Opening remarks

 

Dear President Aliyev,

Dear Minister Shahbazov,

Excellencies,

Ladies and gentlemen,

I’m very pleased to be opening today’s Advisory Council meeting with you.

I want to begin by saying thank you.

Firstly, to President Aliyev and Minister Shahbazov directly for hosting today’s meeting. This is the second time I’ve had the honour to participate, the first time in person.  

I’m looking around this room seeing so many ministers and representatives from the Western Balkans at the Advisory Council today. Your presence here is proof enough of just how important the Southern Gas Corridor is for the European Union and for this region.

Second, I want to thank Azerbaijan for the efforts in ramping up the gas supplies travelling to the EU via the Southern Gas Corridor. This is a delicate moment in terms of the security of our gas supply, and Azerbaijan has stepped up and supported. Azerbaijan is a reliable and trusted partner for the EU.

 

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Now onto our discussions today.

Our agenda today reflects well the challenges and opportunities ahead of us. Some of them concern the functioning of the Southern Gas Corridor. We will discuss them in session one.

Others concern the long term vision for our energy systems. This will be tackled in the second session.

Let me share some thoughts on each.   

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First, today’s meeting should serve us to look back at the way the Southern Gas Corridor has worked, after one year of full scale operation. The corridor is a great engineering and policy achievement. We should not fail to acknowledge this every time we meet. It crosses six countries and stretches over 3 500 km, it is a lasting proof of what cooperation among partners can produce. Since last December, the Trans-Adriatic Pipeline can deliver almost 10bcm of gas to the European market.

We all remember the difficulties and hurdles this project had to overcome. But today, even most of those who were sceptical are grateful that it is there.

Reliable, competitive, affordable gas is making its way to South Eastern Europe. Homes are supplied, buildings are heated and citizens receive the energy they need. And with rising energy prices and tightened gas supplies, the Corridor’s role is strategically important for the EU, now more than ever.

In our view, the Southern Gas Corridor is a continuing success story. And of course, as for all success stories, this brings the question of its next stage, and whether the corridor can be expanded in its capacity or even extended geographically.

Our Ministerial meeting has begun addressing these issues last year.

Since our meeting last year, the broader conversation around gas and the policy context around the Corridor have evolved.

The European Union has clarified its position on the role of gas in the transition, and its regulatory and infrastructure implications.

We have adopted last December a Hydrogen and Decarbonised Gas Markets package, setting out a framework to drive the gas sector towards a decarbonised future, and unlock new opportunities, in hydrogen or biogas.  But that package also aims at making today’s gas market work better: a more resilient and consumer-friendly market. We have also adopted an important and balanced set of rules on reducing methane emissions from the energy sector.

Just two days ago, the Commission adopted a complementary delegated act on taxonomy, which identifies the activities in the gas sector which contribute to mitigate the climate change. This will help the private sector direct their investment into assets and projects Europe needs for a clean energy transition which is gradual and fair for every Member State. 

We now also have a new Trans-European Networks in Energy where we prioritise public financing within the EU, for hydrogen networks or repurposing natural gas pipelines for hydrogen use by a target date. However, in the EU’s neighbourhood, we are open to invest into gas infrastructure under the Economic and Investment Plan.

Our regulatory and infrastructure framework recognises the role of gas for many years to come, while promoting gradual switch over to hydrogen and low carbon gases. We assess that until 2030, gas will represent up to 22% of Europe’s energy mix.

In the current context of rising energy prices, and geopolitical tensions, there is also in Europe a growing awareness of the importance that diversification in natural gas supplies has, through LNG but also pipeline supplies.

As we recognise the role of gas in our own trajectory to net zero, we also recognise it for our neighbours, notably in the neighbourhood and the Western Balkans.

There is a clear priority for the region to move away from coal and towards a decarbonised system. Many of the coal-fired power plants are old and no longer comply with standards. It’s a threat to the environment and citizens alike.

We are working through the Energy Community to support the decarbonisation plans of the countries in the region, and to exploit all their potential for renewables energy.

But each country is unique. And so is each country’s energy system. That means that each country has its own path to take, which may include the use of gas to replace more polluting energy sources.  

The Western Balkan countries, I salute their representatives here, are still working on their own assessment of the future gas needs and the exact paths they want to take for the energy transition. Their choices in the coming months will determine the scope for the new projects in the region.

But let me say that we will support the region in whatever those choices may be. We will cooperate with them to design credible and coherent strategies towards greener and more sustainable energy systems, in line with our Investment Plan for the region.

Therefore, as the policy and regulatory context around the Southern Gas Corridor becomes clearer, the market takes centre stage.

In this context, the market test  being carried out by the TAP consortium is an important step. The results will be known by July 2022 and will provide clear signals in relation to the demand for possible additional gas deliveries to the EU or to neighbouring markets. This is something we will be following with interest in the Commission.

All these elements set the scene for our discussion today, and I believe our exchange today will help us understand better the prospects for the Southern Gas Corridor, on both the supply and demand side.

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Let me now briefly turn to the second session today on the energy transition.

This session underscores an important point: the clean energy transition can unlock tangible opportunities and new revenue sources also for those systems that are currently relying mainly on fossil fuel.

I expect quite a few topics to come up, but all guided by a single question: How to achieve climate neutrality while ensuring stable energy supplies?

I want to highlight the importance that methane emission reduction has in this transition debate. Methane is a potent and dangerous climate agent. The damage it does to the environment can be quickly and cost effectively reduced. That’s why in the EU we are putting a significant emphasis on this topic and investing into innovative technologies that could reduce the CO2 impact at limited costs.

As for renewables, they are the cornerstone of Europe’s long-term vision. Not only they will help us to decarbonise, but greater renewables also means greater energy security and energy independence.

Our knowledge, experience and ambition in this area is something we want to share with other regions. Starting from Azerbaijan. I learned with interest, dear President, about the ongoing assessment of the offshore potential in the Caspian Sea. And given that Baku is known as the City of Winds, it’s clear there is huge opportunity for Azerbaijan.

Europe is also committed to develop in this decade a fully fledged hydrogen market and a strong hydrogen industrial sector. Europe will be a large hydrogen market, open to imports from third countries. So, renewables and hydrogen, these are just two areas where opportunities for regional strategic cooperation are at their highest.

I mention these topics to say that even when we look to a carbon-free future, there are many reasons for a long term strategic cooperation on energy with Azerbaijan and through the Southern Corridor. Therefore it is very appropriate that today we  exchange on how our cooperation can shape up in the short but also in the long time period. And in the future, our Advisory Council can become a useful platform for exchanging on our common clean energy challenges. 

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Ladies and gentlemen, ministers, Mr. President, I will end my remarks here. I hope I have provided some ideas to frame our exchange and hopefully make for an engaged discussion today.

Thank you.

 

Closing remarks

 

Minister Shahbazov,

Ladies and Gentlemen,

As we have finalised this year’s Advisory Council, I would very much like to thank President Aliyiev and Minister Shahbazov for their hospitability and excellent organisation.

The statements, comments, questions, expertise and insight from each country has been very informative.

As I said in my opening remarks, in order to shape the energy system of the future, we need to focus on both the short term building blocks and the long-term vision. And I think today we did exactly that very successfully.

One thing that stood out is the strong support for strengthening of energy cooperation, putting a big emphasis on the strategic role of the Southern Gas Corridor.

And while we often talk about the climate ambitions in the EU, listening to the discussion today I’ve seen a number of countries who are on the same page.

Specifically, to our hosts, Azerbaijan seems well prepared for this future transformation ahead.

We were successful today in moving these important conversations forward. And I am absolutely certain we will continue this dialogue beyond today’s Advisory Council.

Thank you again for your attention. And I look forward to our future discussions.