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Germany’s Energiewende and the Baltic Sea region: Public opinion and systemic interactions

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Dr. Thomas Sattich is an Associate Researcher at the Institute for European Studies at the Vrije Universiteit Brussel, where he is working on energy- and industry-related topics. With various publications on EU energy policy and Germany’s energy transition (Energiewende), his focus lies on the power sector, the integration of renewables and the adaptation of the electricity transmission infrastructure to the needs of Europe’s sustainability agenda.

Executive summary

Germany’s energy transition changes the demand for energy on regional and international energy markets. A major share of the country’s energy imports comes from, or passes through the Baltic Sea region, making Germany the area’s main energy importer. Public discourse does, however, not reflect this situation accurately. Imports of natural gas block the view on the importance of other energy carriers. The latter, especially oil and coal, are, however, equally important both as elements of the regional energy system and with regard to Germany’s energy future. This article therefore aims at going beyond the narrow focus on natural gas, and provides a more encompassing assessment of the impact Germany’s Energiewende is likely to have on energy flows in the Baltic Sea region.

Introduction

In 2011 Germany started enthusiastically into its Energiewende adventure. Since then it became clear that the goal of a nuclear free and carbon-neutral energy system is not to be achieved easily or cheaply. The international implications of the project have not received much attention in the beginning; yet in the energy sector things are per definition interrelated and not confined to the national level. Soon after the phase-out of the first eight nuclear power stations, the country hence saw itself confronted with the international dimension of the latest of its energy policy u-turns. But to the major surprise of the general German public, the idea of a quick nuclear phase-out and large-scale increase of renewables did not turn out to be an Exportschlager (export success).

On the contrary, the focus of countries, such as Poland, Sweden and Great Britain, remained on coal, gas and nuclear power. Others such as Spain even reduced their subsidies for renewables. But even though Germany’s energy transition causes only little enthusiasm in neighbouring countries, the Energiewende still has repercussions in the international energy system: being Europe’s largest importer of energy, the transformation of Germany’s energy system changes demand on international and regional energy markets. Moreover, electricity flows go through the interconnectors between national power systems, and thus have an impact on the emerging EU electricity market. It is thus very likely that the Baltic Sea region will not remain unaffected by the Energiewende.

The aim of this article is a twofold assessment of 1) the role of the Baltic Sea region for Germany’s Energiewende project and 2) the likely impact of this project on energy flows in the region. A short-term and a long-term scenario could serve as the basis for this analysis: according to Germany’s national energy strategy the nuclear phase-out is to be completed by 2022. At this point renewables should contribute with at least 18 per cent to meet national net energy demand, and with at least 35 per cent to electricity demand. The renewables are supposed to increase to 60 per cent of national net energy demand and 80 per cent of electricity demand by 2050 (BMWi 2014a). As the

Energiewende’s history suggests, sudden turns in Germany’s energy policy are possible. As a consequence, the article elaborates on the basis of a 2020/2022 short-term scenario.

What role does the Baltic Sea region play in Germany’s plans to transform its national energy sector?The following section provides an analysis of public discourse in Germany. Aiming at an assessment of those issues that will affect the region’s energy system in the following years, this analysis looks at the Baltic Sea region through the eyes of the country’s energy-interested public. Based on this assessment, the energy system of the region and the likely impact of Germany’s energy system itself is analysed. The focus of this step lies on import/export flows of different energy carriers.

Germany’s energy transition and energy flows in the Baltic Sea region: public opinion in Germany

The significance of a particular region for a country’s energy policy should be reflected in the national media coverage: the more important a particular region appears to journalists and experts to be as a source, supply route, and/or location for energy production of a given country, the more prominent its place in the energy-related media coverage should be. Similar patterns should be noticeable in the German case. On the basis of this assumption, the following analysis aims at assessing the relative importance of the Baltic Sea region for Germany’s Energiewende. It is based on a sample of 717 articles from five of Germany’s leading daily and weekly newspapers, covering the spectrum from centre-right to centre left and a time period from April 2005¹ to October 2014: Die Zeit (76 articles), Der Spiegel (63), Süddeutsche Zeitung (206), Die Tageszeitung (90), and Die Welt (282).²

How much attention does the Baltic Sea region receive in German debates around the Energiewende? From the sample of articles, 134 mention the term ‘Ostsee’ (the Baltic Sea), that is almost 19 per cent. However, this number shrinks drastically if the search term is amended with ‘erneuerbare Energie’ (renewable energy) or ‘Energiewende; only 33 (4.6 per cent), respectively 26 articles (3.6 per cent) discuss the role of the Baltic Sea for the country’s energy transition towards more renewables. In order to put these numbers – and hence the relative importance German press attributes to the Baltic Sea – into perspective, it has to be related to the prominence of other areas. Since Germany is not only a littoral state of the Baltic Sea, it seems logical to ask also about the prominence of the North Sea and other neighbouring regions in German energy-related press (Figure 1).

Based on the findings of this analysis, aforementioned search results appear in a different light. Even though other countries and regions rank higher on the echelons of energy-interested public awareness in Germany, a nevertheless considerable percentage of energy-related press articles seems to discuss the threats or benefits of the Baltic Sea for the country’s energy policy. It can hence be assumed that the Baltic Sea is considered an area of significant importance for Germany’s Energiewende project by German press (and thus the country’s energy-interested public). Moreover, this general interest in the Baltic Sea seems to increase (Figure 2). Yet the results of this analysis are indifferent with regard to the specific role the Baltic Sea plays in energy-related public debates in Germany; the relatively low number of articles in the year 2013, for example, cannot be explained on this basis. In order to provide a better view, a closer look on the specific targets of the Energiewende is necessary.

According to BMWi (2014a, 11), the Energiewende aims at distinctively changing central elements of Germany’s energy system: on the one hand, the share of renewables in Germany’s gross energy consumption is to be increased to 18 per cent until 2020 (60 per cent by 2050); on the other hand, the use of primary (fossil and nuclear) energy is to be decreased by 20 per cent (50 per cent by 2050). In sum, these and other measures are supposed to decrease green house gas emissions by 40 per cent in the same time period (80 to 95 per cent by 2050). The electricity sector has to play a fundamental role in this programme, with targets even more far reaching: power consumption is to be decreased by 10 per cent until 2020 (25 per cent by 2050), and full nuclear phase-out is to be achieved until 2022. By then (2020) renewables are to increase to a share of 35 per cent in gross final power consumption (80 per cent by 2050).

How does German press reflect these targets with regard to the Baltic Sea? While the percentage of newspaper articles from the sample generally reflect the significance of individual Energiewende targets, the Baltic Sea appears to be a blind spot in this regard: only a small fraction of those articles, which are dealing with Energiewende targets also mentions the Baltic Sea. A look at the different forms of energy explains why: German press mostly reflects on the Baltic Sea region with regard to conventional energies; most important in this context is gas and oil, but nuclear energy and coal also play a significant role. Renewable energy, such as solar, biomass and hydropower, on the other hand hardly appear at all (Figure 3). The exception that proves the rule in this context is wind power, as more than a third of those articles that mention the Baltic Sea deal with this form of power generation.

In a first approximation this analysis has examined the prominence of the Baltic Sea in German energy-related press; yet the search term ‘Ostsee’ (the Baltic Sea) is too narrow to include the entire region, that is those countries around the Baltic Sea. A deeper assessment therefore has to include the individual littoral states in German Energiewende-related press. There are slight differences between the numbers of articles that mention the search terms ‘Energiewende’, ‘erneuerbare Energie’ and individual countries around the Baltic Sea; yet all in all Poland, Russia, and Sweden appear to be at the centre of attention, whereas Denmark, Finland and Norway attain less attention and rank second in German press.³ Estonia, Latvia and Lithuania attract the smallest share of attention.Thus, a few preliminary conclusions can be drawn: if the prominence of the Baltic Sea in German press is taken as an indicator, it appears that the energy-interested public in Germany attributes only limited attention to this region in terms of the Energiewende targets. The interest is, however, growing. Moreover, by broadening the scope to include the littoral states of the Baltic Sea, the picture changes significantly, with individual countries, such as Poland, Russia, and Sweden attaining considerable attention by German press. Seen through the eyes of the German press, the Baltic Sea region is, however, of limited importance with regard to the primary targets of Germany’s energy transition, that is the reduction of (fossil) energy consumption and the increase of renewables. On the contrary, the German press perceives the Baltic Sea region mostly as a supplier for fossil energy, especially gas and oil, or as the location of conventional/nuclear energy based electricity generation capacity.

A closer analysis reinforces this impression: screening the sample of articles mentioning the Baltic

Sea for different search terms to appear in the same section as ‘Ostsee’ (the Baltic Sea), almost two thirds of the results account for the term ‘gas’, while only 18 per cent account for ‘wind’. Hence, not only do most articles in the sample largely cover fossil fuels; the particular sections within the articles that contain the search term ‘Ostsee’ also mostly cover the issue of natural gas which is mentioned. The conclusion of this analysis must hence be that gas largely predominates where public discussions in Germany mention the Baltic Sea region and the Energiewende. Given the Energiewende targets to decrease the use of carbon based energy carriers⁴, the following sections can hence be based on the hypothesis that – with the exception of wind power – the Baltic Sea region will lose some of its importance for Germany’s energy system.

Germany’s energy transition and energy flows in the Baltic Sea region: statistical facts and trends

Where the Baltic Sea region is mentioned, it is largely portrayed as a supplier or supply route for fossil fuels – namely gas – by the German press. In comparison, other forms of energy, such as nuclear energy or biomass, hold an inferior position. The construction of the Nord Stream pipeline might, however, have resulted in a place of gas imports in German public discourse disproportionate to its actual role. Beyond, renewables pose a serious challenge for gas-fired power plants in Germany. The role of natural gas might therefore decrease in the years ahead. The Energiewende targets to generally decrease the use of fossil fuels until 2020 and beyond. In order to provide a clearer idea of the interactions between Germany’s Energiewende and energy flows in the Baltic Sea, this section will therefore analyse the energy system of the Baltic Sea region in more detail. Basis of this analysis is Eurostat data on energy consumption and imports from 2010-2012 (see Annex at the end of this article).

If the territory of the littoral states is included in the analysis, the Baltic Sea region⁵ is an area rich in energy resources, with a three years (2010-2012) average surplus of primary energy production of 500.2 mtoe (million tonnes of oil equivalent). Unsurprisingly, the distribution of available energy resources is, however, highly unequal, with only three countries, namely Denmark (2010-2012 average surplus of 1.7 mtoe), Norway (2010-2012 average surplus of 169.6 mtoe) and Russia (2010-2012 average surplus of 602.5 mtoe), showing a positive balance between energy consumption and production. If one compares this (positive or negative) balance with gross energy consumption of individual countries, the seriousness of this situation becomes clearer: with the exception of the three net exporters, the countries of this region do not produce indigenous energy in numbers sufficient to supply the national economies (Figure 4). The energy supply gap of those countries⁶ with insufficient access to indigenous energy sources amounts to a (2010-2012) average of -273.7 mtoe.

With an index of -0.613 Germany is to be found amongst those countries that in the region with the smallest basis of indigenous energy. As a result of its internal energy situation and the size of the German economy, the country thus is confronted with a massive (2010-2012 average) energy gap of (-)198.1 mtoe, that is 72.38 per cent of the region’s combined energy supply gaps. 95.3 mtoe, or 48 per cent, of the necessary imports to Germany come from the littoral states of the Baltic Sea region.⁷ The Baltic Sea region can thus be described as the backbone of Germany’s energy supply, and should be of strategic interest for the country. Given that Germany also accounts for some 24 per cent of gross energy consumption in the Baltic Sea region (including entire Russia), any changes in the German system of energy production, imports and consumption can be expected to affect energy flows in the entire region (Figure 5).

Energy imports from the Russian Federation and Norway play a particular role in this regard, as they account for nearly the totality of imports from the Baltic Sea region to Germany, and hence fill almost half of the country’s energy gap. Including Norway and Russia in the analysis is, however, based on a very broad understanding of the Baltic Sea in terms of geography, as both countries stretch far beyond the geographical limits of that area. This analysis therefore requires a closer definition of the ‘Baltic Sea region’. In this regard, it is important to understand that Germany’s national energy system is located at the crossing point of several major Euro-Eurasian energy regions (Högselis, Aberg & Kaijser 2013, 56). German gas and oil imports from Norway, for example, come from fields in the North Sea, and cross that sea through different pipelines (via Europipe I, Europipe II, and Norpipe); from its entry points to the national German system – located at the shores of the North Sea – Norwegian gas then predominantly supplies areas in North-Western Germany (such as the Ruhr), which, in a more narrow sense, cannot be described as being part of the Baltic Sea region.

In the strict geographical sense, Norwegian gas (2010-2012 average of 25,003 mtoe) and oil (8.5 mtoe) supply to Germany can hence mainly be attributed to the North Sea Europe region (Högselis, Aberg & Kaijser 2013, 56); they are thus to be excluded from the following analysis. With energy from Russia, things are more complicated, as parts of the transit system are part of the Baltic energy system (Nord Stream, Yamal/Europol), whereas others (e.g. Brotherhood) pass through different regions. However, yearly transport capacities of individual pipelines⁹, and actual gas flows in these pipelines¹⁰ allow to infer an estimated 50 per cent of Russia’s gas and oil supply towards Germany passing through countries in the Baltic Sea region. The following analysis thus includes only those 50 per cent of German oil and gas imports from Russia that can be assumed to pass through the Baltic Sea region.

As a result of this, the overall picture of energy flows in the Baltic Sea region changes considerably, and leaves a clearer perspective on the interplay of Germany’s Energiewende with the flux of various forms of energy in the area (Figure 6). Accounting for approximately 79 per cent of energy exports, the predominance of Russia amongst the energy exporting countries remains largely unchallenged in this closer definition of the Baltic Sea region, whereas Norway’s role as energy exporter becomes far less important. Germany’s energy imports from the region reduces largely, to approximately 57.6 mtoe, that is a comparably small 36 per cent share. In other words, the importance of the Baltic Sea region for Germany’s energy sector diminishes if the analysis is based on a strictly geographical understanding of the geographic area.

Moreover, the perspective on different energy carriers as a commodity in the Baltic Sea region changes with an exclusion of Norwegian and Russian sources: while gas is most prominent in the German (Energiewende-related) press on the Baltic Sea region, its actual share amongst those energy carriers which are traded and shipped in the region, is small compared to other energy carriers, such as oil and the different forms of coal (see Figure 6). Compared to the flows of oil, gas is only the second most important energy in the energy system of the region, and depending on the share of coal among solid fuels¹³ it is likely that gas even ranks third. An analysis of the impact ofGermany’s Energiewende on energy flows in the region has to take this limited role of gas into account. Moreover, the place of electricity imports and exports in the region amongst other forms of energy flows has to be noted, as its relatively small share indicates that electricity generation still has a very strong national basis.

The impact of Germany’s energy transition on energy flows in the Baltic Sea region

Its scarcity of indigenous energy resources makes Germany irrelevant as an energy exporter.¹⁵

Regardless of major modifications of Germany’s energy system, such as the Energiewende, this is unlikely to change. As an importer Germany plays, however, an important role in different energy markets. With a yearly average of 57.6 mtoe (2010-2012) of energy imports, 25 per cent of Germany’s total imports of 176.4 mtoe (2010-2012 average) come from or pass through the Baltic Sea region.¹⁶ To put it differently, 36 per cent of the Baltic Sea region’s total energy flows enter Germany’s energy system. The Energiewende will affect this pattern (until 2020 and beyond), yet the question is, how and to what extent. Since Germany’s exports is unlikely to change significantly¹⁷, the reminder of this section focuses on energy imports.

Based on an energy scenario from 2010 (Prognos, EWI, GWS 2010)¹⁸ , it can be assumed that Germany’s energy imports from the Baltic Sea region will decrease by 27 per cent to 41.8 mtoe until the year 2020 (Figure 7). In today’s numbers, this implies that Germany remains the largest destination for energy flows within the region, but the country’s share of imports would reduce from 36 to 26 per cent. As a consequence, the region’s combined energy deficit of (-)273.7 mtoe (see Annex, Table 2) would be reduced by about 15 per cent. In other words, energy demand would decrease. Yet in order to infer from Germany’s national energy policy on future energy flows in the entire region, several factors need to be taken into account, namely economic growth, national policies of neighbouring countries, and energy prices.

Sound and continuing economic growth of Germany’s eastern neighbours, makes it, for example, possible that by 2020 Poland will be the region’s main importer of energy from the Baltic Sea region.¹⁹ In view of relatively large share of oil, development of road traffic and transport could be a decisive factor in this regard, both in Germany and other countries. National policies are very different in terms of their approach to road traffic: while Germany implemented programmes to promote the use of electric cars and increase their number from only 12,156 at the beginning of 2014 (Car Sales Statistics, 2014) to one million by 2020 (Bundesregierung), other countries did not. Depending on the success of Germany’s policy to convince consumers of the benefits of electric cars, oil demand will develop accordingly.

Other national policies, such as supply diversification programmes in Poland and the Baltic States – that is increased use of LNG from overseas and of indigenous shale gas, as well as the continued use of nuclear power (in Sweden and Finland) and/or the successful construction of new nuclear plants and the necessary grid infrastructure (in Poland and the Baltic States) – might generally reduce demand for gas in the region (largely gas from Russia). Whether Germany will actually retain its roleas the region’s main importer thus depends on the development of German demand for natural gas, bituminous coal, and solid fuels. Their place in Germany’s energy system is, however, very much unclear. The reason behind this uncertainty is to be found at the very core of Germany’s

Energiewende project – namely the phase-out of plants suitable for meeting base load requirements and increasing number of intermittent renewables.

Both technically and economically this combination of decreasing numbers of base-load generators and increasing numbers of peaking units such as solar and wind power is a complex issue, and – despite many scenarios and plans – there is no blueprint for a system where decentralised and intermittent renewables largely replace centralised base load plants. Flexible gas and biomass power plants are seen as the ideal technological link between the two elements; yet as the case of Europe’s most recent gas power plant in Irsching (FAZ, 2015)²⁰, illustrates, investments in state-of-the-art equipment and turbines becomes unprofitable under the economic conditions of the Energiewende: as renewables have priority access to the grid, they are growing in numbers and come with low prices at peak hours, therefore, market for gas and other fossil fuels is shrinking. Moreover, gas faces a double challenge, as coal still outcompetes gas due to lower prices.

The development of Germany’s gas imports hence largely depends on the question whether policy makers agree on a capacity market that provides an economic framework suitable to keep gas plants in the system. Such a step is currently under discussion (BMWi, 2014b). Outcomes of this discussion and their implementation will certainly affect Germany’s demand for coal and gas imports. Notwithstanding the results of this political process, the demand for biomass is likely to increase in Germany over the following years, because this form of energy – either used in decentralised plants or in form of co-combustion in existing fossil fuel plants.²¹ The share of biomass amongst energy imports is thus to until 2020. Depending on the availability of biomass and the outcomes of Germany debates on capacity markets, this energy source is hence – to a larger or smaller extent – to replace either coal or gas in Germany’s energy imports from the Baltic Sea region.

Conclusions

Against the backdrop of energy imports and exports patterns in Northeast Europe, this article analyses the place of the Baltic Sea region in Germany’s public discussions about the country’s energy future; natural gas imports from Norway and Russia largely dominate this public discourse. The construction of the Nord Stream pipeline is likely to be one of the reason for this highly topical nature of gas in German public discourse; it can hence be assumed that the perception of the Baltic Sea region by the German public is largely distorted. This article therefore attempts to broaden the discussion by expanding the focus of the analysis to include other forms of energy such as coal and electricity. On the other hand, this article attempts to focus on the energy system of the Baltic Sea region in the narrower sense. As Norwegian oil and gas exports to Germany come from and through the North Sea, they are hence excluded from this analysis. And as about half of Russia’s oil and gas exports to Germany pass through Central Europe, they are equally excluded.

The result of this analysis is, that the importance of the Baltic Sea region for the future of Germany’s energy supply is not fully grasped by German public. Individual countries, such as Poland and Russia

obtain varying degrees of attention, and so do the various forms of energy. But all in all the narrow focus on gas largely hides the role of other forms of energy coming to Germany from or through the Baltic Sea region, and thus the true role of the area for Germany’s future energy system. Taking the bigger picture of energy flows in the Baltic Sea region into account, the role of gas imports from Russia appears overestimated in German discussions concerning the role of the Baltic Sea region for Germany’s energy supply: even though Russia is the region’s main supplier of energy, natural gas is not the most important energy carrier. The focus of German media on this topic hence seems to obstruct the view on other important energy carriers, such as coal and – most importantly – oil, which are at least equally important.

As a response to the growing role of renewables, Germany currently discusses a new market design for fossil fuel power stations. Capacity markets for coal and gas-fired plants will be the likely result of these debates, as backup for the notoriously volatile renewables is needed. As Germany is the region’s largest importer of gas and coal, the design of these markets will largely determine the impact of Germany’s Energiewende on regional flows. The way Germany’s Energiewende will affect patterns of energy exports and imports in the region depends, however, on more factors. The future of the German transport sector will at least be equally important, as oil represents the largest share in energy flows in the region. Widespread use of electric cars could serve as a storage battery for intermittent wind and solar power; in 2014 the German government therefore renewed its support with a broad range of incentives for the use of electric cars.

It remains, however, to be seen whether the customers of the German car industry see electric cars as an attractive option. If they do, Germany’s role as an importer of energy from the Baltic Sea region could diminish largely. In this case, Germany’s place in the energy system of the Baltic Sea region will be determined by the results of current discussions about a capacity market for flexible fossil power stations. Depending on the exact outcomes of these debates, German energy imports could decrease according to official scenarios. In such a case, Germany might lose its role as the region’s main importer of energy. For those countries in the region which have only limited access to indigenous energy resources and hence can only play a minor role in supplying Germany’s energy system, such a development is not necessarily a bad one, as their bargaining position on the regional energy market would improve, especially if they successfully implement programmes to further diversify their energy supply.

References

Auer J. and Anatolitis V. (2014) The changing energy mix in Germany. The drivers are the Energiewende and international trends. Deutsche Bank Research. Current Issues, June 26, 2014.

BMWi (2014a) Zweiter Monitoring-Bericht „Energie der Zukunft“. Berlin: Bundesministerium für Wirtschaft und Energie BMWi.

BMWi (2014b) An Electricity Market for Germany’s Energy Transition. Discussion Paper oft he Federal Ministry for Economic Affairs and Energy (Green Paper). Berlin: Bundesministerium für Wirtschaft und Energie BMWi. Bundesregierung (n.d.) Leitmarkt und Leitanbieter für Elektromobilität. Retrieved from http://www.bundesregierung.de/Webs/Breg/DE/Themen/Energiewende/Mobilitaet/podcast/_node.html, date accessed: April 9, 2014.

Car Sales Statistics (2014) 2014 Germany: Total Number of Electric Cars, March 29, 2014. Retrieved from http://www.best-selling-cars.com/germany/2014-germany-total-number-electric-cars/, date accessed: April 9, 2014.

CIEP (n.d.) Russian Gas Imports to Europe and Security of Supply. Fact Sheet. The Hague: Clingendael International Energy Programme.

FAZ (2015) Energiewende. Irrsinn in Herrsching. Frankfurter Allgemeine Zeitung, March 17, 2015.

Gazprom Export (2015) Transportation. Retrieved from http://www.gazpromexport.ru/en/projects/transportation/, date accessed: February 11, 2015.

Högselis P., Aberg A. and Kaijser A. (2013) Natural Gas in Cold War Europe: The Making of a Critical Infrastructure. In

The Making of Europe’s Critical Infrastructure. Common Connections and Shared Vulnerabilities, edited by Per Högselius, Anique Hommels, Arne Kaijser, Erik van der Vleuten, 2761-101. Basingstoke: Palgrave Macmillan.

OECD and IEA (2004) Energy Statistics Manual. Paris: Organisation for Economic Co-operation and development, International Energy Agency.

Prognos, EWI and GWS (2010) Energieszenarien für ein Energiekonzept der Bundesregierung. Studie für das Bundesministerium für Wirtschaft und Technologie. Basel, Köln, Osnabrück: Prognos AG, Energiewirtschaftliches Institut an der Universität zu Köln, Gesellschaft für Wirtschaftliche Strukturforschung mbH.

Sattich T. (2014) Germany’s Energy Transition and the European Electricity Market. Journal of Energy and Power Engineering, 8(2): 264-273.

Annex

Table 1. Yearly energy production and consumption in the Baltic Sea region (2010-2012 average, in ktoe)

Country	Average consumption	Average production	Balance
DE	322773.17	124684.17	-198089
DK	18875.73	20578.53	1702.8
EE	6149.33	5019.9	-1129.43
FI	35892.37	17173.87	-18718.5
LI	6963.77	1306.27	-5657.5
LV	4514.33	2129.7	-2384.63
NO	30346.63	199960.77	169614.13
PL	99841.07	68491.9	-31349.17
RU	772254	1374802.8	602548.8
SE	50100.53	33757.9	-16342.63

Table 2. Yearly energy deficit/surplus in the Baltic Sea region (2010-2012 average, in ktoe)

Country	In per cent of national consumption	In per cent of regional deficit	In per cent of regional surplus
		(-273670.87 ktoe)	(773865.73 ktoe)
DE	-61.37	-72.38
DK	+9.02		0.2
EE	-18.37	-0.41
FI	-52.15	-6.84
LI	-81.24	-2.07
LV	-52.82	-0.87
NO	+558.92		21.9
PL	-31.4	-11.45
RU	+78.02		77.9
SE	-32.62	-5.97

Arctic dimension of German politics: National approach and aspects of international cooperation

Admin — Mon, 29 Jun 2015 19:54:20 +0000

Vyatkin Kirill Sergeyevich — Ph.D., Amber Bridge Fund, Head of the Berlin office.

Recently Germany has been more clearly indicating growing interest towards the Arctic region. It is determined by a number of political and economic processes in the modern world, occurring against lack of study of the dynamics of climate changes on the planet. The article analyzes the most important factors specifying the interests of Germany in the Arctic; it examines the potential opportunities and a set of tools at the disposal of German policy to achieve its goals; it assesses the nature and degree of involvement of Germany in the process of international cooperation in the Arctic area. Special attention is given to forecasts of further development of Germany in the Arctic project, including international development.

As it is known, Germany is among the countries that do not have direct access to the coast of the Arctic Ocean and, therefore, does not have legal rights to the independent development of the Arctic shelf. Its location is not close to the Arctic Circle and doesn’t have sovereign territories in the Arctic[1].

However, in November 2013, Federal Republic of Germany adopted a document entitled “Guidelines for German policy in the Arctic” [4], which largely explains the renewed interest of Germany to the region.

ARCTIC “MAGNIT” OR GERMAN INTERESTS IN THE ARCTIC

First of all, like most other countries outside the region, the Arctic attracts Germany with its immense hydrocarbon reserves. According to some foreign estimates (which, however, generally refer to the US Geological Survey data [6]), it may contain about a quarter of undiscovered deposits of hydrocarbons in the world. While the proportion of the Arctic in global oil resources is relatively small (less than 7 percent), the amount of gas resources is considered to be much more significant – about 25 percent or more[2].

As an alternative to nuclear power (and the trip of the last reactor is scheduled to 2022) Germany today is focusing on priority development of the so-called “renewable” energy sources – solar, wind, biological and so on. So far, however, even optimistic adherents of “green energy” provide long-term forecasts. So it seems clear that in the short and medium term Germany is likely to increase the consumption of traditional energy resources – oil, gas and coal. Therefore no wonder that the Arctic hydrocarbon reserves and the ways of its transportation are in the center of attention of political Berlin.

Secondly, the Arctic region possesses (again, mostly presumably) considerable reserves of rare metals, minerals, ores and other raw materials of strategic importance. This category, in particular, includes estimated deposit apatite, nickel, cobalt, copper, tungsten, titanium, chromium, manganese, platinum group metals, tin, mercury, gold, silver, diamond and so on. An important feature of a number of known nickel deposits is integrated ore composition, allowing – in the presence of appropriate technology, that Germany has – simultaneously remove additional amount of copper, platinum group of metals, gold, silver, selenium and tellurium. It dramatically increases the value of the ore, despite the high cost of extraction and production in the Arctic Circle [1, Volume 1, p. 126].

Thirdly, the Arctic attracts Germany, as well as other European countries, with its biological resources. The Arctic Ocean is the habitat to more than four hundred unique species of fish and animals. It is home of important species for European fisheries, namely, herring, cod, salmon, flatfish and others.

Fourthly, the Arctic is the area of emerging international transport corridors. In case positive forecasts are right (what happens sometimes), one can expect a lot of new opportunities for further development. When it comes to sea routes, one obviously means the Northern Sea Route (NSR), which runs near the Arctic coast of Russia, and the so-called Northwest Passage, located along the northern coast of Canada. Assuming the continuation of melting ice NSR is likely to become a major transport artery of world importance that will significantly reduce the shipping routes between Europe and Asia-Pacific region[3].

Finally, fifthly, Germany, and many other countries of the world are concerned about global climate change, which is believed to have a direct impact on the environment, economic activities, public health. That is why the monitoring of the climatic situation in the Arctic is of primary importance for the scientific community of Germany. For these purposes the country has already created and successfully launched a number of institutions involved in research in polar regions, including environmental monitoring in the Arctic and Antarctica.

INSTITUTIONAL ARRANGEMENTS

The mechanism of the formation and implementation of the Arctic policy in Germany is quite efficient. Traditionally, the main coordinating role in this important political direction is done by the Office of the Federal Chancellor. Four departments – Ministry of Foreign Affairs, Ministry of Defense, Ministry of Education and Research and Ministry of Economy and Energy are responsible for practical implementation of the basic provisions of the above-mentioned political strategy.

The lead operator for the preparation and conduct of research studies in various regions, including the Arctic region, is the Federal Agency for Geosciences and Mineral Resources (BGR), which is subordinated to the Ministry of Economy and Energy.

One of the main activities of the agency in the Arctic is the study of geodynamic processes in the coastal regions of the Arctic water areas. In this regard, since 1992 the agency has been implementing a multi-year international program CASE (Circum-Arctic Structural Events) [7]. During the reporting period over 15 major research (with a focus on geological and geophysical surveys) expeditions to Svalbard, northern Greenland, the Canadian Arctic and polar regions of Siberia were organized within the program[4].

Since all lands in the Arctic area (ie located to the north of the 66th latitude), as well as adjacent offshore areas are under the territorial sovereignty of well-known five states – members of the Arctic Council, German authorities strictly and consistently adhere to the principle of prior consultation with the countries concerning their programs of scientific and practical studies, which are usually held on the terms of cooperation.

Thus, BGR works on Svalbard are conducted in cooperation with the Norwegian Polar Institute. With respect to Greenland, which is under the sovereignty of Denmark, BGR cooperates with the Geological Service of Greenland in Copenhagen. Project in Canada is implemented within a multi-year program of scientific and technical cooperation (WTZ) between two countries. The main partners from the Canadian side are the Geological Service of Canada and the University of Laval / Quebec. The partners of BGR in the Urals in the frame of the same program[5]are institutes of the Russian Academy of Sciences in Moscow and Syktyvkar (Komi Republic).

“Siberian” part of the project is a priority for BGR. Among its most important exploratory tasks in the Arctic region, in particular, are:

- a range of issues related to the possible continental extension and access mid-ocean ridge of the Arctic Ocean on the mainland of Siberia;

- potential of Laptev Sea bed in terms of mineral (especially hydrocarbon) resources;

- potential of polar Urals in terms of chromite and platinum group elements[6];

- the phenomenon of permafrost and its resource potential; dynamics in this sector and its impact on the processes of climate change on the planet[7].

Thus, in 2001-2003 in the framework of the aforementioned program for scientific and technical cooperation (WTZ) with Russian Federation BGR implemented the project PURE (Polar Urals Expedition), by carrying out three geological expeditions to polar Urals. Long-awaited expedition to New Siberian islands[8] organized in 2011 as part of the program CASE-13 was considered a great success of BGR. The first phase associated with marine geophysical work in Laptev Sea, was finished in the mid-1990s (in cooperation with Murmansk Institute Sevmorneftegeofizika).

The next stage (project CASE-3, 1998), aimed at carrying out complementary geological studies on land, ended in a relative failure. It is essential that the year of default was not the best for polar research in Russia. Extremely unfavorable weather conditions in that year, huge problems in logistics, supply and financial support caused the premature cessation of work.

The subsequent adjustment of the political and economic course of our country, fundamental change in approach towards the Arctic allowed to provide favorable conditions for mutually beneficial international cooperation. The result of intensive and fruitful cooperation between BGR and a number of Russian institutions (the main partner – A.P. Karpinsky Russian Geological Research Institute in St. Petersburg) was the success of obtaining unique scientific data during the international expedition CASE-13 in 2011. Scientists not only from Russia and Germany, but also from France, Britain, Italy and Sweden took part in that project.

Starting from 2015 German Ministry for Education and Research is implementing the third framework program “Research for Sustainable Development» (FONA-3). The Arctic region is one of the key regions of the studies held in the framework of this program. Annually the Ministry allocates an average of about 20 million euros to support research projects in the Arctic. In general, Germany invests around 200 million euros per year in polar and marine research [8].

Among the research institutions of Germany dealing with Arctic issues, the main is undoubtedly Alfred Wegener Institute for Polar and Marine Research (AWI), located in the north of Germany in Bremerhaven town. The Institute is one of 18 major research centers united in the Helmholtz Society. It has about 780 employees, including 450 scientists, employed on a permanent basis, what means a lot for the German standards. The annual budget of the institute amounts to 60 million euros. 90% of the funding comes from the Ministry of Education and Research.

AWI Institute has three departments:

- Research Center in Potsdam

- Biological Institute Helgoland[9]

- Wadden Seastation Sylt [10]

In 1992 in accordance with the recommendations of the Scientific Council of the federal government, a research unit of the Institute AWI was opened in Potsdam in order to preserve the practices and scientific potential of the former GDR in geophysics and polar research. Today its main activities are focused on geophysical surveys in regions of permafrost, as well as experimental studies of atmospheric processes in the polar regions (primarily in areas of permafrost in Siberia and Svalbard). Scientists from “climate science»[11] department explore physical and chemical processes in the system “ocean – ice – atmosphere” and its importance for the development of the global climate. Working groups are engaged in studies of regional and large-scale circulation system and physical and chemical processes in the atmosphere. Current research in this area covers various topics, including influence of clouds and sea ice in the energy exchange between the ocean and the atmosphere, circulation of water masses in polar regions, study of natural climate change and modeling of atmospheric circulation in the Arctic.

A distinctive feature of the Research Center in Potsdam is a close scientific and practical cooperation with the university centers in Brandenburg state, and a number of other federal states. Well-organized system of scientific exchange and cooperation with partners in the universities of Berlin (Technical, Free, Humboldt), Potsdam (University of Brandenburg), Erlangen (Bavaria), Hamburg, Bremen, Kiel (Schleswig-Holstein), Trier (North Rhine-Westphalia) is designed to stimulate the flow of new knowledge and to ensure continuity, including personnel, in the area of polar research.

The Research Center is focused also on two research areas – «Earth Science» and «Biological sciences». Within «Earth Science» scientists reconstruct changes that have taken place in the past. Scientists from Bremerhaven, Potsdam and Sylt study the effect of occurring earlier processes on the climate development. They study the structure of oceanic sediments, surface deposits, polar ice caps. In particular, they analyze composition and distribution of marine sediments, material and energy flows in areas of permafrost and changes in the structure of the crust and polar ice sheets.

«Biological sciences» (which is the main focus of research scientists from Biological Institute Helgoland) cover environmental, physiological and ecotoxicological issues. Particular attention is paid to the study of processes in offshore and coastal zone of the North Sea. Research subjects include reaction of cells, organisms, populations and communities to external influence and organization and dynamics of populations, communities and ecosystems.

Scientists from AWI Institute often conduct research in the high seas or directly in the ice of Arctic and Antarctica. They have stations AWIPEV[12] (Svalbard, 79 ° N) and “Samoylovsky” (island Samoylovsky in the delta of the Lena River, 72 ° N).

As of 1998 island Samoylovsky locates a base for field research. In 2013 it was completely renovated to become a modern well-equipped Arctic research station. Initially the main organizers were AWI Institute from German side and Arctic and Antarctic Research Institute of Roshydromet (at the federal level) and Melnikov Permafrost Institute of the Siberian Branch of Russian Academy of Sciences (at regional level) from Russian side. Currently the station is on the balance of the Institute of Petroleum-Gas Geology and Geophysics of the Siberian Branch of the RAS (Novosibirsk) and is a part of the Arctic Centre, specially created in the institute. It should be emphasized that the whole station was built and equipped with Russian assets, the German side only finances the work of their representatives.

«Experimental Station on island Samoylovsky» is one of three projects (two others – «Global change in the seas of Eurasian Arctic shelf: frontal zones and polynyas in the Laptev Sea» and «Otto Schmidt Laboratory for Polar and Marine Research (OSHL)»), which are part of a large-scale Russian-German program «Laptev Sea System». In turn, the project «Laptev Sea System» is a branch of the Russian-German program «Trans-system of the Arctic Ocean» (Transdrift) and can rightly be regarded as «longevity» and one of the most successful ventures in the history of Russian-German joint research in high latitudes of Arctic.

In addition, Institute AWI incorporates year-round functioning German station Neumayer-3 (71 ° S) as well as Kohnen Station (75 ° S) and laboratory Dallman (68 ° S) in Antarctica. The stations in Arctic and Antarctic carry out meteorological and geophysical measurements all year round.

The main mobile research platform is icebreaker «Polarstern» («Polar Star», in fact being the only icebreaker in Germany)[13]. At the same time it carries out a close international cooperation – about a quarter of the members of the expedition on «Polarstern» are traditionally foreign researchers. In addition, the Institute operates five research vessels to work in temperate latitudes, and two polar aircrafts Polar 5 and Polar 6.

In addition to fundamental and applied scientific research institute AWI also provides coordination and advisory services. Particular attention is paid to biological monitoring, science and technology, infrastructure and logistics support for polar research in Germany, as well as advising the Government of Germany.

In April 2015 a delegation of German politicians and scientists led by the Minister for Education and Research Johanna Vank visited Svalbard. The program of the visit included a visit of a number of German and international research centers.

One of the aims of the visit was a visit to the Norwegian settlement of Ny-Alesund, which is the world’s most northern permanent public settlement. Here is located the world’s most northern permanent civil research station. Researchers from Norway (who has administrative control over then territory), Germany, France and China permanently work there. On a temporary basis the station is visited by scientists from Italy, Britain, Netherlands and Japan. In addition, the politicians got acquainted with the activities of the research station of the Institute AWI, which now operates in a joint German-French-format (AWIPEV).

In general we can say that polar research in Germany is based on an extensive network of public and private institutions that coordinate financial, scientific and practical activities in this area. Ministry of Economy and Energy and Ministry of Education and Research provide primarily institutional support. In addition, Ministry of Education and Research conducts targeted support of research projects in the Arctic.

Since the beginning of the 1990s the German Research Foundation (DFG)[14]actively supports polar research. In 1992 the Presidium of the company established the Special Committee SCAR / IASC (Scientific Committee on Antarctic Research / International Arctic Science Committee), whose tasks include planning and coordination of scientific and practical activities of German universities and university centers with institute AWI and relevant government departments in the field of polar research. Currently, with the support of DFG on the basis of a number of German universities functions an interdisciplinary program of comparative research in Antarctica and Arctic (in 2012 the program has been extended until 2018).

Some more specialized projects for the Arctic are conducted with the participation of the institutions of Max Planck Society, Leibniz Association. Finally, the most important instrument in terms of interdisciplinary coordination and cooperation is the German Society of Polar Research (DGP) that brings together representatives of various scientific disciplines.

POLITICAL ORIENTATION

Obviously, in the foreseeable future Germany will continue the policy of further strengthening of “indirect voting rights” in its Arctic affairs, primarily relying on their undoubted achievements in the field of research and scientific practice. With good expertise in qualified scientific works, as well as solid financial, technical and technological potential for further development, Germany intends to use expert assessments to influence political decision-making, relating to the Arctic.

In this regard, Germany, for example, appreciates the opportunities for cooperation in the framework of the International Arctic Science Committee (IASC). Secretariat of the Committee is based in the branch of the Institute AWI in Potsdam, and the Executive Secretary of it is the authoritative German expert on Arctic F. Rahold. IASC members are national scientific organizations. Germany is represented by the aforementioned German Research Foundation DFG.

Executive Director of the International Association on permafrost (IPA) is held by a German (an employee of the Institute AWI K. Schollen). At the same time, Germany has been active in the European Polar Board (European Polar Board). As a division of the European Science Foundation (European Science Foundation, ESF), it is an important platform for the coordination of polar research between interested countries – EU members. The German experience in the field of polar research has formed the basis of the relevant areas within the next 8-th EU program for research, covering the period 2014-2020.[15]

The specificity of the German Arctic strategy lies in the emphasis on the environmental consequences of industrial development in the Arctic. If desired, one can discern the intention of the international community to form a negative attitude towards any attempt to operate Arctic resources without the use of special “green” technologies. In an effort to ensure high standards of environmental safety as international standards, Berlin, obviously is trying to secure for its own (and European) companies more favorable conditions for the promotion to the Arctic.

At the same time it should be noted, that Germany is quite realistic regarding its competitive opportunities in several areas. For example, Germany so far has only one relatively large oil and gas company operating on an international scale – Wintershall. Concerning the Arctic, its strategic focus is the development of offshore fields in Norway.

However, the company has been recently gradually consolidating its position as one of the largest producers of gas on the Norwegian continental shelf. A subsidiary of the BASF concern has successfully established itself as an integrated enterprise in the field of exploration and production. One of the backgrounds of its growth is its rich portfolio of licenses. Wintershall is one of the largest license holders on the Norwegian continental shelf: it has about 50 licenses, over half of which endows it with the rights of the operator works. Most recently, in January 2015, the Ministry of Petroleum and Energy of Norway issued the company 8 new licenses, giving great prospects. Yet it must be acknowledged that the scope of its activities is not up to a level comparable with world known giants of oil and gas industry.

Obviously, in the foreseeable future Germany will stop its Arctic ambitions by concentrating on production of renewable resources (fish and seafood) as well as on the exploitation of the Northern Sea Route[16]. In this regard, it would be appropriate to recall that Germany has the largest fleet of containerships in the world, therefore it should be interested in the development of new transport communications. Besides, it is an additional opportunity for the development of the national shipbuilding industry. Thus, in December 2012, the Federal Agency of Sea and River Transport of Russia and the German company «Nordic Yards» signed a state contract for the construction of two multipurpose salvage vessels with capacity of 7 MW, designed to work in the Russian Arctic. The total amount of orders amounted to 150 mln Eur. The ships were transferred to the Russian side in time and became part of its fleet at the beginning of the year[17].

Germany is likely to leave the development of the access to the region’s energy resources to its partners – Norway and Russia. Berlin is satisfied with the role of the distributor of Russian raw materials on the world market.

Most of German experts are rather skeptic regarding the thesis that the “Arctic is growing potential conflict,” and that predicted by some researchers conflicts in the Arctic will be conflicts over access to hydrocarbon resources. [2] The extent of the reserves in the region, mostly widespread in pseudo-scientific circles, is greatly exaggerated. German experts (in particular, from BGR) are more careful about such estimations. According to them, data on stocks, which are now provided by different sources, are very approximate – primarily due to poor knowledge of the region. For the time being it’s mostly forecasts. Proved reserves are significantly low[18].

It is also noted that in order to assess the potential for conflict in the northern polar regions it is important, that almost all estimated hydrocarbon reserves of the Arctic are concentrated in the exclusive economic zones of coastal States, ie within their undisputed jurisdiction. The central part of the Arctic Ocean, which could theoretically meet claims of coastal states over the continental shelf, is of little promise in search for hydrocarbon resources[19].

In other words, there is simply no reason for the emergence of a new «arms race» in the region[20]. It is significant that the participants of the last annual Security Conference in Munich (February 2015) did not discuss the current situation and its development in the Arctic – apparently due to lack of reasonable forecast expectations for the foreseeable future acute conflict situations in the region.

It entirely corresponds to the estimates from defense authorities of Germany. For example, published in July 2014 analytical study «Climate Change and Security in the Arctic after 2014″ prepared by planning department of Bundeswehr concludes that a widespread and military interstate conflict in the Far North is unlikely to happen. Even in the context of the ongoing melting of ice the Arctic will remain quite stable region for Germany, having nevertheless increasing economic and environmental value. In light of this, German security policy will primarily face the task of a comprehensive and long-term-oriented monitoring of the situation in the region [3, S.24]. For the process to be monitored and analysed one can attribute, for example, political dynamics associated with the autonomy of Greenland (which, in turn, could lead to the transformation of the «Arctic» status of Denmark), or increased political activity in the Arctic Council of «observers» among Asian countries (mainly China and Japan).

Sharing the opinion of the majority of Russian, Norwegian, Canadian experts, German experts say that today the military are able to fully ensure the safety and protection for civilian use such a wayward region as Arctic. However, they note that there is currently no need for additional support of Arctic forces of German partners in NATO with forces and means of Bundeswehr. Improving capacity and operational capabilities of German armed forces in Arctic is neither today nor in foreseeable future a priority of the development [3, S.25].

List of References

Аrkticheskij region: problemy mezhdunarodnogo sotrudnichestva. Khrestomatiya v 3-х tt. Izdatelstvo RSMD. М., 2013.
Corinna Röver, Katrin Ridder-Strolis, «Nachhaltigkeit in der Arktis: Prämissen, Probleme und Potentiale». Länderberichte der Konrad-Adenauer-Stiftung e.V. Oktober 2014.
Klimawandel und Sicherheit in der Arktis nach 2014. Hat die friedliche und kooperative internationale Arktispolitik eine langfristige Zukunft? Planungsamt der Bundeswehr, Dezernat Zukunftsanalyse. Juli 2014.
Leitlinien deutscher Arktispolitik. Verantwortung übernehmen, Chancen nutzen. Auswärtiges Amt, November 2013.
Nichtstaatliche Konflikte in Räumen begrenzter Staatlichkeit. Planungsamt der Bundeswehr, Dezernat Zukunftsanalyse. Future Study 2012.
United States Geological Survey. URL: http://www.usgs.gov/newsroom/article.asp?ID=1980#.VWRhOEa8xip
Bundesanstalt für Geowissenschaften und Rohstoffe. URL: http://www.bgr.bund.de/DE/Themen/Polarforschung/Arktis/Expeditionen/expeditionen_node.html

Bundesministerium für Bildung und Forschung. URL: http://www.bmbf.de/de/26677.php

[1] Perhaps Svalbard archipelago may be a specific exception, the territory of which is under sovereignty of Norway. Since 1925 Germany is a party to the Paris Treaty on Spitsbergen of 1920, which provides that parties equal rights to exploit natural resources of Svalbard and its territorial waters

[2]See f.e.: http://polpred.com/?ns=1&ns_id=1159650&searchtext= or

http://www.zeit.de/wissen/2015-05/arktis-klimawandel-erderwaermung-eisschmelze-rohstoffe

[3] With a relatively favorable ice and weather conditions taking NSR from the German Hamburg to Japanese Yokohama could make only about 6,600 nautical miles, while through Suez Canal – 11 400 miles. Accordingly, the transportation time of cargo could be reduced to 40%. [5,S.26].

[4] Indeed, regions (and hence organizations) of United States are not present in this list.

[5] It is based on an agreement on scientific and technical cooperation (WTZ), which was signed by Germany and Soviet Union in 1987, subsequently was subject to repeated amendments and additions, in particular, during German-Russian intergovernmental consultations in July 2009.

[6] This area is of particular interest to Russia because after the collapse of the Soviet Union, it lost access to the largest in the USSR deposits of chrome ore in Kazakhstan.

[7] In this case, the Germans seem to be “engaged” in a very promising process. The fact is that as long as the Americans are developing shale gas, the world begins to develop a much more substantial reserves of “blue fuel”, which, in compressed form – so-called gas hydrates – are stored in the permafrost on the seabed and on land. According to the Russian Ministry of Energy (2013), reserves of gas hydrates are more than twice of the total reserves of shale and conventional natural gas. Russia has large deposits of natural hydrates found in areas of permafrost in Yakutia and West Siberia. Large reserves are discovered on the Sakhalin shelf in the Okhotskoye Sea (in particular in the area of the east coast), and the Kuril Islands (which, by the way, is so eager to get Japan).

[8] New Siberian Islands – Russian archipelago in the Arctic Ocean, located between the Laptev Sea and East Siberian Sea.

[9] Helgoland – German-owned archipelago located in the Bay of Heligoland in the south-east of the North Sea.

[10] Sylt – Germany’s largest island in the North Sea, which is part of the waters of the Wadden Sea; since 1927 the island connected to the mainland by a causeway.

[11] This area is part of one of the six areas of basic research, on which Helmholtz Societyis concentrated: Energy, Earth and Environment, Health, Aeronautics, Space and Transport, Key Technologies, Structure of Matter.

[12] The base is named after Carl Koldewey, in honour of the head of the first German polar expedition in 1868. It was founded in Germany in August 1991 as a base of the Alfred Wegener Institute (AWI), and in 2003 it merged with the base of the French Institute Paul Emile Victor (IPEV).

[13]The construction of the new multi-polar vessel, which should replace the current ship carrying “scientific watch” since 1983 is planned by the end of 2019.

[14] The Foundation is the central organization for promotion of research in Germany. It operates on the principles of self-government and is organized on the basis of civil law. Its main task is research funding of universities and public research institutions of Germany. The Foundation itself is financed mainly at the expense of federal and state governments.

[15]http://www3.uni-bonn.de/forschung/euroconsult/8.-frp

[16] It should, however, added that in these areas Germany prefers cautious forecasts. For example, regarding the NSR it is noted that severe weather conditions and unpredictable ice conditions will remain for the foreseeable future dependence of marine transportation vessels of icebreakers and, most importantly, trained personnel, what in financial terms largely eliminates the possible gains from reducing the distance and travel time. Therefore transarctic container transport (especially those which are carried out on an urgent basis “just-in-time”) are not a short thing of the future.

Equally uncertain (and in fact, simply unexplored) remain assessments as to whether the result of the temporary exemption of ocean space from ice is to expand commercial fish habitat and thus will lead to an increase in their populations.

[17]Being a class of Icebreaker 6, the vessels may conduct rescue operations in difficult conditions. They can be used for icebreaking operations in port and at sea in the thickness of the ice up to 1 meter, extinguish fires on floating objects and coastal oil spill.

[18]F.e., opinion of expert of BGRG.Elsner in: http://www.zeit.de/wissen/2015-05/arktis-klimawandel-erderwaermung-eisschmelze-rohstoffe/seite-2

[19]Expert BGRK. Reihert, the same source.

[20] In particular, experts of authoritative German Foundation for Science and Policy, acting as a leading consulting center for the government of Germany, followed in their assessments this line. See: http://www.swp-berlin.org/publikationen/kurz-gesagt/arktische-kooperation-trotz-europaeischen-frosts.html

PILOT FINANCIAL INITIATIVE FOR BALTIC REGION ENVIRONMENT

Admin — Mon, 25 Aug 2014 17:22:09 +0000

Participants in intergovernmental contacts tend to sum them up in a final document “to fix positions”. These written compromises differ in form, but not in fate: they are of interest only to a narrow circle of professionals. They do not often merit the oblivion, not with so much work behind each provision, accomplished in the interests of states and ordinary citizens.

This article is a brief story of a provision of the Statement of the Conference of heads of government of the Baltic Sea region on the protection of the Baltic Sea held in St. Petersburg on April 5-6, 2013. It reads: “Participants specifically noted the Pilot Financial Initiative of the CBSS… as a new mechanism of promoting activities to protect the environment of the region”.

Annual presidency rotation in the Council of the Baltic Sea States (CBSS) offers a challenge and a test for the ability of member-states to coordinate implementation of proposed cooperation priorities in “your own” term of presidency in the organization. The universal troika mechanism comprising previous, current and future chairs of the Council allows, as a rule, to coordinate new regional projects and ensure succession in their implementation. The story of the CBSS Pilot Financial Initiative offers a vivid example of efficiency of the mechanism.

In June 2011 when Norwegian presidency was coming to an end, the 16th ministerial session of the Council adopted the Oslo Declaration. One of the agreed decisions related to the Russian-German initiative to exchange experience in Public-Private Partnership (PPP) to promote investment into the future of the region and study ways to encourage regional partnership in innovations and modernization within the CBSS framework. During subsequent German presidency in the Council (July 2011 – June 2012) the Russian foreign ministry initiated practical efforts to engage major banking institutions in cooperation along the guidelines. The result was not long in coming. On May 31, 2012 on the sidelines of the 9th meeting of the heads of government of Baltic Sea states in Stralsund (Germany), a memorandum of understanding was signed in the presence of Russian delegation chief – First Deputy Prime Minister Igor Shuvalov – between CBSS Secretariat, the German banking group KfW (state development bank), and State Corporation Bank of Development and Foreign Economic Activity (Vnesheconombank). The document was signed by Director General of CBSS Secretariat Jan Lundin, Vnesheconombank Deputy Chairman Mikhail Kopeikin, and KfW Director General Stephan Opitz.

The launched Pilot Financial Initiative (PFI) was a prelude to creating an open platform to attract partners and funds into projects aimed at sustainable economic development and cooperation in the geographic area of the CBSS, transfer of scientific and technical knowledge, increased efficiency of CBSS investment, and implementation of sub-regional programs. The initiative is open for other financial institutions operating in the Baltic Sea region.

Under the CBSS aegis in 2012-2014, Vnesheconombank and KfW expressed readiness to begin financing projects and open a credit line up to 100 million euro a year for PFI area – St. Petersburg, Kaliningrad, Pskov, Leningrad, and Novgorod regions.

Trilateral cooperation includes:

– easy-term loans to small and medium businesses in the sphere of innovations and modernization. The PFI mostly targets sustainable development of Russian northwestern regions, and

– financing of Public-Private Partnership projects as a most efficient instrument to modernize economy and intensify cooperation in the Baltic Sea region. It is focused on municipal infrastructure, climate and environment, energy efficiency, and complex development of territories.

The financing mechanism works as follows: KfW Bank provides long-term incentive loans for VEB projects which, in its turn, finances projects either directly or through its network of subsidiaries (MSP Bank, Svyaz-Bank, Globex Bank, Federal Project Financing Center, and others) or though a corresponding network of partner banks in Russia or other CBSS member-countries under the on-lending principle.

The PFI working body is the Coordinating Committee comprising six members, two from each party. Its main function is to estimate and approve project proposals offered by KfW and/ or VEB, control and assess PFI implementation, and submit reports to the CBSS Committee of Senior Officials. The founding meeting of the committee took place in the office of the Russian foreign ministry in St. Petersburg on June 7, 2012. Head of the KfW office in Russia Daniil Algulyan was elected its chairman.

The first agreement in the PFI framework was signed in Moscow on November 16, 2012. It envisages a five-year credit facility of 110 million US dollars to finance projects in St. Petersburg, Kaliningrad, Leningrad, Novgorod, and Pskov regions. According to the terms, VEB provides finances to partner banks which in turn lend them to Russian enterprises.

The second agreement was signed at the CBSS Secretariat in Stockholm on December 12, 2012. According to the loan agreement worth up to 65 million US dollars, funds will be provided in ruble equivalent at a fixed rate. They will be used by VEB to finance the project of economically and ecologically feasible treatment of mixed household waste in St. Petersburg implemented by Avtopark #1 Spetstrans Company. The agreement is valid for seven years.

The implementation of the project will dramatically decrease the amount of solid waste at dumps, extend the service life of the dumps and improve the general environmental situation in the region. Five waste-treatment enterprises will recycle up to 70-75% of paper, corrugated cardboard, offset paper, plastic bottles and solid-plastic boxes, polyethylene film, ferrous metal scrap, aluminum cans, heat-producing elements for cement industry, and biologically degradable waste. Up to 15-20 percent of recycled garbage will become environmentally safe as it will contain no biologically degradable waste. The aggregate recycling capacity will reach 900,000 tons of solid waste a year. Thus, the project will decrease greenhouse emissions in the region and eliminate harmful impact of garbage dumps on the environment.

There is enormous demand in Leningrad region for such services and waste-treatment plants are expected to have a full load. The project is being implemented with the support of the long-term regional goal-oriented investment program for treatment of solid household and industrial waste in St. Petersburg in 2012-2022. It is also backed by the government of St. Petersburg as the enterprises will be built on municipal land under a long-term (49 years) lease contract.

On November 22, 2012 Kaliningrad hosted, within the PFI framework and under the auspices of the Russian CBSS presidency, the International Conference on Support to Small and Medium Businesses in the Baltic Sea Region: Financing, Public-Private Partnership, and Innovations. The event aimed at attracting the attention of small and medium businesses, financial institutions and agencies to the problem of long-term financing and support to small and medium businesses in the sphere of innovations and modernization in the Baltic Sea region. The conference was attended by representatives of development banks and financial institutions of the Baltic Sea region, small and medium businesses, the Embassy of Germany in Russia, the government of Kaliningrad region, organizations which support small and medium businesses, and scientific and expert communities.

At present, the CBSS Secretariat is working to engage in the PFI such influential regional financial institutions, as the Nordic Environment Finance Corporation (NEFCO) and the Nordic Investment Bank (NIB), as well as development banks from other countries of the Baltic Sea region.

It is logical therefore that the PFI implementation experience was a major issue in the economic section of the address by Russian Foreign Minister Sergei Lavrov about priorities of the Russian CBSS presidency delivered at the third ministerial meeting of the Northern Dimension in Brussels on February 18, 2013. The algorithm of the PFI project as an instrument of close and mutually beneficial cooperation of well – tested business partners and the non-governmental organization can and should lose its unique status as soon as possible. The Baltic Sea region should again confirm its pioneer status in introducing new models of social and economic interaction for the benefit of its peoples. The recipe of Public- Private Partnership is available.

Heads of governments at the Baltic Sea Forum in St Petersburg on April 5-6 praised the PFI in acknowledgement of well-chosen areas of work, as well as the readiness to offer projects under implementation for the fulfillment of new tasks.

Despite the seeming triviality, the problem enormous economic and social significance. In the modern world, approaches to its solution demonstrate maturity of the state and business and their ability to create a comfortable environment for the life of the citizens.

Therefore, the problems of the “green growth”, reduced discharge volumes and rational recycling of waste also for the production of energy have fully entered the global agenda. We shall definitely discuss the issues at the G20 which Russia currently chairs.

Russia accumulates some 3.5 billion tons of waste every year. Close to a quarter, but much less in reality, is recycled. The rest is burned down or dumped at special sites. Regrettably, much waste is dumped at illegal sites whose number is constantly growing.

The volume of accumulated waste in Russia currently comprises around 90 billion tons.

The experience of many countries shows that utilization and recycling of waste is a complicated but promising type of business activity. We have to create conditions for investors and small and medium businesses to come and operate in the sphere.

Quoted from President Vladimir Putin’s speech at a meeting on April 10, 2013 devoted to incentives in household and industrial waste treatment.

Nikolai Lakhonin,

for Amber Bridge

The Amber Bridge has already covered various PFI stages. Its third issue in 2012 contained an interview with Russian Foreign Minister Sergei Lavrov headlined Synergy of Efforts – a Practical Task while issue 4 in 2012 published an article by Director General of the CBSS Secretariat Jan Lundin headlined Who We Would Like To Be With. We believe it is logical to continue covering the implementation of the successful project.