 Colleagues, good afternoon. My name is Heather Conley. I'm Senior Fellow and Director of the Europe Program here at the Center for Strategic and International Studies, and I'm delighted to be joined by my colleague, David Palmfrey, who co-directs our Energy and National Security Program here as we both join in welcoming the European Union Commissioner for Energy, Gunther Ettinger. What a privilege and a pleasure that you could be here with us. We are going to be incredibly efficient in the next moments of discussion. The Commissioner has to depart a little earlier at 2.15 to have a meeting at the Department of Energy. So, we are going to get down to business as quickly as possible, and we'll ask when we stop at 2.15, if you can just remain in your seats, we're going to escort the Commissioner out so he can get on his way and then we will proceed to departure. The Commissioner has been very generous to say any unanswered questions, we will collect them, and he is going to answer them, or his very talented staff will be answering them. And then we will post them on our website. So if we don't get to your questions, he will be very, very responsive. So very briefly, Ettinger has been the Energy Commissioner since February of 2010. Prior to that he served as the State President of Baden-Wettenberg from 2005 to 2010. A veteran and seasoned political leader in the Christian Democratic Union has held many, many significant positions throughout both the party leadership as well as in Baden-Wettenberg. So we are delighted, Energy is on our mind, the impact of the U.S. unconventional oil and gas revolution, and the changing and evolving energy landscape in Europe. So Commissioner, we welcome you, the floor is yours, and then my colleague David will take us through a very efficient question and answer session. So thank you all very much for joining us, and Commissioner again, welcome. Dear Ms. Conley, dear Mr. Pamre, dear Daniel Yelkin, friends, ladies and gentlemen, thank you for inviting us to say a few words about recent developments on global energy markets and the implications that these have or will have on our transatlantic partnership. Ensuring a reliable and steady flow of energy is a fundamental requirement for our modern economies and the high quality of life that we have achieved today. Energy is, if not the engine, at least the fuel of our economic growth. And for this we require competitive, low energy prices, since even more important in current economic situation. However, increasing demand for energy concerns about the possible lack of investments, price volatility, and concerns about safety and sustainability has meant that energy, security and sustainability has become an important issue alongside promoting economic recovery and climate change. C.U. and C.U.S. share a common vision of energy security and sustainability, that this is best achieved through open, competitive and transparent international energy markets and through supportive policies that promote the sustainability of energy production and consumption, in particular the development of renewable energies and energy efficiency. As President Obama recently said in a speech to Georgetown University, we can't just drill our way out of the energy and climate challenge that we face. It is these values that we need to continue to promote globally, particularly in countries where the state plays an excessively dominant role in the energy sector. These values should be fully reflected in our transatlantic trade and investment partnership, currently under negotiation. We should set the global benchmarks together and thereby contribute to developing a stronger set of rules for the energy sector in the multilateral trade system. International initiatives and organizations, such as the International Energy Agency or the International Energy Forum or the International Partnership for Energy Efficiency Corporation and increasingly the G20 also provide important vehicles for us to influence the global energy debate. And to ensure energy security also means addressing issues that go beyond just the energy sector itself. Climate change, trade and development, social and environmental issues, as well as political and security concerns are all now a full and integral part of the energy security challenge. But looking at the changing global energy landscape, the question arises as to whether the EU and the US are now following diverging paths across the Atlantic. In the North American continent, it's clear that a significant energy revolution has taken place, but one that is having and will continue to have a major impact on EU and global energy markets. In the space of a couple of years, the energy situation in the US has radically changed from being one of increasing dependency on oil and gas imports to a situation where US domestic production of both oil and gas are expected to expand significantly. As you are doubtless aware, the US Energy Information Administration, latest annual energy outlook suggests that US oil and oil dependency will continue to increase from 45% in 2011 to only 33% in 2013. While current predictions suggest that imports may increase thereafter again, these are expected to be largely sourced from the same hemisphere rather than the Middle East. Today, for the first time in 60 years, the US is exporting more refined petroleum than it is importing. And US domestic production of gas is expected to increase to 2040, surpassing domestic consumption by 2020, and spruing net exports of gas. The first LNG exports from the US could already be occurring by 2016. This, your energy revolution, is already having a major impact on the competitiveness of certain segments of the US industrial sector, particularly on energy-intensive industries such as the chemicals sector, steel, plastics, cement, ceramics, and glass. Indeed, I noted that the US President's National Security Advisor reported back in April that manufacturers in energy-intensive sectors have announced up to $95 billion investments across the US to take advantage of low-cost natural gas. This is in contrast to the situation in the EU. The positive message is that our latest working scenarios for the EU suggest further improvements in energy efficiency and renewable energy to 2030. They suggest that total energy demand could decrease by 9 percent in 2030 compared to 2010, and that there will be a stronger uptake of renewable energy than has been suggested in our previous scenarios. This means that our 20 percent renewables target by 2020 could be slightly overachieved and could reach around 25 percent by 2030. In the electricity sector, renewables could account for nearly 45 percent of power generation in 2030, driven largely by onshore and offshore wind as well as solar. However, when looking at the oil and gas sectors, the EU's import dependency will increase significantly as domestic production continues to decline. We anticipate that domestic oil production could decrease by 45 percent between now and 2030 and domestic gas production to increase by some 30 percent over the same period. This drop in gas production could eventually be somewhere mitigated by unconventional gas production, but this faces significant challenges in the current context in the EU. The result is that the EU's dependence on oil imports could increase from 80, 85 percent in 2010 to over 90 percent in 2030 and for gas from 60 to nearly 75 percent. At the same time, the EU faces the challenge of high energy prices, which are particularly important for EU's competitiveness. In 2012, industry gas prices were more than four times lower in the US than in Europe. This was recently discussed at a meeting in Brussels by the heads of state of the EU member countries, who have now requested the Commission to carry out a full assessment of the composition and drivers of energy prices and costs in the EU and to look more widely at the EU's competitiveness vis-à-vis its global economic counterparts. While key oil suppliers for the EU are Russia and Norway and for gas also Algeria, the main conventional proven reserves are in more challenging regions. This has led the EU in terms of supplies of hydrocarbons to focus on our enlarged neighbourhood for new sources of supplies while ensuring that whatever energy arrives from external sources, as well as what is produced domestically, can circulate freely around Europe. It is for this letter reason that the key priority for us is the creation of a fully integrated and fully functioning EU-wide internal energy market. This is being addressed from the regulatory perspective with our legislation on the liberalisation of the electricity in gas sectors as well as from the infrastructure perspective to ensure that the EU market is fully interconnected. The heads of state of the EU member countries have set an objective of completing the internal energy market by next year and developing interconnections so as to put an end to any isolation of member countries from the European gas and electricity grids by 2015. It is in this context that we are working very closely, for example, with the countries concerned on a Baltic energy market in the connection plan to take concrete measures to connect Lithuania, Latvia and Estonia better to the wider EU energy networks. Ladies and gentlemen, it's important to recall that energy has been a core policy area of the EU from the start. Following the Schumann Declaration of 1950, the former runner of today's EU was the European Coal and Steel Community, which paved the way for a new kind of peaceful cooperation in Europe. However, it's only with the entry into force of the Lisbon Treaty in 2009 that the EU was given an explicit competence in energy policy. And we are on the way to European ice energy policies. Even in this new context, individual member states remain responsible for managing their own energy mix. For example, whether nuclear power should or should not be an option remains a national choice. I have therefore challenged our 28 member states. That is our common interest for the EU to speak with one voice in external energy relations. To our third partners, take Russia or take Algeria, Norway and others. It makes sense for the world's largest practically fully integrated regional market to present as fair as possible a single common approach to external partners. This is because firstly our member states have broadly similar if not an identical interest in ensuring a secure competitive response and sustainable flow of energy to their markets. And secondly, as the EU single energy market becomes a reality decisions and developments on one member state will have an increasingly important impact on all other member states. Dear friends, Russia is of course a key partner in this context. The Russian Federation is our foremost external supplier of energy goods. It delivers 30% of the EU's gas imports, 34% of its oil imports and 27% of its coal imports. In addition, Russia is an important supplier of uranium to the EU. So it's our main partner since decades and for decades. At the same time, Russian companies and Russian state budget rely heavily on the income generated by these exports to the EU. Our infrastructure systems for oil and gas are closely interconnected and not just in the Baltics. And indeed, Russia and the EU complement one another. Over the past decades, we have been developing a stable supplier-consumer relation and very close trade and business relations. The other side of the coin is that our energy relations in the past years have not always been easy. There are security of supply concerns in the EU and security of demand concerns in Russia. The interruption of gas-applies during the Russia-Ukraine conflict in January 2009 was a wake-up call for the EU to further continue its diversification policy and speed up the creation of an internal market for gas and electricity. However, it's clear that some of the dissensions are based on different conceptions, different cultures about how our energy markets should function rather than geopolitical considerations. In the EU, we want to create effectively functioning and competitive energy markets across the internal frontiers of EU member states. Gas and electricity should flow freely across markets from low-price areas to high-price areas. Prices should be based on supply and demand and not reflect regulation, subsidized or the dominant position of one market player. When looking specifically at gas, Russia has been our main supplier for many decades, making up 25% up to 30% in most years, some 150 billion cubic meters in 2012. But this has changed recently, this Norway catching up fast and the share of LNG growing significantly in particular after the 2009 gas crisis. Russia needs to reflect on these developments and adapt its positions to be more flexible in its attitude with buyers and more competitive in terms of price. Let me take this occasion to clearly state that I do not think that the way such is too dependent on Russian gas. We also do not have to worry about increasing Russian gas volumes coming to the EU. However, in order to ensure a functioning, competitive and sustainable internal gas market, all parts of the EU should have access to different gas sources and access to gas at competitive prices. And this includes encouraging new suppliers such as the US to play an active role in the global gas markets. Ladies and gentlemen, a few words to Ukraine are required to complete this picture. Despite ups and downs of its relationship with Russia, Ukraine remains a major transit country for Russia and Russian energy sources. And we have traditionally viewed the country in this light. We have led the initiative to modernize Ukraine's gas transmission system, which together with the ongoing gas sector reforms should reinforce Ukraine's role as a reliable transit country in a way that will be to the mutual advantage of Ukraine, the EU and Russia. However, Ukraine has a major potential to be more than just a transit country. It has significant domestic gas resources, both conventional and unconventional, together with the vast network of gas pipelines already in place and important gas storage capacities. These are key assets. Provided certain conditions are met, these assets can be used to in a way that further develops the role of Ukraine as fair as energy is concerned in particular in the upstream gas market and offers a real potential for Ukraine to become an Eastern European gas hub. We are working with Ukraine and its neighbors to ensure that Ukraine has the possibility to access gas from the international markets, namely by reverse flow technologies from Poland, Hungary and maybe Slovakia. Ukraine became a member of the Energy Community Treaty in 2011. This was a historic event. The Energy Community extends the EU internal energy policy in electricity and gas to Southeast Europe and Black Sea region on the basis of a legally binding framework. Ukraine's membership can therefore be seen as an important step by the EU and Ukraine towards a common energy market and should also be seen as a clear signal of Ukraine's European perspective. So the forms that membership of the Energy Community entails should enhance the attractiveness of the energy sector to international energy and financial companies. A number of the European and US oil companies are now actively interested in Ukraine. It's Chevron, Exfomobile and many others. And I think our Energy Community is the best legal basis for investments you can have. But to complement the major role that Ukraine will continue to play, it is in the gas sector where the Commission has been most actively promoting a diversification of sources and this is already showing results. An important priority has been to work with the concerned countries and companies to open up the so-called Sazan Corridor to ensure direct and sizable access to the hydrocarbon sources of the Caspian and Central Asian region. In this context, I warmly welcome the fact that the decision was taken at the end of last month and the pipeline to bring gas from Azerbaijan to Europe. TAP, the Trans-Atriatic Pipeline, was chosen as a European distribution pipeline for gas coming from these fields. A historical decision as it signals the substantial volumes of gas will come to Europe from a Caspian country on a direct way, directly from Azerbaijan, Georgia, Turkey, to our European Union markets and not over Russian areas. In addition, I expect that Azerbaijan, together with other countries in the Caspian region, will be supplying us with at least 30 billion cubic meter per year by 2025. In the context of the EU-U.S. Energy Council, we have been discussing with our U.S. counterparts their experience in developing unconventional gas resources, particularly in the light of the Commission's work underway in producing an environmental climate and energy assessment framework to enable safe and secure unconventional fossil fuel resources. While we do not anticipate significant production of unconventional gas in the EU, it could nonetheless perhaps slow down our growing gas dependency. Ladies and gentlemen, whatever developments the modern world has produced in recent years, the fact remains that the EU and the U.S. jointly still represent by fair the largest trade and investment zone. Total U.S. investment in the EU is three times higher than in all of Asia. And EU investment in the U.S. is around eight times the amount of EU investment in India, in China together. It is therefore in our common interest to nurture this relationship. In this context, the EU-U.S. Energy Council was established back in 2009 to enhance our transatlantic dialogue on energy security, energy technologies research, and on energy regulatory policy and is our primary bilateral framework in the energy field. It's now led on the U.S. side by Secretary Kerry and Moniz and on the U.S. side by my colleague Lady Ashton and me. Our annual discussions and contacts at a working level have ensured a sharing of information, for example, on global oil and gas market developments, energy developments in key producing and transit areas, as well as enhancing technology cooperation on nuclear fusion, smart grids, hydrogen and fuel cells, and critical materials. And on energy policy, our focus has been on energy efficiency, carbon capture and storage, smart grids connected to electric vehicles, and nuclear safety, with the objective being to try to coordinate policies and set compatible standards and incentives to promote the market uptake of clean energy technologies. Together with the transatlantic trade investment partnership discussions that are underway, we now have a real opportunity to take the joint lead in setting the rules and standards for the global energy market. And with the growing energy potential of the North American continent, there is a real possibility of a renewed transatlantic energy trade. Indeed, the reduced U.S. call on the global LNG markets has already benefited the EU by introducing price pressures on the traditional pipeline suppliers in addition to supplying the growing Asian market. And in the near future, we could also potentially see U.S. LNG exports and further U.S. exports of refined oil products. So, while our energy markets in terms of import dependency on hydrocarbons may be diverging, this may in fact open up significant opportunities for an increased energy partnership and transatlantic energy trade. Thank you all. Thank you, Commissioner, for a very good comprehensive overview of issues both for the union and for our relationship. We'll go ahead. We have about 15 minutes for questions. Heather has reinforced to me that we're on a very tight time schedule. So in true CSIS fashion is when you ask your questions, are you going to take the microphone around? Wait until the microphone gets to you because it's probably easier than using these on the desktop. Identify yourself, and if you can, have whatever statement you want to make at least formulated in some way as a question as we go forward. But I would like to follow up first. I haven't taken the prerogative of maybe if you can expand a little bit on some of the initial thinking that you may have in Europe on the question of how energy might factor into the negotiations beginning on the TTIP process. So what might be some of the things Europe might be looking for out of that negotiating process? I think energy should be a major role in our negotiations. It should be on our common agenda, exports and imports, and common rules, all products and standards, take biofuels, take biomass, take sustainability, and no doubt it's up to you and your government and your industries to decide whether you are willing to export LNG gas, whether you are willing to export conventional gas. We would prefer to come to a common market. I'm sure our companies are willing to import gas. And next point are electrotechnical products and standards. Take GE products or Siemens products or Phil's products, labeling, and eco-design, and all technical standards or take plugs and cars. So energy consumer products could be an issue for our negotiations as well to come to technical standards for security as well in the whole energy chain from crude oil from energy sources up to energy-consuming machines, tools, and goods. Okay, I can see who has some questions. Okay, we'll start here and then take one in the back and I think there's one on the site. Why don't we get all three on the table so that you'll have a chance to... Thank you for your comments. Steven Zabel of Transatlantic Academy here in Washington. I have a question for you about the Russian pivot toward Asia. Do you take this seriously? Is this a real energy alternative for Russia by going toward Asia with the Chinese now coming in with promises of financing? I thought we might get... Fernando, yeah. I had a question on the South Stream Pipeline as the European Commission considers the approvals for the onshore sections of that. Do you think that it could end up as a pipeline that will be open to third-party access for Caspian supplies? Francesco Federa and Basio Vitali and, as you know, Commissioner Itali welcomed... well, extremely welcomed the decision from the Shahadini consortium for TAP, the trans-hadiatic pipeline. If you could just elaborate a little more on how you see this decision as a possible difference maker for the future of energy in Europe. Thanks. If you take Italy, Italy is depending on... on imports and, namely, gas coming from Algeria is relevant for your home country. And this TAP infrastructure means having a new route and new sources. And so it's good for your markets and for your position having two competitors. TAP, it's a consortium with three companies. It's Stadeuil, Norway. It's a consortium of local regions of Switzerland. And it's Ionurgas. But this TAP consortium is open to more shareholders. And I think Italy should be engaged to be a part of the consortium. So it's up to your companies to decide whether they are willing to go inside this consortium. And let me say what we prefer is a scalable pipeline system, not just 10 billion cubic metres, up to 30 and more. And so the TANAP pipeline now is issue because from the eastern border of Turkey, Georgia-Turkey to the western border of Turkey, it's a huge distance. Several billion have to be invested. And this TANAP pipeline should be a scalable pipeline. So we have an increasing relationship to the Caspian region. I mentioned 30 billion cubic metres at the end of the process integrating Turkmenistan, integrating the northern parts of Iraq, the Kurdish parts means that a volume up to 50 billion cubic metres is feasible. South Stream. South Stream at the moment we don't know enough. It's a strategic option for Mr. Putin and Gazprom. It's never a business case. To build a pipeline through the Black Sea is a huge challenge. And there are many risks. The Black Sea is a deep sea. If you compare the Black Sea to the Baltic Sea you can't compare it. The Baltic Sea some metres deep. The Black Sea some 1000 metres deep. And private investors wouldn't invest. But political investors maybe are investing. South Stream is an instrument in a poker game with Ukraine between Russia and Ukraine. And it was an instrument against Southern Colorado. What we accept is that South Stream is a new route for old existing sources. And at the end of the day we are accepting South Stream but they have to accept our rules. And bundling through party access competition rules environmental obligations and so on. And my hope is that we can come to a compromise between Russia, Ukraine and EU for to renovate existing pipelines the existing gas 20 systems throughout Ukraine. And I'm not sure that South Stream is an option but it's not decided. And it's an ongoing process. I'm sure it's mainly Ukraine. If we come to a compromise between Russia, Ukraine and EU then South Stream is not really a must in our Eastern and Western European pipeline system. Russia in general we have many points on our common agenda and I'm sure we have to come to a package before end of the year. If you look to a third pipeline in the Baltic Sea or fourth pipeline if you look to our pipeline systems inside CEU Nelen or Palen so on and our third internal market package if you look to our Baltic states and how to desynchronize the grid systems if you look to Kaliningrad and nuclear power plants there and the Russians are interested to export power to the European Union markets we are coming near and near to a bigger package of compromises with our Russian partners. So one question here if we have time for about two quick questions one here and then more Thank you. My name is Jesper Peterson I'm a Ron Astmus fellow with the German Marshall Fund Mr. Commissioner you recently invited public comments on your 2030 energy plan and some of the major industrial and commercial interests in Europe responded that they had significant concerns with high energy prices and their effect on European competitiveness especially as some of the major EU member states either phase out nuclear or reject the option of utilizing unconventional resources. Do you share those concerns or do you believe that the combination of efficiency gains and use of renewables can adequately address them Thank you. Mr. Commissioner Good afternoon. My name is Lawrence Jones I'm also the board of the Center for Sustainable Development in Africa. My question comes back to the transatlantic concept you talked about. Recently after President Obama's trip to Africa I've had discussions with African leaders who've looked at transatlantic relationship being Africa, Europe and the United States. Do you envision scenario where the US and Europe could come together and have a common policy towards Africa to kind of counterbalance to what China is doing just in terms of the huge volume of resources China is bringing as opposed to splitting up the US component and the European component. Could we have an EU-US approach to African energy investments? Thank you. Good question. In former times or in last decades there was an US engagement in Libya or in Nigeria there was an US investment from your private industries and so on with the shale gas revolution maybe your own priorities are changing. It's up to you. It's not Africa as a whole. You have to divide the makeup zone that's our direct neighbor Morocco, Algeria, Libya, Tunisia and we are developing a pan-European strategy. It's namely infrastructure. We have existing oil pipelines, gas pipelines and my dream is to have some power pipelines so some grids between the Sassan military and the northern and and having investments coming from Europe in these regions avoiding to burn oil to produce power and installing more and more offshore onshore wind and solar power plants. I think it's a real option and a real win-win effect but on a long term 20 to 30 years. Then you must look to countries as Nigeria having own sources and we must look to Central Africa having no own sources no fossil fuels and last point is South Africa in our process energy for all we are engaged it's the United Nations process and I think we need a common approach indeed it's engineering it's looking to pragmatic projects a hydro project or projects country by country and I think energy could be a main point when we look to our relations to these countries in Africa up to 40% have no daily power and power is the one and only for cooling buildings for manufacturing for safety and security for life quality and I think so in Central and Eastern parts of Africa for all is the best offer from your side and our side from G20 for to come to a level of life quality which should be developed in next 5 to 15 years our queen book coming in out in March this year what is the background there for our way to UP nice energy policies and to UP nice climate change policies in parallel and connected will end in 2020 if there is no next dimension because our 2020 targets have a goal in 2020 and so now investors need long term planning security and 2020 was yesterday for investors in the energy sector and 2030 is tomorrow morning we need a common policy and we need clear signals to the market and to investors what happens beyond 2020 in our EU 28 in our European Union energy markets when I started energy policy European energy policy was just an instrument for climate change policies climate change was secretary and energy was under secretary was just a service provider and my understanding is that we need an own energy strategy connected to climate change policies but connected to industrial policies to growth and development as well and connected to social follow ups acceptable energy prices avoiding energy poverty and so on and I think these concerns of our European industries namely of our German industries and some Austrian and some Dutch and Belgian industries and some French industries are relevant cause in Germany you have to pay for gas four times more as US industries have to pay at the moment it's not acceptable for no energy intensive sector it's not acceptable they have to go and our electricity market means double price in Germany behind Japan and Cyprus and Denmark has one of the highest electricity prices and our renewable support scheme will increase the price in next years year by year by 10% I'm sure in 2014 10% more, 2015 2016 and so I have close contacts to the BDI the German association of industries and we have to change something what are the reasons for higher and higher enterprises and what can be done by lower taxation by more efficient investments by new grits by decisions wind parks located where the wind is blowing solar parks in the south of European Union is maybe a must for to avoid and the industrialization of Europe I think that you have more and more industries is welcome but not as a follow up of our European energy and climate change policies we need a win-win effect between your and our industries but not the country well thank you very much for taking so much time with us out of a very busy schedule we know that you have in Washington please join me in thanking the commissioner for his presentations today and as Heather mentioned if you could please stay in your seats until his delegation are able to leave the room we made that as a promise so we could get across town for the next set of meetings thank you very much terrific question