BASREC Ministerial meeting in Reykjavik 28. October 2005.

Valgerður Sverrisdóttir Minister of Industry and Commerce.


Commissioner Piebalgs, esteemed representatives of the BASREC member countries, dear guests.

It is with great pleasure that welcome you to Iceland and to this important meeting. Today we will take stock of our achievements so far and set priorities for the coming years. It is my firm believe that co-operation between nations is an important thing that adds to mutual understanding of different situation with different nations. I believe that regional co-operation such as we have in BASREC were we focus on the very essential issue of energy is important and will become even more important in the future. As we all know the issue of energy supply will in the future be of more significance as energy demand in the world increases. Although the energy situation differs between the individual member countries we will all gain from the co-operation.

As I know that many of you are visiting Iceland for the first time I would like to give you some insight into the energy situation in Iceland.

Iceland produces all its electricity from renewable natural resources, and almost 90% of all heating is based on geothermal sources. Furthermore, 72% of the total gross energy usage in the country derives from renewable energy resources, which is the highest utilisation rate of renewable energy sources in the world. Natural conditions in Iceland favour the harnessing of geothermal and hydropower for generation of electricity. The harnessing of these natural resources for economic and sustainable development has played a large role in maintaining a high standards of living here in Iceland.


Ladies and Gentlemen

I would like to give a short overview of Icelandic priories during our presidency in the Council of Baltic Sea States which we hold until 30th of June 2006. This is the first time that Iceland holds the CBSS presidency. Iceland became member of CBSS in 1995, three years after its establishment. Although Iceland is not directly adjacent the Baltic Sea, it belongs to the Scandinavian "family" and has contributed to democratic development, trade and investment in the Baltic Sea area during its more recent history.


Iceland places great value on cooperation with the regional organizations in Northern Europe and the European Union on the basis of the Northern Dimension.

Let us then focus on the energy sector and regional co-operation in this sector. The general targets of BASREC were defined in the communiqués of the conferences and meetings of the Ministers of Energy in Stavanger in 1998, in Helsinki in 1999 and in Vilnius in 2002. It has been agreed that the main goal of BASREC is ensuring an effective, efficient and environmentally sound energy system for the Baltic Sea Region. A key precondition for this is enhanced framework conditions for investments and energy trade that promote the use of secure, affordable and environmentally sound energy sources. Co-operation with the energy industry is a key activity for achieving the above mentioned goals.



Before I ask my permanent secretary, Mr. Kristján Skarphéðinsson, to assist me in chairing the meeting I would open again like to welcome you all and express my hopes for a fruitful meeting.

Mr. Skarphéðinsson if you would now introduce the agenda of the meeting.









Commissioner Piebalgs, distinguished representatives of the BASREC member countries, dear guests.

The Group of Senior Energy Officials has prepared a report to the ministers, covering the BASREC activities during the period from the last Ministerial Conference in Vilnius in November 2002. You should all have received a copy of the report and on behalf of the Ministers I would like to thank the GSEO for their report. I will now highlight what I feel are the main points of the report.

As is stated in the report the period from 2003 to 2005 has been marked with changes in the region, in particular the enlargement of the European Union. This means that ten of the eleven BASREC states are effectively part of one energy market. Furthermore, global trends in energy demand and supply are influencing prices and investment potential locally. These factors, the progress of liberalised markets, of policies to enhance sustainability, concentration of market power, global trends and geopolitical shifts and interplays, have led to new dynamics internationally in energy markets and policies and have given rise once more to concerns about security of energy supply. This shifting picture needs to be tracked continually and policies adjusted accordingly.


The EU-Russia energy dialogue has become a key forum to understand the way in which the EU energy market and the Russian energy market interrelate. Each of the regional countries of course at the same time has distinct bilateral relations with Russia. These cover many issues and energy is just one of these. The Northern Dimension continues to offer a good general framework to combine regional work with Russia.


System and cross-border interconnection in the region is increasingly an issue concerning not only bilateral, but also multilateral agreements. The BASREC context may therefore be a convenient forum for achieving progress, as many potential interconnector projects will involve regional countries and players, with Russia and among regional countries. This can mean working actively on these projects, or undertaking the study work needed, to create the preconditions for investments. The idea to start with a broad-based regional study on security of supply at this time has been expressed.


The report gives an excellent overview of the structure of the work as well as BASREC activities and events. The conferences in Saint Petersburg and Tallinn in 2004 and the workshop in Poland played a key role in guiding the BASREC process. However, the main event of the period has to be the signature and ratification of the Testing Ground Agreement. The creation of the Testing Ground Facility means that conditions are ready to initiate climate change projects with 15 Million Euros put into place. The importance of the environmental dimension is constantly increasing and it is good to express that BASREC and

BASREC countries have been the most active on the climate change agenda at regional level, in European context and globally. Therefore strengthened practical collaboration and carrying out projects which can positively influence emissions levels, including demand-side measures, in the context of the Testing Ground Agreement should be used to stimulate the climate change agenda. This can help us achieve a level playing field in regional and global emissions trading schemes. And at this stage of a new policy field using new instruments it is a period of training for our governments and companies – the Testing Ground is ideally suited to build capacity and experience before 2008.


The report gives a detailed description of the activities of the five working groups under the GSEO. The BASREC cooperation in the period of 2003 to 2005 has built upon the foregoing period, stabilising and extending established agendas in climate change, electricity, energy efficiency, gas and renewables, with a focus on bioenergy, as indicated by the Ministers in the Vilnius communiqué. The five working groups have actively pursued their agendas.


The working group on bioenergy has contributed to capacity building at a period of rapid growth for regional bioenergy markets. The electricity working group has reviewed and pursued options to progress in regional interconnection. The energy efficiency working group has identified and started work on key issues of focus, buildings and district heating, and found its role in the trend of increasing attention to energy efficiency in Europe and worldwide. This is an area which Mr. Piebalgs has given well-deserved focus in a recent Green Paper. I congratulate his foresight and determination to pursue a long, difficult and vital road to the hard discipline required of all users of energy in our world today. The working group on gas has monitored and analysed barriers to market and infrastructure development. I will not go into in more detail but we will have an opportunity to discuss these topics later.


Chapter five of the report deals with the financing and organisation of the BASREC activities. One of the main objectives of this ministerial meeting is to take stock of the work and discuss how we should move forward. The most important part of that discussion is the future organisation of BASREC and what is our vision of the future for BASREC.


Ladies and Gentlemen,

I would like to conclude this by saying that despite regional and global changes, BASREC has showed to be successful in many respects and that this is reflected in the report. The changes may have led to different views on how to proceed and they call for an evaluation of the future of BASREC. I believe that in that work it is important that we do not forget the progress we have made, for example with the Testing Ground and that more work is to be done regarding that. Furthermore, I think it is important to keep in mind that the BASREC network is and can be a valuable asset for future regional cooperation in the energy sector. It plays a role in integrating regional energy markets and promoting investments in the region, including implementation of the internal European energy market in the region and regional projects related to the EU-Russia dialogue.