'Dutch-Russian energy
relations are very dynamic'
Ten questions for IEA Executive Director Maria van der Hoeven
The Dutch Executive Director Maria van der Hoeven of the International Energy Agency is a woman on a mission. With her organisation's expertise, research and views she wants to support well informed policymaking on energy. Here we interview Van der Hoeven on her expectations of the development of global energy market and the roles Russia and The Netherlands play in this field.
1 Since September 2011 you are working for the International Energy Agency. What is the most important lesson you have learned about the global energy market?
“That would be a lesson on the enormous potential of efficient energy use. In the past energy effiency has been called the ‘hidden fuel’, one that extends energy supplies, increases energy security, lowers carbon emissions and generally supports sustainable economic growth. But as we show in our Energy Efficiency Market Report, it is hiding in plain sight. We found out that energy efficiency markets around the world drew investment of up to USD 300 billion in 2011, a level on par with global investments in renewable energy or fossil-fuel power generation. The degree of global investment in energy efficiency and the resulting energy savings are massive. So massive that they beg the following question: Is energy efficiency not just a hidden fuel but rather the world’s first fuel?”
2 During the Saint Petersburg International Economic Forum you talked about a 'golden age' of natural gas. What do you mean by that?
“In 2011, the IEA issued a report that explored the potential for ‘a golden age of gas’, one in which gas could account for more than a quarter of global energy demand in 2035. Although we revised downward our estimates of global gas in 2013 due to weakness in European demand and systematic problems with production growth in the Middle East, the golden age is in full swing elsewhere in the world. North America continues to surprise on the upside and now is emerging as a credible exporter. Gas demand growth in China is accelerating and large conventional discoveries were made in both East Africa and the Mediterranean.”
3 Your agency expects 'renewables to surpass gas by 2016 in the global power mix'. How important will gas be in the near future? Do you think it will bridge between the oil and sustainable energy era?
“The projection you mention factors in all renewables, including the gigantic hydro-electric dams. Compared to wind and solar, however, gas remains several times bigger. Most renewable technologies generate electricity, a sector where oil is not really used, so gas is not a bridge between oil and renewables, although it has started to make an impact in the transport sector. Gas will have a very important role to play for several decades as it is an abundant, flexible and reasonably clean energy resource. It will reduce CO2 emissions from coal and provide flexibility for renewables.”
4 You have recently met the Russian Deputy Prime Minister Arkady Dvorkovich. In that meeting you have focused on global energy security. Can you give us some insights in how Russia contributes/can contribute to that?
“With its immense oil, gas and coal reserves Russia plays a key role for Europe’s supply security. The country is now also increasingly exporting oil to the Asia-Pacific region. This contribution is highly valued by Asian economies, as Russia offers a unique opportunity to diversify imports sources and meet growing consumption. We also very much welcome plans to largely increase Russia’s liquefied natural gas (LNG) exports to the Asia-Pacific region. More LNG supplies from Russia are likely to find buyers as demand in the region is growing quickly, not least due to environmental concerns related to coal combustion.”
“Russia is currently undergoing a major oil and gas sector tax reform to enable to sustain and even increase oil and gas production over the long term.”
“Russia plays an indispensable role in global energy governance. IEA and Russia co-operate on enhancing energy security, notably electricity sector modernisation, mitigating the environmental impact of energy production and use, promoting energy efficiency and clean energy technologies, and fostering open, transparent, and efficient energy markets. As the host of the G20 in 2013, Russia provided important support for cooperation between countries in many of these areas.”
5 The IEA thinks that Russia has to develop more resources and infrastructure for Asian exports. Why do you believe that to be so important? Do you think the Dutch can be a major partner in that?
“Natural gas has the potential to make a major contribution to enhancing environmental sustainability and air quality in Asia and other parts of the world. But several governments prefer coal because of the higher cost of gas as well as gas supply security concerns. East Siberian gas represents a new resource base that will generate environmental and energy security benefits in Asia that have global scale positive implications. I think that Dutch companies like Shell, with a project like Sakhalin 2, and financial institutions like ING, in its role as financial advisor of Nord Stream, have demonstrated great commitment and involvement. They have shown that Dutch companies can indeed be major partners of Russia.”
6 As the Dutch Minister of Economic Affairs you took initiatives in advancing several key aspects of you country's energy policy, including developing the Dutch gas hub policy. That is important because the country will turn from a gas exporter into a gas importer (2020-2025). What does the Netherlands have to do to become really an important gas hub in its region?
“Thanks to its strategic location, excellent infrastructure and an attractive regulatory framework, the Netherlands already hosts one of Europe most liquid and active gas hubs. Further strengthening of the country’s gas hub position could take place if, for example, it were to serve as a transit point for Russian gas to the UK market. In addition, the Netherlands would benefit from becoming a hub for the use of gas for transportation in Europe.”
7 How can Russia contribute to that goal of the Dutch?
“Dutch-Russian energy relations are long-established and very dynamic. Examples of this include the participation of Gasunie in Nord Stream and that of Gazprom in the Bergermeer gas storage project. More flexible pricing and less dependence on oil indexation can make gas more attractive in Europe versus coal or renewables for power generation or heat, for example. The Dutch experience shows that flexible pricing can boost gas trading. Russia must realise that a transparent, well-regulated competitive European gas market is in its strategic interest. Gas requires trust from society and policymakers if it hopes to expand its role in the energy mix; the foundation of this trust is transparency and competition.”
8 The Russians and the Dutch already work well together in the field of energy. Are there new or unexplored business opportunities for both sides?
“I think there is plenty work to do and huge potential for Russian-Dutch co-operation in energy efficiency. The two countries already work together on energy efficiency in buildings. And there are also opportunities in the transport sector and industry, as well as in end-use applications such as lighting appliances.”
9 How important is it for Russia and the Netherlands to develop more sustainable energy sources? Do you think it would be wise to invest money they earn with natural gas in sustainable energy?
“Russia has a very large potential to improve energy efficiency, and this is an emerging priority for the Russian government. Russia does not have ‘EU style’ policies on renewables, but the combination of its gas, energy efficiency and stable nuclear programs have a potential to deliver large emission reductions.”
10 Imagine it is two years from now. We have invited a panel of specialists in the energy market. We ask them to look back at your tenure. What do you hope they will say?
“The IEA will celebrate its 40th anniversary in 2014. One of my key goals is to ensure that the IEA remains relevant and viable for another 40 years, if not longer. With this in mind, I have worked to enhance the impact of IEA research and analysis and to strengthen the IEA’s ties with key emerging economies. Against the backdrop of seismic shifts in the global energy landscape, I am committed to putting the IEA on a more sustainable path, with a future adapted to the changing reality of global energy governance. Under my leadership, the IEA has repositioned and streamlined its products to meet the needs of stakeholders and the wider energy economy. Finally, I have refocused the IEA’s mission to prioritize core capabilities by focusing on energy security.” .
Maria van der Hoeven took over as Executive Director of the IEA on 1 September 2011. Previously she served as Minister of Economic Affairs of the Netherlands from February 2007 to October 2010, during which time she demonstrated leadership on energy policy at the national, regional and global levels. As the Executive Director of the IEA, she has steered the agency during a period of exceptional change in the global energy economy. She led a strategic reorganisation of the IEA in 2012, part of an ongoing effort to reposition the agency and equip it to confront contemporary energy challenges. .
When Maria van der Hoeven was minister of Economic Affairs of the Netherlands,
energy was an important field in her portfolio. In 2009 she attended the official
opening of Russia’s first liquefied natural gas (LNG) plant, part of the Sakhalin II Project.
