Julian Popov, ECF Fellow
ECF Fellow Julian Popov was one the keynote speakers at the 2018 energynomics Awards Gala. This is the transcript of his intervention focusing on the priorities of the Romanian EU Council Presidency this year, but also on the significant trends and threats in regional and global energy, and how they can be turned into opportunities for the Southeast Europe if well connected to the European Union needs and targets.
First of all, thank very much energynomics for inviting me!
Before I say a few words about the energy in Europe and in our region, about the [EU Council]* Presidency, I would like to pay tribute to Mihnea Constantinescu, a good friend and a great energy diplomat who passed away recently. He was a diplomat with high intelligence, skills and vision. There are many diplomats who are very intelligence and very skillful, but not too many diplomats with a vision.
Managing the change
I think we need energy diplomacy with vision, because the energy world is changing dramatically and we will find it very difficult to catch-up with this change. It is not just the technological change, but it is also a dramatic change in energy economics. We are used to running energy politics in a certain way, and in the last four-five years, probably, energy economics has turned upside down. Everything that was cheap in the past became expensive; everything that was expensive in past became cheap. Things that were centralized in the energy system are becoming decentralized, now, things that were decentralized are becoming centralized. And this is a very rapid change. Of course, the economics field, the economic practice can’t catch-up, and if the economics can’t catch-up, the administration and politics are lagging behind, behind, behind. This is not the case just in Bulgaria, or in Romania, but it is the case everywhere in Europe. Probably in some pockets in Europe, in China, in America and in some other places thing are going forward, but however the change is very fast.
Julian Popov – VIDEO (14 min)
I can give you a couple of examples. Few years ago, nuclear energy and coal energy were cheap energy, [while] solar and wind were expensive energy. Now nuclear has become prohibitively expensive, which is a problem because we would have needed it for reaching the 2050 targets. Coal energy which everybody said that was very cheap is also becoming very expensive. The very expensive wind and solar energy are becoming the cheapest one. So what are we doing with all that? That will be a very complex and difficult task, I think.
In this context, we are also moving the whole European project very fast.
Not many files, but great stories
I have to say that I am very jealous about the approaching Romanian Presidency! I was quite closely involved with the Bulgarian Presidency, few months ago [January 1st – June 30th 2018]. Apart from various other things, I am the so-called Goodwill Ambassador for the Bulgarian Energy Policy, which I tend to hide because the day when I was appointed to be Goodwill Ambassador, [the Zimbabwe President Robert] Mugabe was appointed to be Goodwill Ambassador for Human Rights [by UN’s World Health Organization, back in 2017]. So, I would never-never say I am a Goodwill Ambassador for anything! Fortunately, he was withdrawn from that position, so, in a very shy way I would mention that…
The Bulgarian Presidency was a very busy Presidency with a lot of administrative stuff and all the files, a negotiations, and all that. We somehow managed. The main thing about Bulgarians, I don’t know about Romania, is not to fail in front of the foreigners. That’s the driving force in our lives. So, we didn’t fail in front of foreigners, we did fine!
Romanian Presidency will not be so busy with negotiating files, but it will be probably the most luxurious presidency that Europe has ever seen. You have all the fantastic stories to preside over. Obviously, we start with the Brexit, which is a very sad story, but to be the President while Brexit is happening is incredibly exciting.
The EU budget and the 2050 Strategy
The second thing that I think it will be very-very interesting is related to the negotiation about the [EU] 2050 strategy. This is a very interesting document because, finally, the European Union, the European Commission switched on and realized that the low carbon economy is not just some kind of a burden or a responsibility to the future, all the beautiful things that people don’t care much about. It is actually about the competitiveness, about competition, about prosperity. They managed to produce this document that is focused on the development of the European economy and that will be very interesting to negotiate.
Of course, linked with that there are the negotiations on the next European budget. This is, again, a very interesting document, because the European budget now will have increased to at least 25% the climate related spending and an increase of 60% [in spending] for research and development. Again, this is European awakening, because we have suddenly realized something about China, the China we always said about: ”Well, they are our manufactures! We are the clever guys, we think about various things, invent them and then send them to these guys to produce them!” Guess what, China has now higher spending for research and development than Europe! And suddenly, Europe is saying “stay, what is happening?!”. What’s happening is that they bought all the technologies; everything that they didn’t manage to buy they stole, or maybe the other way around, they stole everything, and what they didn’t stole, they bought. Now they are running ahead as leaders in wind energy, solar energy, electric vehicles, electric buses, super grids, everything you can possibly imagine. They are probably still lagging behind in the hydrogen and in the offshore wind sectors, but at the moment when there is something big they will buy it. We have to compete with that!
The Future of Europe and the CESEC meeting
And there is the other big story that you will do it, on which I am quite jealous on you, too, – it is the EU Summit in Sibiu on the future of Europe [on 9th of May, 2019]. Future of Europe is not about talking philosophy and how Europe appeared on this world and how wonderful Europe is… It is a very specific thing: how to mend the divides in Europe, how to deal with Russia… Russia knows how to deal with us, but we do not know how to deal with Russia, and this is a very important thing. And then, it is about how to deal with China. What do we do? Are we taking some Trumpian posture and say “we raise barriers” and do this and that, or we will invest more in research and development and cooperation? This will be a very interesting thing.
I think that another event that very few people will notice, but in my view is very important, is the CESEC meeting – the South East Europe Energy Connectivity group of the 17 Energy Ministers. Probably nobody knows that there are 17 countries in the SEE, and Ukraine is one of them, strangely enough! But this is a very-very important thing, a fantastic place where the energy cooperation in the SEE can play.
All these stories raise the question: “What are we doing?”. From my experience after the Bulgarian Presidency, one option is to be here to do the best possible job, so that nobody can say “they are Romanian, or Bulgarian, what can you expect from them?!”. This was the starting point of the Bulgarian Presidency, by the way! I remember what Claude Turmes [MEP from Luxembourg for 19 years, until June 2018], who was responsible for the Governance [of the Energy Union] files, told me once: “If you do everything well, very well, they will say ‘that is your job’. If you fail in anything, they will say ‘they are Bulgarians, what to expect from them?!’”. That was quite a serious driver for us.
The exceptional opportunities for the SEE region
But is there something more than can be done? I think there is, because the SEE region has some exceptional qualities and assets that can be put into this global competition for which the 2050 strategy is talking about. One of them is, of course, the exceptional renewable potential of the region. Bulgaria, Romania, Greece and all the countries in the region have, as a whole, the best cost-competitive potential [for renewables], that is cheaper than gas, in the entire Europe. Well, the question for us is “OK, why to develop it? Is there a benefit for us?” That is a very important thing to negotiate with the European Union. If we can contribute more than our share, how can we benefit? Can we sell renewable energy to Germany, statistically or physically? Can we attract special conditions investments in Bulgaria, in Romania, in the whole region? What can we do? I think that negotiation should be established on a quite tough basis, because we have a very strong position there.
Another thing that there is, and you might decide that I am a bit obsessed with China!, is the competition with China. SEE has a fantastic opportunity to bring back the big industries that are in the new sectors, in the low carbon world. I mentioned the electric vehicles… Recently the City of Sofia booked a big order for electric buses, because the air is very dirty in Sofia. And they bought them from China, because they are produced in China! Why are the e-buses and e-cars produced in China, and not in Bulgaria or in Romania? The combination between the very high technical skills, knowledge, experience in our countries, the low labor cost and the proximity to the European market and the fact that we are inside the EU positions us in an absolutely fantastic place to be the leaders in low carbon technology manufactures. This is something for which the European Commission have to contribute and pay. When they want to develop hydrogen industry, we can say that we can develop the biggest hydrogen pilot installation. There are the innovation funds, and these innovation funds should not go always to Denmark, Germany and France because they are ‘the innovators’. They should come to Romania and Bulgaria, because this is where the innovation that we need for the [EU] competitiveness can drive the economy of this part of the world forward.
I truly believe that we are in a very strong position, and this is something that we can work together, we can stick together. This means not only looking for our benefits in intense negotiations, but looking for the common good, achieving the climate neutrality in 2050, and doing it in such a way that can drive the competitiveness of the European economy and our national economies forward.