WEC Inside 1st of May 2011

Interview with Nataša Vujec, Croatian Energy Minister

1. What are the major concerns for the Croatian energy sector at the current time when Croatia is preparing to join the EU family?

During the pre-accession negotiations referring to Chapter 15 - Energy, the Republic of Croatia had a challenging task, in particular with respect to implementation of Directives referring to the second, and currently to the third package of energy acts. The strict defining and diversification of energy activities, opening of the energy market and introducing of the new standards and relations between the energy companies and the buyers has not been always simple and easy to explain. Although the necessity of strengthening competitiveness was mentioned during the whole process, we are currently faced with the price increase in the energy sector. In such circumstances the communication of the changes resulting from EU Directives implementation is not an easy task. However, we are aware of the fact that we are not an exemption and that the neighbouring member states, having the similar history, are faced with the similar challenges. On the other hand we are satisfied since we, as the Ministry, were seriously engaged in indicating the necessity of adjustment associated with entering in the integrated European energy market to our companies.  Significant efforts have been made, all the participants are acquainted with the opportunities and threats they are facing in future and our task in the democratic procedure is to adopt the legal framework which will provide for implementation of all determinants of the third EU energy package.

 
2. Does Croatia seriously work to adapt the national legislation to EU-energy one?

The Acts are drafted, pending the open discussion prior to submitting of the acts to the Government of the Republic of Croatia for adoption and subsequently to the Croatian Parliament. However, this is not the first public discussion on the Third Package. In the recent six months since preparing of the study addressing the implementation of the third package implementation in energy legislation, open discussions are in the process with all the stakeholders, energy companies, trade unions, employers, academic community and the others, with a view to reaching a high quality decision.

Our instructions were clear. It remains to be seen whether they will be adopted by the companies. That is, we have positive experience in organizing the gas sector in the way provided for by the TSO model. The competent authorities in the electrical sector do not consider this model as the most aligned with their vision of future business operations and development and prefer the ITO model. The Act will provide for the framework set forth by the Directives as well and the regulator and the Ministry will advise them about the necessary processes and will supervise their implementation.

3. How should the Croatian energy mix look in 2020? 

Croatia will be generating a great part of its energy from hydro power plants, but also from other renewable energy sources. We will be using more efficiently energy power that we know the best today.  However, to reach the 20-20-20 goals the greatest actions will be on the side of consumption. Transport sector will have a significant share in realisation of energy goals, but without energy management in towns or activities on local and regional levels it will not be possible to achieve the goals. Solar technologies' prices are expected to be reduced in order to become available for wider use in households. Our goal is to increase the usage of hydro power and renewable energy as much as possible and to reduce the use of fossil fuels primarily oil in electricity production.

4. What driving policies does Croatia apply to increase the share of renewables over the next 10 years?

The Energy Strategy places following goals: increase of renewable energy sources share in gross final energy consumption to 20% in 2020. Sectoral aims for 2020 are the following:

o  35% of RES in electricity generation including large hydropower plants
o  10% of energy in transport from RES
o  20% of RES for heating and cooling

The success of the Energy Strategy implementation related to RES depends on improving the inter-sector cooperation in the areas of energy, industry, agriculture, forestry, water management, environmental protection, architecture and physical planning.

The main driving measures which Croatia will apply in order to increase the share of renewables over the next 10 years are regulatory measures and economic instruments as follows:

1.    Promotion of the use of renewable energy sources in electricity generation through the Regulation on the Minimum Share of Electricity Produced from Renewable Energy Sources and Cogeneration Whose Production is incentivised and the Tariff System for the Production of Electricity from Renewable Energy Sources and Cogeneration. This is both regulatory and financial measure because they determine the minimum share of electricity produced from plants using renewable sources of energy and cogeneration plants whose production is incentivised as well as the right of eligible producers of electricity to an incentive price of electricity paid by the market operator for the delivered electricity produced in plants using renewable energy sources and cogeneration plants.

2.    Promotion of the use of renewable energy for heating/cooling (subsides - investment grants) which is financial measure which will support investment into the renewable thermal energy sources (heat pumps, biomass utilization, thermal solar and deep geothermal).

3.    Promotion of biofuels use through the Act on Biofules for Transport and suplementary bylaws which is both regulatory and financial measure. This act regulates use of biofuels in transport, adoption of programmes and plans for the promotion of production and use of biofuels in transport, powers and responsibilities for establishment and implementation of the policy aimed at promoting production and use of biofuels in transport, as well as the measures to stimulate production and use of biofuels in transport (introducing the party liable for placement of biofuels on the market,  the special environment fee for non-placement of biofuels on the market, the fee for stimulation of biofuel production…). The National Action Plan for the promotion of production and use of biofuels in transport, 2011-2020 is a planning document for a period of ten years, which establishes a policy aimed at stimulating increase in production and use of biofuels in transport in the Republic of Croatia. It contains an outline and assessment of the situation on the market of fuels for transport, comparable analyses, long-term objectives, including the National target for placement of biofuels on the market (minimum mandatory target for placement of biofuels on the market for transport purposes in the Republic of Croatia).

4. Reduction in fossil fuel consumption through the use of biodegradable municipal waste in cement industry (fossil fuels used in cement industry will be replaced by RDF to the amount of 20 per cent).

5. Reduction in fossil fuel consumption through utilization of biodegradable municipal wastes in district heating plants.

6. Loan programme for the financing of projects of environmental protection, energy efficiency and renewable energy resources through the Croatian Bank for Reconstruction and Development (HBOR) Promotion of the use of renewable energy sources and energy efficiency through the Environmental Protection and Energy Efficiency Fund HEP ESCO Programme.

7. CO2 emission charges-Behavioural change - stationary sources are stimulated to invest in renewable energy sources by means of lowering their CO2 emission charges

 
5. Where are investments currently focused in the Croatian energy sector?

We are focused on establishing of production capacities in the electric power sector, further development of the gas transport network and construction of the LNG terminal. With a view to accomplishing the goals of the energy strategy the investment of over EUR 15 billion in the energy sector is anticipated. The main electric power system projects comprise the hydro power plants on the rivers Sava, Drava, Ombla, HE Kosinj and on the rivers Lika and Gacka, as well as the new block TE Plomin C fired by coal. New power plants are also necessary for regulation of grid and as a backup for renewable energy sources.

Apart from it, the construction of the LNG terminal on the Island of Krk will be initiated. Further connecting of the gas system with the neighbouring countries is anticipated. The Croatian energy market is developing and we are expecting new market participants. This refers in particular to the new gas suppliers and further development of the distribution networks. With a view to achieving the more efficient energy exploitation we aspire to develop, i.e. modernize the heat energy systems in each of the major cities, as well as install the electricity cogeneration plants for generation of electricity and heat energy. In this segment we expect financing from the public private partnership.

6.  Will the current nuclear accident in Fukushima have an impact on public opinion and policy making in future decisions about the nuclear option?
 
Here I would underline one relevant fact. In the future without nuclear energy use it would be difficult to generate sufficient electric energy freed from CO2 emissions.

Therefore, we have to know how to use discoveries, knowledge and technology. This knowledge must not be ignored or underestimated by the profit desire. Rules exist, safety requirements exist, it is well known how the location for nuclear power plant construction or nuclear waste repository must look like, but nevertheless very often the profession and prescribed rules are ignored by the influence of politics or profits.  Furthermore, nuclear energy knows no bounds. Therefore we are determined in our efforts to establish Croatian Nuclear Programme to preserve the acquired knowledge, educate new generations of those who will be able to ensure peaceful coexistence in the future in the proximity of two power plants or 5 nuclear reactors. It is stated in our Strategy that it is not enough the desire to build a nuclear power plant but to know how and to be able to make it well. We are expecting that the future discussion on safe usage of nuclear energy will take this direction and that set standards will be unconditionally respected.  So, at the end of an era of neoliberalism we have received strong and dire warning that will return the whole world to the path of enduring in strict respecting of adopted standards.

We should not forget that electric power generation from nuclear power plants is competitive.  Therefore, we consider that the Krško NEK is the model of nuclear power plant where the electric power price is formed on the basis of labour costs, fundings to repay loans, future waste management and permanent investment in security system is one of possible answers. Due to such approach we peacefully live in proximity of the Krško NEK.