REPORT

TAKING NATURAL GAS HOSTAGE

Geopolitics as a context for the role of natural gas
in achieving energy objectives of the European Union

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Source: PAP Mediaroom

It’s been two years since the publication of the DISE report titled: ‘Natural Gas In the Energy Transition In Poland’, where we looked at the questions: when can Poland achieve climate neutrality and what role should natural gas play in this process.

Since then, the energy markets have experienced an enormous change brought about by the massive energy crisis that accompanied Russia’s attack on Ukraine and the aggressor’s use of gas infrastructure as energy weapon against EU Member States. The crisis has led to a change in the way those states perceive energy raw materials in general, and natural gas in specific. In particular, the perception of those natural gas as subject only to market play has been replaced by energy strategies that take into account geopolitical factors as significantly affecting both, the availability and price of this fuel.

At the same time, continuing trend toward decarbonisation of European and global economies, in conjunction with EU regulations including the ‚European Green Deal’, denotes a shift away from the use of hydrocarbons, especially coal, for electricity and heat generation. In addition, the ‚REPowerEU’ document published by the European Commission in response to the energy crisis calls for an acceleration of the energy transition and the use of RES to speed up independence from fossil fuels imported into member states outside the EU.

This raises the question of whether, in the changed geopolitical and economic realities of the energy crisis, it makes sense to continue to use natural gas as a bridge fuel in the energy transition. And if so, to what extent, under what conditions, and with what risks? Energy security is probably most prominent and pressing issue, i.e. how to ensure necessary quantities of the fuel at an acceptable price from new supply routes, taking into account key risks, including global demand.

Given the variety of energy mixes among EU Member States and differences in stages in energy transition for each economy, the approach to the use of natural gas as a transition fuel is likely to differ for each counrty. In Poland, where still more than 70% of electricity and heat generation comes from lignite and hard coal, the use of gas in place of coal as decarbonizing fuel is necessary if not inevitable (at least in the perspective of the next 10 years). Moreover, owing to its highly flexibility technology, gas-fired generation is highly desirable as it can enable and stimulate growth of intermittent in nature RES.

Thanks to a continuing cooperation with the European Climate Foundation, DISE is proud to present this in-depth report that tackles the issues mentioned above. We hope that it will provide readers with an informed view on what the use of natural gas for energy purposes in the European Union, and Poland in particular, could look like, taking into account geopolitical factors. Our aim was to juxtapose two important cognitive elements, namely widely understood geopolitics and the market determined by the supply-demand relationship. We are convinced that the analysis carried out by our team of international experts provides a comprehensive account of the key factors influencing the strategic choice of using gaseous fuel in the energy transition under new market conditions created by the ongoing energy crisis.

Wishing you an enjoyable read, I would like to extend my sincere thanks to the entire team of authors for excellent cooperation on the report, our grant provider ECF headed by Dr Katarzyna Harpak and Mr Antoni Bielewicz, as well as our partners at the US think-tank Institute for Energy Economics and Financial Analysis (IEEFA), in particular Mr. Clark Williams-Derry, with whom we had the pleasure of having fascinating discussions on global gas markets.

Remigiusz Nowakowski
President of the DISE Management Board

GALLERY

AUTHORS OF THE REPORT

Marcin_Sienkiewicz

Marcin Sienkiewicz, PhD

Research fellow at the Institute of International
Studies, University of Wrocław,
Gas Market Expert

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Expert of the Eastern Policy Forum and assistant professor at the Institute of International Studies, University of Wrocław. From 2008 to 2010, he cooperated with the Office of National Security and the Office of the President of the Republic of Poland in the field of national security and energy. From 2016 to 2018 he was President of the Board of the Lower Silesian Institute of Energy Studies. Since December 2015, he has been involved with the Polish Power Exchange, where he is responsible for the development of the gas exchange market. In 2013, he completed a teaching internship at Technical University of Ostrava (VŠB). From December 2013 to January 2014, he was an intern at the Gas Studies and Projects Office in GAZOPROJEKT S.A. Author of the conceptual study on the establishment of a gas hub in Poland. Publicist and reviewer of Wiadomości Naftowe i Gazownicze, a monthly magazine published by the Association of Engineers and Technicians of the Oil and Gas Industry. Participant and co-organiser of many conferences on energy issues. Author of more than a hundred scientific publications and expert studies on energy security, energy policy of modern states and operations of international energy markets.

R_Nowakowski-200x200

Remigiusz Nowakowski

President of the DISE
Management Board,

Energy Industry Expert

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He has many years of experience in building and implementing business strategies, managing large companies and investment projects in the energy and district heating industry, as well as excellent knowledge of the specifics of the energy sector and the principles of the electricity and natural gas market. Proven leadership skills in practice and the ability to lead teams in an international environment. Remigiusz received a thorough education in management, law and energy from prestigious universities including: Stanford University, Sustainable Banking Initiative, Certificate Course – Poland Energy Sector Executive Workshop, California, USA, Certificate Course in Leadership and Managerial Effectiveness at the International Institute of Management, New Delhi, India. He holds a master’s degree in economics from the Wrocław University of Economics and a law degree from the University of Wrocław. He is currently the President of DISE. In the past, he held top management positions in energy companies. From 2018 to 2020, he was the President of the Management Board of PILE ELBUD S.A. (construction of electricity infrastructure). From 2015 to 2016, he was President of the Management Board of TAURON Polska Energia (a leading Polish energy company) and Member of the Management Board of PKN ORLEN S.A. From 2016 to 2019 he was a member of the Board of Directors of EURELECTRIC. From 2008 to 2015 and 2020, Executive Director at Fortum, Heating & Cooling, responsible for Poland and the Baltics.

Kamila Tarnacka

Kamila Tarnacka, PhD

Legal Adviser, Energy Law Expert

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She is a legal adviser with many years of experience in providing legal services to Polish and foreign clients operating in the energy sector. She has provided comprehensive services for projects involving the construction and modernisation of power generation sources, including thermal power plants and wind installations, as well as the initial phase of the project to build Poland’s first nuclear power plant. She provided services to companies in the sale, purchase and trading of electricity, heat and natural gas; advised on regulatory issues, transactions and disputes, and also handled privatisation processes in the energy sector.

She has been involved in the development of offshore wind energy in Poland for several years, where (as Vice-President of the Polish Wind Energy Association) she coordinated the sector’s discussion and dialogue with the public on the creation of new legal regulations establishing this area of activity in Poland, which resulted in the enactment of the Act on the Promotion of Electricity Generation in Offshore Wind Farms, as well as the signing of the Declaration for the Development of Offshore Wind Energy.

From 2011 to 2014, as a partner at Baker & McKenzie, she headed the firm’s energy practice. In previous years, she gained professional experience at an international law firm called CMS Cameron McKenna. Between February 2017 and January 2022, she was Vice-President of the Polish Wind Energy Association.

She is an expert in the field of energy, recommended by prestigious legal rankings such as Chambers & Partners and the Legal 500. In addition, in 2014 she received a distinction in the IFLR Euromoney Women in Business Law ranking.

Pawel Turowski

Paweł Turowski

Gas Market Expert

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Graduate of the Institute of History, University of Warsaw. For many years, he has been working on, inter alia, the topics of energy security, hybrid threats, information threats, below the threshold of war, the topic of state resilience to multidimensional non-military threats.

Jakub Bartoszewski

Jakub Bartoszewski

Energy Market Expert

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He holds undergraduate and master’s degrees in economics, trade and international relations from New York University and Texas A&M University. He combines his research activities with practical experience in the energy sector. His areas of interest include energy economics, energy policy and commodity trade. He speaks English, Polish, French, Italian and Spanish.

Amma Mikulska

Anna Mikulska, PhD

Gas Market expert

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Anna Mikulska is a non-resident fellow in energy studies at the Center for Energy Studies at the Baker Institute for Public Policy at Rice University. Her research focuses on the geopolitics of natural gas in the EU, the former Soviet bloc and Russia. Her current interests include the potential use of natural gas as a geo-economic tool and exploring ways to use US LNG exports to strengthen European energy security. Anna Mikulska is also a senior lecturer at the Foreign Affairs Research Institute and teaches graduate seminars on energy policy and energy geopolitics at the University of Pennsylvania’s Russian and East European Studies. She is on the editorial committee of the Adam Mickiewicz University Law Review and on the scientific committee of the academic journal Energy Policy Studies. She speaks Polish, English, German, Persian and Russian. She holds a law degree from the Adam Mickiewicz University, a master’s degree in international relations from the University of Windsor, Canada, and a PhD in political science from the University of Houston.

EUROPEAN CLIMATE FOUNDATION

This report was developed with the support of the European Climate Foundation. Responsibility for the information and views expressed herein rests with the authors. The European Climate Foundation accepts no responsibility for the use of any content contained or expressed herein.