This presentation was presented by Chloé Le Coq during the annual SITE Development Day 2021 conference at Stockholm School of Economics via Zoom. Disclaimer: SITE has the permission from Chloé Le Coq to upload this presentation slide.

1. GREEN TRANSITION & EU’S ENERGY SECURITY
Chloé Le Coq Elena Paltseva
SITE SITE
Paris II-Panthéon-Assas New Economic School, Moscow
SITE Development Day
Environmental Policy in Eastern Europe
December 08 2021

2. Two key pillars of the European energy policy
• Green transition = be climate neutral by 2050 with the European Green Deal
boost the economy through green technology
create sustainable industry and transport
cut pollution/C02
• Energy supply security = continuous availability of energy at affordable prices
low energy price
safe energy (low accident probability)
reliable energy supply
Þ Does green transition improve energy security in the long run?
• Our focus: the current and future role of natural gas consumption within EU

3. Green transition and increased demand for gas
First effect of green transition
More renewable sources of generation (biomass, wind, solar)
Þ more weather-dependent and more volatile electricity supply
Þ larger gas-fired power plant capacity for reliability of power supply
Second effect of green transition
Electrification of the economy
+
Phasing-out of coal, oil-fired, and nuclear generation plants
Þ more power demand
Þ more gas as energy in the generation mix (more environmentally friendly than coal)

4. Energy security and increased demand for gas
Source: Intercontinental Exchange, Inc. (ICE), euronews.com
Evolution of natural gas prices in European markets since April 2021
Dutch TTF gas futures
§ Current gas prices: four times
higher than this past spring
§ Increased gas prices impact the
electricity prices
(Recall: a fifth of Europe's
electricity comes from natural gas!)

5. Energy security and increased demand for (Russian) gas
Percentage of non-EU country imports of natural gas (2020)
Source: Eurostat
§ Security of external gas supply
-90% of EU’s natural gas from outside
-Russia is the largest exporter of gas (43.4%)
§ Key issue with the external energy security
- Energy trade driven by economic rational and
political objectives
-Example: geopolitical concerns with the state-
controlled Gazprom
=> How to assess the problems with the security of
external energy supply?

6. Energy security and increased demand for (Russian) gas
Risky External Energy Supply index (REES)
Source: Le Coq and Paltseva, 2009
Le Coq and Paltseva (2009)
§ Risky External Energy Supply index
(REES)
-importance of the energy type for the
economy
--access to different energy suppliers
§ Our findings
- Index varies greatly not only across
countries, but also across fuels
- Natural gas energy is “riskier” than oil or
coal

7. Energy security and demand for Russian gas
Source: S&G Platts
§ 77% of net EU’s gas imports arrived through
pipelines (ENTSO-G data, 2021)
=> Transit risk: probability of gas supply
disruption
§ 42% for Russian pipeline gas
Þ Russian gas transit dispute across Ukraine
(2006, 2009), Belarus(2010), and Moldova
§ New energy routes (diversification!)
Example of Nord Stream 1 (2012)

8. Energy security and increased demand for (Russian) gas
Source: Le Coq and Paltseva, 2009
Le Coq and Paltseva (2012)
§ Transit Risk Index (TRI)
-importance of the energy type for the economy
-availability of alternative energy routes
-bargaining power
of countries connected to energy route
Nord stream: good news for diverfication?
0,0 10,0 20,0
Germany
The Netherlands
Belgium
France
Czech Republic
Poland
Italy
Slovenia
Austria
Hungary
Slovakia
Romania
Bulgaria
Greece
Finland
Latvia
Lithuania
Transit Risk Index
Scenario 1 (No_Nord Stream), Scenario 2 (Nord Stream)
No_NS NS_Conservative

9. Energy security and increased demand for (Russian) gas
Source: Le Coq and Paltseva, 2009
Le Coq and Paltseva (2012)
§ Index varies greatly across countries
after Nord Stream 1’s implementation (2012)
“Winning” countries (smaller TRI) having directly access to NS
“Losing” countries (higher TRI) sharing other pipelines with NS
countries
0,0 10,0 20,0
Germany
The Netherlands
Belgium
France
Czech Republic
Poland
Italy
Slovenia
Austria
Hungary
Slovakia
Romania
Bulgaria
Greece
Finland
Latvia
Lithuania
Transit Risk Index
Scenario 1 (No_Nord Stream), Scenario 2 (Nord Stream)
No_NS
NS_Conservative

10. Summing up_ The difficult trade-off
§ Green transition reduces carbon emissions but may also increase gas demand
Example: gas capacity should be around 3 to 4 times the current capacity by 2050 for a full
electrification of the transport and heating in France, Germany or Netherlands (Le Coq et al., 2018)
§ Increased gas demand would increase Russian gas import for some EU’s member states, raising
concerns regarding EU’s energy security
=>The severity of the trade-off much depends on the countries’ specificities
-renewable energies policies,
-the energy mix (initial conditions)
-social costs of green transition

11. Summing up_ How can the European Union lose this trade-off?
§ Exercise EU’s buyer power within the EU common energy policy
( see Le Coq and Palsteva, 2013)
Remark: Gazprom has met its obligations under long-term agreements, it has not sold
additional gas on the EU spot market, opting to fill domestic storage
§ Reverse flows technology
§ New energy routes
Turk Stream pipeline (Jan. 2020)
Nord Stream 2 pipeline (when?)
Imports from USA via existing natural gas (LNG) terminals
§ Investment in new technologies
Development of offshore winds
Storage capacities
Hydrogen

12. References
§ Le Coq C. and E. Paltseva (2020), Covid-19: News for Europe’s Energy Security, FREE Policy brief.
§ Le Coq C., J. Morega, M. Mulder, S Schwenen (2018) Gas and the electrification of heating & transport: scenarios for
2050, CERRE report.
§ Le Coq C. and E. Paltseva (2013) EU and Russia Gas Relationship at a Crossroads, in Russian Energy and Security
up to 2030, Oxenstierna and Tynkkynen (Eds), Routledge.
§ Le Coq C. and E. Paltseva (2012) Assessing Gas Transit Risks: Russia vs. the EU, Energy Policy (4).
§ Le Coq C. and E. Paltseva (2009) Measuring the Security of External Energy Supply in the European Union, Energy
Policy (37).

13. Thank you
Chloé Le Coq
Homepage: http://chloelecoq.org