Transcript Folie 1

IFIEC EUROPE – International Federation of Industrial Energy Consumers
Climate Change Policy as Today’s Driver
for Energy Policy
Annette Loske, IFIEC Europe
[email protected]
Prague, 12.9.2007
1
IFIEC EUROPE – International Federation of Industrial Energy Consumers
2007 EU Strategic Energy Review
The Jan. 10th – package: „An Energy Policy for Europe“
 The long awaited position how to further
develop / improve the internal energy market
 Published together with the final sector inquiry
report:
 “consumers and businesses are losing out
because of inefficient and expensive gas and
electricity markets”
 Main reasons:
 high levels of market concentration
 vertical integration of supply, generation and
infrastructure leading to a lack of equal access
to, and insufficient investment in infrastructure
 possible collusion between incumbent
operators to share markets
2
IFIEC EUROPE – International Federation of Industrial Energy Consumers
2007 EU Strategic Energy Review
Content:
1. Climate Chance Policy Goals
•
EU commitment of 20 % GHG reductions by 2020 compared to
1990*
•
EU objective in international negotiations of 30 % GHG
reductions by 2020 compared to 1990
•
EU binding target of 20 % renewable energy in primary energy
consumption**
•
EU goal of reduction primary energy use by improving energy
efficiency at 20 % by 2020
2. Energy markets
See presentation Hans Grünfeld
*) Currently achieved: - 2 %; Kyoto target: - 8 % till 2008 - 2012
**) Currently achieved: 7 %
3
IFIEC EUROPE – International Federation of Industrial Energy Consumers
2007 EU Strategic Energy Review
State of Agreement:
1. Climate Change Targets
•
Agreed at March 07 Council
2. Energy Policy
•
•
•
•
Draft directive proposal Sept. 19th
Inofficial version widely spread
and well known already
Clear: difficult agreement on
unbundling issue in Council
Lengthy process for
implementation to be expected
4
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Emissions trading – The Main EU Climate
Change Policy Instrument
1st trading period:
• close to its end
• test period failed due to missing shortage
• huge indirect price effects through opportunity cost pass-through by
electricity companies
High costs – low results
5
IFIEC EUROPE – International Federation of Industrial Energy Consumers
How big is the indirect cost effect?
Academic survey on the market
Source: London Economics Study for EU Commission
 The additional costs for consumers are significant EU-wide
 But also high competition distortion for consumers within the EU
 EU consumers / EU industry hit by EU ETS much more than needed !
6
IFIEC EUROPE – International Federation of Industrial Energy Consumers
How big is the indirect cost effect?
Real price picture
Full pass through of CO2 value is (nearly) a reality now !
Power prices including
2nd period CO2 prices
Power prices including
1st period CO2 prices
7
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Emissions trading – The Main EU Climate
Change Policy Instrument
2nd trading period:
• Greater shortage
• More direct costs
• Even higher indirect costs
through greater use of
auctioning
• „Cost-effective instrument“
used to raise new state funds
with the argument: „Solving
the windfall profits problem“
Additional price stimulus
Due to wish to keep margins
by companies with market power
Example: coal power plant, certificates price 20 €/t
8
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Emissions trading – The Main EU Climate
Change Policy Instrument
3rd trading period:
• Review in Process led by DG Environment
• Amended Directive expected later 2007
• Issues in focus:
•
•
•
•
•
•
•
•
•
•
•
Expanding to other sectors and gases
Small installations – possible exclusion
Monitoring, reporting, verification
Compliance and enforcement
Cap-setting (EU-wide / national)
Increased predictability
Allocation methodologies (Benchmarking, Auctioning)
New Entrants
Closure Rules
Linking with other ETS
CDM/JI
General direction:
• Change as little as possible - save the system
• Much more harmonisation
• Indirect cost effects accepted widely as part of the system
• Competitiveness problems of industry (if any) to be solved otherwise
9
IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Position in EU ETS Review – 1st element
Performance-based allocation:
Same incentive as auctioning, (hardly or) no leakage,
good for competitiveness
10
IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Position in EU ETS Review – 2nd element
The advantages of relying on actual data
The 4 problems solved !
1. Power prices
2. Leakage
Power price
effect limited to
actual cost
Option not to
produce but to
sell is gone
Better
competitiveness
for industry
Leakage only at
extremely high
CO2 prices
Cutting down
the system‘s
costs
Providing for
really cost
efficient
instrument
Negative global
emissions
effects
diminished
significantly
Lower impact on
competitiveness
Higher
attractiveness
for other
countries to join
3. Hindering competitive strategies
Competitive
strategies
(going for
market share)
supported to the
benefit of whole
economy
4. Discriminate
new entrants
No special rules
for new entrants
No special rules
for closures
Equal treatment
for every player
in the market
Basing EU ETS on actual data provides
for a system, that
stimulates efficiency improvements
establishes a real cost-efficient
instrument
enables (extremely needed)
competition in the electricity market
makes it feasible to combine Kyoto
and Lisbon
11
IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Position in EU ETS Review
The proposed design – performance-based allocation based on actual
production - solves the major problems:
Eliminating the disadvantages of present rules




Uncompetitive high electricity prices
Exporting and increasing emissions (leakage)
Hindering competitive strategies
Discriminating new entrants
Realizing the advantages of a market based instrument
 Providing for cost efficiency
 Setting the right incentives for efficiency improvements
 Guarantee of total cap
If not solving ETS‘ huge power price effect 
there is the need to save EU energy intensive industry by additional
mechanisms, which would bring discredit on EU ETS
12
IFIEC EUROPE – International Federation of Industrial Energy Consumers
Outlook
• EU ETS to function on a tougher ground also beyond 2012
• Present Trend:
• Auctioning (up to 100 percent) for electricity (not exposed to international
competition)
• Benchmarking for industries under global competition
• Grandfathering in single, small areas
• Compensation mechanisms for some industries ?
• Climate Change Policy to remain the leading part of the energy policy
triangle for a longer time
• A competitive internal energy market to be established by new
measures ???
13