VZCZCXRO0486
RR RUEHAG RUEHAST RUEHDF RUEHHM RUEHIK RUEHLN RUEHLZ RUEHMA RUEHPB
RUEHPOD RUEHROV RUEHTM
DE RUEHBS #1189/01 2131539
ZNR UUUUU ZZH
R 311539Z JUL 08
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA
RUEHAH/AMEMBASSY ASHGABAT
RUEHKB/AMEMBASSY BAKU
RUEHKV/AMEMBASSY KYIV
RUEHMO/AMEMBASSY MOSCOW
RUEHKO/AMEMBASSY TOKYO

UNCLAS SECTION 01 OF 02 BRUSSELS 001189 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET SENV
SUBJECT: AMBASSADOR SILVERBERG'S MEETING WITH EU ENERGY 
COMMISSIONER PIEBALGS 
 
REF: A. A. BRUSSELS 952 
     ¶B. B. SOFIA 503 
 
¶1.  (SBU) Summary.  In a July 28, 2008 meeting with 
Ambassador Silverberg, EU Energy Commissioner Andris Piebalgs 
laid out his goals and concerns for the coming months.  On 
the environment, Piebalgs argued for the need for the US, the 
EU, and Japan to adopt a common position going into the 
Copenhagen negotiations.  He acknowledged that China and 
India would have to be part of any agreement, but said he was 
not sure exactly what commitments they would be willing to 
make.  On energy security, Piebalgs lamented that political 
problems are preventing a solution to open up the Southern 
Corridor for gas transit through Turkey.  According to 
Piebalgs, Turkey has fallen back on demanding t keep a 
lift-off clause as a pre-condition foran agreement, which is 
a non-starter for Azerbaijan.  Piebalgs thinks there is 
currently a power vacuum in Russia and he doesn't understand 
current Russian actions on TNK-BP, the oil cutoff to the 
Czech Republic, and the lack of Russian interest in pursuing 
South Stream, which Piebalgs categorized as dead.  Speaking 
on energy efficiency, biofuels, and energy research, Piebalgs 
emphasized the need for greater cooperation between the U.S. 
and the EU.  Looking ahead to autumn, Piebalgs indicated he 
would be devoting much of his time to the EU's Strategic 
Energy Review.  The difficult question for him will be what 
the EU should announce, especially regarding the balance 
between member state competencies and EU competencies.  End 
Summary. 
 
¶2.  (SBU) In a July 28, 2008 meeting with Ambassador 
Silverberg, EU Energy Commissioner Andris Piebalgs laid out 
his goals and concerns on a range of subjects including the 
environment, energy security, energy efficiency, biofuels, 
energy research, and the Commission upcoming Strategic Energy 
Review. 
 
Environment 
----------- 
¶3.  (SBU) Piebalgs began by noting the good cooperation he 
has enjoyed in the past with USEU.  He said the major issue 
coming up for him is the Environment Summit in Copenhagen. 
Piebalgs said his dream would be for the U.S., the EU, and 
Japan to agree to a common position on climate change, but he 
realizes this will be challenging.  He emphasized that 
industry needs clear signals on climate change policy to make 
investment decisions.  Asked about including the major 
developing nations (especially China and India) in a climate 
agreement, Piebalgs said he agreed that China and India must 
be part of any agreement, but is less clear what their 
commitments under an agreement would be.  While they would 
need to share the same goals, they might have different 
commitments than developed nations.  He believes China will 
be willing to agree to targets for energy efficiency and 
sectoral goals, but he is not sure this will be enough. 
Japan has been working to try to involve China and India 
through the sectoral approach.  At this point, it is not 
clear to him what the blueprint for Copenhagen will be.  He 
does believe, however, the difficulties to overcome are 
mainly technical, not political. 
 
Energy Security 
--------------- 
¶4.  (SBU) Piebalgs sees the question of European energy 
security becoming more and more political.  The biggest 
problem affecting the Southern Corridor strategy is the EU's 
inability to reach an agreement on transit.  Piebalgs 
indicated that the EU team, which held discussions in Turkey 
on July 24, did not meet with success.  Contrary to the 
positive outlook for a breakthrough noted Ref. A, Turkey 
insists on a lift-off clause as a pre-condition for an 
agreement.  According to Piebalgs, this is a non-starter for 
Azerbaijan who doesn't want to see part of its exports 
siphoned off in Turkey at a lower price than it could get by 
exporting to Europe.    Piebalgs stressed that Turkey could 
end up being bypassed and said it was a pity that Turkey 
doesn't realize this.  Energy Minister Guler, unlike the MFA, 
does not seem to understand this risk.  Piebalgs noted he is 
now waiting on the political developments regarding the AKP 
closure case, but whatever the results the EU will continue 
working towards a solution with Turkey. 
 
 
BRUSSELS 00001189  002 OF 002 
 
 
¶5.  (SBU) Speaking candidly, Piebalgs said he believes the 
Russian South Stream project is nearly dead and seems to have 
been completely abandoned by the Russians.  He indicated he 
does not understand why the Russians have stopped pursuing 
it.  Piebalgs categorized the problems with Nord Stream, on 
the other hand, as lying within the EU, not with Russia. 
Turning to the recent Russian oil supply problems in the 
Czech Republic, Piebalgs said the Russians had sent a letter 
to the Czech's proposing that the Czech government start 
purchasing Russian oil directly, bypassing the traders. 
Piebalgs finds this strange, as he believes the supply 
"problems" were politically motivated - traders make money by 
shipping oil, not by disrupting supplies.  Similarly, 
Piebalgs described the TNK-BP situation as ridiculous and 
nothing more than an expression of British-Russian security 
relations.  Piebalgs sees this episode as evidence there is 
currently a power vacuum in Russia. 
 
Energy Efficiency, Biofuels, and Energy Research 
--------------------------------------------- --- 
¶6.  (SBU) Speaking on energy efficiency, Piebalgs mentioned 
the EU initiative for external power supplier (phone 
chargers, etc.) performance criteria.  He acknowledged that 
the U.S. has the lead in this field and that his goal is to 
get the EU up to U.S. standards within one year after the 
proposal is adopted.  In two years, the goal would be to move 
beyond the U.S. standard.  Part of this proposal would 
involve implementing a mandatory Energy Star program, rather 
than a voluntary one.  Piebalgs emphasized that his 
philosophy is that if similar standards are developed in the 
U.S.  and the EU, they should be compatible and along the 
same lines.  He pointed to cars as one of those areas where 
there is a divergence in standards with the U.S. using miles 
per gallon and the EU using grams of CO2 per kilometer.  He 
pointed to biofuels as an area where both sides of the ocean 
are working well together to develop standards.  He said that 
the EU biofuels program has survived the public outcry phase 
and will go forward because biofuels address both climate 
change and energy security. 
 
¶7.  (SBU) Piebalgs lamented the fact that the EU and the U.S. 
have not had better cooperation in energy research and 
development, using the example of an EU Commission proposal 
for cooperation on a bio-refinery to which the US, in his 
words, did not respond.  He also thinks the U.S. and the EU 
could do more together on research for second generation 
biofuels.  Piebalgs believes demonstration projects for 
second generation biofuels are needed quickly, but so far 
everyone seems to be competing and not cooperating.  Lack of 
cooperation is not just an EU/U.S. problem, Piebalgs pointed 
to Sweden, which has three demonstration projects underway 
all of which he believes will fail because they are not 
cooperating.  He feels the key going forward will be to find 
a balance between cooperation and competition. 
 
Strategic Energy Review 
----------------------- 
¶8.  (SBU) Looking ahead to autumn, Piebalgs indicated he 
would be devoting much of his time to the EU's Strategic 
Energy Review.  The difficult question for him will be what 
the EU should announce, especially regarding the balance 
between member state competencies and EU competencies.  In 
his mind, there is really only one national competence left - 
the decision for or against the use of nuclear energy.  He 
acknowledged, however, that the member states would disagree. 
 As such, he will be looking for a proposal that goes far 
enough to be valuable but doesn't go too far in antagonizing 
the member states. 
 
¶9.  (SBU) Comment.  The EU's negotiations with Turkey on gas 
transit seemed to have taken a turn for the worse with 
political issues seemingly outweighing commercial issues. 
Piebalgs's comments on South Stream are surprising, 
especially in the face of recent press reports citing 
ratification of South Stream by Bulgaria's Parliament. (Ref. 
B) End Comment. 
 
Silverberg. 
.