May 14, 2008
As the EU’s energy liberalisation drive heats up, European consumers may be wondering when and in what shape the EU’s new energy policy will begin to transform the way energy is produced and consumed, and if the change will mean lower prices or higher industry profits.
On 6 May, Parliament’s Industry (ITRE) Committee voted in favour of breaking up large energy firms through ownership unbundling, meaning the separation of a firm’s power generation assets from its distribution assets.The outcome of the vote was widely seen as a setback for Germany and France, who had put forward a proposal for a ‘third way’ on energy liberalisation that was rejected by a narrow margin of MEPs. The committee’s rejection of the proposal came shortly after it emerged that the Commission would only consider the third way if strict conditions – too strict, according to Berlin and
Paris – were added to the proposal.But the committee’s vote and the Commission’s stance have not settled the issue of the third way. Germany and France, who with the support of six other member states form a blocking minority in the Council, have shown no sign of backing down from their opposition to ownership unbundling, raising the spectre of drawn-out negotiations.
The climate link
Although the liberalisation package is focused on technical and regulatory aspects of the EU’s electricity and gas markets, “fully competitive markets are an essential pre-requisite” for a “new energy path towards a more secure, sustainable and low-carbon economy, for the benefit of all citizens,” according to the Commission press release that accompanied the 19 September proposals.
Brussels is thus concerned that a delay in the adoption of the liberalisation proposals may have a negative impact on the wider climate change efforts outlined in the climate and energy package.Shaky investor certainty and lack of investment at the heart of these concerns, as continued control over national and regional energy markets by a limited number of energy firms creates few incentives to invest in electricity grid upgrades and other infrastructure investments necessary to boost the efficiency of energy production and transmission, according to the Commission.
Europe is also struggling to find the cash necessary to fund renewables and expensive ‘clean’ technologies like CCS.UK Liberal MEP Chris Davies, Parliament’s rapporteur on a Commission proposal for a legal framework for CO2 storage, argues that the EU Emissions Trading Scheme (EU ETS) could be leveraged to solve the financing problem.
CO2 stored with CCS technology should be given double credit under the EU ETS, he told. The Commission is divided on the issue, but may be “open to persuasion”, he said.
From EurActivAuthor : EMI