Gas Infrastructure Europe (GIE) and Deloitte have released their third annual report on the decarbonisation status of the CEE and SEE region. In this year’s edition, two new topics have been introduced: specific insights into the impact of Europe’s Energy Crisis in 2022 and an overview of the development of the hydrogen value chain in the region.
“The European Commission requested this regional analysis as Europe lacked figures on the energy systems of this geographic area,” commented Boyana Achovski, GIE Secretary General. “We filled that gap to support the EU institution’s work and enable an efficient and inclusive transition. It has been three years now and this third edition captures the figures from last year’s crisis, illustrating the region’s role in supporting the realisation of REPowerEU.”
“We can observe that energy plays a critical role in the region’s economy due to the high energy intensity of its countries’ GDP, well above the EU average,” stated Milan Sedláček, GIE Board Member. “The extensive use of coal and oil in energy consumption adds another layer to the region’s challenges. For an effective decarbonisation process, the different starting points of the Member States must be taken into consideration.”
Indeed, energy plays a very important role in the economies of many of the EU member states in the CEE and SEE region. With the exception of Austria and Cyprus, CEE countries have an energy intensity higher than the EU-27 average. However, some decreases were observed, especially in Slovakia (7 per cent) and Hungary (5 per cent). Furthermore, many countries in the region are burdened by a significant carbon footprint due to the extensive use of coal and oil in their total energy consumption.
For Miroslav Lopour, Energy Strategy Senior Manager at Deloitte, “while the energy crisis brought a significant uptake of coal power and heat generation, in the long term, we are still on track for the planned coal phase-outs.”
Also, natural gas still plays an important role in these countries’ energy mix. However, since Russia’s invasion of Ukraine and the reduction of pipeline gas imports from Russia to the EU, we have observed a sharp increase in imports of liquified natural gas (LNG). Traditional transit countries of Russian gas such as the Czech Republic, Slovakia and Austria have now become end stations for alternative supplies such as LNG. As a result, these countries and other landlocked countries in the region are focusing on signing mid- to long-term gas supply agreements with LNG suppliers to ensure the future security of gas supply.
Thus, while the EU plans to reduce its consumption of natural gas long-term (achieving climate neutrality in the EU by 2050), it will still rely on it in the short term. Several countries, especially in light of the need for additional sources of flexibility, are planning further development of gas-fired power plants, mainly CCGT. In the CEE and SEE region, these include Bulgaria (1 gigawatt), Croatia (0.4 GW), Cyprus (0.26 GW in 2023), Czechia (1-1.5GW), Estonia (0.25 GW is likely), Greece (5GW), Hungary (1.65 GW), Poland (5 GW), and Romania (3.56 GW by 2028).
To replace natural gas, as also envisioned by the European Commission, hydrogen and green gases will play a major role. In this regard, several hydrogen projects have been developed in the CEE and SEE region that aim to establish a hydrogen value chain covering
production, transportation and storage to end customers.
First of all, the Central European Hydrogen Corridor (CEHC) project, which aims to create a hydrogen import “highway” from Ukraine via Slovakia and the Czech Republic to large hydrogen demand areas in Germany and the EU by 2030. Secondly, the South Eastern Europe Hydrogen Corridor, driven by the need to decarbonise industry, transport and power across the CEE and SEE region. This is specifically relevant to new green steel projects and
existing industry in Greece, Bulgaria, Romania, Hungary, Slovakia, Croatia, Slovenia, Austria, Czechia towards Germany. Third, the Nordic-Baltic Hydrogen Corridor, which aims to serve the growing capacities of green hydrogen production in the Baltic Sea.
Read the whole report here.