EU leaders want to create a single European energy market to ensure future power supplies are cheap, secure and sustainable. But as a new Friends of Europe discussion paper shows, there is no consensus on how to do so.
Some say that Europe has other priorities, given its troubled economic situation. But Philip Lowe, the European Commission’s Director General for Energy, is clear: “That is not an excuse for abandoning our ambitious energy policy objectives. On the contrary, a well-functioning energy market is a key ingredient on the road to economic recover”.
Efforts to integrate markets have nevertheless gone backwards, with many commentators blaming member states. Hans ten Berge, Secretary General of EURELECTRIC, accuses some of Europe’s biggest states, including Germany and the UK, of unilateral policies that “effectively disregard the implications for other European markets”.
Such moves pose “a very real threat to energy investment in Europe”, adds Jean-François Cirelli, vice-chairman and president of the French energy giant GDF Suez.
Controversially, renewable energy policies are accused by a number of contributors to the discussion paper of undermining the margins of existing non-renewable energy power plants, and therefore discouraging investment in new capacity. They also create a need for capacity payment schemes that further distort the market landscape. As a result, the workings of the wholesale energy market are now so distorted “that countries are worried about their ability to ensure future security of supply,” point out Mike Lawn and Jonas Rooze of Bloomberg New Energy Finance.
Any capacity payments must be co-ordinated at European level, adds Cirelli. But Fernand Felzinger of the International Federation of Industrial Energy Consumers (IFIEC) Europe, argues that capacity payments “should be considered only as a last resort”, adding that given Europe’s high energy costs, artificially increasing the CO2 price “would further sap the EU’s competitiveness and would send distorted signals to investors”.
Johannes Meier and Arne Mogren of the European Climate Foundation, disagree, saying “we need a robust carbon price in order to drive the long-term, low-carbon investments that will enable us to decouple growth from fossil fuel consumption and decarbonise the power sector”.
Those that say otherwise are “antediluvian patriarchs”, suggests Jorge Vasconcelos, founder and former chairman of the Council of European Energy Regulators and Member of the Energy Roadmap 2050 ad hoc Advisory Group.
