What do we do if the wind doesn’t blow, a gas pipeline fails or a new investor wants to build a greenfield factory, requesting a reliable and affordable energy supply in one of the countries of Central Europe? How can Europe find balance with the “Energy Trilemma”, boost its economy and encourage investment in technologies? Acknowledging today’s energy issues is the first step, and one that must be quickly followed by open, honest debate and action. At GE we believe that solutions are available if we are open to the challenges and are ready to work together.
The Energy Union, which Poland helped to shape, is designed to ensure affordable, secure, and climate-friendly energy for citizens and businesses. This Energy Union could be enormously beneficial for the EU, if done right, as it could boost economic growth and encourage investments. Currently, the EU faces both externally and internally imposed challenges related to energy. While we need energy to act as a boost to the EU economy, sadly, it all too often acts like a drag, preventing us from moving forward.
In particular, we have a much-debated struggle to balance the three dimensions of the “Energy Trilemma” (energy security, carbon reduction and energy prices).
Rational debate about trade-offs
Firstly, we need to recognize the delicate balancing act of energy policies and have a rational debate about the choices to be made. Over the past two decades there has been a huge focus on de-carbonization and a lesser focus on energy security and affordability. These “hot topics” are not mutually exclusive, but there can often be tension between the tools needed to achieve each of them. This is something we need to acknowledge, and that is why we need a frank and open debate about how we balance them if we are to find solutions that help all three.
Security and diversity of supply
Secondly, diversity of supply is an asset, but it requires effort when we consider how additional sources of energy mean less reliance on any one of them. If the wind doesn’t blow one day, or a pipeline fails to ship gas, we need the flexibility to generate from somewhere else the power needed. Renewables help with diversity but they bring their own challenges of volatility. While domestic gas may be a fossil fuel, it is far cleaner than coal and can become cleaner still with more advanced technology. At GE, we strongly believe that gas will be an important part of the future energy mix in the EU and, specifically, in Central and Eastern Europe. Diversity also means more distributed energy, a move away from the centralized models of the mid-20th century to one where more energy is generated closer to the point of use.
Policies and infrastructure
Thirdly, we need policies and infrastructure to support a more diverse and complex energy network. The intermittency of renewables means that we need to be able to deal with sudden changes in the location and direction of energy flows. At the same time, gas having multiple sources means that we need to be able to use an LNG regasification terminal on the Atlantic coast just as effectively as using a pipeline that comes from Eastern Europe. In both cases, we need the infrastructure and policies to get energy from point A to point B, which means in many cases crossing multiple national borders. Clearly, this is an area where European nations need to work together.
Finally, continued technology investment is much needed. This is the one factor that allows us to balance the three important objectives – energy security, affordability and environment impact. According to the European Commission, an investment of €1 trillion in EU energy technology over the next 10 years is required in order to diversify existing resources, replace equipment and meet our challenging and changing energy requirements.
The private sector undertakes its role and should – and indeed will – continue to make the lion’s share of investment in energy technologies. However, the sector needs governments to provide the right policy and financial environment to support such investment. European science, engineering and manufacturing can create the next generation of energy technologies that will power both social and economic growth. This is why 36,500 of GE’s 90,000 employees in Europe today work in energy-related fields. For GE, CEE has a major role as a manufacturing and innovation hub for European and global markets, with seven energy and two oil and gas technology production plants and the Polish Engineering Design Center. It is also why we are currently finalizing the largest acquisition in our company’s history – bringing the talent and expertise of Alstom’s energy business together with our own.
Energy is critical to the future of Europe – it presents challenges but it also provides opportunities for the entire EU. In order to utilize these opportunities we need a rational debate that focuses on good policies and infrastructure, and how we can balance objectives, secure diversity of supply, and, last but not least, encourage investments in technology.