High Level Group proposes urgent actions to promote a competitive and sustainable European energy system

The BioPact closely monitors the EU's energy policy developments, to see where it is taking our bioenergy and biofuels future. Today, the High Level Group (HLG) on Competitiveness, Energy and the Environment has adopted its first report, including a number of concrete recommendations to address pressing issues, such as: the improvement and implementation of EU regulatory energy framework, cost-effective inputs for energy intensive industries, energy efficiency, the functioning and the review of the EU Emissions Trading Scheme (ETS).

Composed of high level stakeholders, the HLG looks at ways to foster consistency between policy and legislative initiatives and to contribute to creating a more stable, predictable and competitive regulatory framework (see IP/06/244 and IP/06/226). The Commission considers that only a comprehensive approach to all parts of the energy chain and to the three objectives of security of energy supply, environment and competitiveness can lead to lasting success as put forward in its recent energy Green Paper. The recommendations of the HLG will help to achieve this goal.

The main conclusions of the first HLG report are:

1. Functioning of EU electricity and gas markets

The HLG calls for making full use of competition instrument to ensure a more competitive environment for electricity and gas supply. Member States are called upon to improve in a timely fashion the implementation of the current regulatory framework with a specific focus on unbundling provisions and the removal of regulated tariffs distorting competition. Member States should also enhance the role and independence of national regulatory authorities. Co-ordination among national transmission system operators (TSOs) should be improved, the interoperability of gas systems harmonised and the time needed to authorise investments be shortened.

2. Cost-effective and predictable prices for energy intensive industries

Public authorities should evaluate current initiatives relative to pooled generation, long term contracts and partnerships. The Commission should provide guidance on the compatibility of long term downstream supply contracts and competition law.

3. Energy efficiency and conservation

Since there still is a significant potential for improving energy efficiency, the HLG recommends that a list of priorities for energy efficiency measures be established. The High Level Group considers that a new sense of urgency is needed to fully tap the cost-effective energy efficiency potential. There is a need to have a better assessment of the payback time of investments. Take-up of Energy services should be promoted and energy using products should be subject to dynamically improving efficiency standards. The HLG recommends also making full use of the Eco-design Directive (e.g. minimum energy efficiency requirements for all energy using products, as well as further development of combined Heat and Power, and district heating.

4. EU emissions trading scheme (ETS)

The group confirmed its preference for a well-functioning ETS as a central instrument for reducing greenhouse gases. To ensure that the EU has a cost-effective instrument at its disposal for contributing to the fight against climate change, the HLG proposes to improve the current system by taking action in three stages. This instrument should, therefore, give efficient incentives for investment in low carbon technologies, have limited impact on the competitiveness of energy intensive industries competing on global markets and should be an attractive “docking station” for schemes in other big emitting countries after 2012.

To further improve the functioning of the ETS, the HLG recommends the full and urgent implementation of current EU legislation regarding the liberalisation of electricity and gas markets.

In the coming weeks the national allocation plans of Member States for the 2008-12 period should be assessed to make maximum use of the experience gained from the first trading period.

In the short term before the end of 2006 the EU ETS should give a stronger signal towards encouraging low carbon investment, and providing a level playing field. Ways to reduce the administrative burden for small installations to monitor and report emissions should be explored. Cost-effective solutions to providing information on actual emissions to ensure market transparency should be explored, as well.

The HLG recommends the general review of the ETS should take place in the broader context of international action against climate change. It calls to bring forward the international climate change policy framework post-2012, so as to ensure more long term certainty and transparency in future emission reduction efforts. The HLG recommends also intensifying discussions with big emitters and identifying how the EU ETS can be linked with compatible system emerging in other countries.

Outlook

At its today’s meeting the HLG has also set up two ad hoc groups to analyse barriers and drivers for investment in innovative energy technologies and long term energy future for the EU.

The future work of the High Level Group will focus on a more strategic reflection on future energy policies for Europe. The objective will be to draw up recommendations on how policy options can be developed to enable a sustainable, low carbon, and competitive energy system which also contributes to strengthening the competitiveness of the European economy and which promotes energy security of supply post-2010.

The full HLG report and more information can be found here.

Europa Rapid Press Release.