WARNING SOUNDED OVER EU ENERGY REFORMS: “WEAK COMPROMISES WILL NOT FIX A FAILED MARKET”

agree.net press release


Any failure this year to agree substantial energy market reforms would lead the European Union to miss its strategic energy and climate goals and make it inevitably that yet another round of legislation would be needed in the future, a new survey published today warns.
 
The report, “A Critical Assessment of Energy Markets”, prepared by agree.net, a network of non-governmental organisations based throughout central, eastern and south-eastern Europe, examines energy market conditions as they presently exist.
 
The main conclusion is that, despite a decade applying EU reforms, there has been little impact so far on increasing competition or on improving environmental protection. agree.net therefore calls for stronger political determination to apply fully existing laws and to commit to further essential measures.
 
The report\'s launch comes ahead of the EU Energy Council on Thursday (28 February 2008) where ministers will consider all of the European Commission recent proposals.
 
Issues identified by the report are typical of those often encountered elsewhere in the EU. But such problems occurring in CEE countries often tend to be more severe, including:

  • \'INCREASING OLIGOPOLIES\': Incumbent operators, often state-owned, still predominate, and are often helped to become national champions, or when firms are privatised they tend to be bought by the \'European giants\' (e.g. E.ON, RWE, EDF);
  • \'INADEQUATE REGULATION\': A consistent lack of effective unbundling, weaknesses and lack of independence amongst regulators, and limited or non-existent support schemes and enabling rules for energy efficiency and renewables;
  • \'FALSE PRICING\': very long-term power purchase deals in the generation sector, and retail sector political price fixing that is not cost-reflective;
  • \'FORGOTTEN ENVIRONMENT\': The challenges and opportunities for energy efficiency and renewables as responses to climate change and security of supply generally are not being realised.

Ada Amon, the Director of the Budapest-based Energiaklub said: “Political determination to push ahead with reforms is essential. For all the proposals being considered, weak compromises will not fix a failed market. If we do not get a good third energy package, then there will only need to be a fourth package in the future. And not finishing the job properly denies people the benefits that these proposals aim for, while allowing climate emissions to continue at a higher level.”
 
Lidija ®ivèiè, Programme Leader at Ljubljana-based FOCUS said: “The ETS so far has not lived up to its promises. Although it was supposed to cut emissions by the least-cost means, it has proved more a way to channel large amounts of state aid into dirty industries. Tighter caps and full auctioning are essential to ensure ETS works properly in the future.”
 
Petr Holub, Energy Campaigner at Hnutí DUHA (Friends of the Earth Czech Republic) said: “Energy efficiency has, often at the same time, the least political appeal yet the greatest actual potential. The habit amongst politicians of not seeing efficiency as the central part of strategy must end immediately. In this region, where efficiency standards are still below EU15 standards, this is especially important.”
 
NOTES

  1. agree.net (Actions for Green Renewable and Efficient Energy) is a unique network of non-governmental organisations in Central, Eastern and South Eastern Europe working to build clean energy economy, bring in more jobs and address climate change.
  2. Copies of the report can be downloaded from: www.agreenet.info/market, or from the Energiaklub\'s webpage:
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