A group of top regulators and industry executives operates at EU level to advise the Commission on policy initiatives related to energy, competitiveness and the environment. The need for massive new energy infrastructure investments and shortcomings in EU gas and electricity markets feature among the topics being dealt with by the group. The EU emissions trading scheme is also being reviewed to make sure it does not put European industries at a disadvantage to international competitors.
At their spring summit in March 2006, EU heads of state singled out "high and volatile energy prices", import dependency and global warming as major issues facing the EU. In response, the Commission forwarded new plans, which were endorsed during the March 2007 European Council and which have been presented as an ambitious new EU climate change and energy policy (see our LinksDossier).
In order to realise the commitments made in March, the EU is trying to find the correct 'balance' between the three potentially conflicting objectives: security of supply, competitiveness and environmental sustainability.
A high-level group of regulators, business leaders and civil society organisations was set up by the Commission in February 2006 and is providing advice for addressing this challenge. Its main goal is to foster closer coordination between policy and legislative initiatives and the development of an integrated approach as well as to contribute to creating a more stable and predictable regulatory framework.
In a first report published on 2 June 2006, the group made the following recommendations on what it believed to be "the most urgent and sensitive issues to be addressed at EU level":
1. The functioning of the liberalised EU electricity and gas markets (see related LinksDossier )
- fully unbundling network operation from service delivery to reduce vertical concentration in the energy sector and guarantee fair access to the network for new market entrants
- establishing minimum rules for price transparency and disclosure of price formation mechanism
- enhancing the independence of national regulators and extend their competences to address cross-border transmission
2. Access to affordable energy for power-intensive industries
- The Commission should provide guidance, within 12 months, to make long term contracts with external gas and oil suppliers compatible with EU competition law. Long term contracts, the group says, are "necessary to have access to cost-effective energy inputs".
3. Energy efficiency and conservation (see related LinksDossier)
- drawing up a list of priority measures to increase energy efficiency and achieve the EU target of 20% energy savings by 2020. Cost-effectiveness and duration of payback periods should be taken into account when drawing up the list (an energy-efficiency action plan is due in September 2006)
- making full use of the possibilities offered by combined heat and power generation (CHP) to address rising demand for heating and cooling
- making full use of harmonised energy-efficiency standards, for instance on stand-by energy consumption of household and office appliances (Eco-design directive)
4. Reviewing the EU emissions trading scheme (EU-ETS) (see related LinksDossier)
- Before 30 June 2006: making more use of auctioning (up to 10% of total allowances under current EU rules); making more use of clean energy projects outside the EU (CDM/JI) and urge the UNFCCC to clear up the remaining obstacle to their widespread use; consider differentiated allocation between sectors for the second phase of the ETS in order to favour investment in new energy infrastructure
- Before end 2006: send a stronger signal towards low carbon investment; reduce administrative burden for small plants
- 2007 and beyond: advance negotiations on a post-Kyoto regime in order to build a global carbon market; include other gases in the ETS; increase certainty for investors including regulatory stability; harmonise allocation methods; consider exempting small plants from the ETS for the second trading period
Large industrial consumers of electricity represented by the Alliance of Power Intensive Industries warned about an "enormous risk of de-industrialisation" in Europe as a consequence of high electricity prices. "Power is a very important component of our cost structure," says the alliance which includes the alloys, cement, ceramics, chlor-alkali, glass, iron & steel, lime, non-ferrous metals and paper industries. But it says current energy and environmental policy has added to the cost of power beyond anything driven by oil and gas price increases worldwide. The alliance believes failures in the liberalisation of EU gas and electricity markets as well as the unintended consequences of the CO2 emissions trading scheme are to be held accountable. It says both developments are "exclusively European" and therefore call for "a critical review".
The European chemical industry - which claims to be the largest energy consumer in the EU manufacturing sector - says more needs to be done to ensure the ETS does not put European companies at a disadvantage over international competitors. "We must reduce the complexity [of the EU ETS] for example by excluding SMEs, and limit the impact on power prices," said Theo Walthie, from the European Chemical Industry Council (CEFIC). Walthie called for quick action to be taken under the second phase of the scheme, which starts in 2008 until 2012. "We cannot wait until 2013 for a solution," he said. CEFIC believes more use should be made of clean development projects abroad (so-called JI/CDM in UN jargon) to help the EU meet its commitments under the Kyoto Protocol.
The European Trade Union Confederation (ETUC) raised concerns about the employment implications of industries threatening to re-locate to escape high energy costs in Europe. ETUC secretary general John Monk warned about a purely liberal approach to energy policy, saying "public service obligation" needs to be guaranteed to the benefit of citizens. ETUC also points to rising energy prices as a serious concern for households, saying there is an increasing threat of "fuel poverty", particularly in the new member states.
Environmental NGOs criticised the composition of the high-level group as being imbalanced in favour of energy-intensive industries and large energy utilities. "Leading companies […] in the renewable energy and energy efficiency sectors are absent. Consumer and health organisations are absent. Academia and research institutions are absent," the NGOs said in a statement to the group. They recommended that the balance be corrected to better reflect these concerns.
WWF, the global conservation organisation, condemned what it called a "misconception" about the alleged negative effects of the ETS on the competitiveness of European industries. It says the ETS is "by far cheaper" than other options (such as taxes) to achieve CO2 emissions reductions targets, adding the fears are "not justified". "The ETS is expected to result in only modest losses in most traded sectors," the WWF points out. It also points to a study by the ZEW economic research institute in Germany which says the scheme will "not be a job killer". "If employment effects of the EU ETS are compared to impacts of alternative regulation methods assuring the Kyoto targets, ZEW rates the arrangement of the EU ETS among the better choices," says the WWF.
- 28 Feb 2006: Commission launches high level group (HLG) .
- May 2006: Commission releases official data on 2005 emissions, carbon prices crash (EurActiv 16/05/06)
- 2 June 2006: Commission adopts first HLG report addressing the "Functioning of the energy market, access to energy, energy efficiency and the EU Emissions Trading Scheme"
- Oct. 2006: Commission presents energy-efficiency action plan
- 30 Oct. 2006: Commission adopts 2nd report of the High Level Group (Lisbon national reform plans; renewable energy)
- 10 Jan. 2007: Commission presents 'energy and climate change package' including a Strategic Energy Review focusing on both external and internal aspects of EU energy policy
27 Feb 2007: Commission issues 3rd HLG report: "
Helping energy intensive industries adapt to the energy and climate change challenges"
- 8-9 March 2007: EU summit adopts action plan and launches a Common European Energy Policy (see our LinksDossier).
8 Nov 2007: Commission adopts 5th HLG report "
Addressing both international action on climate change and better regulation", which will be presented at a closing conference on 27 November.
- 22 Nov. 2007: Commission to present a Strategic Energy Technology Plan (SET-Plan)
- 23 Jan. 2008: Commission to make legislative proposals for carbon trading under the EU-ETS for the period after 2013 along with a Communication on carbon capture and storage (CCS), as part of a larger package on renewable energies and climate change.
- March 2008: Commission hopes for endorsement (and financing commitments) from EU leaders for the SET-Plan.
EU official documents
- Commission: Presentation to the ITRE Committee of the EP:: Impact assessment of the 3rd package proposals (21 November 2007)
- Commission:Press release: Energising Europe: A real market with secure supply(19 September 2007) [FR] [FR] [DE]
- Commission:The EU Electricity & Gas markets: third legislative package(September 2007)
- Eur-Lex:Proposal for directive - electricity(third package) [FR] [FR] [DE]
- Eur-Lex:Proposal for directive - gas(third package) [FR] [FR] [DE]
- Eur-Lex:Proposal for regulation - electricity(third package) [FR] [FR] [DE]
- Eur-Lex:Proposal for regulation - gas(third package) [FR] [FR] [DE]
- Eur-Lex:Directive concerning common rules for the internal market in electricityCOM 2003/54 (June 2003) [FR] [FR] [DE]
- Eur-Lex:Directive concerning common rules for the internal market in natural gasCOM 2003/55 (July 2003) [FR] [FR] [DE]
- Eur-Lex:Commission Communication: Completing the internal energy marketCOM 2001/125 (March 2001) [FR] [FR] [DE]
- DG TREN:Notes for the implementation of the Electricity directive 2003/54/EC and the Gas directive 2003/55/EC
- Commission (DG Enterprise):High Level Group (HLG) on Competitiveness, Energy and the Environment: Addressing both international action on climate change and better regulation
- Commission (DG Enterprise):Fifth report of the HLG on Competitiveness, Energy and the Environment:(8 November 2007)
- Commission (DG Enterprise):Fourth report of the HLG on Competitiveness, Energy and the Environment: Ensuring future sustainability and competitiveness of European enterprises in a carbon and resource constrained world(11 June 2007)
- Commission (DG Enterprise):Third report of the HLG on Competitiveness, Energy and the Environment: Helping energy intensive industries adapt to the energy and climate change challenges(27 February 2007)
- Commission (DG Enterprise):Second report of the HLG on Competitiveness, Energy and the Environment: Long term energy futures and investment in power generation and energy efficiency(30 October 2006)
- Commission (DG Enterprise):First report of the HLG on Competitiveness, Energy and the Environment: Functioning of the energy market, access to energy , energy efficiency and the EU Emissions(2 June 2006)
- Green Group in EP:Commission has to tackle the oligopolistic behaviour in the EU gas and electricity market(September 2005)
- G8:Statement on Global Energy Security
- International Energy Regulation Network (IERN):Website
- Council of European Energy Regulators (CEER):Website
- International Energy agency (IEA):Lessons from Liberalised Electricity Markets and Learning from the Blackouts| Executive summary
- UK (DTI & DEFRA):Fuel Poverty Advisory Group
- UK Department for Trade and Industry:Liberalisation of European Energy Markets
- UK Department for Trade and Industry:The Social effects of energy liberalisation, the UK experience(2000)
- UK Department for Trade and Industry:Energy - Competition in the UK and Europe
- France (Ministry of Industry):Letter by François Loos to Andris Piebalgs(10 Jan. 2007)
- France (Ministry of Industry):L'adoption de la loi de programme fixant les orientations de la politique énergétique
- German Ministry for Industry and Energy:Bundesumweltminister Sigmar Gabriel begrüßt Energie- und Klimapaket der EU-Kommission(10 Jan. 2007)
- German Ministry for Industry and Energy:Energiedaten - Nationale und Internationale Entwicklung(Sept. 2005)
- German Ministry for Industry and Energy:Energiepolitik im Spannungsfeld zwischen europäischen Vorgaben, nationalen Interessen und umweltpolitischen Ansprüchen(18 Jan. 2005)
- German Ministry for Industry and Energy:Neues Energiewirtschaftsrecht seit 13. Juli 2005
Business & Industry
- EU Chemical Industry Council (CEFIC):Security of supply
- Eurochambres:Eurochambres' response to Energy Green Paper(12 Sept 2006)
- European Chemical Industry Council (CEFIC):Cefic encourages structured follow-up of High Level Group on Energy recommendations(6 June 2006)
- European Chemical Industry Council (CEFIC):Position paper on energy market issues - Markets Liberalisation Failures and Way Forward(16 Feb. 2006)
- European Committee of Domestic Equipment Manufacturers (CECED):High Level Group misses opportunity(9 June 2006)
- European Trade Union Confederation (ETUC):Written statement to HLG by John Monks, ETUC General Secretary(2 June 2006)
- Alliance of Energy Intensive Industries:The Impact of EU Emission Trading Scheme (ETS) on Power Prices: Remedial action urgently needed 10 months after start of ETS(Nov. 2005)
- Alliance of Energy Intensive Industries:Presentation of issues - IEA workshop on emissions trading(Oct. 2004)
- Eurometaux:Building a sustainable future on metals(Sept 2006)
- Eurometaux:Contribution to the EU Energy Strategic Review(22 Sept. 2006)
- Eurometaux:Competitiveness - Energy and climate change
- European Trade Union Institute (ETUI):Energy policy and the European Social Model: a preliminary investigation(March 2006)
- EU Chemical Industry Council (CEFIC):Energy markets liberalisation
- EU Chemical Industry Council (CEFIC):Position paper on EU energy markets(April 2007)
- Eurelectric:Report: Better Functioning Retail Electricity Markets Across Europe
- Eurelectric:Review of European Electricity Prices 1995-2004 compiled by consultants KEMA(Nov. 2005)
- Eurelectric:Electricity Markets: Getting the Picture Straight and Boosting Market Integration
- Eurelectric:Full liberalisation of the EU electricity and gas market
- Eurelectric:Press release: Eurelectric's contribution to the Consultation on the Sector Enquiry
- European Transmission System Operators (ETSO):Opinion on the evolution of the internal electricity market:(30 June 2005)
- Union for the Co-ordination of Transmission of Electricity (UCTE):Electric system reliability in the context of market liberalisation(2000)
- European Federation of Public Service Unions (EPSU):Energy unions firm in critique of electricity and gas market
- European Federation of Energy Traders (EFET):EFET view on the DG Competition Gas Sector Inquiry(28 April 2006)
- EDF:Marché intérieur de l'électricité - Bilan et perspectives au 1er juillet 2005(1 July 2005)
- EDF:Opening of the electricity market in France
- EDF:Electricity prices hit turbulence area[dossier in EN & FR] (May 2004)
NGOs and Think-Tanks
- EEB/FoE/Greenpeace/T&E/WWF & others:Statement by environmental NGO representatives to the HLG(28 Feb. 2006)
- WWF:Emission trading best choice for EU economy and to ensure Kyoto compliance(7 June 2006)
- WWF:Clearing the mist: EU ETS, Competitiveness and Employment(7 June 2006)
- WWF / ZEW centre for European Economic Research:The Impacts of the European Emissions Trading Scheme on Competitiveness and Employment in Europe - A literature review(May 2006) Executive summary
- Centre for European Policy Studies (CEPS):The EU Emissions Trading Scheme: Taking Stock and Looking Ahead(19 July 2006)
- Greenpeace:Whose power is it anyway? Report on European energy suppliers(April 2005)
- Climate Action Network Europe:Liberalisation of the gas and electricity markets
Think tanks & Academia
- Clingendael Institute (Jacques de Jong):The 'Regional Approach' in Establishing the Internal EU Electricity Market(December 2004)
- Delft University (Francois Boisseleau):The role of power exchanges for the creation of a single European electricity market: market design and market regulation(January 2004)
- Öko-Institut:Power Generation Market Concentration in Europe 1996-2004(September 2005)
- Oldenburg University:The European Electricity Market – Does Liberalisation Bring Cheaper and Greener Electricity?(October 2003)
- DB Research:Liberalisation of the German gas industry - under pressure to increase competition(October 2003)
- Wuppertal Institut:Completing the market for least-cost energy services
- CE:Vrije strom, vieze stroom, weg stroom? Effecten liberalisering elektriciteitsmarkt, Notitie voor de Bezinningsgroep Energie(Sep. 2005)
- Electrical Energy Research Group (ELECTA):Development of the Internal Electricity Market in Europe(July 2005)
- European Policy Centre (EPC):Gas and electricity in Europe: the elusive common interest(15 May 2006)
- European Policy Centre (EPC):The new EU energy policy(29 Jan 2007)
- Commission (Press release):High Level Group proposes urgent actions to promote a competitive and sustainable European energy system(2 June 2006) [FR] [FR] [DE]
- Commission (Press release):Energy, environment, competitiveness: Commission launches high level group [FR] [FR] [DE]
- DG TREN:Report on progress in creating the internal gas and electricity market(15 Nov. 2005) Technical annex Technical annex Related press release Technical annex Related press release [FR] Technical annex Related press release [FR] [DE] Technical annex Related press release [FR] [DE] Related Memo
- DG TREN memo:Towards a competitive and reglated European electricity and gas market(July 2004) [FR]
- DG TREN:Review of European electricity and gas prices:(July 2005)
- DG TREN:Annual Report on the Implementation of the Gas and Electricity Internal Market(January 2005) [FR] [FR] [DE]
- Commission (Memo):European Commission sets out a new impetus for the internal energy market(10 Jan. 2007) FR FR DE
- Commission:Prospects for the internal gas and electricity marketCOM(2006)841 FR FR DE
- DG Competition:Sector Inquiries - Energy
- DG TREN:Electricity
- DG TREN:Gas
- OEIL:Energy: rules for the internal market in natural gas (repeal. direct. 98/30/EC) [FR]
- OEIL:Energy: rules for the internal market in electricity (repeal. direct. 96/92/EC) [FR]
- European Regulators' Group for electricity and gas (ERGEG):Website
- European Renewable Energy Council (EREC):The Myth of Effective Competition in European Power Markets
- German Electricity Association (VDEW):Preisanstieg an Europas Strombörsen(20 Feb. 2006)
- Institut Français du Pétrole (IFP):The Liberalization of Gas Markets in Europe
- European Federation of Public Service Unions (EPSU):Energy Sector Inquiry
- Eurometaux:Contribution to the EU Energy Strategic Review(22 Sept. 2006)
- Eurometaux:Improving the electricity markets in continental Europe
- Eurometaux:Alliance of Power Intensive Industries response to preliminary conclusions of Energy inquiry
- European Federation of Energy Traders (EFET)Press statement: Benchmarking Gas Transmission Access Systems in Europe: a trader's perspective(9 Feb. 2006)