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31.01.2006

BA-CA Commentary: How secure is the energy supply in the New Europe?

  • Energy demand will increase further
  • Strongest increase to be expected in the New EU Member States
  • Import dependency to rise, especially with regard to natural gas

Over the coming 25 years, the new Member States (NMS) will converge to the EU-15 in terms of energy consumption. The energy intensity of their production will decrease. However, given the current high level, energy consumption of the NMS will remain far above the EU-15 level. At the same time, by 2030, the NMS’ dependency on imports will be almost as high as the dependency of the “old” EU states. This is the results of a recent analysis by Bank Austria Creditanstalt’s (BA-CA) Economics Department based on a report published earlier by the European Commission1 .

The import dependency of the 25 EU member states will continue to rise in the coming years. With regard to natural gas, the degree of dependency will increase from about 50 percent at present to over 80 percent. The NMS’ demand for gas will grow particularly rapidly. As for solid fuels, import dependency will nearly double from currently 35 per cent to more than 65 per cent. Despite a fall in the energy intensity of production, the demand for liquid fuels (oil) of the EU-25 will rise from 1074 million tons of oil equivalent (toe) in 2000 to 1390 million toe in 2030. The needs of the NMS will increase from 119 million toe to 165 million toe.     

“The economies of the New Member States are far more energy-intensive than those in Western Europe, their supplier structure is less differentiated and the major supply routes for Western Europe traverse through their territories”, says BA-CA’s economist Hans Holzhacker. “For structural reasons, the CEE countries should therefore have an even greater interest in energy policy than the rest of Europe”, adds Holzhacker.

Austria’s role in the future EU energy policy
The interruptions in the supply of Russian natural gas related to the gas dispute with Ukraine at the beginning of this year and, more recently, the extremely cold weather conditions in Russia leading to higher domestic energy consumption have heated up the discussions about the future of energy supply to the European Union. Polish Prime Minister Kazimierz Marcinkiewicz announced a proposal for a common EU energy policy, while the Austrian presidency will be holding a conference in Vienna on 16 March called “Energy Paths – Horizon 2050”, where the key topics will be the security of energy supply and the environmental impact of energy consumption.

Austria is a permanent member of the Secretariat of the "Energy Community for South East Europe", whose founding treaty was signed on 25 October 2005 in Athens by the EU, Albania, Bosnia, Bulgaria, Croatia, Macedonia, Romania as well as Serbia and Montenegro, and which will be based in Vienna. “Given its prominent position within the CEE region and its function as a hub for European energy supply, Austria should play an important mediating role in formulating a more binding and stronger common EU policy to secure the supply of energy throughout the EU”, says BA-CA’s chief economist Marianne Kager. Fields of such a policy could include projects to further diversify the supply infrastructure by building pipelines for example, better co-ordination in expanding storage capacities and in the reserve management of EU countries as well as a set of agreements governing mutual support in crisis situations. 

1)  “European Energy and Transport – Scenarios on Key Drivers“

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Inquiries: Bank Austria Creditanstalt Economics Department
 Hans Holzhacker, phone +43 (0)5 05 05 ext 41965; e-mail: hans.holzhacker@ba-ca.com