Experts disagree on EU energy market liberalisation

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On 26 June, panellists from a range of sectors debated the role of regulation, fiscal incentives, consumers and other issues related to the transformation of the EU’s energy market in light of climate-change and energy-security concerns.

  • Energy taxation

In the opening speech at the event, EU Customs and Taxation Commissioner Laszlo Kovacs commented on the role of tax policy in restructuring the EU’s energy market to reach the 20% targets set by EU leaders in March (EURACTIV 13/03/07). Commissioner Kovacs indicated that the revision of the Directive on Energy Taxation is being guided by CO2 emissions and energy content considerations, implying that the Commission favours fiscal incentives for efficent low-carbon technologies and energy sources.

  • Liberalisation 

The liberalisation of energy markets was a central theme in the discussions. Arguing against liberalisation, blogger and investment banker Jerome Guillet said that the resulting prohibition of state guarantees for investments will encourage investment in cheaper carbon-intensive technologies, such as coal or gas-fired power plants, and will discourage investments in more (initially) expensive renewables infrastructure. 

Dominique Ristori of the Commission’s DG Energy and Transport refuted the claim, saying that in the current context of volatile prices for energy products, it cannot be assumed that certain energy sources will always remain cheaper. Ristori added that even if member states were permitted to support renewables infrastructure, there is simply not enough money in public coffers to support the massive investments needed in energy infrastructure in the coming decades.

In related news, eight member states, led by Denmark, have written to the Commission in support of breaking up large energy firms, a move that is opposed in particular by France and Germany.

  • Grid security

An audience representative of German energy giant E.ON proposed that rather than ‘unbundling’, meaning the separation of network ownership from transmission services, Europe should have a secure and efficient cross-border grid that can feed in wind energy from the north and solar energy from the south, for example.

Speaking on behalf of the cogeneration industry, Fiona Riddoch refuted the claim by the E.ON representative that more independent power generation would destabilise the grids and lead to power cuts, citing the example of Denmark, where combined heat and power (CHP) facilities provide up to 50% of the country’s home energy needs.

  • Policies and targets

There was a general sense among panellists and participants that the 20% targets are welcome, yet highly ambitious, and that they need to be followed up with sound policy measures.

Ristori pointed out that climate change and related energy policies are a global challenge, and that the EU will not be able to reach the targets without support at international level. 

  • Emissions trading

Neil Eckert of the carbon-trading firm Climate Exchange argued in favour of a CO2 trading regime with a high price for carbon: 40 to 50 euros per tonne of CO2, as opposed to the 25 euros per tonne price currently forecast by the Commission for the period 2008-2012. 

  • The role of the consumer

In response to discussions on the importance of changing consumer habits for achieving CO2 reductions, Edda Mueller of the Federation of German Consumer Organisations stated that consumers are not intent on contributing to global warming, but are rather interested in efficient, cost-effective technologies that light their homes and provide reliable transport. 

The event was part of an annual Energy Europe conference organised by the Brussels think-tank Friends of Europe.

Participants included Robert Amsterdam, lawyer for former Yukos chief Mikhail Khodorkovsky, Claude Mandil of the International Energy Agency (IEA) and Philip Lowe, Director General for Competition in the Commission.

  • International Energy Agency (IEA):Website

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