Brussels Energy Brief - October 2007
October 2007
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KEY DEVELOPMENTS
Commission Clears Aid in Polish Electricity Market
Bróna Heenan
Following an investigation, the European Commission has requested that Poland terminates long term electricity purchase agreements that, in its view, constitute unlawful State aid. Around half the electricity generated in Poland is sold under these long term agreements that also foreclose a significant part of the market to new entrants. At the same time, the Commission has authorised the Polish compensation system designed to cover stranded costs. These are the costs arising from the canc
Distrigas Commitments to End Long-Term Gas Supply Agreements Become Binding
Elena Kostadinova
The European Commission has closed the abuse of dominant position case against Distrigas, the largest gas importer and supplier in Belgium, and accepted the gas company’s commitments for remedies. In 2004 the Commission launched an investigation into Distrigas’ supply of gas to large customers, including industrial customers, electricity producers and resellers. The Commission investigated long-term supply contracts and restrictions on the use of gas. Under the commitments, Distrigas will reduce the volumes of gas tied under long-term contracts sold in Belgium. The maximum duration of new contracts will be two years with gas resellers and five years with industrial consumers. Breach of these commitments, which are binding until 31 December 2010, would expose Distrigas to a potential fine of up to 10 per cent of its total turnover.
Energy Research: Commission Launches New Projects for Greener, More Competitive Air Transport
Geert Dierickx
The European Commission has unveiled the results of the first EU-wide call for research proposals in aeronautics and air transport under the EU Seventh Framework Program for Research. It is hoped the projects selected will bring important advances into greener, safer, more secure air transport and improved cost efficiency in aeronautics. The projects were selected following an evaluation by independent experts and include innovative research into flight physics and alternative fuels to reduce CO2 emissions. The final budget figures and project details are subject to the signature of contracts by and between the project teams and the Commission, with the first project teams planning to start their research in January 2008.
Subsidies for Biofuel Crops Reduced Due to Popularity
Bróna Heenan
Over-subscription and budgetary constraints have led to a reduction in the level of subsidies available to European farmers for energy crops (such as rapeseed, sugar beet and biomass). With their introduction in 2004, the European Commission hoped to increase the 0.31 million hectares devoted to biofuels to 2 million hectares. With applications approaching 2.84 million hectares this year and the Commission’s EUR 90 million budget depleted, farmers can now expect to get EUR 45 per hectare for just over 70 per cent of land planted with biofuel crops rather than for all land so planted. The Commission’s scheme had come in for criticism for being biased towards a particular technology as well as allegedly causing increases in the cost of basic agricultural commodities such as milk and cereals.
Legal Actions Taken by Commission Against 12 Member States for Failing to Submit Energy Efficiency Action Plan
Mélanie Bruneau
The European Commission has launched infringement proceedings against 12 EU Member States (Belgium, Estonia, France, Greece, Hungary, Latvia, Luxembourg, Malta, Portugal, Slovakia, Slovenia and Sweden) for failing to notify their national Energy Efficiency Action Plans by 30 June 2007, as required by the 2006 Energy End-Use Efficiency and Energy Services Directive. The purpose of the Directive is to create the necessary conditions for the development and promotion of a market for energy services and for the delivery of other energy efficiency measures to final consumers. The action plans should present national strategies for achieving a 9 per cent energy savings target by the end of 2016 as well as set out how Member States plan to comply with a number of other provisions in the Directive.
Energy Performance of Buildings: Commission Takes Legal Action Against France and Latvia
Chen Dingsheng
The European Commission has sent a reasoned opinion – the last step before referral to the European Court of Justice – to France and Latvia for failing to notify whether they had implemented the measures required by the Directive on Energy Performance of Buildings. France and Latvia were issued letters of formal notice in 2006, urging them to notify the appropriate legislative measures. To date the Commission has not received all the necessary evidence to conclude that the two countries have implemented the required measures, which should have been transposed by 4 January 2006. The aim of the Directive is to significantly reduce energy consumption in buildings, one of the cornerstones in mitigating climate change. The Directive requires Member States to establish minimum energy performance standards and energy performance certification schemes for buildings, as well as to ensure that heating and air conditioning installations are regularly inspected to enable performance improvements.
Environment: Commission Takes Action to Promote Hydrogen Cars and Technologies
Elena Kostadinova
The European Commission has adopted a proposal to facilitate the placing on the EU market of hydrogen cars by extending the European Community Whole Vehicle Type-Approval (WVTA). When used either in combustion motors or in fuel-cell systems, hydrogen does not produce any carbon emissions. Therefore hydrogen cars are expected to improve air quality in cities. The WVTA system currently applies to vehicles powered by conventional fuels (petrol and diesel) only. An EC WVTA certificate issued by the authorities of an EU Member State is valid throughout the European Union. The proposal provides for the inclusion of hydrogen cars in the system, while taking account of certain safety issues related to the use of hydrogen for vehicle propulsion. A second proposal by the Commission concerns the creation of a public private partnership for research, a Joint Technology Initiative (JTI), which should contribute to developing robust hydrogen supply and fuel cell technologies for commercial take-off. The JTI will be a partnership between the European Union, represented by the Commission, and an industry grouping established as an international not-for-profit association. The Commission will contribute up to EUR 470 million for a six year period ending in 2013. This funding should be matched by private investments. The JTI will develop its own work programme to be implemented mainly through calls for proposals. These two Commission proposals are yet to be formally adopted by the European Council and Parliament.
EC–EIB Financial Instrument for Research and Innovation on Renewable Energy Technologies
Chen Dingsheng
The European Commission and European Investment Bank (EIB) have announced the successful introduction of the Risk Sharing Finance Facility (RSFF) – the latest in a series of joint Commission–EIB initiatives to support research, development and innovation projects in Europe. In particular, it contributes EUR 359 million to research and innovation, with a strong focus on renewable energy technologies. The first RSFF financing operations focus on renewable energy technologies, a priority lending objective for the EIB in 2007, together with financing for automotive, engineering and biotechnology projects. The principal beneficiaries of RSFF loans will be midcap companies and small and medium-sized enterprises, as well as large companies and public/private entities.
Environment: European Parliament Votes to Tighten Rules on Aircraft Emissions
Benoît Keane
The European Parliament’s Environment Committee has voted in favour of tightening the rules on aircraft emissions. The Parliament has proposed that the total emissions cap of aircraft be set at 75 per cent of the average emissions recorded by the industry between 2004 and 2006. This is more stringent than the European Commission proposal which suggested calculating the cap at 100 per cent of emissions recorded in this period. The Parliament has also proposed that the regulations apply as of 2010 – a year earlier than that proposed by the Commission. The proposal, if accepted, will cover all planes arriving at or departing from EU airports while allowing airlines to buy and sell “pollution credits” on the EU carbon market.
MERGER NOTIFICATIONS
End September – October 2007
M.4934 - KAZMUNAIGAZ / ROMPETROL (12 October 2007)
M.4890 - ARCELOR / SFG (16 October 2007)
MEETINGS
November 2007
High-Level Energy Working Group Meeting (5 – 6 November 2007)
Transports, Telecommunications and Energy Council (29 – 30 November 2007)
