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New international challenges, in particular price fluctuations, the uncertain geopolitical and security situation, the entry of new players, such as the US on the global gas market, and commitments under the Paris Climate Agreement were in the focus of the Energy Geopolitics panel at the Bled Strategic Forum.

Dr Fatih Birol, Executive Director of the International Energy Agency, emphasised low oil prices, new players such as the US and Australia on the gas market, the declining costs of renewables, and flat consumption of coal as the main trends at the moment. This has hit in particular countries whose cost of production are high, including Venezuela, Nigeria and some Gulf producers.

Turning to climate change, he said the Paris Climate Agreement needed to be implemented, with the energy sector at the core of the activities, for it accounts for two-thirds of global emissions. “Without fixing the energy sector, we have no change whatsoever to implement the agreement,” he said.

Mr Leonid Grigoryev, Chief Advisor to the Head of Analytical Centre for the Government of the Russian Federation, acknowledged that low prices had hit Russia hard, but the treasury bore the brunt of the decline in oil prices whereas producers have not been affected too much.

While Mr Birol noted the declining prices potentially made capital investments in the energy sector uncertain, Mr Grigoryev noted that there were currently two schools of thought in Russia on that: either production is sustained given that the treasury is absorbing the price shocks, or investment should be scaled down. He said this was a difficult dilemma.

Mr Peter Fischer, Deputy Director General for Energy and Climate Policy and Export Control at the Federal Foreign Office, meanwhile focused on the Energiewende, Germany’s overarching policy of transitioning away from fossil fuels and nuclear towards renewables.

Mr Fischer said the share of renewables had already increased to a third of overall electricity consumption and was projected to rise further, but this has not come at a great cost to the German economy. On the contrary, the focus on renewables has generated jobs, reduced reliance on energy imports, made air cleaner, and resulted in a significant drop in the price of renewable energy.

More broadly, the transition is helping deliver carbon reduction goals. “There are immediate energy security and energy geopolitical issues to sort out, but we need to keep an eye on the long-term challenge,” he said.

Mr Christian Burgsmüller, Member of the Cabinet of European Commissioner Cecilia Malmström, meanwhile highlighted trade as an important aspect of energy security. He said the forthcoming free trade deals with the US and Canada, TTIP and CETA, were a good way of improving energy policy while also allow the bloc to diversify its sources. “To have privileged access to the north American energy market is a part of that strategy,” he said.

Similarly, Ms Mary Warlick, Principal Deputy Assistant Secretary for the Bureau of Energy Resources at the US Department of State, noted that the US had an interest in the EU diversifying its resources, which helps individual countries’ political independence and promotes regional integration.

This was also the reason why, according to her, the US had opposed the proposed South Stream pipeline from Russia to Western Europe, arguing that the same gas transported on the same routes did not contribute to energy security. Instead, the US has been promoting regional interconnection and reforms in the region aimed at encouraging investments and supporting interconnectivity, she said.

Similarly, Mr Janez Kopač, Director of the Energy Community Secretariat, noted that members of the Energy Community, which comprises EU and non-EU countries, was promoting the transposition of EU legislation as well as competitiveness as a way to improve energy security and reduce prices. Mr Kopač also stressed that existing infrastructure was often underutilised, which could be improved by opening up to competition.

Mr David Wells, Canadian Senator and former Deputy CEO Canada-Newfoundland and Labrador Offshore Petroleum Board, said his constituents were concerned about declining public revenue as a result of low prices, but they were reassured by continued investments in offshore drilling, which is a long-term business.