WEC Europe: Implementation of new EU energy policy needs careful consideration

Posted on 4 May 2014

The WEC’s European member countries discussed the EU’s new energy policy with the European Commission at the WEC’s 3rd European Energy Forum in Paris on 24–25 April. WEC France 3rd European Energy Forum 2014

While pledging general support for the 2030 Framework for Climate and Energy Policies, the WEC’s European members asked policymakers and sector experts to carefully consider its implementation, warning that poor implementation of the policy could compromise countries on their competitiveness and risk upsetting the balance of the ‘energy trilemma’ in Europe.

The proposed policy calls for a 40% reduction in greenhouse gas emissions below 1990 levels by 2030 and sets an indicative EU-wide target for increasing the share of renewables to at least 27% of energy consumption by 2030.  With the new policy the EC aims to promote a low-carbon economy, send the right signals to investors, while increasing competitiveness.

The European Commission is expected to turn the proposal into legislation after gathering the feedback of EU Member States, who are discussing the proposal.

The WEC workshop was organised following the submission of a joint letter from WEC European member committees responding to the proposed Framework when it was announced.

The letter urged Dominique Ristori, the European Commission’s Director-General of Energy, to consider the issues of technological neutrality and an overall CO2 target for Europe. Competitiveness was highlighted as a paramount issue.

At the Forum, hosted by Conseil Français de l’Énergie (CFE), the WEC French committee, nearly 100 representatives from 13 European member committees plus 3 European Commission officials anchored their discussion around the recommendations. The recommendations were presented at the Paris forum by Jean-Eudes Moncomble, Secretary of CFE who also chairs the WEC task force preparing WEC Europe’s recommendations for the EU policy proposal.

Leonhard Birnbaum, WEC Vice-Chair for Europe, said that in order to achieve effective policy implementation, Europe must learn from its mistakes. He said in a keynote address: “The EU’s current  energy and climate policy has several mismatching targets, which have triggered some inadequate regulation on the national level.” He added that while countries will likely achieve most of the EU’s 2020 goals from the existing energy policy, there will be “unexpected side effects to European competitiveness.”

Mechthild Wörsdörfer, Director of the Energy Policy Directorate at DG Energy of the European Commission, said that the new policy has taken into account past learnings and has introduced a framework which “should take care of these concerns”. However, there are still “some Member States and Members of the European Parliament who do not yet agree with our new approach and goals,” he added.

The EU and its Member States have introduced a variety of measures which do address the triple challenges of the ‘energy trilemma’, a WEC concept which was presented by Joan MacNaughton, Chair of the WEC trilemma study, at the event. Yet several speakers at the Forum noted that policymakers have not properly assessed how to balance the three trilemma dimensions: environmental sustainability, energy security, and energy equity.

On environmental sustainability, the EU Emissions Trading Scheme (EU-ETS) is considered to have worked well technically, but it has not delivered the expected price signal for carbon. The new climate and energy policy framework and the proposed adjustments should strengthen the system, according to Polona Gregorin from DG Clima, the European Commission’s department for climate change.  Michael Grubb, Chair of the research organisation
Climate Strategies at Cambridge University, identified a number of missing links between the objectives and instruments of current EU energy and climate policy, which has hindered the potential of our climate objectives.

Capacity mechanisms, or the creation of a capacity market, were considered essential to strengthen security of supply in several EU countries such as the UK and France. This would incentivise investment by allowing power plants to recover their costs in more ways than simply from the power generated, while enhancing security of supply at times of tight supply.  As capacity remuneration mechanisms encourage capacity investment, they “are not to be excluded as a policy option in the context of security of supply,” said Inge Bernaerts from DG Energy of the European Commission. However, she added that “such mechanisms must be carefully implemented giving due attention to detailed design questions and to the cooperation at regional and EU-wide level.”

The EU’s newly introduced State Aid guidelines were met with criticism. The guidelines are aimed to guarantee that different national policy measures have minimal market distortions in the EU internal energy market. Denis Cochet, President of Alstom France, stressed the negative impact of State Aid regulations to global market players, while Carsten Rolle from the Federation of German Industries reviewed the ongoing tussle between the European Commission and the German government surrounding the allegedly unfair competitive advantages given by the government to large German industries through reducing their payment of renewables subsidies.

Participants also expressed concerns about competitiveness of the European economy. Marco Margheri, Director at Edison, an Italian utility, said that there is an additional worrying trend in several countries where the government have used electricity bills to collect unrelated revenues. The share of costs associated with electricity supply has been stable in the last decade, but the share of taxes and levies has increased significantly, he added.

The next WEC European Forum, to take place in early 2015 in Paris, will focus on preparations for the COP-21 climate conference.