Germany walking tightrope on EU energy blueprint

The official launch of a common energy policy in March will be a tricky task for Germany as it faces criticisms over its reluctance to open up gas and electricity markets and for going it alone on relations with Russia.

German presidency priorities on energy include energy-efficiency, expanding the use of renewables, as well as seeking closer co-operation with supplier, transit, and consumer countries.

But the task will not be easy. After the Commission adopts of a new series of energy proposals on 10 January, the German presidency will have little time to draw up an action plan to launch a common energy policy scheduled for approval at the Spring Summit in March.

In particular, the ongoing liberalisation in the gas and electricity sector, a prerequisite in the eyes of the Commission to any real European energy policy, is creating unease in German business and political circles.

German utilities recently came under close scrutiny for alleged antitrust practices. On 12 December, the Commission raided the offices of major German power utilities RWE, E.ON, EnBW and Vattenfall. The move followed similar inspections in May over suspected price-fixing.

Although energy liberalisation is officially backed by Berlin, further moves in that direction are being resisted by Chancellor Angela Merkel. On a recent visit to Paris, she backed French President Jacques Chirac in rejecting Commission calls for so-called ownership unbundling, a move that would see former state monopolies such as E.ON and EdF broken up into companies dealing with transmission and power generation separately (EURACTIV 11/12/06).

Competition Commissioner Neelie Kroes has repeatedly argued that the absence of full unbundling in power markets leads to “systemic conflicts of interests” where operators deny network access to new competitors.

In the face of German and French opposition, Commission President José Manuel Barroso is said to be considering a less radical approach where networks would remain in the hands of former state monopolies. In exchange, the role of national regulators would be strengthened to ensure fair and neutral access to pipelines and electricity transmission networks. 

However, Germany’s difficulties with the EU on energy do not end there. Last year, it signed a deal with Gazprom to build a new gas pipeline under the Baltic Sea, in an effort to secure its long term gas supplies. The move triggered furious reactions from Warsaw which said it had been bypassed, in contradiction with EU solidarity principles (EURACTIV 9/09/05).

It also raised questions as to Germany’s willingness to support a truly European approach in dealing with powerful suppliers like Russia.

Other problems are also likely to surface. While greater EU co-operation on energy is widely accepted, it could quickly cross national sovereignty ‘red lines’ as member states keep the final say on their preferred choice of energy mix.

Here too, Germany’s nuclear phase out runs in opposition with choices made in other countries like France, Finland and others. The Commission will attempt to defuse the issue with the publication of a ‘strategic energy review’ that will map out the advantages and drawbacks of each source of energy in terms of supply security, economic viability and environmental impact.

German business association BDI said the German government should use the Presidency to create a "functioning internal market for electricity and gas" and "make every effort to bring high European energy prices to an internationally competitive level, in particular by dismantling high state taxes."

BDI also said it regretted that the future development of nuclear energy was "disregarded" in EU debates. "It is not made clear that all energy sources are required and that none can be left out of the equation," BDI said.

Matthias Warning, Managing Director at Nord Stream AG, the Gazprom-led consortium set up to build the Baltic gas pipeline, tried to play down Polish fears over future gas supplies. "The gas transported by Nord Stream will be fed into existing networks and reach a whole row of Western European states. The European dialogue cannot be dominated by the interests of individual states or enterprises."

"The key priority for Germany over the next six months must be to deliver a sustainable energy policy", said John Hontelez, secretary general of the European Environmental Bureau, a federation of 143 environmental citizens' organisations. 

EEB said it expects the Presidency to "speed up implementation of the EU Energy Efficiency Action Plan, using standards and market instruments". 

"There should be agreement on sector-specific targets for energy production from renewable energy sources. Strict environmental criteria must be enforced through a comprehensive and mandatory certification system for biofuels, and nuclear energy must be excluded from consideration," the EEB said.

The Thomas More Institute, a Paris-based liberal think tank, is highly critical of the German Presidency programme on energy, saying it contains only "declaration of principles" on global warming and the importance of innovation and research. Therefore, it says it expects little more than "great empty words" from the presidency.

[Translations in FR and DE to follow in January 2007] 

Germany's main task in the energy field during its six-month stint at the helm of the EU will be to draw up an 'Energy action plan' for adoption by the summit of EU leaders on 8-9 March.

In a Green Paper, endorsed by the Spring European Council in March 2006, the Commission put the completion of the internal market for electricity and gas on top of its objectives. Raising the EU's profile in relations with suppliers and transit countries, especially Russia, is also high on the agenda.

  • 10 January 2007: Commission to present 'energy package' comprising:

    • Strategic energy review: analysing advantages and drawbacks of national energy choices and their impact on other EU member states. Foreign relations and internal EU energy market to be considered as well.
    • Communications and reports on: coal, biofuels, nuclear
    • Renewables road map with possible new targets for 2020
    • Final report on competition enquiry into electriticy and gas markets
    • Communication on the costs and benefits of global warming action post-Kyoto. Environment Commissioner Stavros Dimas told reporters in Brussels that the aim should be a 30% reduction in greenhouse gas emissions from developing countries by 2050.
    • Commission consultation (Green Paper) on adaptation to climate change
  • 8-9 March 2007: EU Spring Summit to adopt an Action Plan to launch a common European energy policy
  • May 2007: EU-Russia summit (Samara)

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