Lithuanian energy independence: a carbon wolf in sheep’s clothing?

Thursday, 06 September 2018 14:28
The Ignalina nuclear plant in Lithuania, which the EU demanded to be shut down as a condition of accession The Ignalina nuclear plant in Lithuania, which the EU demanded to be shut down as a condition of accession
Since Lithuania joined the European Union in 2004, the relationship between Vilnius and Brussels has mostly been a happy one.
Lithuania is the second-biggest net beneficiary of EU investment, with €8.56 billion earmarked for Lithuanian schools, laboratories, oncology centres and even the bustling airport in Kaunas from 2014-20. In return, Lithuania has adopted the euro and its officials talk up their commitment to “Western values.”

Ignoble end for Ignalina

As with any relationship, however, there are hurdles. One bone of contention concerns the 2600MW Ignalina nuclear plant, which the EU obliged the Lithuanians to shut down as a condition of accession. Vilnius reluctantly complied, shuttering the first unit in 2004 and the second in 2009. Nearly ten years later, Lithuania and the EU are still negotiating how much each side should pay for decommissioning.

Brussels has pledged €552 million from 2021-2027, while Lithuanian energy minister Zygimantas Vaiciunas insists on €780 million. Part of Brussels’ reluctance to fork over more cash is due to concerns over how swiftly Ignalina is being retired. A 2016 Court of Auditors report criticised Ignalina and other Soviet-era reactor decommissioning projects for running behind schedule. The report also accused Lithuania of using funds to maintain rather than decommission the site.

Energy “independence”

The loss of Ignalina continues to impact Lithuania’s energy mix. The plant provided roughly 80% of the country’s power needs and enabled Vilnius to export 12 billion kilowatt-hours (kWh) of electricity in 2003 alone. Its closure transformed Lithuania from a net exporter of electricity into an importer— with no coal, oil or gas resources to fall back on. Even as energy officials struck supply deals with Estonia, Latvia, Belarus and Ukraine, Russia inevitably stepped in to fill the supply gap. By 2012, Russia was providing 63% of Lithuania’s electricity and Gazprom became the sole supplier to Lithuania’s natural gas market.

Lithuania, where memories of Soviet rule are still fresh, responded with a strategy of ‘energy independence’. A huge LNG terminal in the port city of Klaipeda started operations in 2014, importing gas from Norwegian firm Statoil. The LitPol (Lithuania-Poland) and NordBalt (Lithuania-Sweden) grid extension projects linked Lithuania’s grid with those of its neighbors and facilitiated import diversification. These projects have already dramatically changed how, and from whom, Lithuania imports its electricity. In 2016, NordBalt alone accounted for 27% of Lithuania’s electricity consumption. Russian imports supplied less than a third of Lithuania’s electricity needs.

Now Lithuania, in tandem with its Baltic neighbours, is working on an even bolder move: disconnecting entirely from BRELL, the power grid which connects the Baltic countries with Belarus and Russia. Lithuania and its neighbors are now set to hook the country up to the European grid by 2025.

The European Commission is funding the €1 billion intiative, even though critics assert desynchronization makes more sense on political grounds than economic ones. Poland has raised both economic and environmental concerns. As recently as last year, Lithuanian leaders were considering the “plan B” option of joining the European grid on their own if Latvia and Estonia chose to remain in BRELL. The LitPol and NordBalt projects have already demonstrated that desynchronizing is not a prerequisite to diversifying Lithuania’s electricity supply. While Lithuanian leaders pitch exiting BRELL as a safeguard against “geopolitical blackmail”, Russia’s hold over Lithuania’s electricity sector has already been broken.

A new Iron Curtain?

This push for electric autonomy offers symbolic separation from Moscow, but it does nothing to alleviate another problem: the country’s overwhelming reliance on carbon-intensive fuel sources. Usage of fossil fuels has soared from just over 50% of overall energy consumption in 2004, when the Ignalina closure began, to a peak of nearly 75% in 2012. The government’s pledges to support renewable energy still leave the question of post-Ignalina baseload power unanswered. Lithuania’s “independence” strategy has helped create a carbon dependency characterised by low diesel taxes and plummeting revenues from environmental levies. The Klaipeda LNG terminal does not help reduce Lithuania’s rising carbon footprint.

The EU, despite its desire to wean member states off fossil fuels, may have aided and abetted this approach. Across the border in Belarus, the Astravets nuclear plant is currently under construction and would add 2,400MW of low-carbon electricity to the regional network. Astravets is set to become the only such facility in the Baltic region – and could offer Lithuania the carbon-free baseload power it lost when Ignalina went offline. Instead, Lithuanian officials have promised to block any electricity from Astravets entering the country and extracted pledges from Brussels that the bloc will take a unified position towards the project.

Vilnius insists Astravets is unsafe and that the project is a Russian power play, pointing out that construction is led by Russia’s state-backed nuclear energy company. Belarus has always maintained its neighbor’s complaints are baseless. Last year, European Commission President Jean-Claude Juncker pledged full solidarity with Lithuanian demands to ensure the safety of the plant. This July, however, the official results of an EU “stress test” conducted at Astravets by a team of European inspectors ultimately found the facility lived up to European standards.

A curious turn of events

Why is Vilnius so insistent on cutting off a major source of clean energy being built right on its border? The adamant rejection of Astravets is a stark turnaround from a few years ago, when Lithuanian politicians were keen to build their own 1,350MW nuclear power station at Visaginas until the plans were voted down in a 2012 referendum. Is anti-nuclear sentiment the real driving force behind Lithuania’s opposition? Or is it perhaps a question of the country’s fledgling LNG industry promoting gas consumption by raising electricity prices?

Some critiques of Vilnius’ energy policies point to the latter, and specifically to the substantial underutilization of the Klaipeda terminal. Alchema, Lithuania’s largest gas consumer and also Klaipeda’s largest customer, has accused the government of engineering a state aid scheme to prop up the LNG terminal. If Lithuania’s pricey moves towards energy “independence” are in fact cover for subsidizing fossil fuel interests, then the EU is well within its rights to ask where its money will be going.

The Brussels Times
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