Brussels Energy Brief - May 2007
May 2007
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KEY DEVELOPMENTS
Antitrust Proceedings Against RWE and ENI
Sara Bacchio
The European Commission has announced the opening of separate competition proceedings against the German energy company RWE and the Italian energy company ENI for allegedly abusing their respective dominant positions in their national wholesale natural gas markets. ENI is suspected of capacity hoarding and strategic underinvestment in the transmission system in Italy. RWE is accused of hindering competitors’ access to capacity on gas transport infrastructure in Germany. The Commission’s preliminary view is that such behaviour of both companies was aimed at excluding potential competitors from the market (ie, so-called market foreclosure) and this possibly constitutes an infringement of the EC Treaty. Both cases are being launched on the basis of information gathered during dawn raids carried out in May 2006.
Nuclear: Parliament to Claim More Powers
Jérôme Cloarec
On 10 April 2007 the European Parliament voted by a large majority in favour of a report proposing a revision of the Euratom Treaty and extending parliamentary powers to nuclear energy policy. Euratom, which came into force in 1958, aims to assist EU Member States in developing nuclear policies for civil purposes. Euratom also prevents any military use of nuclear installations. The vote endorsed the proposition that the “Euratom Treaty remains for the moment an indispensable legal framework” and to “extend the co-decision procedure (with the Parliament involved) to legislation adopted under it”. The Parliament also calls for an increase of EU powers in nuclear policies while modernising the “outdated provisions” of Euratom. Such reforms, according to the report, should be discussed in an intergovernmental conference.
Commission Supports Green Electricity in Slovenia Subject to Conditions
Elena Kostadinova
The European Commission has authorised Slovenian tariffs for “green” electricity subject to changes in the financing mechanism. Slovenian network operators have the obligation to purchase electricity produced from renewable energy sources and efficient combined heat and power plants at a price above the market price fixed by the State. The aid thus provided by Slovenia does not exceed the difference between the market price and the production cost for this type of electricity and is in line with EU environmental aid guidelines. However, as part of the scheme, consumers had to pay an additional parafiscal levy on their electricity consumption. According to the Commission this could have led to discrimination against imported “green” electricity. Slovenia has therefore undertaken to finance the scheme through a lump sum based on connection power.
Launch of EU Network of Energy Security Correspondents
Marta Becerra
On 10 May 2007 the first meeting of the Network of Energy Security Correspondents (NESCO) was held in Brussels. According to European External Relations Commissioner, Benita Ferrero-Waldner, the purpose of this new network is threefold: First, to monitor the security of the EU’s external energy supplies, drawing on the collective capacity and expertise of the European Commission, the Council Secretariat and Member States. Second, to act as an early warning mechanism for potential disruptions of supplies. Third, through its shared assessment of potential threats, to enable the EU to take decisions and prepare itself in the event of a specific threat to EU energy supply. The creation of NESCO was endorsed in the conclusions of the December 2006 European Council as part of a range of proposed actions to ensure greater security in the supply of energy throughout the EU.
Solar Industry Seeks EU Reassurance on Renewables Law
Helen Kinghorn
On 14 May 2007 the European Photovoltaic Industry Association (EPIA) called upon the EU to expand its ambitions and increase its regulatory efforts to remain a world leader in solar power. The EPIA raised concerns that a future framework directive on renewable energy (part of the Commission's "Energy Policy for Europe") will be weaker than existing legislation that provides for specific targets for electricity produced from renewable energy sources. According to the EPIA, the directive should impose mandatory sector-specific targets for Member States, who should commit themselves to respecting these targets by: (i) refraining from harmonising support schemes which are currently left to Member States; (ii) simplifying administrative procedures to install and operate solar power plants; and (iii) ensuring fair access to the electricity grid for photovoltaic power and other renewable-energy sources. Solar power accounted for only 0.7 per cent of renewable energy consumption in 2005.
Energy Commissioner Calls for International Agreement on Energy Efficiency
Elena Kostadinova
At the meeting of the International Energy Agency (IEA) on 14 – 15 May 2007 Energy Commissioner Andris Piebalgs called for an International Agreement on Energy Efficiency, which would initially bring together the Organisation for Economic Co-operation and Development (OECD) and key developing countries such as China and India. The agreement would focus on promoting energy efficiency worldwide and include various areas of co-operation such as regulatory co-operation, information exchange on energy saving strategies, methods of measurement, and research co-operation on energy efficient technologies. It was proposed that the G8 Gleneagles Dialogue should function as a governing board for this agreement. In a recent communiqué the IEA members declared their willingness to implement energy efficiency measures but did not actually address the issue of an International Agreement.
Estonia’s and Italy’s National Allocation Plans for 2008 – 2012 Emissions Trading Period Approved, Subject to Changes
Sara Bacchio
Estonia’s and Italy’s National Allocation plans (NAPs) are the 20th and 21st NAPs respectively to be assessed by the European Commission for the 2008 – 2012 emission trading period. In both cases, the Commission accepted the NAPs subject to amendments. First, the total number of emissions allowances has to be reduced. The cleared annual allocation is 195.8 million tonnes of CO2 allowances for Italy and 12.7 million tonnes of CO2 for Estonia. Second, the NAPs must include more information on the way new entrants will be treated. Finally, in relation to the credits used for investment in clean technologies in third countries carried out under the Kyoto Protocol's flexible mechanisms, Italy is required to reduce the use of these credits to 15 per cent of its total allocation, while Estonia must include a reserve for them in its total CO2 allowances. Estonia’s and Italy’s NAPs will be approved automatically once these changes have been made.
European Commission Launches Biofuels Public Consultation
Frank Schoneveld
The European Commission has launched a public consultation on "biofuel issues in new legislation on the promotion of renewable energy". It addresses issues such as how to achieve a 10 per cent biofuel share in transport fuels by 2020 while ensuring environmental sustainability. The consultation is principally aimed at helping the Commission draft proposals on incorporating this 10 per cent target into legislation. The Commission recognises that biofuels will play a key role in improving security of fuel supply, reducing greenhouse gas emissions in transport and in offering new sources of income to people dependent on agriculture. There is concern, however, that these advantages should not be offset by environmental damage through inappropriate land use or outdated production processes. Views are sought from public authorities, businesses, non-governmental organisations and other interested parties on four questions:
How should a biofuel sustainability system be designed?
How should overall effects on land use be monitored?
How should the use of second-generation biofuels be encouraged?
What further action is needed to make it possible to achieve a 10 per cent biofuel share?
The consultation will close on 4 June 2007.
Poseidon Gas Pipeline Between Greece and Italy Exempt From Third Party Access, Subject to Conditions
Elena Kostadinova
The European Commission has approved, subject to conditions, the exemption of the "Poseidon pipeline" from the third party access rules. This new gas pipeline will connect Greece and Italy, and is currently under construction by Edison of Italy and DEPA of Greece. The exemption from the obligation to provide access to the pipeline to parties not involved in the investment project for a limited period of time should allow the investing companies to recover their costs. If the Commission’s conditions are respected, it is expected that the project will promote more effective competition on the Italian gas market.
MERGER NOTIFICATIONS
End April – May 2007
M.4654 - IPR / MITSUI (UK Electricity generation business) (19 April 2007)
M.4634 - SABANCI / VERBUND / ENERJISA JV (30 April 2007)
M.4599 - RWE POWER / CARBON / JV (10 May 2007)
M.4675 - IBERDROLA / API / SER JV (11 May 2007)
M.4689 - WINGAS / HYDRO WINGAS (15 May 2007)
MEETINGS
June 2007
Transport, Telecommunications and Energy Council (6 – 8 June 2007)