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"International Aspects of Energy Policy" - Speech by Frank-Walter Steinmeier at the Second Federal Government Energy Summit, 9 October 2006

09.10.2006 - Speech

Ten years ago anybody talking about "energy foreign policy" would probably have had to explain what they meant. Today, concerns about primary stocks – and not just of oil and gas – are altering the balance of power around the globe. Alliances and counter-alliances based on energy issues are gathering their own dangerous momentum. A collision between the global thirst for resources and world public policy is increasingly likely. Our energy, foreign and security policy must face up to these challenges. It must be designed to limit the potential for conflict generated by the increased competition for resources. The forthcoming EU and G8 Presidencies will give us the chance to play a major role in formulating energy policy for Europe and beyond and to directly enhance our security of supply.

Three main aspects should be emphasized. Firstly, Russia remains our key energy source, above all for gas. The medium-term challenge is to maintain our mutual and equitable interdependency with Russia, whilst broadening the Russian-German relationship to create a Russia-EU relationship. To this end, greater integration in the energy sector is needed. Some people would call this naive. I for my part would advise us to look for such options as long as we – and our energy companies – are strong. Rediscovering mercantilism is certainly the wrong strategy. We should look for these options building on firm principles, including reciprocal market access, acceptance of the strict EU competition rules for all companies active in Germany and the EU, and a stable and reliable legal framework on both sides. Changing the rules during play is detrimental to the climate for cooperation – as the example of Sakhalin has shown. The Energy Charter principles endorsed by Russia at the G8 summit in St Petersburg, such as reliability, transparency and investment security must be transposed into the EU-Russia relationship. The renegotiation of the Partnership and Cooperation Agreement with Russia provides us with an opportunity to work on this, as long as the Energy Charter has not yet been ratified by all states.

The second key factor needed to ensure our future security of supply is the diversification of our suppliers. To this end, we will do more to develop our energy policy cooperation with Norway, North Africa and Central Asia. We intend to work on an EU Strategy for Central Asia during the German EU Presidency.

The third factor is energy cooperation on a global scale. We need functioning international energy institutions that involve emerging market economies more closely in their work. This aim will also be pursued by a conference the Federal Foreign Office plans to hold in the G8 framework next autumn. This should launch a dialogue on energy security with partners from China, India, Brazil, Mexico and South Africa. There is also transatlantic potential, above all in technology development for the post-oil age, most notably on the long road towards hydrogen fuel – which has by no means been fully explored.

Key areas of our energy policy and energy foreign policy will become ever more embedded in European structures. The German EU Presidency will in particular have to come up with a coherent package that takes into account our interests. This is also true for the internal energy market. Without a functioning internal market there can be no fair competition in Europe, nor any takeover of Endesa by E.on. The issue of European solidarity on ensuring security of supply in the gas sector will also be raised. We will not be totally unreceptive to this idea. But we cannot accept a solution that communitarizes Germany's trailblazing achievements.

Energy security is inseparably linked to climate and development policy. Energy efficiency, the promotion of renewable energies, technology transfer and climate partnerships are the key words here. The Federal Government will remain a driving force in international climate policy – above all during our Presidencies. The goal must be to include the US and the major up and coming consumer countries in some post-Kyoto arrangement. We must bridge the artificial divide between a technology-based approach and quantitative obligations. Our credibility and technological competence in this field mean that we are in an excellent position to make progress on energy efficiency and conservation. Reducing demand through such measures reduces the burden on the global market and on the environment.

Energy foreign policy and external economic affairs together have a potential that we can and must do more to harness. German companies are international leaders in the fields of mechanical engineering, building insulation, measurement and control technology and process management. We want to do all we can at political level to ensure that these strengths are recognized internationally. We also want to push close public-private cooperation when it comes to Joint Implementation under the Kyoto Protocol. For the JI Mechanism creates an international win-win situation – additional emission reduction units (ERUs) for use at home and the promotion of technology exports benefit everyone involved, as well as the climate. The forthcoming restructuring of the power station pool in Eastern Europe is also a great opportunity for German business. Model projects at the interface between energy, environmental and technology policy, for example in Russia and Ukraine, are lending fresh impetus to our energy policy cooperation with these countries.

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