Baltic States – CIS, Energy, Estonia, EU – Baltic States, Forum, Latvia, Round Table

The article is prepared for the Round Table “Regional economy’s transformation in the Baltic Sea Area”, organised by the Baltic International Academy, Latvian Employers Association and International Web-Magazine “The Baltic Course” on 21^st of October in Riga, Latvia. 

Hot zones of the planet – the Middle and Far East, Latin America, Central Asia are zones where power-producing problems are solved.

System researches, performed in several countries in recent years, have revealed new important tendencies in power-engineering development of the world that may have significant impact not only on social and economic processes, but on the world order as a whole. The general conclusion of these researches is that power-engineering is becoming a determining factor of social and economic development both of a single country and of the world as a whole.

A level of power-engineering development is the crucial indicator of economy and society. The farther, the more obvious that security of energy supply of any country is becoming to a large extend a synonym of its national safety.

Dialectics of power-engineering current state is growth of energy consumption and simultaneous exhaustion of natural power resources. Growth of energy consumption inevitably results in growth of anthropogenous, negative impact on the environment. In these conditions a rise in prices for power resources becomes objectively caused. "Inexplicable" swings in power resources prices are a consequence of politico-speculative processes, they do not reflect real tendencies.

Let's look at some figures. Nowadays the annual volume of the world manufacture of primary energy sources makes about 10 billion tons of an oil equivalent. By 2020 growth to 15 billion tons and by the middle of the century  to 20 billion tons is expected. According to the different estimates, the known reserves of primary energy resources,  on retention of modern level of annual consumption, will suffice:

• Oil – for 40-60 years,
• Natural gas – for 65-150 years,
• Coal – for 250-300 years,
• Combustible shales - not less than for 250-300 years.

In possession of a modern structure of energy production by 2020 it is possible to expect growth in emissions of carbon dioxide by almost 100 %. Both growth of consumption of power resources and growth of emissions of carbon dioxide will be primarily at the expense of Asian and African countries (notably China and India).

As to the prices of power resources, according to the latest forecasts of the largest world institutions of strategic researches, growth in oil price up to 120-150 dollars per barrel is expected by 2020 (possibly by 2015)  and, accordingly, a rise in prices for other power resources. It is clear that prices of power resources can and will be influenced not only by objective, but also by conditionally subjective factors, such as political ones.

It should be noted that the world power-engineering developed and develops rather by fits and starts. A characteristic feature is its territorial differentiation. Local factors play in many respects a defining role in the level of power consumption and power resources endowment.

Globalisation processes, probably, will iron out regional distinctions in due course, but it will hardly occur in the foreseeable future. Today power consumption in different countries differs tens times, and availablity of power resources - hundreds and thousand times.

In these conditions dynamics of the world power-engineering development is determined by two opposite directed processes:

• The first one is the desire to overcome these distinctions;
• The second one is the aspiration to use territorial advantages.

A reflection of the first process is the formation of the international energy and economic legislation. A reflection of the second one is the formation of regional and inter-regional associations of the countries - "owners" of power resources - with the aim of economic domination.

Currently the Earth population makes more than 6.5 billion. Energy intensity in industrially developed countries, probably, will not rise essentially in the coming two decades, but it will increase considerably in developing countries. Today almost three quarters of the Earth population consumes on average about 2 KW per person, and almost 600 million people – only about 100W per person.

Experts know that by 2015 the Baltic States, the Northwest of Russia, Central and Eastern Europe will experirnce shortage of electric power (unless very serious capital-intensive measures are taken). Not accidentally the problems of power-engineering have come to the forefront of discussions at the highest political level. Practically the whole Eurasia will experience electric power deficiency.

The gas conflict between Russia and the Ukraine has very clearly designated a difference in position of energy volatile countries and independent ones.

It is worth mentioning another important factor.

Statistics show that with growth in energy consumption per one inhabitant per year the quality of life rises. The standard of living also depends on energy efficiency. It is obvious that in the countries with higher energy consumption the national income per capita is also higher.

Indicators of energy efficiency of the countries with similar climatic conditions

Power-engineering objectively dictates the necessity of strengthening of general attention to four major components of the globalization process:

• economization – i.e. strengthening attention to savings of constantly decreasing natural resources, increase of efficiency of their use;
• ecologization – i.e. strengthening attention to environment protection, introduction of non-polluting technologies;
• commucativeness (both informational and tangible) – i.e. strengthening attention to creation and functioning of transnational infrastructures (first of all the Internet networks and interconnections);
• socialisation – i.e. strengthening attention to decrease of contradictions in the society, first of all at the expense of convergence of a standard of living of population of different countries.

Considering everything abovementioned, the necessity of working out of strategic concepts of development of power both on the state and regional levels, and on the world level becomes obvious. The condition of power-engineering will be the defining factor, the catalyst of economy development.

But what acceptance of this or that concept of power supply of a country, region, world means? What principles should be put in its development?

First and foremost, it is obvious that a systemic ecological, social and economic approach should be put in the basis (Incidentally, Estonian scientists from the Institute of Energy of Estonian Academy of Sciences, including the author of the present article, were pioneers of working out of such approach in 70 – 80th years of XX century). Thus competent consideration of the possible options of power supply of any country requires a preliminary measurement (or obtaining) of some forecasts-vectors both of a regional and world character for the period of not less than 20-30 years.

Let’s name the major of them:

• the forecast of each country economic development (several options, of course), i.e. its orientations, scale, power consumption, capital intensity, labour intensity, environmental friendliness;
• the forecast of the number and development of socio-economic and living conditions of its population;
• the forecast of the world prices for different kinds of power resources, both with the account of their stocks, and with the account of ecological characteristics of their use;
• the forecast of reliability of power resources obtaining with the account of a political component in the countries of their production and transportation;
• the forecast of the prices for power equipment (with the account of these prices connection with the prices for metal);
• the forecast of labour costs;
• the forecast of capital cost;
• the scientific and technical forecast of improvement and increase of efficiency of traditional methods of generating, transmission and use of energy and introduction of new power technologies.

Such approach corresponds to a modern methodical level of carrying out of such works (researches). The result of such approach should be establishment of approximate requirements of each country in fuel and energy (approximate, since this is a forecast-vector), balanced with possibilities of their covering for the account of internal sources and import, finding of the optimal options of development of power economy, satisfying the scale and character of development of the national economy, revealing of investment possibilities for realization of this or that variant of power supply. Only such approach gives the chance to make justified decisions at the level of legislative and executive authorities. Unfortunately, today we see a number of unreasonable decisions at different levels.

Even one enumeration of required forecasts for development of concepts of power supply allows asserting that this work demands attraction of a wide range of experts and carrying out of serious scientific discussion (discussions). A number of problems must be a subject of public discussion.

Unfortunately, people who are poorly guided in system character of the considered problem frequently noncritically extend microeconomic calculations and tendentious forecasts of interested firms, identifying them with a full macroeconomic assessment, and distinction in these estimations are rather considerable.

Planned, and that is important, urgently required working out of concepts of power supply on страновом, regional and world levels is a consequence of globalisation and its display. Scale of this work should not frighten but only to underline its necessity.

The special attention should be drawn to «blood arteries» of the world economic – gas pipelines, oil pipelines, the main on-shore transmission lines. Construction of these objects effects the interests and sovereignty of many countries and, probably, requires working out of the international legal bases and rules.

Apparently, the initiative of carrying out of such huge, planetary amount of works and coordination of these works corresponds to the United Nations level.