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Ukraine says discussed guarantees with US and Germany over Nord Stream 2

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The logo of the Nord Stream 2 gas pipeline project is seen on a pipe at the Chelyabinsk pipe rolling plant in Chelyabinsk, Russia, February 26, 2020.  REUTERS/Maxim Shemetov//File Photo

The energy ministers of Ukraine, the United States and Germany discussed guarantees for Ukraine about its future as a transit country after the construction of Russia's Nord Stream 2 gas pipeline, Ukraine's energy chief said on Monday (23 August), write Pavel Polityuk and Matthias Williams.

Kyiv fears Russia could use the pipeline, which will bring Russian gas to Germany under the Baltic Sea, to deprive Ukraine of lucrative transit fees. Several other nations also worry it will deepen Europe's dependence on Russian energy supplies.

The three ministers discussed "a number of steps that can be taken together in terms of real guarantees for Ukraine regarding the preservation of transit," Energy Minister Herman Halushchenko said.

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"We proceeded from the position that was declared and voiced by the president of Ukraine - that we cannot allow the Russian Federation to use gas as a weapon," he told reporters.

Ukraine is bitterly opposed to a deal between Washington and Berlin over Nord Stream 2, which will carry gas to Europe while bypassing Ukraine. U.S. President Joe Biden's administration has not tried to kill off the project with sanctions, as Ukraine lobbied for.

"From today's perspective we shouldn't reject any suggestions, but also not create any insurmountable obstacles," German Economy and Energy Minister Peter Altmaier told reporters.

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German Chancellor Angela Merkel met Zelenskiy in Kyiv on Sunday to offer reassurances Ukraine's interests would be protected, but Zelenskiy called for greater clarity on what steps would be taken. read more

Monday's meeting took place on the sidelines of the Crimea Platform, a summit in Kyiv designed to keep international attention focused on returning the Crimea peninsula, annexed by Russia in 2014, back to Ukraine.

"I will personally do everything possible to return Crimea, so that it becomes part of Europe together with Ukraine," Zelenskiy told delegates from 46 countries.

Addressing the summit after the gas talks, Altmaier accused Russia of repression in Crimea. "We will not allow Crimea to become a blind spot," he said.

U.S. Energy Secretary Jennifer Granholm said sanctions on Moscow would remain until Russia ceded back control of the peninsula, adding "Russia must be held accountable for its aggression".

Relations between Kyiv and Moscow collapsed after the annexation and the outbreak of war between Ukrainian troops and Russian-backed forces in eastern Ukraine that Kyiv says has killed 14,000 people in seven years.

Ukraine has accused Russia of trying to sabotage the summit by pressuring countries not to attend, while Russia has criticised the West for supporting the event.

Electricity interconnectivity

Commission approves Greek measures to increase access to electricity for PPC's competitors

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The European Commission has made legally binding, under EU antitrust rules, measures proposed by Greece to allow the competitors of Public Power Corporation (PPC), the Greek state-owned electricity incumbent, to purchase more electricity on a longer-term basis. Greece submitted these measures to remove the distortion created by PPC's exclusive access to lignite-fired generation, which the Commission and Union courts had found to create an inequality of opportunity in Greek electricity markets. The proposed remedies will lapse when existing lignite plants stop operating commercially (which is currently expected by 2023) or, at the latest, by 31 December 2024.

In its decision of March 2008, the Commission found that Greece had infringed competition rules by giving PPC privileged access rights to lignite. The Commission called on Greece to propose measures to correct the anti-competitive effects of that infringement. Due to appeals at both the General Court and European Court of Justice, and difficulties with the implementation of a previous remedies submission, such corrective measures have not been implemented so far. On 1 September 2021, Greece submitted an amended version of the remedies.

The Commission has concluded that the proposed measures fully address the infringement identified by the Commission in its 2008 Decision, in light of the Greek plan to decommission all existing lignite-fired generation by 2023 in line with Greece's and the EU's environmental objectives. Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The decision and the measures proposed by Greece will enable PPC's competitors to better hedge against price volatility, which is a vital element for them to compete in the market for retail electricity and offer stable prices to consumers. The measures work hand in hand with the Greek plan to decommission its highly polluting lignite-fired power plants by discouraging the usage of these plants, fully in line with the European Green Deal and the EU's climate objectives.”

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A full press release is available online.

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Biofuels

Commission approves one-year prolongation of tax exemption for biofuels in Sweden

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The European Commission has approved, under EU state aid rules, the prolongation of the tax exemption measure for biofuels in Sweden. Sweden has exempted liquid biofuels from energy and CO₂ taxation since 2002. The measure has already been prolonged several times, the last time in October 2020 (SA.55695). By today's decision, the Commission approves an additional one-year prolongation of the tax exemption (from 1 January to 31 December 2022). The objective of the tax exemption measure is to increase the use of biofuels and to reduce the use of fossil fuels in transport. The Commission assessed the measure under EU State aid rules, in particular the Guidelines on State Aid for environmental protection and energy.

The Commission found that the tax exemptions are necessary and appropriate for stimulating the production and consumption of domestic and imported biofuels, without unduly distorting competition in the Single Market. In addition, the scheme will contribute to the efforts of both Sweden and the EU as a whole to deliver on the Paris agreement and move towards the 2030 renewables and CO₂ targets. The support to food-based biofuels should remain limited, in line with the thresholds imposed by the revised Renewable Energy Directive. Furthermore, the exemption can only be granted when operators demonstrate compliance with sustainability criteria, which will be transposed by Sweden as required by the revised Renewable Energy Directive. On this basis, the Commission concluded that the measure is in line with EU state aid rules. More information will be available on the Commission's competition website, in the State Aid Register under the case number SA.63198.

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Energy

Biden administration aims to cut costs for solar, wind projects on public land

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Solar panels are seen at the Desert Stateline project near Nipton, California, U.S. August 16, 2021. REUTERS/Bridget Bennett
Solar panels are seen at the Desert Stateline project near Nipton, California, U.S. August 16, 2021. Picture taken August 16, 2021.  REUTERS/Bridget Bennett

The Biden administration plans to make federal lands cheaper to access for solar and wind power developers after the clean power industry argued in a lobbying push this year that lease rates and fees are too high to draw investment and could torpedo the president's climate change agenda, write Nichola Groom and Valerie Volcovici.

Washington’s decision to review the federal land policy for renewable power projects is part of a broader effort by the government of President Joe Biden to fight global warming by boosting clean energy development and discouraging drilling and coal mining.

“We recognize the world has changed since the last time we looked at this and updates need to be made,” Janea Scott, senior counselor to the U.S. Interior Department’s assistant secretary for land and minerals, told Reuters.

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She said the administration is studying several reforms to make federal lands easier for solar and wind companies to develop, but did not give specifics.

The push for easier access to vast federal lands also underscores the renewable energy industry’s voracious need for new acreage: Biden has a goal to decarbonize the power sector by 2035, a target that would require an area bigger than the Netherlands for the solar industry alone, according to research firm Rystad Energy.

At issue is a rental rate and fee scheme for federal solar and wind leases designed to keep rates in line with nearby agricultural land values.

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Under that policy, implemented by the administration of President Barack Obama in 2016, somemajor solar projects pay $971 per acre per year in rent, along with over $2,000 annually per megawatt of power capacity.

For a utility-scale project covering 3,000 acres and producing 250 megawatts of power, that is a roughly $3.5 million tab each year.

Wind project rents are generally lower, but the capacity fee is higher at $3,800, according to a federal fee schedule.

The renewable energy industry argues the charges imposed by the Interior Department are out of sync with private land rents, which can be below $100 per acre, and do not come with fees for power produced.

They are also higher than federal rents for oil and gas drilling leases, which run at $1.50 or $2 per year per acre before being replaced by a 12.5% production royalty once petroleum starts to flow.

"Until these overly burdensome costs are resolved, our nation will likely miss out on living up to its potential to deploy homegrown clean energy projects on our public lands — and the jobs and economic development that come with it," said Gene Grace, general counsel for clean energy trade group American Clean Power Association.

The renewable energy industry has historically relied on private acreage to site large projects. But big tracts of unbroken private land are becoming scarce, making federal lands among the best options for future expansion.

To date, the Interior Department has permitted less than 10 GW of solar and wind power on its more than 245 million acres of federal lands, a third of what the two industries were forecast to install nationwide just this year, according to the Energy Information Administration.

The solar industry began lobbying on the issue in April, when the Large Scale Solar Association, a coalition of some of the nation’s top solar developers - including NextEra Energy, Southern Company and EDF Renewables - filed a petition with Interior’s Bureau of Land Management asking for lower rents on utility-scale projects in the nation’s blistering deserts.

A spokesperson for the group said the industry initially focused on California because it is home to some of the most promising solar acreage and because land around major urban areas like Los Angeles had inflated assessments for entire counties, even on desert acreage not suitable for agriculture.

Officials at NextEra (NEE.N), Southern (SO.N), and EDF did not comment when contacted by Reuters.

In June, the Bureau lowered rents in three California counties. But solar representatives called the measure insufficient, arguing the discounts were too small and that the megawatt capacity fee remained in place.

Attorneys for both the solar companies and BLM have discussed the issue in phone calls since, and further talks are scheduled for September, according to Peter Weiner, the attorney representing the solar group.

"We know that the new folks at BLM have had a lot on their plates," Weiner said. "We truly appreciate their consideration."

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