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[SESSION 2] Fuelling Europe - A Trade-off between Energy Security and Sustainability?
Background « Europe is becoming increasingly dependent on imported hydrocarbons. With “business as usual” the EU's energy import dependence will jump from 50 percent of total EU energy consumption today to 65 percent in 2030. Reliance on imports of gas is expected to increase from 57 percent to 84 percent by 2030, of oil from 82 percent to 93 percent » (EC Communication: An Energy Policy for Europe, 10.01.2007). Europe, therefore, has an important responsibility in relation to the problems and opportunities caused by the extraction of these energy sources. Production of fossil fuels results in enormous amounts of GHG emissions which are proven to be the major cause of climate change. Emissions released by oil and gas companies during gas flaring and venting amounts to approximately 400 million tonnes of CO2 on a global scale. This is more than the amount covered under current Kyoto mechanisms. Globally flared and vented gas makes up about one third of the EU’s annual gas consumption. Besides having significant negative impact on climate change, the extraction of these fuels creates social and environmental problems such as abuses of human rights, corruption, numerous diseases, acid rains and dangerous accidents. Extraction of fossil fuels in developing countries should contribute to their capacity to build up their economies: earn foreign exchange, create jobs and raise living standards. Instead, in most of the cases, it brings poverty and environmental degradation. Most countries that heavily depend on fossil fuels extraction fall low on the ‘Human Development Index’ of the United Nations, in addition to the ‘Human Poverty Index’. In Nigeria almost 40 percent of the population lives in absolute poverty, while for Indonesia this figure is 30 percent, despite the billions of Euros of revenue these countries have earned through resource exploitation. As climate change and sustainable development combined with high human rights standards are at the heart of the EU’s political agenda, measures for the reduction of GHG emissions and negative impacts of fossil fuels extraction on people and environment should become a top priority. Reality, however, shows a different picture. As Europe’s demand for fossil fuels continues to grow, the EU is getting more aggressive in supporting European oil companies in order to ensure energy security for the European markets. There are several examples of the EU and its Member States giving priority to securing energy supply over sustainable development:
In March 2007, as part of a package of measures adopted to help mitigate Europe’s impact on climate change, the European Heads of State set a target to increase the use of agrofuels in all road transport fuels to 10 percent by 2020. This applied to plant fuels such as bio-ethanol or bio-diesel. This policy was developed to ensure that Europe would have sufficient transport fuels, while not increasing the contribution of transport to global warming. Since then, numerous reports, including from the OECD and FAO, have pointed to the risks posed by agrofuel expansion to food security, preservation of tropical forests, land use change, and to the doubtful benefits in terms of climate mitigation compared to “conventional” fossil fuels. It became apparent that securing Europe’s transport needs has extremely detrimental impacts, mostly in developing countries but also in the EU itself, as the prices of many food products have been rising significantly over the last few months. In September 2008, the European Parliament’s Industry Committee proposed to reduce this controversial target to 5 percent by 2015, with further increases dependent on a major policy review. For many, the agrofuel boom is just a “hype” which was pushed by its first beneficiaries which are large corporations from the agro-industrial, biotech and chemical sectors. Others point to the danger of energy policies overriding or even hijacking agricultural and food policies, and of both markets converging. With the amount of agriculture land limited, the EU will be heavily reliant on imports from mainly developing countries, who in response to the new European market demand, are developing ambitious plans to expand key agricultural commodities – especially in Africa, Asia and South America. In this session, we will raise the following questions:
Background documents: Extractives:
* EIB is the leading international public lender in the extractives sector. In 2006, the EIB provided 49 percent of total global funding provided by all the international financial institutions for extractives. For oil and gas extraction in 2006, its share of global IFI support was 58 percent. EIB’s increasing awareness of the need for renewable projects is to be applauded, in the period 2002-2006 it lent nearly FOUR TIMES as much to the oil and gas sector as to the renewable sector. Out of total energy investments of EUR 23.7 billion during this period in all regions, EUR 11.3 billion went for fossil fuels, while only between EUR 3.0 and 3.6 billion went for renewable energy, depending on whether hydropower is included as renewable. Agrofuels:
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