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BB200602, Policy News

Energy takes centre-stage in European policy

08.02.2007

Spiralling oil and gas prices, Russian gas supply disruptions and continued debate over nuclear proliferation has sent energy to the top of the European agenda. Energy is one of four “priority action areas” identified by Commission President Barroso in the Commission’s Annual Progress Report on the Lisbon Agenda, published on 25 January 2006. Together with investment in education; research and innovation; freeing up small and medium sized enterprises (SMEs), energy takes centre-stage in the re-launched Lisbon Agenda from last year.

"We propose for Europe to work together for efficient, secure and sustainable energy," President Barroso said at a press conference in Brussels.

Examples include:

- pledges made to galvanise Europe towards meeting the challenges of rising oil and gas prices and cutting pollution. The report delivers a blunt message to EU leaders that energy is a global issue that needs a European response. That means:
- Better coordination between Europe’s electricity grids and gas pipeline systems; better regulation of energy markets, and more competition.
- More tax and other incentives to promote sustainable energy use and boost research into energy efficiency, clean energy and renewables.
- Europe “speaking with one voice” in negotiations with the external suppliers who will supply more and more of our energy.

The Commission will publish a Green Paper with detailed proposals in early spring 2006.

Energy

Energy is not an EU competence and decisions currently require unanimity among Member States. The European Commission wants to change that and calls for the need for a "truly integrated energy policy":

"Many programmes underline the importance of energy. Europe needs a truly integrated energy policy which promotes growth, provides greater security of supply and which contributes to greater efficiency and environmental sustainability. Whilst important progress has been made in opening domestic markets, there is as yet no European-wide energy market. Energy is a global issue; only a European response will meet our needs."

The four Priority Actions identified by the Commission "require a strong impetus from the highest political level" and "should be implemented quickly – no later than the end of 2007," writes the Commission.

In its "Energy Priority Actions" for more growth and jobs, the Progress Report states:

"The main challenge facing Europe’s energy system is to ensure that energy is available at competitive prices. We need to safeguard security of supply and develop autonomous sources so as to avoid interruptions and price shocks with damaging economic effects. A competitive and integrated Community energy market will provide us with the most efficient and sustainable base for diversification and security of supply. Production and consumption of energy has to take full account of environmental considerations.

(…)

Europe should consider all sources of energy, giving special attention to renewable energy sources, including the development of clean indigenous sources. Lower emissions from our energy sources will reduce air pollution and help our fight against climate change. Again, Europe’s enterprises will be rewarded by the market for early investments in this field."

Electricity

The report reiterates warnings made several times by both DG Competition and DG Energy about the poor state of competition in European electricity markets:

"Promoting more competition on the electricity and gas markets, taking account of the Commission’s sector competition enquiry, in particular by taking steps to address continued dominance of national incumbent operators; insufficient market transparency; inadequate unbundling of network and supply activities; and barriers to cross-border supply which prevents a truly integrated EU energy market."

Renewable Energy Sources

The progress report acknowledges the important role that renewables can play in securing Europe’s energy supply and proposes that "an appropriate regulatory framework should be put in place" and that "research and innovation for indigenous energies" should be stimulated:

"Exploiting the potential of renewable energy sources, such as bio-fuels and biomass, and more efficient use of energy can also help to increase security of supply in Europe, whilst reducing greenhouse gas emissions, improving air quality, and strengthening competitiveness. Member States’ efforts could be complemented by a renewables technology push and demand pull policy at European level.

An appropriate regulatory framework should be put in place. Research and innovation for indigenous energies, including renewable energies, bio-fuels and bio-mass, clean coal and carbon sequestration and the treatment and disposal of nuclear waste, should be stimulated. Similar priority needs to be given to research to develop new energy efficient technologies.

The development of a European framework of incentives to promote renewables could significantly boost their use. The present patchwork of differing national and regional systems creates artificial barriers between national markets, holding back the potential of promising new technologies."

The European Wind Energy Association welcomes the Commission’s report and strongly agrees that Europe must develop a common energy policy.

Alone the Commission’s stated intention of taking full account of environmental considerations in the production and consumption of energy would go a long way towards levelling the playing-field and overcoming one of the most significant distortions of fair competition in European energy markets.

"In the energy sector it is virtually free to pollute. Harmful practices are accepted, and even subsidised. The Commission’s report states, in very clear language, that ‘production and consumption of energy has to take full account of environmental considerations’. We would move a giant step closer to an optimal allocation of resources, if Member States fully applied the polluter pays principle - established by the EC Treaty’s article 174 - to energy production and consumption," says Christian Kjaer, EWEA.

EU Green Paper on Energy Expected Soon

In a related development, also addressed in the Progress Report, the European Commission has announced that it will publish a Green Paper on energy "in early spring 2006". The Green Paper has been anxiously awaited and stakeholder and Member States are already busy positioning themselves.

The European Energy and Transport Forum (the Forum), a consultative committee created by the European Commission composed of high level representatives from a large range of sectors and activities in the fields of energy and transport, published its contribution to the Commission on 20 January. The Forum agrees that "an ambitious and coherent energy policy is a crucial requirement for the European Union and its 25 Member States".

However, the Forum emphasises that such a policy must be directed towards areas that enjoys consensus among Member States and the European citizens:

"Since there is no legal basis for a completely coherent and independent European energy policy led by the European Union, an EU energy policy must seek to address the issues where there is broad consensus amongst the Member States and a large degree of public acceptance. Recalling the recent failure to obtain wide public support for the European constitution, the EU should address energy policy areas that can be accepted by a majority of European citizens and for which there is broad Member State consensus", writes the Forum in its contribution.

EWEA agrees with the Forum that a European energy policy must have the broad support of Member States and their citizens:

"The rejection of the European Constitution in France and the Netherlands demonstrated that, for the population, Europe is not an end in itself. But citizens will support a European energy policy that addresses issues that are widely accepted, as pointed out by the Energy and Transport Forum. In that light, a European energy policy should focus on energy efficiency; renewable energy; distributed generation; energy infrastructure and cross-border trade; electricity and gas liberalisation and competitive markets; and energy diplomacy," says Christian Kjaer.

(See related story on the Eurobarometer opinion poll on attitudes towards energy)

During debates in the European Parliament in Strasbourg on January 17-18, acting Energy Council President, Martin Bartenstein (Austria’s Economic Affairs and Labour Minister) called for more diversification of energy sources. He also stated that the use of nuclear energy is not an option. The Chairman of the European Parliament’s Energy Committee, Giles Chichester, said that there is wide support among European and national parliamentarians for cooperation, coordination and solidarity in the face of an emergency.

Member State Positioning

The energy debate is also heating up in the Member States. On 23 January the UK government launched a three month consultation named, ‘Our Energy Challenge – Securing Clean, Affordable Energy for the Long Term,’ (see related story).

The day after, France presented a memorandum on European energy policy to the EU Council on Economic and Financial Affairs (EcoFin). Among many proposals, France calls for an information coordination centre between electricity transmission system operators; harmonisation of the powers of European regulators; the use of EU structural funds to promote renewables; strengthening of energy related technology platforms; and mobilisation of European Investment Bank (EIB) resources for research initiatives.

Not surprisingly, France, which gets three quarters of its electricity from nuclear power, calls for nuclear to be brought into the climate change policy equation, and suggests developing education and training programmes at European level within the context of the Euratom Treaty.

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