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Moving Central and Eastern Europe from coal and gas to renewables and connectivity

This opinion editorial was co-authored by Nolan Theisen, Senior Research Fellow at the Slovak Foreign Policy Association.

With the annual Three Seas Initiative Summit fast approaching, Central and Eastern
European countries have an opportunity to reframe their energy security outlook. The region now generates more electricity from renewables than from coal but is still undermining its vast clean power potential, turning to gas instead – in fact planning to expand gas import infrastructure beyond what is needed to replace Russian gas or meet future demand.

Decisions made in Central and Eastern European countries impact EU-level politics, even
more so given the upcoming Hungarian and Polish EU presidencies. The region covers
roughly 20 per cent of the EU population and territory and produces 25 per cent of GHG emissions in the EU. Despite this, the region has struggled to find a vision of its own and continues to operate under the inertia and lobbying pressure of the natural gas industry. This has exposed the region to energy security threats and a cost of living crisis, as experienced in 2022.

Since its launch in 2015, the Three Seas Initiative (3SI) has mostly served to reaffirm this dynamic. The 3SI is the largest intergovernmental organisation in the CEE region –
comprised of Estonia, Latvia, Lithuania, Poland, Czechia, Slovakia, Hungary, Slovenia,
Croatia, Bulgaria, Romania, Austria and Greece. About half of its priority projects have gone towards expanding natural gas infrastructure.

Reflecting global concerns along these lines, the Biden administration suspended approvals for liquified natural gas (LNG) exports in an effort to better align US foreign policy with its climate ambition.

More telling for CEE governments eager to expand gas infrastructure is that demand is
moving in the opposite direction: total gas consumption in 3SI countries is expected to fall
from 70 billion cubic metres (bcm) in 2023 to 61 bcm by 2030. This mismatch means that across 3SI members, the sum of domestic production and gas import capabilities through LNG terminals and pipelines from North and South directions will exceed demand by 40 per cent (24 bcm). While countries like Greece mostly use their gas infrastructure to supply fuel to neighbours, outsized gas facilities in Poland or the Baltic States risk becoming stranded assets, especially when extending the timeline to 2040.

A strategic agenda based on LNG facilitation feels increasingly out of touch, as across CEE,
a structural shift away from fossil fuels is already underway. Russia’s invasion of Ukraine
spurred urgent efforts on energy efficiency and conservation measures. This has
accelerated the decline of natural gas in CEE’s energy mix, particularly in the residential
heating sector. Furthermore, 39 per cent of electricity across the Three Seas members came from renewables in 2023, for the first time outperforming coal in terms of power market share (29 per cent). This structural shift is also reflected in the updated National Energy and Climate Plans (NECPs) submitted by CEE governments to the European Commission. The plans raised targets significantly, adding 79 gigawatts (GW) of wind and solar capacity to the previous 2030 goals across 3SI countries and raising the 2030 renewable electricity targets from 46 per cent to 60 per cent.

However, this shift won’t happen smoothly without guidance and support across the region.
To ensure that solar, wind and other clean technologies continue along the current dynamic
growth trajectory and reach their full potential, significant grid investment and modernisation are needed.

The 3SI could play a leading role in mapping out a way forward on those efforts. Among
grid-related investments, interconnectors are a particularly great match for the Three Seas
Initiative’s objectives of enhancing cross-border collaboration and north-south connectivity.

And investing in interconnectors would bring big benefits too, by increasing system flexibility and resilience and reducing power prices across the region. If 3SI countries pursue a higher ambition renewables build-out, Ember’s modelling shows that annual cross-border electricity flows in the region would grow significantly between now and 2030.

Investing in new interconnection capacity thus would enable countries to capture the full economic benefits of expanding renewable generation. Unlocking the renewable potential through better connectivity would bring major economic and security benefits to the region. The expansion of offshore wind in the region is already creating hundreds of jobs and will attract further manufacturing and industry investments thanks to lower electricity input prices. Examples from Ukraine also prove that distributed energy generation and interconnection provide improved resilience in times of war than a traditional, centralised power system.

Going forward, the expansion of renewables can bring about independence from fossil fuel
imports and transform the CEE region into a hub for European clean energy and hydrogen. The 3SI has the opportunity to set the way by facilitating a north-south transmission highway to unlock the full potential of the three seas: Baltic, Black and Adriatic.

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