Foreword to the Annual Review (2011-2012)

FOREWORD BY THE HEAD OF ENERGY SECURITY RESEARCH CENTRE

Since the early days of the newly independent Lithuania, energy security and energy independence have been the top priority issues. Lithuanian road of independence started with Russian energy blockade, eventual cutoff of Russian oil supplies through “Druzhba II” pipeline and rising gas prices. Lithuania was compelled to shut down Ignalina Nuclear Power Plant as one of the conditions of its accession to the European Union. Moreover, pursuant to continuously stricter environmental protection requirements the majority of Lithuanian thermoelectric power stations may have to be closed down due to too high emissions. Record level prices of imported gas, huge electricity import from Russia and other countries, enormous bills for the heating of unrenovated and uneconomical housingsector cause social tensions, grievances and disappointment.

At first glance it would seem that solution of the issues is a technical and economic one. It would seem that to resolve the problems it is sufficient to merely prepare projects of energy system’s development and to find funding for their implementation. However, it is not as simple. The first National Energy Strategy was adopted already in 1994 and was followed by four new strategies (the latest one – in 2012), a plenty of amendments, implementation plans and other documents. All the energy strategies and their implementation plans foresaw technical projects, necessary equipment, organisational means etc. Evaluation based on economic calculations has shown that the proposed scenarios of energy system’s development are effective. They would allow reducing energy prices and energy consumption, as well as partially decreasing dependency on energy import. Nevertheless, the projects have remained virtually unimplemented. Social mistrust in suggested solutions has grown, renovation of housing has not started and independent energy producers who propose using biomass have been struggling. Moreover, in the referendum (2012) the society voted against the construction of Visaginas Nuclear Power Plant. The Liquefied Natural Gas Terminal has as well been criticised.

From the very beginning, energy projects have been based on the arguments of ensuring energy security and energy independence. The most recent National Energy Strategy was even tiled the National Energy Independence Strategy. Nonetheless, in the majority of documents the definition of energy security has been approached rather narrowly. It usually encompasses diversification of energy sources and fuel supplies, connection of national energy networks to the Western European networks and increase of domestic energy production capabilities. However, while deciding on energy development plans and assessing energy security, it is also crucial to take into account geopolitical and socio-political factors. The main task of energy security analysis is to evaluate the resistance of existing or planned energy system against various threats (technological, natural, economic, geopolitical and socio-political). These threats, if materialised, could result into disruptions or even severance of energy and fuel supplies to consumers, as well as rise of energy prices. Socio-political and geopolitical threats can potentially obstruct or even devastate implementation of energy projects. Failing to take such factors into account, the plans will only remain plans and will not bring any energy independence, lower energy prices, or sustainable development of energy sector.

The task of energy security research is twofold. First, it is to ascertain all the factors that affect energy security, to determine their interdependent relationship and to create models capable of showing the impact that different impediments will have on Lithuanian energy system. In addition, it is important to establish what is the likelihood of the occurrence of such impediments and what means are available to neutralise their consequences. Once these objectives are achieved, the second part of the task can be carried out. That is, it is then possible to assess the level of national energy security, to show how various projects will affect it and to compare Lithuanian energy security with energy security of other countries.

Having generalised the long term experience in the field of energy security assessment, in the present publication we provide the results of several studies. We hope that this publication will become the annual report of the Energy Security Research Centre and will allow seeing the change in Lithuanian energy security over time, determining certain trends in the change, as well as highlighting the most important factors that one should pay the biggest attention to.