Baltic Ring
Fact Sheet
* * *
Energy
(Doc. DK-98/65)
The Second Heads of Governments Meeting
on Baltic Sea Co-Operation
Riga, 22-23 January 1998
Council of the Baltic Sea States
Agenda item 1 -C: Energy
Energy
Fact Sheet
Strengthening the Co-Operation in
the Field of Energy in the Baltic Sea Region.
1. Introduction.
The members of the Council of Baltic Sea States (CBSS)
are committed to international cooperation and joint
actions in the Baltic Sea region in the field of energy
and environment. The CBSS members are also parties
to the European Energy Charter, the UN Convention
on Climate Change, the Rio Agreement, and the recent
Kyoto Protocol to the Convention on Climate Change.
Moreover, the countries applying for membership of
the European Union will have to adapt to the legislation
and general rules of the European Union and to strengthen
their institutional performance.
The summit in Visby, May 1996, introduced the Baltic
Agenda 21. The year 1996 also saw the adoption of
the Kalmar Action Programme in July by the Ministers
of Foreign Affairs establishing working programmes
on democracy and stability, economic co-operation,
and environment, and in October 1996, the Ministers
of Environment adopted the so-called Saltsjöbaden
Declaration defining the seven sectors and establishing
guidelines for the activities in the framework of
Baltic Agenda 21. In June 1997, the Nordic Prime Ministers
issued the so-called Bergen Declaration calling for
closer energy co-operation in the Baltic Sea region.
A key element in the co-operation in the Baltic Sea
Region is Baltic Agenda 21. Moreover, major studies
are being carried out of the possibilities of integration
of natural gas supply systems and of electric systems
in the Baltic Sea region with repercussions for both
security of supply, economics of energy supply and
transmission, and impact on the environment.
2. Sustainable Energy Development.
The co-operation in the framework of Baltic Agenda
21 is structured around seven different sectors, one
of which is energy. The lead parties in the energy
sector co-operation are Denmark and Estonia. A Senior
Officials Group (SOG) is in charge of co-ordinating
the work in Baltic Agenda 21. For each of the seven
sectors of co-operation, a report will be produced;
the sector reports will be constitute the basis for
the final Baltic Agenda 21 document expected to be
ready for consideration mid- 1998. The basic objective
of Baltic Agenda 21 is jointly to investigate the
possibility of and prospects for region-wide sustainable
solutions. In the field of energy, the major issues
subject to co-operation in the framework of Baltic
Agenda 21 cover a wide range and include the following:
- Ensure an adequate level of energy services in
all countries, including space heating, electric
appliances and transport;
- Reduce air emissions and acidification, including
fulfilling environmental and climate agreements;
- Deal with nuclear hazards, mainly controversial
nuclear power plants, including issues of upgrading
and decommissioning of nuclear power plants;
- Promote a rational energy policy, including enhanced
energy efficiency and energy savings, ensuring security
of supply, and increase the use of renewable energy
resources
- Enhance regional co-operation in the field of
energy supply and transmission, and in order to
ensure long-term benefits also in the field of energy
research, development, and demonstration.
Co-operation among the parties is expected in particular
to address four major objectives:
- Improved utilisation and further development of
district heating and natural gas networks;
- Energy savings exploiting the potential in the
whole Baltic Sea region, and not least the considerable
potential in the economics in transition;
- Enhanced combined heat-and-power (CHP) production;
and
- Increased and efficient use of the large renewable
energy potential.
Finally, a study, Perspectives on the Energy Markets
in the Baltic Sea Region, is dealing with the energy
markets in the area. The study expects to identify
the main issues and problems in the markets and to
outline prospective energy developments. While the
study covers the whole region, the emphasis is on
the Baltic states, Poland and Russia. The market study
is closely co-ordinated with Baltic Agenda 21 and
the follow-up of the Bergen Declaration.
3. The Bergen Declaration.
In June 1997, the Nordic Prime Ministers issued the
so-called Bergen Declaration on "Sustainable
Energy Supply in the Baltic Sea Region" calling
for closer energy co-operation in the Baltic Sea region
engaging all governments in the vision of a more sustainable
development of the energy sector. More specifically,
the Declaration suggested considering the establishment
of integrated gas supply systems and of integrated
electric transmission systems around the Baltic Sea.
National agencies in the Nordic countries and other
Baltic Sea countries are involved in the subsequent
implementation of the said Declaration.
The Declaration underlines the need for a long-term
approach to the energy issue. Employment and value-added
must be ensured; the energy systems in the Baltic
Sea region must reflect the demand for sustainable
development; and there is a need for further political,
economic, and technological integration in the Baltic
Sea region.
4. Integrated Baltic Supply Systems in the Field
of Natural Gas and Electricity.
Among the major energy projects in the region, especially
the Baltic Sea integrated supply systems projects
are in focus. Consistent with the major guidelines,
including the Bergen Declaration, studies on integrated
natural gas grids in the Baltic Region and a Baltic
Sea "electric ring" are being carried out.
Integrated supply systems in the respective fields
are likely to have repercussions in terms of security
of supplies, economics of energy supply and transmission,
and the environmental impact of energy production.
The possible integration of the Baltic Sea gas transmission
systems has been subject to several studies. The Baltic
Gas Study of February 1997 deals with the natural
gas sector in the Baltic countries. The study covers,
inter alia, pipelines, storage facilities, and organi-sational
structures. The study has resulted in a series of
recommendations concerning security of supply, market
development, technical issues, organisational aspects,
legal and fiscal measures, and international cooperation.
The Nordic Gas Grid Study initiated in June 1997 investigates
the possibilities of integrating the Nordic gas grids
and possible supplies from especially Norway and Russia.
Seven gas companies in Denmark, Sweden and Finland
carry out the study; it is expected to be completed
in June 1998. The North Trans Gas Study initiated
in January 1997 investigates the possibility of a
gas transmission system in the Baltic Sea between
Russia, Finland and Germany. Russian and Finnish gas
companies are carrying out the study, which is expected
to be completed in the autumn 1998. As the latter
studies remain to be completed, general conclusions
or recommendations are not yet available. A number
of important commercial negotiations are under way,
e.g. current negotiations between Norwegian and Polish
gas companies.
In the field of electricity, The Baltic Ring Study
carried out by 18 power companies and utilities 1998
has investigated the possibilities of creating a common
electricity market around the Baltic Sea, emphasising
the need for environmental improvements and benefits
for the consumers. The study has just been completed.
The study emphasises that an open market will benefit
both consumers and producers; it will reduce running
costs, reduce or postpone investment in needs, enhance
security of supply, and reduce emissions if common
environmental standards are accepted. The Baltic Ring
Study underlines the importance of combined heat-and-power
(CHP). The creation of a framework where environmental
investment, including rehabilitation of existing thermal
power plants and new CHP plants, can be financed on
market terms is an important recommendation of the
study. Moreover, the parties to the study recommend
a number of specific projects supporting the vision
of a Baltic Ring and reflecting the need for environmental
improvements. Likewise, the Baltic Ring study can
be expected to indicate that existing and already
decided transmission systems cover the need for transmission
capacity with the exception of the Polish-Lithuanian
link. Consequently, the state and capacity of transmission
systems do not seem to constitute a barrier to trade
and exchange of electricity in the Baltic Sea region.
On the other hand, there seems to be an urgent need
for rehabilitation and improvement of the power plants
in order to increase efficiency and reduce harmful
emissions.
The 18 power companies and utilities intend to establish
the Baltic Ring Electricity Co-Operation (BALTREL).
The report underlines the need for harmonised environmental
standards. The study recommends a rehabilitation of
CHP installations in Riga and Kaliningrad. The companies
expect to implement a joint study with participation
of electricity and natural gas companies and utilities
in the Baltic Sea region.
Copenhagen, 12 January 1998
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