Transcript 23/02/2006 - IFIEC Europe

IFIEC EUROPE – International Federation of Industrial Energy Consumers
EU Climate Change Policy
Necessary Review of EU ETS
Annette Loske
IFIEC Energy Forum
23 February 2006
Slide 1
Baseload Electricity Rolling Year Ahead
CO2-Prices
38
36
Correlation 16.7. - 28.12.:
- 0,24
32
26.01.2006
40
Correlation 29.12. - 31.1.:
0,93
42
12.01.2006
29.12.2005
14.12.2005
30.11.2005
16.11.2005
02.11.2005
19.10.2005
05.10.2005
19.09.2005
Correlation 1.3. - 15.7.:
0,98
05.09.2005
22.08.2005
08.08.2005
25.07.2005
11.07.2005
27.06.2005
13.06.2005
30.05.2005
16.05.2005
29.04.2005
34
15.04.2005
01.04.2005
16.03.2005
02.03.2005
16.02.2005
02.02.2005
19.01.2005
05.01.2005
20.12.2004
06.12.2004
22.11.2004
08.11.2004
58
54
50
48
46
20
44
30
15
10
5
0
CO2-Certificates Price, €/t
25.10.2004
Electricity Price, €/MWh
Up by more than 20 €/MWh
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Emissions Trading‘s huge impact on electricity prices
35
56
30
52
25
IFIEC EUROPE – International Federation of Industrial Energy Consumers
The Commission‘s Reaction
Sector Inquiry:
„…continue to monitor …“
Guidance Note:
just not mentioned !
de-industrialisation accepted as fact / as element to
achieve target
„Recognizing the first phase as a learning period.“ - ???
High Level Group:
Late start of work
Nevertheless: Hope for a serious approach towards a
review
IFIEC EUROPE – International Federation of Industrial Energy Consumers
The Member States‘ Reaction
Energy Council (Dec 05):
„The Commission should review this scheme and should
table as soon as possible proposals, as appropriate, to
make this scheme more effective while taking into account
the need for promoting competitiveness and an affordable
energy supply.
Example: Germany
The new government‘s coalition contract regarding NAP II:
 Avoid windfall profits
 Consider the competitiveness of energy intensive
industries
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Emissions Trading as a way to make use of the most
cost-efficient reduction measures
Savings potential:
3 – 4 billion € per year (Commission‘s MEMO June 2005)
Potential Windfall Profits:
5 billion € per year for German generators alone
„The important point is not the windfall profit for utilities, but
the other side of this coin – the windfall loss for electricity
intensive industries that compete globally“
(analyst from Markedskraft)
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Further flaws of EU ETS
Missing Stimulation of Investment into CO2 Emissions
Reduction Measures
 negative consequences from reduction measures in the form of less
allowances granted in future
 polluter-earns-principle consequence of the current ET regime
 EU ETS reason for inactivity regarding climate change measures within
industry
Freezing Market Shares – Conflict with Competition Rules
 Guidance Note: “having new entrants buy all allowances would be in
accordance with equal treatment”
 Significant disadvantages for potential “winners” and significant
advantages for potential “losers”
 In a already today critically concentrated market (see Sector Inquiry)
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Urgent change to alternative approach
Option of an output related CO2 emissions regime, granting
allowances ex post adjusted, i.e. only depending on actual
production based on a relevant performance standard
(at least or in the first step: for electricity industry)
 Opportunity cost principle avoided
 Incentivising efficiency improvements
 No freezing of market chare
An EU wide approach is necessary! – EU action is needed!
Return to CO2-free price level: doubtful under the current market structure
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Outlook: Post Kyoto
EU ETS
 not working properly
 serious threat to EU industry‘s competitiveness and survival
Very weak basis for a proactive and enthusiastic
industry involvement and co-operation in designing
and deciding on a Post Kyoto strategy