tariffs but we
want to look into some elements components that are used by the
regulators when they are establishing the methodology and here first and
foremost they allowed revenues because the allowed revenues have a direct
impact on the tariffs and therefore we think it is worthwhile to look into
this component and to see whether we can do something and another thing I have
mentioned also we are looking how to at least reduce the impact of the
pancaking that is taking place when you have cross-border transmission flows
what do we also have we have one study completed that was the European
transmission system in light of the 2050 targets which gives some
interesting results when it comes to the future use of
infrastructure I have forgotten one important element also when we talk
about infrastructure we are also looking CER is doing that also into the
depreciation of existing infrastructure because it might be that we will not be
capable to use all the infrastructure because it’s clear that gas and the gas
grid will only be partly available in the new energy system and I nobody can
exclude that some infrastructure pieces have to be closed is it analysed in the
light of the termination of the existing long-term contracts I suppose it is
linked to that and yeah in the other study that I have forgotten to mention
it’s a bit apart I would say is about the regulatory framework for LNG
terminals here we want to see or we know that we have a wide range of regulatory
regimes for LNG terminals and we want to have a look whether we we need to do
something and the last one because we have six plus one I should also mention
is about the regulatory barriers to the entry into the wholesale market and what
I’m referring here to is we will look at the licensing and regulatory conditions
to become a player in the wholesale market and what we also observe here is
that there are regimes in place especially in the licensing they are
very burdensome and very costly and I think there is also maybe room for
improvements and that’s why we are looking into that as well but now I
think I have covered it all yes and you heard there’s a work for
everybody we need everybody a wide range of topics
and it’s very good that it’s sort of an open call to everyone to to contribute
to these projects and I’m not surprised that then the Madrid forum doubled for
next year there will be two to Madrid fora this is also something important to
say so I think we can go to my last question which is about still about the
Madrid forum there was definition I particularly liked upgrading the
European gas sector so what does upgrading mean for you and does it mean
that we are done with the previous target of completing the European gas
market so no it’s not of course not achieved and even under the third energy package there are still some things to do especially in the implementation
because all the network codes in gas and electricity they are still linked to the
third energy package and we are far from being in a situation that we can say
that all these codes are already delivering the benefits that we are
hoping that they are delivering so what it means is that we take a new
horizon as I said 2030 for gas even beyond and we are looking what is needed
and in electricity I think with the Clean Energy Package for all Europeans we have
done this part and now of course everybody is asking if you believe
in the future role of gas what we do what will be then done in the gas sector
and here the gas sector is a bit different from the electricity sector
because we can say that the gas target model is working well it has advanced
the the trade and the the commercial flows between member states but that
does not mean that we should be complacent and
just do nothing I think what we want to do and what we mean by upgrading
we want to put forward most probably in 2020 when a new commission under the new
commission and the new Parliament we want also similar to what we did in the
electricity one to put forward our proposal how to make sure that the
future role of gas in the decarbonisation or in the transition of
the energy system can really contribute and how and where so this is what we
want to do and we do that in a let’s say three chapters in this
proposal the first chapter will deal with all the issues that we have looked
at in electricity and we will decide which one’s need to be transposed in the
in the gas proposal so of course here you have all the institutional issues
and I will only mention one we have created or we will create an EU DSO
entity for electricity but I can tell you that in my view we should also have
one for gas we have adapted the rules of procedure within a sort this should not
only be the case in electricity it should of course also be applicable for
gas so these adaptations we have to make and in substance we have a lot of
improvements in consumer rights in electricity be it billing be it
switching be it the possibility to sell flexibility in on the demand side these kind
of things of course we will also analyse to see what should go into the gas
proposal so this is the first chapter the second chapter is what we have just
discussed and upgrading so these are the five studies on the basis of the five
studies where we will then look at the results
and then to see what we would put into it so that’s the five ones is the
tailor-made regulation so the indicators it is the liquidity of the gas the gas
release programs it is about the the tariffs it is about the regulatory
barriers to the wholesale market so licensing and the fifth one yes LNG
we will also deal with LNG thank you very much so this is the second chapter and the
third chapter we could describe it as looking at what we can do to enhance the
sector coupling so bringing together the electricity sector and the gas sector
here I think we will have the sector coupling study which will show us the
gaps and then we fill the gaps and the regulatory barriers that are currently
existing in a number of member states and that we will then address properly
for instance one of the very important questions to be solved is how do we
apply or adapt the unbundling principle because as you know when we are talking
about power to gas which is one of core instrument when it comes to sector
coupling who can be the owner of the transformation plans from electricity
to to gas can it be a TSO you know for the moment there are only TSOs that
are proposing concrete projects but if you take the unbundling rules literally
you could argue that this is not compatible and this is something that we
should look into we should have a discussion whether we
think that TSOs or even DSOs should have access to this part of the energy system or not so it’s one of
the crucial issues to be solved well thank you very much I
think again lots of interesting points to be discussed interesting insights we
will definitely keep following the work of the European Commission for this
challenge in 2019 thank you very much and see you soon
thank you!

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