by George Kakouris
In the wake of rising energy costs due to Russia's invasion of Ukraine, Kathimerini sits down with EU Commissioner for Energy, Kadri Simson, to discuss the EastMed pipeline, Europe's push toward Green energy and the potential for Cyprus to ensure its citizens both affordable prices and energy security by developing solar and wind power.
"What is really important now for Cyprus’ energy sector, to ensure both affordable prices and energy security, is to develop its enormous potential for solar and wind power." -Simson
The discussion around the EastMed Gas Pipeline has resurfaced in Cyprus as a result of the war in Ukraine and the new push towards the reduction of the EU’s dependence on Russian fossil fuels. The project, however, remains a PCI (Project of Common Interest) for the EU only in so far as the funding of the feasibility study. What role do you see this project play in the context of the EU’s wider planning?
As a response to Russia’s unprovoked and unjustified war against Ukraine, the Commission has just published the REPowerEU plan to end our dependence on Russian fossil fuels as soon as possible – and certainly well before 2030. Mostly, this will be done by accelerating renewables and increasing energy efficiency and savings. Cyprus has enormous potential in terms of solar and wind energy production. Investing in these capacities can bring significant benefits when it comes to security of supply, energy prices, and fighting against climate change – not to mention the long-term benefit to the economy in terms of growth and jobs.
At the same time, we will not be able to replace 155bcm of Russian gas overnight and need to diversify our supply sources. The deployment of Mediterranean gas resources to the EU market is one option. The EastMed pipeline is an EU Project of Common Interest (PCI) and this status has been confirmed recently. It is also clear that ending Cyprus’s energy isolation is important. But in the end, the construction of the project depends on its commercial viability and regional demand dynamics.
The role of LNG in the energy mix of Cyprus, as well as the country’s possible role in LNG transfer and storage for Europe, does not attract the same attention from local media as the discussion revolving around pipelines. How does the country fit in the EU’s planning on LNG transfer and infrastructure?
LNG plays an important part in ensuring the EU’s security of supply, especially as we are phasing out Russian gas. Out of the 155bcm that we currently import from Russia, we expect to replace around 50bcm with LNG this year. It offers an alternative, more flexible possibility of moving gas than pipelines, and there is no doubt that we wouldn’t have been in a position to respond to the Russian threat without the investment that the EU has made in LNG terminals in the past decade.
With the support of the EU, we have already completed a number of key gas infrastructure projects. This year alone, gas PCIs will add in total 20 bcm of yearly capacity to our energy system. In Cyprus, the Vassiliko Floating Storage and Regasification Unit (FRSU) Terminal will become operational next year supported by EU funds. With a potential yearly capacity of 2 bcm, this will help end Cyprus’s energy isolation and allow the country to shift away from more polluting oil.
Cyprus has recently requested technical assistance from the European Commission regarding the development of a market for green hydrogen production and transfer. What form would this assistance take and how far along are we in the appointment of experts and the provision of funds? When do you expect Cyprus would be realistically ready to be involved in the hydrogen market?
The Commission is indeed providing assistance to Member States to be better placed to address the challenges in the energy sector in the wake of the pandemic and in the context of Russia’s invasion of Ukraine. Work has started on looking at revisions to Cyprus’ plans for the energy sector between now and 2030.
The Commission launched in April the EU Energy Platform that will pool demand and negotiate with international partners for joint gas purchases, and in the future also hydrogen. This is a voluntary initiative where all Member States can participate. Under the Platform, we will set up a Global European Hydrogen Facility. It will coordinate Member States and private sector renewable hydrogen initiatives for production in third countries and export to the EU, as well as incentivising domestic renewable hydrogen production to ramp up the global hydrogen market.
As far as Cyprus is concerned, the most obvious benefit for the energy system would be to prioritise investment in renewables for domestic consumption. But given the high potential Cyprus has for renewables, there is clearly scope for increasing renewables production further, to also use it for the production of renewable hydrogen.
The EU is focusing increasingly on cross-border energy infrastructure and the integration of renewables into the continent’s energy mix. How do energy production and transport infrastructure in Southern Neighbourhood countries enter this equation?
The Southern Neighbourhood is a key region for the EU’s energy policy, as highlighted in the recent EU external energy strategy, including for hydrogen trade and renewables development. Already in 2020, the European hydrogen strategy recognised the strategic importance of the Southern Neighbourhood for the European hydrogen market, because of its proximity, natural resources, and existing interconnections with the EU. Hydrogen is also one of the priorities in the renewed partnership with the Southern Neighbourhood.
The European Commission has announced a new Mediterranean Green Hydrogen Partnership to support hydrogen trade between Europe, Africa and the Gulf region. The Neighbourhood Investment Platform is one of the instruments that can be used to support energy production and transport infrastructure. It has financed for many years projects accompanying the clean energy transition in our partner countries. This work builds upon the existing new Agenda for the Mediterranean and its Economic and Investment Plan and will start with the EU-Egypt Hydrogen Partnership. I also want to recall that this year we supported the EuroAsia electricity interconnector with €657 million from the Connecting Europe Facility. This is another crucial project for ending Cyprus’s energy isolation, connecting it to Israel and Greece.
In the long term, should the EU worry about replacing dependence on Russian fossil fuels with a dependence on fuel and energy from undemocratic and potentially unstable countries such as the Middle East, North Africa and the Gulf?
The clear lesson from this crisis is that we cannot be dependent on one single supplier, especially one who is willing to use energy as a weapon. As we import 90% of our gas consumption, 97% of our oil and 70% of our coal needs, diversifying our energy imports is inevitable, if we want to avoid supply risks. This will mean a larger number of suppliers and smaller quantities of supply that can be more easily replaced.
In the long run, our strategy is of course to drastically reduce fossil energy consumption, which will significantly increase our energy independence. Renewable energy is home-grown and comes with far fewer energy security risks.
How do you assess the Cypriot national measures on controlling the effects of the increase in energy prices as a result of external factors? Are there any tools that can be used on the EU level to address these issues, that have not been used so far?
Already last October, when wholesale prices first started to rise, the Commission published a “Toolbox” outlining what measures national governments could take to address the market situation – in particular to protect vulnerable consumers. All Member States, including Cyprus, have taken advantage of the options in the toolbox – relating to direct support schemes, state aid, taxes and levies – worth roughly 100 bn euros across the EU. Cyprus has taken a number of steps which are in line with the Commission toolbox, from VAT and excise reductions to support schemes for renewable energy.
What is really important now for Cyprus’ energy sector, to ensure both affordable prices and energy security, is to develop its enormous potential for solar and wind power. These are among the cheapest energy sources in Europe, with solar costs falling 82% over the last decade. The more Cyprus expands its own renewable energy production and improves its energy efficiency measures (such as building renovation), the more independent it will become from imports and the smaller its energy bills will become.