What happened 5 years ago? Key energy milestones in 2020

To celebrate the CEENERGYNEWS’ fifth anniversary, the editorial team has decided to take a look back at the region’s key developments in a unique format. Over the course of five weeks, five articles will summarise the main events of the energy sector in CEE, with each article covering one year. The first part of this special edition focuses on the year 2020. The arrival of the pandemic presented unknown challenges to energy supply chains, making energy security and concerns about the functioning of the global economy top priorities. In this context, alternative supply routes and renewable energy sources achieved important milestones worthy of reporting, as they were key to the future of the industry.

As COVID-19 started to spread globally, its impact was not limited to public health, but it also disrupted the economy, hitting the energy industry particularly hard. It quickly became clear that the lockdowns would last longer than the initial shock reaction and that the outbreak could trigger an economic downturn in Europe. From a financial perspective, Central and Eastern Europe has adopted a cautious approach to the virus, with many governments announcing substantial fiscal packages. The spread of the virus also led to two other significant challenges: an increasing shortage of crude storage and a resurgence in coal use, despite all countries’ commitment to tackling climate change.

The latter included record-low oil prices, due to extremely low demand for oil products and falling refining margins. The warm winter and failed OPEC+ negotiations also had an unbalancing effect on the markets. Belarusian oil refineries, the main customers of Baltic oil product handling terminals, operated at the lowest capacity until supply resumed following the oil crisis caused by difficult negotiations with Russia. The handling volumes of Baltic region terminals have not dropped drastically. Klaipėda Oil Terminal, operated by KN, has maintained operational efficiency, however, everyone faced shrinking handling volumes. KN’s operations focused on overcoming this challenge through diversification of services, which meant investing in the development of the terminal and expanding its cargo portfolio.

According to the report published by SolarPower Europe, despite the virus-related setbacks, the European solar market grew by 11 per cent in 2020, with 18.7 gigawatts (GW) of installations added. This was the second-best year ever for solar energy in the EU and the year with the strongest growth since 2011. The paper showed that Poland installed the highest capacity in Central and Eastern Europe at 2.2 GW, more than doubling its capacity from the previous year.

To address risks in the energy sector, the European Commission identified 20 good practices. The energy industry implemented exceptional business arrangements to ensure the continuity of critical operations while safeguarding the health of their employees. Regulators and operators of nuclear power plants ensured that there was no adverse impact on nuclear safety and continued oversight. The Commission required Member States to take the necessary measures to protect vulnerable customers in the context of the internal energy market, and it highlighted how important it is to leverage the security of supply tools in cooperation and mutual assistance.

The Trans Adriatic Pipeline (TAP), an 878-kilometre gas transportation system crossing Greece, Albania, the Adriatic Sea and Italy, began commercial operations. The European leg of the Southern Gas Corridor is a gateway project designed to transport 10 billion cubic metres (bcm) of gas supplies from Azerbaijan to multiple European markets. The project was planned to have the potential to double its capacity to 20 bcm per annum. This ensures that Europe can receive supplies from an additional source, supporting key EU objectives such as achieving an integrated energy market and a sustainable, secure and diversified energy mix.

The European Commission adopted the long-awaited strategies for energy system integration and hydrogen. The EU Strategy for Energy System Integration provided a framework for a connected and flexible system that can reduce costs for society and increase efficiency, linking different energy carriers, infrastructures and consumption sectors. The strategy has three main pillars: a more circular energy system with energy efficiency at its core; greater direct electrification of end-use sectors; and promoting the use of clean fuels where electrification is difficult.

The EU Hydrogen Strategy set out how to realise the potential of hydrogen as a fuel through investment, regulation, market creation, and research and innovation. It prioritized the development of renewable hydrogen, which is produced mainly using wind and solar energy. In the short and medium term, however, other forms of low-carbon hydrogen are needed to rapidly reduce emissions and support the development of a viable market.

Overall, the EU reduced its greenhouse gas emissions by 34 per cent compared to the 1990 baseline, equivalent to 1.94 billion tonnes of carbon dioxide (CO2) emissions. According to official EU data, the 2020 reduction was the largest since 1990, with total greenhouse gas emissions reaching their lowest level since that year. This represented an 11 per cent drop compared to 2019.

In several countries in the CEE and SEE region, the annual decline was two digits: in Estonia 21 per cent, in Bulgaria 17.3 per cent, and in Greece 12.6 per cent.