EU Energy policy and Turkey

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					                   EU ENERGY POLICY AND TURKEY

1- EU EXTERNAL ENERGY POLICY

The European Union is developing a common European energy policy which essentially
aims at tackling climate change, limiting the EU’s dependence on imported hydrocarbons
and ensuring the supply of secure and affordable energy for consumers.

This will require a combination of internal and external policies. Climate change must be
addressed globally. External policies will also have to address the EU’s increasing
dependence on energy imports from sometimes politically unstable regions and supplier
countries.

In January 2007 the European Commission presented a comprehensive package including
an action plan on European energy policy. The European Council in March adopted a major
Action Plan for the period 2007-2009 based on the Commission’s communication “An Energy
Policy for Europe”. As regards the external policy the Commission introduced an international
energy policy that actively pursues Europe’s interests.

THE ENERGY COMMUNITY TREATY

The EU and its neighbours have established the Energy Community Treaty. The treaty
provides a structured framework, which extends the EU energy market to its southern
European neighbours within a common regulatory area with shared trade, transmission and
environmental rules.

The Energy Community Treaty entered into force on 1 July 2006 and extends the relevant
EU energy acquis to the Western Balkan countries. The treaty has improved energy security,
created a regional energy market and underpinned investments. Turkey is an observer to the
Treaty.


2- TURKEY AND EU EXTERNAL ENERGY POLICY

Turkey depends on energy imports to an even bigger extent than the EU. Currently, Turkey
imports about 70% of its total energy needs. About 25% of its electricity is generated from
hydroelectric power plants. This, together with potential for geo-thermal, wind and solar
energy, shows that renewable energy can be an important source of energy for Turkey. At
the moment, the largest part of its energy (both gas and oil) comes from Russia, followed by
Iran. Turkey is in close geographical proximity to countries possessing more than 70% of
proven global gas and oil reserves.

Its geographical location makes Turkey an important potential corridor in particular for gas
and oil from Central Asia and other neighbouring countries to the EU.

Turkey is already a major transit route for oil from Russia, and Central Asia, to global
markets. However, most of it goes via tankers through the Bosphorus Straits which
constitutes considerable strains on traffic, and also environmental risks. Since July 2006, the
Baku-Tblisi-Ceyhan (BTC) pipeline is operational, transporting Caspian oil from Azerbaijan to
the terminal in Ceyhan from where it is shipped to world markets. The construction of the



       _____________________________________________________________________________
             Address: Uğur Mumcu Cad. 88, 4th Floor, Gaziosmanpaşa, 06700 Ankara/Turkey
                          Tel: (+90.312) 459 87 00 Fax : (+90.312) 446 67 37
                E-mail : delegation-turkey@ec.europa.eu – Website: www.avrupa@info.tr
                                               2


Samsun-Ceyhan oil by-pass route has started. The pipeline will reduce the increasing
pressure of maritime oil transport through the Bosporus and the Dardanelles straights. It will
also increase secure oil supplies for the EU and world markets.

Turkey has already taken major steps to bring its legal framework into line with the EU
energy acquis. Thus, the right conditions for trade in electricity and gas are being created.
This is part of Turkey's pre-accession process to the EU. It includes technical
interconnectivity of the Turkish grid with the EU’s grid (currently prepared with the help of an
EU financed project).




Source: Ministry of Foreign Affairs of the Republic of Turkey


3- TRANS EUROPEAN ENERGY NETWORKS (TEN-E) AND TURKEY

The Trans European Energy Networks are integral to the European Union’s overall energy
policy objectives. The European Union supports electricity and gas transmission
infrastructure projects of European interest, mainly by financing feasibility studies. Most of
the projects cross national borders or have an impact on several EU Member States.
‘Projects of European Interest’ should be mature projects on priority axes with a cross-border
component or with significant impact on cross-border transmission capacity.

Turkey lies on two of the priority axes of natural gas. The first axis is the NG3 - gas
pipelines from Caspian Sea and Middle East.

The second axis is the NG6 - East Mediterranean gas ring. Turkey is engaged in the South
Europe Gas Ring Project, which aims at bringing natural gas from the Caspian Sea, Middle

_______________________________________________________________________________________       2
                                                 __
             Address: Uğur Mumcu Cad. 88, 4th Floor, Gaziosmanpaşa, 06700 Ankara/Turkey
                          Tel: (+90.312) 459 87 00 Fax : (+90.312) 446 67 37
                E-mail : delegation-turkey@ec.europa.eu – Website: www.avrupa@info.tr
                                             3


East, and Southern Mediterranean countries to Europe through Turkey and Greece. The first
phase of the project, which connects Turkey and Greece, will be completed in 2007.
Feasibility studies were financed by EU funds.

Turkey is also engaged in the Arab natural gas pipeline project which is another project
relevant to the TEN-E NG6 priority axis.

As for electricity, Turkey is preparing to connect to the priority axis EL4 Greece-Balkan
countries UCTE system. Turkey is using EU financial assistance to establish
interconnectivity. Turkey is also foreseen to be part of another priority axis - EL9
Mediterranean Electricity Ring - for which studies are ongoing.

http://www.inogate.org/en/images/maps/gas_map_big.gif

http://www.inogate.org/en/images/maps/oil_map_big.gif



4- EU FINANCIAL AND TECHNICAL ASSISTANCE TO THE TURKISH ENERGY
   SECTOR


   Project “Encouraged”

The European Commission supported the project “Encouraged” (Optimisation of future
'energy corridors' between the EU and neighbouring countries) within the framework of the
6th Framework Programme for Research and Development (FP6). The project has the
following objectives:
   •   To assess the optimal energy interconnections and network infrastructure for
       electricity, gas and hydrogen with and through neighbouring regions (North Africa,
       Middle East and Turkey, Central and Eastern Europe, Russia and Iceland)
       connecting the EU with key producers in the next decades.

   •   To identify, quantify and evaluate the barriers and potential benefits of a large
       European “energy connected area”.

   •   To recommend the necessary measures to be adopted to ensure and implement
       these energy corridors, realise a high-level of network security and organise
       workshops and a final stakeholders conference to assure consensus among
       scientists, stakeholders and NGO’s and to validate the results.
The Technical Assistance team started to present the findings of the project in December
2006. More information is available at: http://www.encouraged.info/index.html.

   Energy Efficiency Finance Facility with CEB/KfW and with EIB

In 2006, the European Commission decided to establish two multi-beneficiary programmes
on energy efficiency, together with the Council of Europe Development Bank in co-operation
with Kreditanstalt für Wiederaufbau and the European Investment Bank. The projects will
cover Bulgaria, Romania, Croatia and Turkey. Both projects aim at providing financial
assistance to the acceding and candidate countries in increasing investments in energy
efficiency. The total budget of the “Energy Efficiency Finance Facility” is € 145 million (€
29 million EC contribution + € 92 million CEB/KfW + € 24 million EIB).



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                                                 __
             Address: Uğur Mumcu Cad. 88, 4th Floor, Gaziosmanpaşa, 06700 Ankara/Turkey
                          Tel: (+90.312) 459 87 00 Fax : (+90.312) 446 67 37
                E-mail : delegation-turkey@ec.europa.eu – Website: www.avrupa@info.tr
                                               4


   Pre-Accession Assistance

In the framework of its pre-accession assistance for Turkey, the European Commission also
provides considerable direct support to the Turkish energy sector, in particular in the areas of
legislative alignment and institution building.

A project of € 1.07 million (2002) aimed at strengthening the administrative capacity of the
Energy Market Regulatory Authority (EMRA) by a Twinning project and supply components.
Twinning projects second experts from EU member states to candidate countries to share
their experience with the implementation of EU rules. In this case, the Italian Regulatory
Authority for Electricity and Gas provided support for the Twinning component. In 2003, a
new project was initiated to develop a regulatory information system for EMRA (€ 0.68
million).

Assistance has also been provided to the Turkish Petroleum Pipeline Company BOTAS on
gas transmission and transit through a service contract of € 1.77 million (2003).

For the connection of Turkey to the EU electricity grid, another project provided
complementary technical studies for the synchronisation of the Turkish power system with
the UCTE (Union for the Co-ordination of Transmission of Electricity) system (2003). The
project had a total budget of € 1.45 million. In order to improve the conditions for cross
border electricity trade in Turkey in compliance with the best practices in the EU, a Twinning
project for € 1.38 million was programmed in 2006.

A Twinning consortium comprised of ADEME of France and Senter Novem of the
Netherlands provided assistance for the improvement of energy efficiency in Turkey (2003).
The project budget was € 1.25 million. The Twinning project will be supported by a public
awareness project on energy efficiency in buildings. The public awareness project was
programmed in 2005 and has a total budget of € 1.07 million.

Finally, the Commission approved the establishment of the FEMIP (Facility for Euro-
Mediterranean Investment and Partnership) support fund for Turkey in 2005. The Fund aims
at financing technical assistance activities complementary to EIB operations. Total budget is
€ 3 million and 50% of the funds is allocated for infrastructure related projects. The fund can
be used as a tool to support large scale EIB interventions in the energy area as well.




_______________________________________________________________________________________       4
                                                 __
             Address: Uğur Mumcu Cad. 88, 4th Floor, Gaziosmanpaşa, 06700 Ankara/Turkey
                          Tel: (+90.312) 459 87 00 Fax : (+90.312) 446 67 37
                E-mail : delegation-turkey@ec.europa.eu – Website: www.avrupa@info.tr