On October 19, it was held in FIDE the session of Energy and Regulation Forum "Is our energy supply in danger?“. As speaker intervened Gonzalo Escribano, Director of the Energy and Climate Program of the Elcano Royal Institute. We also have the participation of Mariano bacigalupo, Director of the CNMV, Full Professor of the University (UNED), Academic Advisor of Fide and co-director of the Forum, as moderator of the session. In addition, the session was energized with the participation of the different attendees.

The objective of the session has been to discuss the changes that the energy geopolitics and geostrategy, as well as its possible effects in the short, medium and long term in our markets.

In the session, two issues of special relevance were identified that have a clear effect on our energy geopolitics:

• Climate change problematic
• The conflict in Ukraine

in the short term energy management is going to be a challenge. The conflict in Ukraine is forcing us to rethink the energy model and even to propose new models on which it is imperative to have a technical debate to study them in detail. Models such as market segmentation, a single auction or a model separating fossils and renewables are some of the proposals.

On the other hand, the European model that involves reopening non-renewable energy plants, such as coal, can provide a short-term solution, but it has very negative implications for our image from abroad. The decarbonization paths of other models are very different from those of the European one.

It is also inescapable to admit that there is a clear divorce between the technical part and the European policy. Governments need results in the short term and the results of energy investment are tangible in the medium or long term.

Additionally, the savings narrative is not adequately reaching citizens. Despite the fact that the measures have a study behind them that supports them, they are not being communicated effectively.

One of the interventions that was discussed expressed the danger that market reforms are carried out based on these moments of exceptionality, since there is, inherently, a high volatility associated with them.

In conclusion, in the short term the debate will have to be much more technical and actions will have to be carried out that were not foreseen and that will damage our image abroad.

in the medium term a solution to increase the agility and speed of execution of the measures may be to reduce the time of "permitting" or processing time of licenses and building permits.

However, it should be noted that this can accentuate certain socio-economic problems, so the ground must be better prepared.

One of the most important decisions to be made in the medium term is to opt for being an energy “peninsula” or an energy “island”. It is necessary to determine the market model for which we are going to opt.

In the first caso we would bring energy security to Europe, but it is essential that we be able to transfer energy and gas across the Pyrenees, which at the moment seems unlikely.

In the second caso, if we intend to be an energy island, the strategy must be to attract industry due to the low price of energy that we could reach. However, this strategy does not have guarantees of direct application, since there are many other factors that influence the strategic decision of companies to move their industry to another country.

in the long run Some of the most relevant issues that must be addressed will be the carbon tax, the geopolitics of renewables or the political challenge that will emerge after determining "winners" and "losers" in the race for energy transition.

Those that have a renewable resource, institution, financing and technical capacity will position themselves as exporters of renewables and as "winners" in the energy transition.

Those who do not have the capacity to reconvert will position themselves as "losers" and it will be then when the geopolitical challenge of managing this situation manifests itself.

Towards the end of the session, energy dependency was discussed. Renewable energies are the cheapest and most stable.

Gas supply is not in jeopardy at the moment, but it has high volatility associated with it. Countries that export this resource, such as China or the United States, can apply measures to protect their markets.

Interdependent relationships have their risks. It will be convenient to have strategic autonomy on all fronts.

These are the main challenges we will face in the energy geopolitical landscape.

This summary has been prepared by David Cuevas, Co-Founder & Executive Director at West.

Directorate of the Energy and Regulation Forum:

• Hermenegildo Altozano, Partner in charge of the area of ​​energy and natural resources of Bird&Bird, Academic Advisor of Fide
• Mariano Bacigalupo Saggese, Professor of Administrative Law at UNED and Director of the CNMV, Academic Director of Fide
• Luis Miguel Palancar, Head of Structured & Project Finance for Europe and Asia, BBVA Corporate & Investment Banking, Academic Advisor at Fide