Baltic Pipe Project is one of the most important proposed gas infrastructure projects between Poland and Denmark, with an objective to supply natural gas in the European market. This project is undertaken to transfer the natural gas from Norway to Poland and Denmark and also in the markets of neighboring countries (baltic-pipe.eu 2018). Apart from that, the Baltic Pipe Project will also enable the natural gas supply from Poland to the Swedish and Danish markets. The authorities aimed for affordable, secure and sustainable energy in the European markets from this cross border project. Poland has huge potential opportunities from this pipeline project as there will be expansion of internal transmission system in the country and new connections will be developed and a stable market for sustainable energy will be developed for the Eastern and Central Europe (ec.europa.eu 2018). The following essay will highlight different aspects of the Baltic Pipe Project and its impact on throughout European region and especially on the UK in the context of its membership in the IEA and Brexit.
The Baltic Pipe Project will be increasing the scope of Poland to increase the scope of importing the gas. The project consists of 5 major components, namely, North Sea offshore pipeline between the Norwegian gas in North Sea and Danish transmission system; onshore Denmark, which is the expansion of the existing Danish gas transmission system from west Europe to the east; establishment of compressor station in Denmark; Baltic Sea offshore pipeline and onshore Poland, which is the expansion of the Poland’s gas transmission system (M?ynarski 2016). The Baltic Pipe Project has been undertaken by Energinet, the Danish transmission system operator of gas and electricity and GAZ-SYSTEM, the gas transmission system operator of Poland.
This project is recognized by as the Project of Common Interest (PCI) by the European Commission. This status is given to those projects that have the purpose of tightening the internal energy market of Europe by meeting the policy objectives for secure, sustainable and affordable energy. Baltic Pipe Project has the objectives of further strengthening of diversification of supply, integration of market, convergence of price and secured supply, primarily in Denmark and Poland and secondly to Central and Eastern Europe, Sweden, and the Baltic region (ramboll.co.uk 2017). The countries have come together with the above mentioned objectives to make a great relation on the basis of natural gas transmission across the borders for a sustainable energy. The PCI status has helped the projects in streamlining the processes of permissions and other red tape regulations. The financial support from the EU, worth of €33.1 million has also contributed largely in successful implementation of the project (baltic-pipe.eu 2018).
The energy policies of European Union are based on the three objectives. As highlighted by Scarlat et al. (2015), they want to secure the energy supply to whenever and wherever it is needed. They wish to ensure that there is competitive environment for the energy producers so that the energy prices can be kept affordable for the domestic and commercial users. Lastly, EU wants to keep the energy consumption sustainable, to reduce the environmental damage by decreasing the CO2 emissions, greenhouse gases, pollution and dependence on the fossil fuels. With these goals, all the energy projects in EU are undertaken and the Baltic Pipe Project is no exception. Different sources of renewable energy are wind, water, oil and natural gas and across the EU region, there have been multiple projects for supplying energy. All these projects have the same objective of supplying secure, affordable and sustainable energy, which is also followed by the Baltic Pipe Project. The authorities have considered all the benefits for the natural environment and local communities and those policies are assessed by implementing Environmental Impact Assessment (EIA). The potential threats to the environment are reduced by mitigation and further impacts are assessed. Both the collaborating companies of Denmark and Poland are keen on improving the gas infrastructure of the EU by introducing a new gas supply corridor across the countries from Norway to Poland (Iea.org 2017).
Similar to other energy projects, the Baltic Pipe Project also faces some key global issues and challenges that may hinder the future prospects. The project aims to offer the scope of increased trade of gas on the basis of stronger network in the EU. According to Europe’s Energy Policy, a completely competitive internal market for energy can be achieved through a pan-European integrated network for energy that would allow the free movement of gas across the continent. The sufficient cross border facilities and capacities among the countries and access to the diversified portfolio are extremely important for creating a single, competitive, flexible and internal market for sustainable energy. The Baltic Pipe Project has opened up immense possibility for the participating countries, such as, Poland and Denmark as well as for the other countries regarding the secure supply of sustainable energy at a competitive price (Kolios and Read 2013).
The growth prospects of such cross border energy projects can be analyzed using PESTLE analysis. PESTLE is an analysis tool for the external influences on the performance of a company or project and stands for political, economical, social, technological, legal and environmental factors, which affect the operations of an organization or project. In the case of the Baltic Pipe Project, the PESTLE analysis will depict the various factors for the energy infrastructure projects that may help in increasing the energy security (Zalengera et al. 2014).
Political: The member countries for the Baltic Pipe Project and the beneficiary countries are all under the same roof of the EU and have stable political environment that ensures smooth functioning of the gas transmission project. There is no geopolitical conflicts and government of majority of the oil and gas producing countries control more than 90% of their reserves through national companies that helps to eliminate the conflicts (Pitatzis 2016).
Economic: Many global economic factors influence the direction of any cross border gas transmission project like the Baltic Pipe Project. The cost of exploration and production, investment capital, revenue and profit level and economic condition of the countries are economic factors that can have big impact on the Baltic Pipe Project (ramboll.co.uk 2017). In the Norwegian Sea, the extraction conditions are harsh, that raises the cost of exploration along with the price. At the same time, huge level of investment, supported by the EU has provided the scope for capital access to this project.
Social: Migration, culture, demography, religion, ideological views and income of the people are the social factors that affect the gas projects. In this case, the awareness of the environment, employment opportunities and improvement in living conditions are the social factors affecting the prospects of the project.
Technological: This is one of the biggest external factors important for any project like the Baltic Pipe Project. The exploration and extraction machineries, tools and equipment for transmission, distribution and supply, technology for inspection, measurement must be new or improved and well maintained.
Legal: Baltic Pipe Project has abided by all the legal requirement for operating successfully in all the countries. The rules and regulations must be obeyed by this project to avoid any legal consequences in future.
Environmental: The Baltic Pipe Project is a project on secure energy supply in Poland, Denmark and Central and Eastern Europe. There will be impact on the environment; however, the companies follow the sustainability policies to minimize the impact on the environment. The objectives of the project are aligned with these factors and hence, have the potential to increase the secured energy supply (Godzimirski and Nowak 2018).
UK has been going through the negotiations for developing the exit terms after the Brexit referendum had taken place in 2016. Had the Brexit not happened, UK would have enjoyed more benefits of the Baltic Pipe Project at a cheaper price. Being the member of IEA, UK can access to the energy at a same price like the other members but due to the impact of Brexit, UK is losing the access to the single market of EU and thus, UK has to pay higher price for the energy (Ziemele, Pakere and Blumberga 2016).
Conclusion
EU has introduced policies, such as, the Energy 2020 and Energy 2030, with the goal of affordable, secure and sustainable supply of energy across the continent. The Baltic Pipe Project follows the same objectives to increase the gas supply in a new corridor by 2022. The project aims for energy efficient EU, integrated market for energy, extension of leadership in energy technology, strengthening the dimension for renewable sources of energy and providing a secured energy supply from the Norwegian Sea. Not only Poland, but Denmark will also benefit from this project in all types economical aspects and the EU will get another new source of affordable energy through the Baltic Pipe Project.
References
baltic-pipe.eu, 2018. The Project – About – Baltic Pipe Project. [online] Baltic Pipe Project. Available at: https://www.baltic-pipe.eu/about/the-project-about-benefits/ [Accessed 6 Mar. 2018].
ec.europa.eu, 2018. Energy Strategy and Energy Union – Energy – European Commission. [online] Energy. Available at: https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union [Accessed 6 Mar. 2018].
Godzimirski, J.M. and Nowak, Z., 2018. EU Gas Supply Security: The Power of the Importer. In Energy Security in Europe (pp. 221-249). Palgrave Macmillan, Cham.
Iea.org, 2017. World Energy Outlook 2017. [online] Iea.org. Available at: https://www.iea.org/media/weowebsite/2017/Chap1_WEO2017.pdf [Accessed 6 Mar. 2018].
Kolios, A. and Read, G., 2013. A Political, Economic, Social, Technology, Legal and Environmental (PESTLE) Approach for Risk Identification of the Tidal Industry in the United Kingdom. Energies, 6(12), pp.5023-5045.
M?ynarski, T., 2016. The role of Polish gas investments in enhancing Central and Eastern Europe Energy Security.
Pitatzis, A., 2016. PEST Analysis for Global Oil and Gas Companies Operations. [online] Energyroutes.eu. Available at: https://energyroutes.eu/2016/05/08/pest-analysis-for-global-oil-and-gas-companies-operations/ [Accessed 6 Mar. 2018].
ramboll.co.uk, 2017. The Baltic Pipe Project – Feasibility study. [online] United Kingdom. Available at: https://www.ramboll.co.uk/projects/rog/baltic-pipe-project-feasibility-study [Accessed 6 Mar. 2018].
Scarlat, N., Dallemand, J., Monforti-Ferrario, F., Banja, M. and Motola, V., 2015. Renewable energy policy framework and bioenergy contribution in the European Union – An overview from National Renewable Energy Action Plans and Progress Reports. Renewable and Sustainable Energy Reviews, 51, pp.969-985.
Zalengera, C., Blanchard, R.E., Eames, P.C., Juma, A.M., Chitawo, M.L. and Gondwe, K.T., 2014. Overview of the Malawi energy situation and A PESTLE analysis for sustainable development of renewable energy. Renewable and Sustainable Energy Reviews, 38, pp.335-347.
Ziemele, J., Pakere, I. and Blumberga, D., 2016. The future competitiveness of the non-Emissions Trading Scheme district heating systems in the Baltic States. Applied energy, 162, pp.1579-1585.
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