The EU Third Package for Gas and the Gas Target Model: major contentious issues inside and outside the EU

By Katja Yafimava, Oxford Institute for Energy Studies

The general provisions introduced by the Third Package (which became law in March 2011) and the detailed provisions to be outlined in the pan-European network codes for cross-border issues (currently under development) are set to fundamentally change the architecture of the EU gas market heralding a transition to a new model. Ensuring that the transition to this new model is as smooth as possible, and that it results in the creation of a fully liberalised EU gas market, requires a clear vision of its main characteristics and the means of achieving them.

New Approach towards “the life blood of our society” - EU Energy Infrastructure

By Jozef Badida

The importance of energy infrastructure for the integration of European energy markets is unquestionable. The European Union and its member states have already recognized many times the significance of the development of trans-European networks, contributing to the achievement of the EU´s ambitious energy and climate goals (20/20/20 targets, decarbonisation, competitiveness, sustainability, security of supply, and elimination of energy isolated islands). [note 1]

Can power markets resuscitate natural gas in Europe?

By Timon Dubbeling

If the integration of variable renewables into Europe’s power systems is to continue in the decades to come, more needs to be done to ensure that the most flexible resources are available in the market. Gas-fired power generation is considered to be a key enabler of the energy transition due to its ability to compensate for variable renewable output. However, increased electricity production by renewables, low coal prices, energy efficiency measures and overall economic woes have reduced gas demand in recent years. In order to obtain the flexibility needed to manage a system with an ever-increasing share of variable renewables, power markets will have to reward generators on the basis of the ramping services they can deliver. Doing so will also help to get the flexible gas capacity back into the market and counter the coal renaissance that has a detrimental impact on Europe’s climate agenda.

Study: building efficiency off track

By the Buildings Performance Institute Europe

Without further guidance, EU countries may mismanage their energy efficiency commitments and risk missing their energy savings' target.

Interview: Susanne Nies of Eurelectric

"We have a problem with politics"

By Karel Beckman

The goals the European Commission has set for Europe's energy transition and for the internal energy market cannot possibly be met with current policies. That is the stark message given out by Eurelectric, the European electricity industry association. Of the investments of about €1 trillion that are needed to ensure the energy transition, no more than half will occur, according to a Eurelectric survey among energy executives. Nor is the EU's ambition to complete the internal market by 2014 likely to be realised, the association adds. According to Susanne Nies, who is in charge of Energy Policy at Eurelectric, "overregulation" and "unpredictable policies" have wrecked the investment climate in the European electricity sector.

Climate wins, energy loses in new EU budget

By Sonja van Renssen

The proposed EU budget for energy interconnections and smart grids has been cut sharply under last week’s budget deal. Climate funds, however, are set to triple compared to today, as EU leaders agreed to commit 20% of all EU spending to climate action. Director-General for Energy Philip Lowe insists that less money in EU funds may not mean fewer projects, since 'a lack of money is not the main barrier to new energy infrastructure'.

Bert den Ouden, CEO of APX-Endex, sounds alarm on the internal energy market

"European power markets are being split apart by political fickleness"

By Karel Beckman

Bert den Ouden, CEO of APX-Endex, the Amsterdam-based gas and power exchange raises the alarm: power prices in North West European markets are diverging for the first time in years. This means that markets are becoming more fragmented again instead of more integrated - in contradiction to what EU internal market policy is all about. According to Den Ouden, this development is the result of political decisions. "As a result of their unilateral and inconsistent policies, policymakers are splitting up markets faster than network operators and power exchanges can tie them together which can potentially be detrimental to end-users." Den Ouden calls on policymakers to agree to an "EU Energy Stability Pact" that would at least compel national governments to take into account the effects of their measures on their neighbours.

After tackling biofuels, Brussels turns its guns on solid biomass

By Sonja van Renssen

The European Commission plans to issue proposals for binding EU sustainability criteria for biomass in the first half of this year. The idea is to pre-empt an environmental backlash of the kind that has thrown biofuels from favour.

Europe should address the "coal renaissance" by reforming its gas market

By Maria van der Hoeven, Executive Director of the International Energy Agency (IEA)

Coal is making a remarkable comeback in Europe. Indeed, Europe, which collectively pays so much to stay at the forefront of the clean energy revolution, is consuming ever more of the dirtiest mainstream fuel. But the way to address this problem is not merely to reform the EU Emission Trading Scheme (ETS) to push up the price of coal high enough to make gas competitive. This would be hugely expensive to energy users and hurt the European economy. Instead, policymakers should finally get serious about reforming the gas market to make gas a more competitive fuel.

Reassessing "market relevance": why national boundaries are increasingly irrelevant in measuring competition in gas spot markets in Northwest Europe

By Santiago Katz and Catrinus Jepma

The 'relevant market' for gas spot sales in Europe is currently being determined by most regulators along national boundaries. The widely accepted 'Gas Target Model', developed by the Council of European Energy Regulators (CEER), similarly measures competition in the spot gas market on a national basis. In the final segment of a three-part series on European gas hubs, Catrinus Jepma and Santiago Katz of the Energy Delta Institute argue that such an approach does not do justice anymore to the reality of the gas market in North West Europe. On the basis of the criteria specified in the European Commission's key Notice on the definition of relevant market for the purposes of Community competition law, they show that the relevant geographic market for spot gas wholesale is regional (international) rather than national. This is important because it turns out that on a regional basis competition in the North Western European gas markets is much stronger than has thus far been assumed by regulators.

EU sets out to save CCS: emission performance standard or mandatory certificates?

By Sonja van Renssen

The European Commission remains committed to carbon capture and storage (CCS) in Europe, despite acknowledging that CCS policy so far has failed to live up to its goals. This appears from a still unpublished draft policy paper on CCS that European Energy Review has seen. In this long-awaited "CCS communication" the Commission makes a number of proposals to salvage the CCS sector that are bound to be highly controversial. Sonja van Renssen has the latest news from Brussels.

Transforming energy systems in Europe: towards a German-Polish model

By Dietmar Nietan, Member of the German Bundestag

No two countries seem to be further apart in their energy policies than Germany and Poland. Whereas Germany is pursuing a hugely ambitious Energy Transformation, Poland is probably the most reluctant country in the EU when it comes to embracing ambitious climate policy goals. This is leading to increasing frictions between the two countries. However, according to Dietmar Nietan, a Member of the German Bundestag for the SDP and Chairman of the German-Polish Association, despite their different approaches, there are plenty of opportunities for the two big neighbours to work together in the energy field. Nietan issues a strong plea for a new German-Polish energy partnership that could be a model for Europe.

A Christmas present for EU renewables

By Sonja van Renssen

"Christmas has come early," announced EU climate commissioner Connie Hedegaard in Brussels on Tuesday in awarding €1.2bn of EU grants to 23 innovative renewables projects. This is money raised on the EU carbon market over the past year by selling the first 200 of 300 million carbon allowances ("NER300") set aside specifically to raise funds for innovative renewables projects – and for carbon capture and storage (CCS). CCS was the initial target in mind when this fund was created back in 2008 as part of the EU Emission Trading Scheme (ETS) review. Yet not a single CCS project was funded on Tuesday.

Interview Philip Lowe, Director-General for Energy at the European Commission

"If there's one area where the European dimension makes economic sense, it's energy"

By Sonja van Renssen and Karel Beckman

Philip Lowe, the top civil servant in Brussels for energy, takes an upbeat view of the progress to date on the internal energy market in Europe and of the prospects for decarbonisation of the European power sector. In an interview with EER, he says the internal energy market has already led to more choice, more competition, more liquid and transparent wholesale markets, and more secure energy supplies. He is also convinced that decarbonisation targets can be met, in spite of current setbacks. "There's no reason to believe that indigenous sources of energy, i.e. renewables, could not provide competitive energy to Europe by 2020."

Interview: biofuel-expert André Faaij

"EU biofuel policy is addressing the wrong issue"

By Loes Knotter

With its latest proposals to cap the production of first-generation biofuels, the European Commission is threatening to wreak havoc on the European biofuels sector, and undermining its own decarbonisation programme, warns bio-energy expert Professor André Faaij of the University of Utrecht in the Netherlands. According to Faaij, European policymakers are addressing the wrong issue. "They should focus on how to organize the synergies between food and fuel rather than wasting time on theoretical models of land use changes that do nothing to improve matters in the real world."

Europe’s misshapen market – Why progress towards a single energy market is proving uneven

David Buchan, Oxford Institute for Energy Studies

Progress to a single European energy market is proving very uneven. David Buchan explains the European Commission’s worry that rapid development of national renewable and back-up capacity markets could shut off countries’ energy sectors from each other, before efforts to improve cross-border electricity connection and trading can produce results.

The EU risks ending up with not a single CCS demonstration plant

The CCS mess

By Sonja van Renssen

The most likely recipient of millions of fresh EU funds for carbon capture and storage (CCS) now appears to be the unlikeliest candidate of all: a French steel plant that was shut down a year ago. All the projects recently tipped as top contenders for the money – up to €337m per project in carbon market funds – appear on the verge of falling off a cliff for reasons that are not yet clear. What is clear is that this soap opera has left CCS advocates flabbergasted and perhaps for the first time seriously wondering whether CCS has a future at all in Europe. Sonja van Renssen has the latest news from Brussels.

Why the EU should stop relying on a global climate treaty

By Oliver Geden

The European Union's decarbonization policies are closely linked to progress in international climate negotiations. But despite the results of last year's world climate summit in Durban, there will not be a comprehensive and ambitious global treaty by the end of 2015. Waiting for summits to produce "grand solutions" will eventually derail the EU's domestic climate policies. Therefore, a new sense of pragmatism is needed. Europeans will have to prove that a low carbon strategy is technologically and economically feasible even under present-day conditions.

We need to move beyond the East-West division inside the European Union

By Emilia Zankina

In a recent article in European Energy Review, Friedbert Pflüger criticizes the EU Energy Roadmap 2050 and EU climate and energy policy in general for not making any distinction between "East" and "West" Europe, or what he calls the EU-11 versus the EU-15. According to Pflüger, when it comes to climate and energy, special considerations should apply to Eastern Europe. However, his argument is quite misleading, as there are huge differences among East European countries, which make any simplistic East-West divide misplaced. What we really need is a common energy and climate strategy that ultimately applies equally across the EU.

European CCS industry faces moment of truth

By Sonja van Renssen

It will soon become clear which carbon capture and storage (CCS) projects in Europe are still alive. EU member states face an end-of-October deadline to announce which CCS demonstration projects they will invest in - and render eligible to receive hundreds of millions of Euros in fresh EU funds. The original demonstration programme from 2007 - which envisaged a dozen demos on the go by 2015 - is but a shadow of its former self. Yet it is questionable whether Europe can do without CCS if it is to decarbonise its economy by 2050. As pressure mounts on member states to finally commit, the CCS industry is looking beyond its traditional partners in coal and power to become a story about gas, biomass, manufacturing and jobs. Sonja van Renssen reports from Brussels.

Analysis of climate and energy roadmaps in North West Europe

Netherlands Environmental Assessment Agency PBL

Although energy markets are interlinked and energy companies operate internationally, European countries have a strong national focus in their climate and energy policies. Countries have little regard for the impact of their national policy measures on neighbouring countries and vice versa. Better coordination between countries would support the desired energy transition and reduce costs.

Ranking European gas markets

By Santiago Katz and Catrinus Jepma

In this article, Catrinus Jepma and Santiago Katz of the Energy Delta Institute show how the widely accepted indicators of market performance in the European "Gas Target Model" can be turned into a methodology that gives a simple, transparent score for each European gas hub. Applying their methodology, the authors conclude that most North West European gas markets are functioning (reasonably) well. And the winner is ... you guessed it: the UK's National Balancing Point.

Biodiesel back from the dead as EU drops ILUC factors

By Sonja van Renssen

In what some may see as cruel twist of fate it is the bioethanol, not biodiesel, industry which in the end has most to lose from the European Commission's long-awaited proposals on preventing indirect land-use change, or ILUC, from biofuels. Bioethanol that is, and climate change.

Crisis in the ETS comes to a head

By Sonja van Renssen

The EU Emission Trading Scheme (ETS) is in crisis and Climate Commissioner Connie Hedegaard and her Director-General Jos Delbeke are in an impossible position. They must reassure EU member states there are no plans to permanently remove carbon allowances from the market - this would equate to tightening the overall emissions cap, a highly sensitive issue. Yet they must also tell market players that yes, the big allowance surplus will be cut down to size so please do go ahead and make those low-carbon investments. The ETS-crisis is coming to a head in Brussels as the carbon price stubbornly stays below €10 a tonne and pressure intensifies for policymakers to intervene. Sonja van Renssen reports from Brussels.

Are the days of the European biodiesel industry numbered?

By Sonja van Renssen

The continuity of the European biodiesel industry appears threatened as this summer's food vs. fuel debate has injected fresh life into long-pending EU proposals on how to prevent the indirect displacement of forest by crops grown for fuel ('indirect land-use change' or ILUC). Studies have shown that production of biofuels can lead to a net rise in CO2 emissions if ILUC effects are taken into account. Debate has raged in Brussels over whether and how these effects should be handled in new biofuels legislation. In October, proposals originally due in early 2010 are finally likely to see the light of day. A leaked draft suggests they are full of surprises - but one thing is evident: they spell big trouble for the European biodiesel sector. Sonja van Renssen reports from Brussels on the implications of the draft proposals for the bioenergy market, oil companies and EU climate goals.

Leaked draft of Internal Market communication shows EU not satisfied with progress

By Sonja van Renssen

In a leaked draft of a policy paper not expected until mid-October, the European Commission's energy department says the EU is not on track to meeting a 2014 deadline to complete the EU internal energy market. The document, entitled "Making the internal energy market work", is undergoing internal revision as we write, but it gives a flavour of what the Commission's priorities are.

What Brussels holds in store for the energy sector

By Sonja van Renssen

It's tough, la rentrée, but the bureaucrats are back, the crisis has resurfaced and the EU machine is in motion once more. What does it hold in store for energy policy this autumn? Cyprus, which took over the rotating 6-month presidency of the EU in July, has four main priorities: grids, the safety of offshore oil and gas platforms, renewables, and Energy Star (an energy efficiency programme with the US). Also on the agenda are: the reform of the EU Emission Trading Scheme (ETS), the internal energy market, energy taxation, biofuels, shale gas, carbon capture and storage (CCS) and nuclear energy. EER-correspondent Sonja van Renssen takes a look at what to expect from Brussels this autumn.

European climate policy must distinguish between East and West

By Friedbert Pflüger

EU energy and climate policies are exerting a disproportionate burden on the economies of Central and Eastern European countries. This is leading to growing discontent and opposition in these countries. The only way that unity can be maintained, argues Friedbert Pflüger, is a new approach within the EU on energy and climate policy that takes the needs and interests of Central and Eastern European states into consideration.

The European Gas Target Model: how it could be improved

By Catrinus Jepma and Santiago Katz

European regulators have adopted a "Gas Target Model" on the basis of which they will determine whether gas markets in Europe are functioning properly. However, although this model is useful as a starting point, it has a number of shortcomings which urgently need to be addressed. The model is based on a set of indicators which are in some ways unclear and not integrated into a coherent methodology. In addition, its vision of what constitutes the size of the relevant market is too limited and the model ignores the important function of long-term contracts.

A Partnership of unequals - Electricity exports from the eastern neighbourhood and western Balkans

Bankwatch

Cooperation in the energy sector is one of the European Union’s key priorities in its relationships with neighbouring states. Although the promotion of energy efficiency, energy savings and the use of renewable energy sources should be the primary areas of cooperation along with “energy security”, the latter receives the lion’s share of attention and in several cases also a disproportionally large amount of financial support. This can have several negative environmental and social implications as this study shows.

Interview: Arne Mogren, Programme Director Power of the European Climate Foundation

"Everyone agrees on where we need to be in 2050, but not on how to get there"

By Sonja van Renssen

A more flexible Emission Trading Scheme (ETS), harmonised support schemes for renewable energy technologies, and much stronger EU coordination of the development of the transmission grids - that's the policy cocktail Europe needs to achieve its decarbonisation goals, says Arne Mogren, Director of the Power Programme of the European Climate Foundation (ECF) in a wide-ranging interview with EER. According to Mogren, a key official in this highly influential NGO, "everyone agrees on where we need to be in 2050", but it's not clear at all what the next steps must be. He sees tremendous opportunities for the power sector. The only problem is that these opportunities are "policy-driven" , so "you need to trust the policies".

Interview: Walter Peeraer, CEO Fluxys

Why the national Belgian gas transmission company is looking far beyond its national borders

By Karel Beckman

The Belgian transmission system operator (TSO) Fluxys has, over the last two or three years, "quietly grown into a European company", says Fluxys CEO Walter Peeraer in an interview with European Energy Review. Fluxys views itself as a "first mover" in the rapidly changing European gas market. Through a series of well-placed investments, the national TSO of Belgium has extended its reach far into Europe. As a result, it is competing with other TSO's - while at the same time cooperating with them to make the single European gas market a reality. Welcome to the complex new world of European gas infrastructure.

The four great challenges for the European gas market

By Kirsten Westphal

The transition to a new regulatory regime has left the European gas market in an extremely vulnerable position. Liberalisation has destroyed old certainties while new structures are not yet in place, undermining Europe's security of gas supply. Kirsten Westphal, Senior Researcher at the German Institute for International and Security Affairs (SWP), identifies four major challenges that market players and policymakers urgently need to address - and gives several recommendations on how to do so. "The market alone will not ensure security of supply."

A challenge for Brussels

How to find a cure for the Emission Trading Scheme without killing it

By Sonja van Renssen and Karel Beckman

Reports of the death of the EU Emissons Trading Scheme (ETS) have been greatly exaggerated. That was one of the key messages from European policymakers at an "Energy Policy Breakfast" organised by European Energy Review and public affairs agency Interel in collaboration with Italian energy company Enel on the 21st of June in Brussels. Representatives from the European Commission and the European Parliament acknowledged that the ETS has shortcomings which need to be addressed, but they are intent on it remaining the backbone of the EU's climate policy for decades to come. They are now debating how they can intervene into the ETS without destroying its credibility as a market-based scheme. Remedies are expected to be proposed in July.

A new EU Gas Security of Supply Architecture?

Florence School of Regulation Policy Brief

The Clingendael International Energy Programme (CIEP), together with the Fondazione Eni Enrico Mattei (FEEM), the Loyola de Palacio Chair at the Robert Schuman Centre of Advanced Studies, European University Institute (EUI) and Wilton Park have organized a series of workshops in order to take stock and discuss a possible new architecture for EU gas security. Discussions and reflections reported from the workshops held under this project have developed into the following recommendations for a new EU gas security of supply architecture that are synchronized in this policy brief.

For Italy it's TAP or being left out in the cold

By Friedbert Pflüger

The shape of the Southern Gas Corridor is gradually becoming clear, as far as the delivery of gas from Azerbaijan to Europe is concerned. The first leg through Turkey will be controlled by Azerbaijan and Turkey. From the Turkish border there will be a northern route - either BP's South East European Pipeline project or a Nabucco "light" version - and/or a southern route to Italy. The Shah Deniz II consortium, the producers of the Azeri gas, have indicated that for the southern route they favour the Trans Adriatic Pipeline (TAP) over the Italian-backed ITGI project. However, TAP has one weakness: it does not (yet) have an Italian partner. This is where the Italian government comes in: in the interest of Italian and European security of supply, Rome should make a clear commitment to back TAP.

Interview: EU Energy Commissioner Günther Oettinger on renewable energy targets and emission trading

"Four instruments may be too much"

By Sonja van Renssen

In an upcoming policy paper on renewable energy, the European Commission says a "binding supportive framework" for renewable energy is needed beyond 2020. But the Commission has not yet decided whether such a framework should be primarily based on markets (i.e. on emission trading) or on a combination of EU targets and national support schemes. In an interview with EER, Energy Commissioner Günther Oettinger says he is "open" to the idea of extending the current renewable energy target by another decade to 2030. About the EU Emission Trading Scheme (ETS) he says it is not sufficient to promote renewable energy on its own. "A CO2 stand-alone target is not the guarantee for ambitious investments in renewables". He also says that "four instruments" (the 2020 targets for CO2 emission reductions, energy efficiency and renewable energy, plus the ETS) "may be too much". Sonja van Renssen reports from Brussels.

Azerbaijan: knock, knock, knocking on Europe's door

By Matthew Hulbert

While policymakers and pundits debate which pipeline consortium will bring Azeri gas to European markets through the Southern Corridor, they rarely stop to think about what Azerbaijan might want out of the deal. The assumption is that state oil company SOCAR will be happy to sell gas at the Turkish border and that Ankara and Europe can safely sort out the rest of the route. However, the actions of the Azeri's show that this is a mistake. They clearly want 'in' on every part of the Southern Corridor value chain, all the way to European end consumers. High time for Brussels to consider opening its doors to Baku - or risk failure of its crucial Southern Corridor.

Is Europe giving up on energy efficiency?

By Sonja van Renssen

Virtually everybody agrees that energy efficiency is the number one energy priority for Europe, that it can provide growth, jobs, energy security and environmental benefits, and that it needs intervention by policymakers to really get going. So why is it so difficult for Brussels to agree on a legislative framework to drive energy efficiency? The EU's 27 member states and the European Parliament are further apart than ever in negotiations on a new EU energy efficiency law. The major measure on which a deal is likely to centre is a requirement for energy retailers to deliver 1.5% energy savings per year from their customers. Sonja van Renssen reports from Brussels.

Italian free-market think tank in new report:

"Replace emission trading scheme with a carbon tax"

By Karel Beckman

If the European Commission wants to stimulate "green growth", as its official policy states, then the Emission Trading System (ETS) is the wrong instrument. That's one of the major conclusions of a new study from the prestigious Italian free-market think tank Istituto Bruno Leoni (IBL). The authors, Stefano Clò and Emanuele Vendramin, argue that a carbon tax would be much more suitable to the goals of the EU's green growth agenda than an emission trading scheme. The ETS is the EU's flagship climate policy instrument, but it is widely criticized for being ineffective.

European gas market reforms undermine security of supply

By Sergei Komlev

Market reformists who are trying to put an end to oil-indexed gas contracts fail to understand the unique value of the current "hybrid" pricing system Europe enjoys in the gas market. If they get their way, Europe will lose the protection of long-term contracts altogether and will move to a purely hub-based short-term pricing model as exists in the US, warns Sergei Komlev, Head of Contract Structuring and Price Formation at Gazprom Export. This model, he says, is not suitable for an import-dependent market like Europe. It will leave Europe at the mercy of short-term market forces without any regard for security of supply.

Interview: Jean-François Cirelli on change the European gas industry can believe in

"We need a decarbonisation policy that favours gas"

By Sonja van Renssen

The European gas industry is bracing itself for tremendous changes. "The market is changing to a degree which has never been seen before", says Jean-François Cirelli, President of natural gas trade association Eurogas and Vice Chairman and President of French energy company GDF Suez, in an interview with EER. According to Cirelli, the market will see a gradual shift from fewer oil-indexed long-term contracts to more liquid wholesale markets. "All our membership is very market-oriented", he says. He does warn for "over-regulation". And he is also only half-satisfied with the EU's decarbonisation policy. "We believe gas should be more favoured than it is today." He calls for a single CO2 emission reduction target for 2030, but no other new targets, such as for renewable energy and energy efficiency. "The CO2 price must be raised in a predictable manner. The value of gas is clearly linked to the carbon-price."

The fate of the EU carbon market hangs in the balance

By Sonja van Renssen

If European policymakers do not intervene soon in the EU's emission trading scheme, Europe's flagship climate policy risks sinking into oblivion. This is bad news when debate is just beginning over a new EU climate and energy package for 2030. If the EU ETS cannot deliver, what should lie at the heart of this new package? A carbon tax? A myriad of national policies? To save the ETS, many stakeholders - including energy companies - are advocating a "set-aside", or one-off removal of carbon allowances from the market, to raise the CO2 price. Others want a complete overhaul of the system. Sonja van Renssen reports from Brussels.

EGEC policy paper on the European Commission’s Energy Roadmap 2050

European Geothermal Energy Council

The European Union (EU) is committed to decarbonising its economy while at the same time ensuring security of supply and preserving industrial competitiveness. This objective implies the reduction of greenhouse gas (GHG) emissions by 80-95% in 2050 compared to 1990 levels. As regards to the energy sector, this means some 85% GHG emission reductions by mid-century.

The EU's Energy Roadmap 2050: targets without governance

By Severin Fischer and Oliver Geden

With the Energy Roadmap 2050 of December 2011, the European Commission has opened the debate about the future shape of Europe's energy sector. But two central conflicts within the Union narrow the relevance of this planning instrument in the ongoing political process. Firstly, the European consensus that climate policy should determine energy policy, which has held since 2007, is likely to erode. Secondly, formulating European targets for 2050 suggests a greater scope of governance than the EU actually possesses, mainly because the European treaties still reserve the decisive role in shaping the energy mix for the member states. If the governments of the EU member states take the long-term approach of a European energy roadmap seriously, they will have to accept a major curtailment of their national sovereignty over energy policy.

It's finally coming: the great European gas market transformation

By Karel Beckman

The European gas market is awaiting radical changes in the years ahead. The old market structure, based on bilateral long-term contracts between a limited number of big suppliers and buyers, will be replaced by (presumably) thriving wholesale markets where sellers and buyers meet on trading hubs to make short-term deals. Some analysts are sceptical. 'Europe is taking a big risk if it relies on this single model', says Dick de Jong of the Clingendael International Energy Programme (CIEP) in the Netherlands. 'We are too much focused on the internal market instead of on the external market on which we increasingly depend.' But Jean-Michel Glachant of the Florence School of Regulation is positive. 'The global gas market is changing fast. Europe has to adapt to the new realities. Otherwise there will be a bloodbath.'

After Durban it's back to the trenches

By Sonja van Renssen

As the dust from Durban settles, the mountain left for world governments to climb to agree a new global climate treaty by 2015 is coming sharply into focus. The generous rhetoric of the UN climate conference last December is rapidly giving way to the defensive language of entrenched positions. China and India appear to see little role for themselves in helping to do what needs to be done to avoid dangerous climate change, the US is pussyfooting, post-Fukushima Japan is helpless and countries like Australia, Russia and Canada show no signs of wanting to step up their pledges. All this leaves international climate policy in a perilous state. Hope rests mostly on initiatives that lie outside the scope of the climate negotiations, reports Sonja van Renssen.

There is life for the Southern Corridor after Nabucco

By Alan Riley

Both for reasons of security of supply and for climate policy it is crucially important for Europe to develop the Southern Gas Corridor. But it is not necessary to do this on the basis of a large, politically motivated project like Nabucco. The same purpose can be achieved with smaller, more commercially motivated pipelines that gradually build up capacity.

Time for a grand bargain with Poland on energy and climate

By Thomas Spencer

Energy relations between Poland and the EU have been extremely difficult in recent years, especially when it comes to climate policy. This situation is highly damaging to both sides. It is time for the EU to gain a better appreciation of Poland's unique challenges and to offer the country a credible long-term deal on energy and climate, argues Thomas Spencer, Research Fellow in Climate and Energy Economics at the Paris-based think tank IDDRI.

Brussels pushes for full carbon accounting of all road transport fuels

By Sonja van Renssen

It's never been about banning oil sands or killing off the fledgling biodiesel market, but about correctly calculating the carbon footprint of fuels and incentivising those that are cleanest, European policymakers insist. Yet they are caught in a whirlwind of controversy over accounting methodologies that would, if they became law, effectively do just that: put an end to the use of high-carbon fuels, which could include certain forms of biodiesel. They would also stimulate the use of petrol at the expense of diesel, causing a sea-change in European road transport. At the heart of the roaring controversy are the EU's 2009 fuel quality directive, which demands a 6% greenhouse gas emission reduction in road fuels from 2010-20, and a proposal to revise EU energy taxation law. Sonja van Renssen reports from Brussels.

Regulatory lag threatens to slow down the stormy growth of the European gas market

By Santiago Katz and Catrinus Jepma

Gas trading markets on the European continent have developed surprisingly fast in recent years. Europe, or at least North Western Europe, is closer to a single gas market than many might realize. There is just one snag: policymakers have yet to catch up with this reality which they themselves have helped to create. Regulations are lagging behind. As a result, pipelines remain utilized suboptimally, and investment in cross-border infrastructure is hampered. According to Santiago Katz and Catrinus Jepma of the Energy Delta Institute, regulation will have to catch up with the markets if the EU is to become a fully-functioning single market.

€200 billion will flow into the low-carbon agenda - or will it?

New: the EU budget - it has never been so green 

By Sonja van Renssen

For the first time ever decarbonisation is an explicit goal of the next EU budget. And it shows: the European Commission wants to devote fully 20% of the €1 trillion budget, which runs from 2014 to 2020, to climate-related actions. The goal: to change the face of the European energy system and sow the seeds for a low-carbon economy in 2050. But it is the Member States who will ultimately have to make up their minds whether they want to make the EU's green dream come true. Sonja van Renssen reports from Brussels.

Five reasons the new energy efficiency directive will not work - and what can be done to remedy this

By Jacob Huber

The success of the EU's climate policy depends to a large extent on the realization of very large energy efficiency gains. It is questionable, however, whether the Energy Efficiency Directive proposed by the Commission, which the European Parliament will vote on at the end of March, will deliver the required results. Jacob Huber of the Energy Delta Institute suggests five ways to improve the Directive, and notes that it is time for Member States to start taking energy efficiency more seriously.

The Fatal Conceit of the EU 2050 Roadmap

By Kent Hawkins

The EU 2050 Energy Roadmap is meant to guide Europe to a low-carbon future. But Kent Hawkins argues that the plan is deeply flawed. He notes that the Advisory Group set up to advise the European Commission about the Roadmap issued a highly critical report - which has not received much attention yet.

Harvesting Transition? Energy Policy Cooperation or Competition around the North Sea

Clingendael International Energy Programme (CIEP)

The Northwest European electricity markets are increasingly becoming intertwined with the advance of the internal market. This implies that national fuel mix policies increasingly have cross-national implications.

A new EU gas security of supply architecture

Jacques de Jong, Clingendael International Energy Programme (CIEP)

As part of a four-party project (with FEEM, the Loyola de Palacio Chair in Florence and Wilton Park) on a new EU Gas security of Supply Architecture, a CIEP-workshop was held in July 2011. The "invitation-only" workshop discussed issues on the global gas market setting and its consequences for the EU gas supply perspectives, on the infrastructure challenges accommodating those (external) supplies, and on the market and regulatory designs that might be needed in that context.

EU Involvement in Electricity and Natural Gas Transmission Grid Tarification

Florence School of Regulation

Current EU involvement in the regulation of TSO revenues and transmission grid tarification is rather limited and the existing heterogeneity among national regulatory practices and transmission tariff structures might be an obstacle for functioning competition and adequate investments in the grids.

Time to reform the EU Emission Trading Scheme

By Thomas Spencer and Emmanuel Guérin

While the ongoing debt crisis has absorbed European attention, another centrepiece of European economic integration is also seeing hard times: the European Emissions Trading Scheme (EU ETS). According to Thomas Spencer and Emmanuel Guérin of the French think tank IDDRI (Institut du Déeveloppement durable et des relations internationales), the ETS needs to be urgently reformed if it is to play its role as backbone of European climate change policy. Failure to do so will lead to huge extra costs and damage the credibility of the EU. They analyse the key weaknesses of the ETS and suggest three steps that could be taken to salvage the system.

Responses to the 2050 Energy Roadmap:

"Oettinger's think piece" now needs to be backed up with concrete actions

By Karel Beckman

Responses to the EU's 2050 Energy Roadmap range from "broadly" positive to fairly and sometimes highly critical. The most heard criticism is that the Commission fails to put words into action. As WWF puts it, 'Oettinger's roadmap will remain a pure think piece if not backed by effective legislation'.

Peering into the future fog of C02 – how road maps can help

David Buchan, Oxford Institute for Energy Studies

The term ‘road map’ is proliferating in energy and climate policy to denote any policy or aspiration projected into the future. Connie Hedegaard, Europe’s environment commissioner, hailed the Durban conference agreement as a ‘road map’ to an eventual global climate deal.

Pier Nabuurs, Chairman Smart Energy Collective, ex-CEO KEMA, on how to go forward with liberalisation and smart grids

"My smart meter should belong to me, not to the network company"

By Karel Beckman

Pier Nabuurs, retired CEO of the prestigious Dutch energy consultancy KEMA, Chairman of the Smart Energy Collective in the Netherlands and former President of the European Technology Platform Smart Grids, is concerned that anti-market sentiments could derail the liberalisation of the European energy market. That would be a disaster, he says. 'The transition to a low-carbon economy needs a free, competitive energy market.' Nabuurs is dismayed that the European Commission has put responsibility for the development of smart grids into the hands of the network companies. 'We need to involve a wide range of different companies to build the platform that will launch innovation in the energy market.'

Durban leaves large question marks hanging over climate policy

By Sonja van Renssen

The EU hailed the outcome of the climate conference last weekend in Durban, where world governments agreed to create a new global climate treaty by 2015, to enter into force in 2020. This successor to the Kyoto protocol will for the first time require emerging economies such as China and India to cut their emissions. The world is once more set on the path to a low-carbon future, said EU representatives. Yet there will be no increase in emission cuts for a decade and uncertainties continue to plague the future climate regime. The big question is whether Durban gives energy companies the signals they need to invest in a low-carbon future. The answer is far from clear. Sonja van Renssen reports from South Africa.

The new EU External Energy Policy: an important move - if it is not too late

By Alexander Mirtchev

With the adoption of its new External Energy Policy, the EU has finally made a first step towards its integration as a single negotiating bloc in the world energy market. As such the External Energy Policy could become an important factor in the global energy security picture and a possible geopolitical game-changer. However, it remains to be seen whether the big EU member states will be willing to subordinate their interests to the wider EU interest. The External Energy Policy has probably come five years too late, argues Alexander Mirtchev, President of Krull Corp. and Vice-President of the Royal United Services Institute for Defence and Security Studies.

Ready … set … go! The European decarbonisation race is on

By Sonja van Renssen

In February European political leaders called for an energy revolution. Next week on 13 December the European Commission will release its long-awaited response to this call: a 2050 Energy Roadmap that sets up the signposts and the routes that are meant to lead Europe to a decarbonised future. However, drafts of this Roadmap, including the accompanying impact assessment, have already been circulating for weeks in Brussels, and have given rise to the first heated debates. EER's Brussels correspondent Sonja van Renssen spoke to stakeholders and gives a first overall sketch of the European energy revolution-in-the-making. Her most important conclusion? Despite all the modelling, it is the decisions taken by policymakers that will determine what our energy future will look like.

French study: Electricity liberalisation has failed to deliver benefits to households

By Hughes Belin

A new study by the Institut Français des Relations Internationales (IFRI) shows that the liberalisation of electricity markets in the EU 'has not had a major effect on prices'. It also shows that opening up and connecting markets does not necessarily lead to a more efficient system. The results of the study, which was presented in Brussels earlier this week, are contrary to what the European Commission has always claimed.

Study reveals how to build a CO2 transport system for Europe

Finally, the plan for the CCS revolution

By Karel Beckman

European plans for CCS (carbon capture and storage) will require a network of 22,000 kilometres of CO2-pipelines to be built across Europe. The construction of this network, which will be able to transport 1200 million tons of CO2 per year by 2050, will cost some €50 billion. This is concluded by an international consortium of companies and research institutions, CO2Europipe, that has conducted a unique in-depth study to find out what it takes to build a European-wide CO2 transport network. According to CO2Europipe, the most important challenge lies in coordinating all the many activities the complex project requires. For this reason it recommends that a small "vanguard" of nations (UK, Germany, Norway, the Netherlands and Poland) take the lead and develop a Master Plan in collaboration with the European Commission.In an interview with EER, Stijn Santen, one of the authors of the report, calls on policymakers to come forward and support CCS. 'Without CCS, fighting climate change will be much more expensive.'

Industry sounds warning: interest of key players will be lost if no firm action is taken

CCS in Europe under serious threat

By Sonja van Renssen

Carbon capture and storage (CCS) is facing strong headwinds in Europe. EU member states have so far failed to translate an EU CCS law into national legislation. In the UK, a prestigious demonstration project has been cancelled. The European Commission still supports CCS, but sees an important role for it only after 2030. Too late, say beleaguered industry representatives. They fear that the momentum for CCS will be lost and key players will desert their CCS activities if policymakers don't take firm action soon. "The moment to push is now."

EU Treaty revision - a plea to update energy policy in Europe's constitution

By David Buchan, Oxford Institute of Energy Studies

The German decision to abruptly shut down seven nuclear power plants has had major adverse consequences for some of its neighbours, who have already responded with countermeasures. David Buchan proposes that a possible revision of the EU Treaty – if this were to take place as the result of Eurozone crisis – be used to amend the Treaty’s energy article, requiring member states to consult with each other before making major changes to their energy mix. This would help prevent similar surprises in future and put the internal energy market on a firmer footing.

Power Perspectives 2030 – On the road to a decarbonised power sector

European Climate Foundation

Power Perspectives 2030 builds on the widely referenced Roadmap 2050: a practical guide to a prosperous low-carbon Europe, and provides an analysis of the next steps required in the development of the European power sector by 2030 in order to remain on track to full decarbonisation by 2050.

A necessary kick-start to energy infrastructure from Brussels

Just build it!

By David Buchan, Oxford Institute for Energy Studies (OIES)

The European Commission, accused of timidity and irrelevance in the eurozone crisis, has launched bold proposals to involve the European Union, for the first time, in streamlining national planning approval of vital energy infrastructure and in financing it. Brussels finally seems to have lost its market innocence.

Expanding the European Dimension in Energy Policy

David Buchan, Oxford Institute for Energy Studies

This paper relates to events taking place at the European level to help the European Union towards its ambitious 2020 energy and climate goals. Specifically, the paper tracks the European Commission’s initiatives in 2011 to streamline national planning approval of vital energy infrastructure, to use EU funds to leverage more private finance for energy projects, and to lend some reality to a common external energy policy through Commission-led negotiations with foreign energy suppliers on international infrastructure.

Europe's green energy chaos

By Andrew MacKillop

The EU's climate and energy policies are too expensive, too ambitious, too complex - and ineffective to boot, argues Andrew MacKillop. Brussels' blind faith in drastically reducing CO2 emissions and liberalising energy markets will profit only a select group of companies and officials at the expense of everyone else. EU officials would do well to rethink their plans - before the public rises up in anger.

Brussels: energy projects of "common interest" should get special treatment

By Sonja van Renssen

The European Commission will launch a proposal next week intended to stimulate the construction of major new electricity, oil, gas and CCS infrastructure projects. The primary aim of the proposal, of which EER has obtained a draft copy, is to establish a number of 'projects of common interest' (PCI's) that will be able to benefit from specially designed fast-track permitting procedures. These should override the cumbersome national procedures that are now in place in various member states. The proposal further puts pressure on national energy regulators to grant extra financial incentives to investors and sets out conditions under which projects will get special EU subsidies.

Industry body warns that climate policies and regulatory burdens will have 'major impacts' on EU oil market

European refineries face 'dramatic' future

By Sonja van Renssen

An inexorable decline in the demand for oil in combination with ever more stringent regulatory burdens will lead to the closure of roughly half of the capacity of the 100 oil refineries  in Europe by 2050. This 'dramatic' picture emerges from a new long-term report produced by Europia, the European Petroleum Industry Association. Although Europia accepts that the importance of oil in the European energy sector will decline as a result of climate policies and the rise of renewable energy, it warns that stifling European regulations are threatening the viability of the remaining refineries. This could have major consequences for the European economy and Europe's import dependence, says Europia's Secretary-General Isabelle Muller in an interview with EER.

European Climate Foundation calls on policymakers to engage the financial community

Energy transition: power companies can't do it on their own

By Karel Beckman

European energy companies will not be able to finance the transition to a decarbonised power system on their own. They will need the help of institutional investors. But these investors will only become involved if the EU and member state governments become more actively engaged with them and reduce the policy risks associated with low-carbon energy sources. Those are some of the main conclusions coming out of a new report from the European Climate Foundation about how to finance Europe’s transition to a low-carbon economy. EER's editor Karel Beckman spoke with two of the report’s authors, Martijn Broekhof and Sean Kidney. "There has been too much emphasis on pushing risk on to investors."

External energy policy: Brussels takes charge

By Sonja van Renssen

For the first time, Brussels is taking concrete steps to wrest control of external energy policy from the EU member states. To begin with, the European Commisson wants to monitor all intergovernmental energy deals between EU member states and third countries. In the longer term, it wants to be allowed to negotiate energy deals on behalf of the EU. The proposals come at a sensitive time in the history of the European Union.

Europe's new push for energy efficiency: too little, too late, too complex?

By Sonja van Renssen

The European Commission’s first-ever Energy Efficiency Directive, which was unveiled last month, has the traces of fierce disagreements and lobbying efforts written all over it. It fails to propose binding targets for energy efficiency, but does require member states to realise minimum energy savings. Then again, it does not say how these savings should be realised, leaving room for plenty of ambiguity. The draft Directive also includes obligations on the public sector to realise a minimum amount of renovations and contains a strong regulatory push for combined heat and power (CHP). Reactions have predictably been mixed – if only because the proposal is so complicated that stakeholders are still struggling to grasp all its ramifications. Sonja van Renssen reports from Brussels.

Applying belt and braces to EU energy policy

David Buchan, Oxford Institute for Energy Studies

New proposed rules to save energy are encroaching on the Emissions Trading Scheme. David Buchan examines the growing tension inherent in Europe’s belt and braces approach of trying to combine increasing regulation of energy efficiency and renewables with the market mechanism of the ETS. The simple solution would be to reduce the supply of ETS carbon allowances in line with the regulation-induced drop in carbon demand. But the politics of doing this are proving impossible.

Plea for a bold strategic energy shift: Brussels should bet on Beijing

By Matthew Hulbert

The current European energy security strategy, based as it is on the fast-fading military and diplomatic power of NATO and the US, has proven a failure. To safeguard its worldwide energy interest, the EU should replace it with a radical new strategy: an energy consumer partnership with China. This new Brussels-Beijing Alliance would serve as a hedge against Russia and other large power producers, argues Matthew Hulbert.

A proposed target model for the European natural gas market

Frontier Economics

A report prepared for GDF Suez by Frontier Economics as contribution to the debate on a European target model for the natural gas market.

Stagnant European gas market needs radical reforms

Break it up and shake it up

By Iana Dreyer

The German nuclear phaseout will catapult gas to the top of the European energy agenda. Unfortunately, at this moment the European Commission gas market policy, such as it is, has no priority. Brussels must get its gas act together, argues Iana Dreyer, and shake up Europe's stagnant gas market. 'The real problem is the absence of integration and competition.'

Impressions from the Eurelectric conference in Stockholm

An industry plagued by uncertainty, waiting for political leadership

By Karel Beckman

‘Europe we need you!’ The European electricity industry is crying out for political leaders that can usher in the long-awaited, liberalised and integrated European energy market. But at a gathering of industry leaders, the mood was fairly sombre. As one top consultant expressed it: ‘If we don’t get some form of protection or support, we are not going to see enough investment.’

The Commission's new Energy Efficiency Directive

European Commission

A new set of measures for increased Energy Efficiency is proposed today by the European Commission to fill the gap and put back the EU on track. This proposal for this new directive brings forward measures to step up Member States efforts to use energy more efficiently at all stages of the energy chain – from the transformation of energy and its distribution to its final consumption.

The security of energy supply in Europe

The European Files

A 48-page brochure in which top European politicians (Van Rompuy, Barroso, Oettinger, Brüderle), policymakers and academics give their views on European energy strategy.

Interview: Robert Jan Jeekel, Eurometaux

"EU climate policies are driving smelters out of Europe"

By Karel Beckman

The EU's climate and energy policies are threatening the survival of the European producers of non-ferrous metals like aluminium, copper, zinc and nickel, says Robert Jan Jeekel, Director Energy & Climate Change of Eurometaux, the European Metals Association. According to Jeekel, the models the European Commission uses to calculate the effects of climate policies on the industry are deeply flawed. The EU's 'unilateral policies' are driving up electricity prices for European producers compared to their international competitors, he says. 'As a result, factories are closing. This could spell the end of the production of aluminum and other non-ferrous metals in the EU.'

Now playing in the European Capital

The Eurovision Energy Contest 2050

By Sonja van Renssen

Many people will agree that the process that decides the winners of the Eurovision Song Contest is, well, not necessarily designed to award top musical genius. But what of the processes that will decide the winners of the Eurovision Energy Contest?

Brussels' energy taxation revolution

By Sonja van Renssen

The European Commission has issued proposals that, for the first time, attempt to regulate fuel taxation rates in EU member states, rather than simply setting minimum values. It wants to see motor and heating fuels taxed according to their energy content and CO2 emissions rather than by volume as is the case today. If the proposals are accepted, diesel will in future cost more than petrol, biofuels will become relatively cheaper and LPG and CNG (compressed natural gas) will become more expensive. From the perspective of climate policy and the internal market, the proposals are not unreasonable. The question is, will the member states be willing to bite the Commission's bullet?

Report on the Caspian Development Corporation

European Commission

Europe's growing dependence on imported fuels is evident in the gas sector. The Southern Corridor would be – after the Northern Corridor from Norway, the Eastern corridor from Russia, the Mediterranean Corridor from Africa and besides LNG – the fourth big axis for diversification of gas supplies in Europe.

The EU Emission Trading Scheme: designed by committee

By Arnold Mulder

Ever since the EU Emissions Trading Scheme (EU ETS) came into effect on January 1st 2005, it has been surrounded by uncertainty. Although the scheme is intended as the most powerful weapon in the effort to reduce European carbon emissions, doubts about its effectiveness and feasibility have remained. In theory, 'the ETS should allow the European Union to achieve its emission reduction target under the Kyoto Protocol at a cost of below 0.1% of GDP, significantly less than would otherwise be the case', according to the European Commission. (2008). In practice, the efficiency and effectiveness of the ETS remain questionable.

Energy comes to Brussels

By Sonja van Renssen

They came from far and wide and their achievements were quite impressive. No, this was not a meeting of European heads of state, but the night of the annual EU Sustainable Energy Europe Awards. These may be considered Europe's energy Oscars, where Brussels generously rewards projects from all over Europe for real, measurable reductions in energy use, switching to renewables, or increasing awareness of green energy.

Energy investment needs 'strong regulatory push'

By Karel Beckman

Europe needs to invest hundreds of billions of euros in new energy networks and renewable energy production. Most of this money will have to come from "the market", but financial experts agree that, left to their own devices, banks and energy companies are neither able nor willing to do all that needs to be done. They say that a strong inflow from additional sources, such as dedicated investment funds and public institutions, will be indispensable. The European Commission has already started preparing a "tool box" that will contain "innovative market-based solutions" intended to seduce investors. But one private investor warns that if the EU is to achieve its ambitions with regard to climate and the internal market, the EU and member state governments will have to take a much more active role. 'A strong regulatory push is required'.

Interview Philip Lowe, DG Energy

"The energy sector is still in the dark ages"

By Karel Beckman and Sonja van Renssen

Philip Lowe, the highest energy official in the EU, is impatient. The internal energy market, whose creation he is supposed to oversee, is still meeting with skepticism all around. Financial institutions are reluctant to invest because they don't believe the market will be free of political interference. Member States tend to pursue their own short-term policies even if they conflict with market principles. And the energy companies? 'They don't seem to be too eager to compete', says Lowe, in an interview with European Energy Review. 'They are focused more on regulations than on their customers. The energy sector is still in the dark ages when it comes to satisfying consumers.'

Nabucco's CEO Analyzes Strategy

Theodoros Tsakiris

Reinhart Mitschek is Managing Director of the Nabucco consortium, which is promoting the construction of a 31 bcm/year capacity, 3,300km long gas pipeline to carry gas from the Caspian region and the Middle East to Eastern and Central Europe. He outlines the project’s prospects in an interview with Dr. Theodoros Tsakiris.

The growing vulnerability of the European energy system

By Karel Beckman

Almost ten years after 9/11, the EU has barely taken any steps to develop a common policy to protect its critical energy infrastructures. Responsibility for the security of the crucial energy infrastructure systems that our societies depends on continues to lie with the governments of member states, many of which do not give the matter much priority. At the same time, as the integration of the European energy market is proceeding apace, countries are becoming more and more dependent on each other's security systems. 'The chain is as strong as the weakest link.'

European leaders, aren’t you forgetting something?

By Sonja van Renssen

When EU heads of state and government met in Brussels on Friday, 4 February, for a first-ever high-level summit dedicated to energy and innovation, they paid scant attention to their energy ministers’ recommendation last December that efficiency should be Europe’s number one energy priority. They thereby forgot to prioritise the one measure that is best-suited to improve not only security of supply, competitiveness and sustainability, but also their citizens’ energy bills. However, a draft version of the European Commission’s upcoming energy efficiency action plan that is circulating in Brussels shows the Commission has plans to repair this omission.

European power industry calls on policymakers to focus on carbon price

Eurelectric

Ahead of the European Council on Energy on 4 February, EURELECTRIC, the association of the European electricity industry, has developed a position paper outlining its position on the European Commission communication “Energy 2020 - A strategy for competitive, sustainable and secure energy”, published on 10 November 2010.

The Danube region – a future European Energy Corridor?

By Vlad Popovici

Last December the European Commission adopted the EU Strategy for the Danube Region (EUSDR). Energy is one of the themes of the new Strategy. While EUSDR mentions some energy topics such as renewable energy and energy efficiency, other significant pieces of the regional energy puzzle are absent – an integrated regional energy infrastructure plan, the energy poverty challenge, and the regional nuclear energy sector, among other things. More work should also be done to create links to other regional and EU organizations, programs and policy instruments with relevance to the energy sector and to convince the participating countries that regional energy cooperation is critical to the Strategy’s success.

Joint Declaration on the Southern Gas Corridor

European Commission

The President of the European Commission José Manuel Durão Barroso and the President of Azerbaijan Ilham Aliyev have signed on 13 January 2011 a Joint Declaration on gas delivery for Europe in Baku. Azerbaijan commits to supplying substantial volumes of gas over the long term to the European Union, while Europe provides access to its market for them. This Joint Declaration is an important step in the realization of the Southern Gas Corridor and the diversification of Europe's energy supplies.

Beyond Turkey: The EU's Energy Policy and the Southern Corridor

Kristin Linke and Marcel Viëtor, editors

The European Union is seeking to diversify its natural gas supply and intends to establish a new supply route in addition to the three existing ones, from Norway (Northern Corridor), Northern Africa (Western Corridor) and Russia (Eastern Corridor). The fourth, Southern Corridor will make it possible to have natural gas shipped from the Caspian region and the Middle East to customers in Southeastern Europe and the EU. Turkey will be the key transit country for these deliveries via a multitude of pipelines, including Nabucco. Although several pipeline projects have reported development progress, it remains uncertain whether and when they will be able to secure sufficient gas supplies so that their realisation can commence.

Statoil’s crucial role in the EU’s Southern Gas Corridor

‘To us it is just a money game’

By Rudolf ten Hoedt

Norwegian state oil company Statoil, the second largest gas supplier to Europe, is doing all it can to cash in on the Southern Gas Corridor, Europe’s strategy to secure energy supplies from the Caspian region and the Middle East. Statoil is not only a co-owner of the crucial Shah Deniz-II gas field in Azerbaijan, in a separate venture it is also trying to bring Shah Deniz gas into Italy through the Trans Adriatic Pipeline (TAP). By doing so, it is competing directly with the EU’s flagship strategic project for the Southern Gas Corridor, the Nabucco pipeline. But Statoil does not seem to be primarily concerned with the EU’s strategic considerations. Rune Bjoernson, Statoil’s Senior Vice President of Natural Gas, says, ‘To us this is a money game. It is about getting the best value from the Shah Deniz value chain.’

EU fires first shot in new round of the global CO2 struggle

By Sonja van Renssen

The European Commission’s recent proposal to ban carbon credits from emission reductions of certain controversial projects in China and India from the EU carbon market is more than just an attempt to fix a defect in the system. Brussels has a much broader goal in mind, namely a thorough overhaul of the international carbon market. In the meantime it does not expect a significant impact of the ban on the EU’s own carbon market, an assessment not everyone agrees with. Get ready for the next round of the global CO2 war.

Doubts grow over the effectiveness of Europe’s flagship climate instrument

The EU Emission Trading Scheme: can it deliver?

By Sonja van Renssen

There is growing doubt over whether the EU’s flagship climate policy instrument, its emissions trading scheme (ETS), will drive the green investment needed for Europe to reach its long-term climate and energy goals. Carbon prices in the ETS are lower than many had hoped for and threaten to stay that way for many years to come. Some argue that emission limits should be lowered to drive up the carbon price, but industry representatives strongly resist this idea. Other observers are more optimistic and suggest that the mere existence of a price for carbon is getting things moving. ‘What is critical is to create confidence that the ETS is here to stay.’

Finally, Brussels’ battle plan for the European energy market

By Hughes Belin

The European Commission has set out its vision on how to develop the European energy networks needed for a low carbon and more import-dependent future. Brussels’ infrastructure battle plan, adopted on 17 November, is to focus on a limited number of priorities with high added value in terms of achieving European energy and climate change goals, to identify specific but flexible projects that enable the EU to adapt to a changing economic and technological environment and to create tools that can support this policy. Legislative proposals will follow soon. The stakes are high. Success or failure of the new infrastructure policy will be crucial to Europe’s entire strategy on energy efficiency, renewable energy, the Single Market, and security of supply.

The EU’s energy strategy:
adapting too slowly

By Hughes Belin

The European Commission has updated for the second time the energy strategy for the European Union, as it does every two years. Although the new strategy, “Energy 2020”, sounds a more urgent note than the two previous editions, it does not offer much in the way of new plans or insights. It also generated few reactions in energy circles in Brussels. The strategy, which was published on 10 November, will be discussed by EU leaders during a summit on energy on 4 February 2011. The idea is that it will then be agreed upon by EU leaders at another EU summit in March 2011 to become the framework for all new EU energy policy initiatives – at least until the next update, in late 2012.

EU infrastructure package: questions and answers

European Commission

On 17 November, the European Commission presented a new "Communication" on energy infrastructure.

‘For Nabucco it is now or never’

By Rudolf ten Hoedt and Karel Beckman

Will Europe be able to source gas from the Caspian region and the Middle East, bypassing Russia? That is the question on everybody’s mind in the European gas market, as the battle between the Russian-backed pipeline project South Stream and the EU-backed Nabucco project is coming to a head. (See the box below.) Brussels, Berlin and Washington are pushing hard for Nabucco, but it is the supply countries – Azerbaijan and Turkmenistan in particular – that will ultimately determine the fate of Europe’s great non-Russian gas pipeline. ‘The supply countries will need to make some key decisions in the coming months’, says Jeremy Ellis, Head of Business Development of RWE Trading in an interview with EER. ‘If the political will is there, Nabucco will get built. If not, the window of opportunity for Nabucco will be lost for a long, long time.’

Speech of Commissioner Oettinger at the Dinner Debate with the European Energy Forum

European Commission

Mr. President, Ladies and Gentlemen, Thank you for inviting me tonight. It is a pleasure to see some familiar faces, as well as many new friends. It is always good to exchange views on energy policy with an informed audience and it is a pleasure to have the chance to do so in this relaxed setting.

Shah Deniz: King of the Sea

By Ramiz Mammadov

Shah Deniz translates from Azeri as “King of the Sea” and it really is the king of Caspian region, being the 9th largest gas field in the world with reserves of around 1.2 trillion cubic meters. The “King” is situated in the South of the Caspian Sea, off the Azerbaijan shore, approximately 70 km south-east of Baku, the capital of the Azerbaijan Republic. It is being operated since the end of 2006 through a production sharing agreement (PSA) ratified in 1996 by a consortium of companies consisting of lead operator BP (25.25%), Statoil (25.5%), Socar (the State Oil Company of Azerbaijan), Lukoil of Russia, Total of France, NICO of Iran (10% each) and TPAO of Turkey (9%).

Emission trading scheme is starting to bite

By Sonja van Renssen

The future structure of Europe’s flagship climate instrument, its emission trading scheme (ETS), is currently being pieced together in Brussels. Starting in 2013, the power sector will have to buy CO2-allowances for some €15 billion a year at current CO2-prices. The industrial sector will get part, though not all, of its allowances for free, at least until 2020. Power companies complain that it is taking too long for the auctioning of allowances to get started. Industry sources complain that the ETS is going to drive up costs and hamper innovation. How effective the ETS will be in stimulating low-carbon investment remains to be seen.

Brussels to unveil new energy infrastructure vision

By Hughes Belin

A single European energy network. That is the goal towards which the European Commission is moving. Its new “infrastructure package”, set to be unveiled in November, will lay down plans and legislative proposals for connecting up offshore wind and hydropower to the European grid, developing new routes for gas imports, improving the liquidity of the European gas market, building new east-west gas and electricity interconnections, the development of a CO2-grid linking power stations to carbon storage facilities, the roll-out of smart grid technologies and even the development of a “supergrid” to bring the whole European network together. Together these plans amount to a revolution in the EU’s energy infrastructure. Our Brussels correspondents Hughes Belin lifts the veil and takes a look at the huge changes awaiting the European energy sector.

‘A remarkable turnaround of past trends’

By Karel Beckman

The Commission’s report, “EU energy trends to 2030”, presents two scenarios. The Baseline scenario is based on current trends and policies, including the European Emission Trading (ETS) scheme and several energy-efficiency measures. The Reference scenario also assumes that the national targets under the Renewable Energies Directive are met.

Nabucco gas pipeline

Bankwatch.org

The main justifications for Nabucco pipeline are its role in ensuring energy security and fighting climate change. Yet there remain serious doubts over whether the Nabucco pipeline can help to solve any of these problems. Moreover, it will bring limited public benefits and comes with serious social and environmental concerns. Bankwatch believes that Nabucco should not receive public support, either financial or political.

Speech Commissioner Oettinger at the Odessa Forum

European Commission - 10/09/2010

Günther H. OETTINGER EU Commissioner for Energy Speech of Commissioner Oettinger at the International Odessa Forum International Odessa Forum Odessa, 27 July 2010.

Making Nordstream a European project

Lena Kolarska-Bobinska MEP

The European Commission says it is considering the introduction of "a general framework to deal with transmission pipelines entering the EU". Such a framework could include intergovernmental agreements, Energy Commissioner Oettinger said in the name of the Commission in a reply dated July 28th to MEP Lena KOLARSKA-BOBINSKA's written question. In her question, she urges the need for such agreements including on Nordstream (also see her European Voice's article of 20 May 2010). If enacted, this would see the creation of new EU-wide rules governing all external oil and gas pipelines and would have a major effect on external energy policy.

Speech of Commissioner Oettinger at the International Odessa Forum

EU Commissioner for Energy

The European Union, its Member States and companies have a long-standing record of cooperation on energy in the Black Sea region and with its coastal States. The accession of Romania and Bulgaria to the European Union in 2007 was a major development for the EU perspective on the Black Sea.

EU struggles to phase out coal subsidies

by Hughes Belin

The European Commission wants to extend the aid regime for Europe’s coal sector, which is set to expire at the end of the year, for another decade. In a proposal for a new regime, Brussels puts more emphasis on the need to close unprofitable mines. But environmental organisations and some European commissioners say this does not go far enough. They argue that an extension of aid flies in the face of the EU’s climate policy. What complicates the issue that it is not just about climate or the envirionment – but about employment and security of supply as well.

EU gets ready for a new energy strategy

by Hughes Belin

The European Union is shaping a new energy strategy for 2011-2020 against the backdrop of the global economic crisis and difficult climate change negotiations. The European Commission warns that ‘the uncertainty created by the crisis puts the brakes on many critical energy projects and risks slowing down energy technology development.’ In response to these new challenges, the Commission has now issued a strategic document that will be discussed with stakeholders and within the European institutions. Once the details of this new strategy are agreed upon, it will shape all the EU’s legislative work in the energy sector until 2020.

Raising the toll on the transport sector

by Hughes Belin

The European energy industry has long complained about the ‘easy ride’ given to the transport sector by European Union lawmakers. Transport is a big emitter of greenhouse gases and the energy industry feels that the burden of EU climate policy should be fairly distributed. As European Commission President José Manuel Barroso has made greening the transport sector one of the main priorities for his second mandate, one can expect that the sector will finally start to pay a higher toll. However, for politicians the holy motor car is a much more difficult target than “dirty” power plants. EER takes stock of Brussels’ transport policy.

Energy brings South Eastern Europe together

By Hughes Belin

Electricity industry associations such as Eurelectric and the former Union for the Coordination of Transmission of Electricity in Europe (UCTE) have long claimed that energy interconnections play an important role in stimulating political connections in Europe. This is borne out once again as countries in South Eastern Europe have formed an “Energy Community” which provides them with an important political and legislative basis for future entry into the EU. In fact, the Energy Community of South Eastern Europe is in many ways superior to the EU’s own common energy policy.

Academics call for ‘full rethink’ of EU energy policy

by Karel Beckman

Four prominent European think tanks, with the implicit support of a large section of the European energy industry, have issued a call for a major overhaul of EU energy policy. ‘Are we smart enough in the way in which we implement our objectives?’ they ask. Their answer is: ‘clearly not’. They have ‘one vision and 22 recommendations’ to offer policymakers to make EU energy policy smarter. ‘Energy policy should be made Chef-Sache.’

Let’s get together

by Karel Beckman

Jacques Delors’ think tank Notre Europe has come up with an impressive plea for a European energy policy. ‘Europe faces several major crises: an energy crisis, an environmental crisis and an economic and financial crisis. It is dangerous and illusory to assume that these challenges can be addressed at state or regional level.’

Policy Proposal by Jacques Delors

Towards a European Energy Community

by Notre Europe

When six European states decided in 1951 to integrate two key sectors of their economies to create a Community, their purpose was to replace conflict with cooperation and antagonism with prosperity. Energy was one of the sectors, and almost sixty years later, energy is still at the top of the political and economic agenda. However, the rules that ensured equal access to common resources no longer exist. Despite increased regulatory activity, Europe has lost its ability to pursue a truly common policy covering the three objectives that are essential to energy policy today: affordable access to energy; sustainable development of energy production, transport, and consumption; and security of supply.

Gertjan Lankhorst on the best market model

‘The time for Grand Designs is over’

by Gertjan Lankhorst

In designing a market structure for the energy sector, governments (including the EU), should take a pragmatic approach, argues Gertjan Lankhorst, ceo of Dutch gas company Gasterra. Yet in the end all approaches should lead to liberalised energy markets to maximise benefits for all stakeholders. ‘States that believe they can manage on their own, are deceiving themselves.’

An integrated and competitive electricity market: a stepping stone to a sustainable future

Günther Oettinger, EU Commissioner for Energy

Speech delivered at the Eurelectric Conference : "Building a secure and sustainable future: how can market integration contribute"

A French rethink of the free gas market?

by Karel Beckman

The French government is looking into the possibility of creating a gas purchasing consortium. French experts like the idea, which would go totally against the EU’s commitment to a liberalised gas market.

Interview: Gerhard König, Wingas

‘The market can take care of security of supply’

by Karel Beckman

Europe is in an excellent position to secure all the gas it needs. Just let the market do its work, says Gerhard König, Chairman of the German gas producer Wingas, in an interview with European Energy Review.

The great security of gas supply struggle

by Karel Beckman

The Ukraine gas crisis of 2009 may seem a distant memory. But within the EU a debate is raging how to prepare for a next crisis. The outcome of this debate will not only shape the EU’s response to future emergencies, it will also determine to an important extent the future structure of the European gas market.

European Energy: The ‘Solidarity’ Conundrum

by Matthew Hulbert

European energy policy is critically flawed. It has proven impossible to square the circle between security of supply, greater sustainability, and affordable prices. Despite claims of ‘solidarity’, national politics still trumps the ‘European good’ on energy matters. Progressing liberalisation remains important for competition and resilience, but Europe’s real challenge is to re-level the low carbon technology playing field to properly realign global emission concerns and security of supply in future.

Gazprom responds: we are not abusing our position

The article by Iana Dreyer, analyst at the European Centre for International Political Economy in Brussels, which we recently published, and which argues that the EU should instigate antitrust proceedings against Gazprom, has prompted a reply from Sergei Kupriyanov, official spokesman of Gazprom. Kupriyanov roundly rejects the notion that Gazprom may be abusing its market position in Eastern European countries.

EU in desperate search for climate strategy

by Hughes Belin

The European Union is struggling to find a new direction after the failure of the Copenhagen conference. The mood is gloomy, with the general public feeling let down and the EU unable to agree on its climate change policy ahead of the follow-up to Copenhagen in Mexico at the end of 2010. The fact that there is a new Commission now in place might help matters, but it will still be a major challenge to get EU leaders all pulling together in the same direction.

Copenhagen 2009

Failure or final wake-up call for our leaders?

Benito Müller, Oxford Institute for Energy Studies

It has been said that summits are either ‘successful’ or ‘very successful’. The time has come to face the facts: this is wrong! That is not to say that Copenhagen was a failure, but merely that it could have done better, but still probably passed the test. The final verdict will depend on what happens next.

Energy fever in the Baltics

by Reiner Gatermann

Asked recently by EER what he thought of when he heard the words “energy” and “Baltic States”, Lithuanian Energy Minister Arvydas Sekomokas promptly responded: ‘Two things: renewable energy and nuclear power.’ And natural gas? Sekomokas has no love for this. ‘Nord Stream is a solution of the past’, he says. But things won’t be that simple for the Baltic region. There are still plenty of puzzles to sort out as the Baltic States are feverishly trying to integrate their energy systems with the European Union.

EU must use antitrust law to reduce its dependence on Russian gas The competition case against Gazprom

by Iana Dreyer

For years the EU has tried to use international trade agreements and political agreements to prevent Russia from taking advantage of Europe’s dependence on Russian gas. That strategy has failed. It is time now for the EU to apply its own market principles to Gazprom’s activities in Eastern Europe and to start antitrust proceedings against the Russian company. There is no reason to treat Gazprom differently from Microsoft or other companies.

Strengthening European regulatory powers

by David Haverbeke, Barbara Naesens and Wouter Vandorpe

In 2009 the European institutions adopted the Third Energy Package, a bundle of Directives and Regulations which aims to remove regulatory gaps in the EU Energy markets. One of the most important changes in the regulatory institutional framework was the establishment of an Agency for Cooperation between Energy Regulators (ACER). The creation of this Agency will unavoidably lead to a general repositioning of the role and competences of the existing regulatory bodies. David Haverbeke, Barbara Naesens and Wouter Vandorpe of Lydian Lawyers in Brussels, explain how European energy regulation has evolved in recent years, and what to expect of the future.

Copenhagen: gone and almost forgotten

by Chris Cragg

Is it a bird? Is it a plane? No, it’s media coverage of the aftermath of Copenhagen and climate change, disappearing rapidly into the wide blue yonder! The post mortems have finished and the patient is not merely agreed to be dead, but the whole conference is pronounced ‘a failure’. Add in the awkward fact that most of Europe and North America has suffered the coldest winter in decades and the entire ‘global warming’ community is busy explaining that ‘climate’ is not the same thing as ‘weather’. Yet again.

View from Brussels

Günther Oettinger: a friend of industry

by Hughes Belin

The Minister President of Baden Württemberg Günther Oettinger could hardly have failed to pass his confirmation hearings before the members of the European Parliament last Thursday in Brussels. After all, he was perfectly briefed by his compatriot, the current Director General of Energy and Transport, Matthias Ruete. He also showed that he was broadly familiar with the issues, but made sure that he did not venture too far into the specifics. A very cautious three-hour hearing resulted.

Climate policy after Copenhagen: Managing carbon price risk in an uncertain world

William Blyth, Chatham House

Copenhagen alters the international policy landscapeIt’s not until something breaks that you know how fragile it is. The multilateral climate negotiation process was tested to destruction in Copenhagen. But there is a notable divide in opinion across the two sides of the Atlantic.

What “Copenhagen” means?
An energy revolution

by Alex Forbes

The message from Copenhagen for the energy industry is that mitigation of climate change is an imperative and an opportunity that can no longer be ignored. There may not yet be binding targets, but climate change policy will drive what some have described as a ‘technology revolution’ and others as ‘a new industrial revolution’. As US Representative Ed markey said, ‘we will be competing as nations to be the leaders in this renewable and efficiency revolution’.

Blow for carbon storage as UN committee recommends CDM delay

by Alex Forbes

The prospect of carbon capture and storage projects being included in the Clean Development Mechanism created by the Kyoto Protocol took a knock this week when a UN committee recommended that such a decision should be delayed. Further delay would put into question ambitious targets put forward by the International Energy Agency for how many plants should be operational by 2020.

Next steps for the Transatlantic Climate Change Partnership

Christian Egenhofer and Anton Georgiev, CSIS

For much of the last two years the international community has worked toward developing an international agreement to lay out the basic framework of a new climate change regime. The slow progress to date does not result from a lack of effort or opportunity.

Green lobbying in Copenhagen

by Stefan Nicola

Copenhagen is bustling with PR people trying to tell you that clean coal is the real deal, or that natural gas consumption needs to be boosted in favour of oil. Even the oil people proclaim that they need to be part of a sustainable solution. Everyone wants a piece of the climate cake, a huge pastry topped with giant amounts of cash. But lobbying is not reserved for big oil and gas. The renewable energy companies have also dispatched their industry leaders to the Bella Center in Copenhagen.

Schwarzenegger brings glamour and a serious message to ‘Hopenhagen’

by Alex Forbes

Introduced yesterday at the Copenhagen climate talks as a ‘climate action hero’, the governor of California, Arnold Schwarzenegger, urged a select audience of delegates and journalists to recognise the role that ‘sub-national’ governments are playing in mitigating climate change. Calling on the UN to organise a climate change summit for regions, states and cities, he proclaimed: ‘80% of greenhouse gas mitigation will be done at the sub-national level.’

Europe's energy security after Copenhagen: Time for a retrofit?

John V. Mitchell, Chatham House

Whether or not the international community reaches a comprehensive climate agreement at Copenhagen in December 2009, the EU member states are among those countries set to adopt policies to mitigate the threat of climate change – as documented by the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) – by progressively reducing their CO2 emissions. In its ‘20-20-20’ Climate-Energy legislative package the EU is committed to transforming its energy system to achieve a 20% reduction in greenhouse gas emissions (30% in the case of international agreement), 20% share of renewable energy in total energy consumption (and 10% in transportation) and a 20% increase in energy efficiency, all by 2020. This amounts to an overhaul of existing energy systems across the region and brings with it fresh challenges for energy security policy-makers.

Climate change: regulators claim their part

by Hughes Belin

Energy regulators want to play their part in the fight against climate change. They have many instruments at their disposal to promote energy efficiency and the use of renewables. But in the end it is governments that have to give them the necessary powers.

Gas security proposal undercuts European gas market

The powers conferred upon the European Commission by its proposed “Regulation to safeguard security of gas supply” represent an unprecedented violation of the principles of free markets and of equal burden-sharing which are supposed to apply in the European Union. Moreover, in the long term, the Proposed Regulation will have the opposite of the intended effect: it will make European gas supply more vulnerable, not less.

Power choices 2050

Eurelectric outlines the path to carbon-neutral electricity in Europe by mid-century

Eurelectric

“Carbon-neutral electricity in Europe by 2050 is attainable through the market system. For this to become reality, policymakers must support the carbon market so as to deliver the CO2 cap at least cost, work for an international agreement on climate change action, ensure that all sectors internalise the cost of greenhouse gas (GHG) emissions, and enable the use of all low-carbon power technology options. However, the key to Europe’s low-carbon future will be on the demand side, where a paradigm shift is needed away from direct use of fossil fuels to energy-efficient electric systems - including electric road vehicles and electric heat pumps”, said EURELECTRIC President Lars G. Josefsson in Brussels today as he unveiled a new study - Power Choices: Pathways to Carbon-Neutral Electricity in Europe by 2050 - at the European Parliament.

Economic impacts from the promotion of renewable energies: The German experience

Rheinisch-Westfälisches Institut für Wirtschaftsforschung

The allure of an environmentally benign, abundant, and cost-effective energy source has led an increasing number of industrialized countries to back public financing of renewable energies. Germany’s experience with renewable energy promotion is often cited as a model to be replicated elsewhere, being based on a combination of far-reaching energy and environmental laws that stretch back nearly two decades. This paper critically reviews the current centerpiece of this effort, the Renewable Energy Sources Act (EEG), focusing on its costs and the associated implications for job creation and climate protection.

Crossing borders in European gas networks: The missing links

Aad Correljé, Dick de Jong en Jacques de Jong, Clingendael International Energy Programme

EU indigenous gas production is in decline and imports will grow. A liberalized gas market is expected to develop, leading to new movements of gas. Security of Supply has moved up on the policy agenda. Accommodation of these developments requires a significant expansion of the current EU 'interstate' natural gas transmission network in the coming decade. This study analyzes the main impediments to the development of these cross border connections. It focuses on those concrete situations in which market players have not only expressed an interest, but also the willingness to pay for new pipeline capacity. It offers recommendations for regulatory and coordination issues to overcome these problems.

Continental European long-term gas contracts: is a transition away from oil product-linked pricing inevitable and imminent?

Jonathan Stern, Oxford Institute for Energy Studies

The author argues that a transition away from formal contractual oil product price linkage in Continental European long term gas contracts is inevitable and imminent. The conclusion of inevitability arises from the diminishing rationale of the price linkage with oil as the markets into which oil products and gas are sold have diverged substantially.

Interview Lord Mogg

by Hughes Belin

‘Regulators have a role in fighting climate change’

For Lord Mogg, President of the Council of European Regulators (CEER), the role of regulators must be extended from market monitoring and tariff setting to today’s hot issues: climate change and recovery from the current economic crisis. Those will be among the issues tackled by the fourth World Forum on Energy Regulation (WFER IV) in Athens in October.

EU energy regulators struggle for power

by Hughes Belin

With the adoption of the third directive on the liberalisation of the energy market, European regulators have won a battle, but not the war. Watchdogs with teeth may seem to be required in a free market, this does not mean they are now automatically springing into being across the EU. Politicians don’t always like to give away their powers.

Column Claudia Kemfert

by Claudia Kemfert

More gas competition please

View from Brussels

by Hughes Belin

Agassi meets DG TREN

Daunting energy challenges for new European law-makers

by Hughes Belin

The new European Parliament and the to-be-renewed European Commission are faced with the challenge of managing the legislation that was adopted at the end of the previous mandate – and attacking the unresolved problems that can no longer be put off. We are in for a very rough ride.

Deal – or no deal?

by James Osborne

Only a few months remain before the crucial climate change conference in the Danish capital but the positions of developed and developing countries remain far apart on emissions reductions as well as on financing mitigation and technology transfer. Will the world be left without a plan to combat climate change?

Brussels opens Pandora’s Box

by Rik Komduur

The European Commission is taking a unique initiative by setting up an organisation for purchasing gas in the Caspian Sea region, the Caspian Development Corporation. The Commission feels that private European energy groups are not making enough headway in purchasing non-Russian gas.

The Nature of LNG Arbitrage: an Analysis of the Main Barriers to the Growth of the Global LNG Arbitrage Market

By Polina Zhuravleva, Oxford Institute for Energy Studies

This paper by Polina Zhuravleva is one of the first to provide a rigorous definition of LNG arbitrage and analyse the different types of transactions, and barriers to the future growth of this type of trade. The author’s conclusion that most of the existing barriers to trade can be eliminated if participants have incentives to do so, should be of interest to all LNG stakeholders.

Modernisation needed to meet policy targets

The future portfolio of European power plants needs to be consistent with the EU energy and climate change goals set for 2020. For an optimal and yet feasible choice, the European Commission's Joint Research Centre (JRC) has examined the technology and fuel options, together with the conditions that would lead to it.

Nordic power exchange aims for global expansion

by Stefan Schroeter

After its recent partnership with the US-Swedish stock exchange operator Nasdaq OMX, the Nordic power exchange Nord Pool is looking for further international expansion. The next target is the UK.

‘You don’t solve market challenges by merging exchanges’

by Stefan Schroeter

European energy exchanges may be undergoing a process of consolidaton, Erik Saether, ceo of Nord Pool Spot (NPS), is not eager at this moment to merge with his European competitors. ‘It will be better for Europe if local markets are improved first.’

Energy trading at the cross-roads

by Karel Beckman

Power and gas exchanges in Europe multiply, but, experts say, we are nowhere near a mature, integrated European energy market as yet. Trading regulations need to be improved and harmonised and interconnections expanded. European Energy Review assesses the state of energy trading in Europe and interviews the ceo’s of NordPool and APX.

Dutch exchange looks to gas to retain independence

by Karel Beckman

To arm itself against the ongoing consolidation in the European energy trading market, the Anglo-Dutch gas and power exchange APX has moved ahead of its rivals into gas trading. ‘The sense of urgency to create an integrated market is bigger in gas than in power’, says ceo Bert den Ouden.

Influence of rising commodity prices on energy policy

Keppo, I.J., Energy research Centre of the Netherlands

During the past few years we have first witnessed a rapid increase in the prices of commodities and then later, as a consequence of the economic downturn, an even more drastic drop. Simultaneously with the commodity price increase, an increase in the investment costs of power plants was experienced. The rise in material costs was often stated as one of the reason for this increase. In this study the relationship between commodity costs and energy prices is studied.

The Brussels liberalisation march continues

by Hughes Belin

After 18 months of wrangling between different European institutions, the EU on the last day of March finally adopted the Third Energy Package. The Council of European Ministers and the European Parliament approved the legislation, which gives regulators more powers and consumers more protection, but allows utilities to avoid splitting off their grid assets. The Brussels march to liberalisation continues, even if the troops do not always stay in line.

End Game: What now for Europe’s energy markets?

Kash Burchett, Datamonitor

At the end of April 2009, the European Parliament will hold its plenary session, in which it will approve the so-called ‘Third Energy Package’. The details pertaining to the liberalization of the EU’s gas and power markets have now been agreed and are of critical importance to all involved in European energy.
In capitulating to the European Council’s demands, the European Parliament has allowed utilities to retain effective control over their distribution networks. The incorporation of compulsory unbundling into the EU legislature is now off the agenda for the foreseeable future. However, vertically integrated energy firms may yet be forced to spin off their transmission assets as a result of unilateral action by the Competition Commission.

European renewable energy targets expensive

PricewaterhouseCoopers

Making renewable energy 20% of total energy consumption in the 27 countries of the EU will require an investment of €1.8 to €22 trillion over the next decade depending on the type of renewable technology. In practical terms, that will mean building more than a million windmills or installing enough solar panels to cover an area twice the size of Belgium.

EU funding a shot in the arm for NabuccoKash Burchett, Datamonitor 

The European Union has finally signaled its willingness to finance Nabucco; the proposed gas pipeline linking the Caspian Basin with Europe via Turkey. At a summit in Brussels on the weekend, leaders gave final approval to a €200 million finance package intended to kick-start the controversial project. However, according to Datamonitor energy & utilities Kash Burchett, the pipeline is still by no means guaranteed as a number of other obstacles, including ensuring reserves, remain.

Second Strategic Energy Review: the wrong focus

PressTV's Energy World 

Associate Fellow at Chatham House and EER Editorial Board Member Walt Patterson was interviewed 20 February on the Iranian channel PressTV programme Energy World. In this interview Mr Patterson comments on the EU Second Strategic Energy Review and argues that the Commission starts at the wrong end of the issue. Instead of looking at the supply of fuels and electricity we should look first at how we use them, and what for. We know that we waste far too much, and could use them much better.

Mandil: Energy solidarity 'still just words'

Euractiv

Many European countries were not playing the card of solidarity in the gas crisis at the beginning of this year. The Italian government even issued a decree that said that any operator supplying gas in Italy had to divert all its imports in order to supply Italy. According to Claude Mandil, former director of the International Energy Agency and the author of the report on European energy security that was written for the French presidency of the EU, this was a shamefull act.

EU foresees major role for carbon trading in efforts to tackle climate change.

European Commission press department

In a paper outlining its position ahead of international climate talks, the commission says the costs of containing global warming are likely to soar in years to come – adding €175bn to the world's annual bill by 2020. More than half that amount will be needed in developing countries like China and India. The EU and other economic powers should help defray the costs of reducing greenhouse gases emitted by developing nations.

The climate ship comes in

by Hughes Belin

European Union institutions have managed to push through the difficult adoption of an ambitious legislative package on energy and climate change in less than a year. The global financial crisis did not derail the plan, though it did force some concessions. Our Brussels correspondent Hughes Belin takes stock of the results.

Europe’s ambitious new energy course

by Hughes Belin

The European Commission has produced a new roadmap aiming to ‘guarantee secure and sustainable energy supplies’. Stakeholders in the energy sector take note: this new EU Strategic Energy Review will form the basis of all future EU energy policy and pave the way for a reflection on the energy challenges facing Europe between 2020 and 2050.

Confessions of a climate doubter

by Karel Beckman

“Climate change” has grown into a large bureaucratic, industrial and political machine, on which the livelihood of many thousands of people depends. In this intellectual climate there is little room for doubt. Changes to the energy system may be inevitable, argues Karel Beckman, editor-in-chief of European Energy Review, but we should not blindly follow the beliefs of the climate preachers.

All eyes are now on Copenhagen

by Stefan Nicola

The UN climate change summit in Poznan ended without groundbreaking results, but it left the road to a post-Kyoto Protocol clear. To strike an ambitious deal by the end of 2009, however, the world will have to significantly step up its efforts.

The impact of the EU ETS on electricity prices. Final report to DG Environment of the European Commission

Sijm, J.P.M.; Hers, J.S.; Lise, W.; Wetzelaer, B.J.H.W., Energy Research Center of The Netherlands

The present study analyses the impact of the EU Emissions Trading Scheme (ETS) on electricity prices, in particular on wholesale power markets across the EU. To study this impact, it uses a variety of methodological approaches, including theoretical, empirical, model, literature and policy analyses.

Europe’s complex climate compromise

David Buchan, Oxford Institute for Energy Studies

In this paper it is argued that the EU's December 2008 agreement raises almost as many questions as it settles. Buchan says that, although passage in less than a year of the post-2012 reforms to take the European Union’s climate and renewable energy programme beyond Kyoto is a remarkable legislative feat, the December 2008 compromise is a step backwards from the Commission’s blueprint of January 2008. Since it is based on far more free allocations of emission allowances than the Commission proposed in its original blueprint.

Is the competitive electricity supply market dying
(and does it matter)?

Tim Tutton, Oxera

Ofgem, the energy regulator in Great Britain, has always aspired to create 'effective' competition in electricity supply - which would require regulation only through the normal application of general competition law. Its recent Energy Supply Probe is notably pessimistic about achieving this. Tim Tutton, Oxera Principal, suggests that such pessimism is appropriate, but that it may matter less than Ofgem thinks.

European Parliament seals climate change package

The reality of official climate aid

by J. Timmons Roberts, Kara Starr, Thomas Jones, and Dinah Abdel-Fattah, Oxford Institute for Energy Studies

This paper by Prof Timmons and his team provides preliminary findings on trends in climate aid from the world's major donor nations from 2000 to 2006 based on individual categorization of over 115,000 aid projects randomly selected from the OECD/CRS database.

Energy Commissioner Rides Electric Car to Council

Press release by Eurelectric

EU Energy Commissioner Andris Piebalgs tested out today in Brussels a fully-electric vehicle. On his way to join EU Energy Ministers at their Council session, where vital energy-climate policy proposals were on the agenda, Mr Piebalgs tried out the electric car being showcased by EURELECTRIC this month as part of the Electricity Drives Cleaner campaign, to show his support for electric transport.

Energy package survives in battered shape

by Hughes Belin

With just one short paragraph the French presidency managed to rescue the climate-energy package at the Summit of the European heads of state and government in mid-October. But some compromises will be inevitable.

Making sense of the EU climate change package

William Blyth, Chatham House

The EU is currently at a hectic stage in the development of its internal climate change policies. Having proposed a package of measures in January 2008, the Commission aims to finalize a deal by the end of the year. The key elements include proposals to improve and extend the EU emissions trading scheme (Europe's flagship carbon market), an allocation of effort between member states on reducing emissions, and an ambitious Directive to meet 20% of the EU's total energy demand from renewable sources.

Using WTO rules to enforce energy transit through pipelines

by Jung-ui Sul, Arnoud Willems

As the membership of the WTO expands to include more countries that play an important role in energy production and transport, it looks increasingly attractive to use WTO rules to enforce oil and gas transit through pipelines. Governments and energy companies are well advised to closely watch this area in the coming years.

Interview Phillipe de Ladoucette: 'French regulator favours gradual approach'

by Yves de Saint Jacob

The European Commission intends to create a European energy regulators’ agency. ‘A real step forward’, says Philippe de Ladoucette, chairman of the French Energy Regulation Commission (CRE). EER interviewed the ex-aide of industry minister Alain Madelin and ex-ceo of coal group Charbonnages.

Interview Claude Turmes: 'The European Parliament will not allow loopholes'

by Hughes Belin

Claude Turmes, the European Parliament’s foremost energy watchdog, is confident that the European Commission’s ambitious climate package and energy liberalisation package will be adopted by the Parliament on time. ‘We are in control of the situation.’

Make or break time for EU energy package

by Hughes Belin

There is precious little time left for the EU to adopt the all-important Third Energy Package. Almost unnoticeably, liberalisation has slipped down the priorities list of the Council of Ministers. Are we headed for a spectacular failure?

By Clingendael International Energy Programme

The outlook for gas in Europe is characterised by growing uncertainty. There is considerable uncertainty regarding the demand for gas and the role it will play in future European energy systems. Much of this uncertainty relates to the stated environmental targets and the effectiveness of their implementation. As a consequence, demand projections by analysts vary considerably.

Targets and markets are not enough: a critique of EU climate package

by Luc Werring

Europe has set the most ambitious CO2-emission reduction targets in the world. But they will not be met if the EU continues to rely on market mechanisms.

International Adaptation Finance: The Need for an Innovative and Strategic Approach

By Benito Müller, Oxford Institute for Energy Studies, June 2008

Dr Benito Müller, Director (Energy & Environment) of the OIES, presents an analysis of the numerous funding proposals that have recently been put forward to fill the 'adaptation funding chasm' and he proposes a strategic framework for the use of such international funding for adaptation in developing countries.

Politicians and prices - the itch to intervene

By David Buchan, Oxford Institute for Energy Studies, June 2008

The temptation for EU governments to be seen to "do something" about rolling back energy prices has increased, is increasing and ought to be resisted.

Managing the transition to a secure, low-carbon energy future

By Sarah Ladislislislaw, Kathryn Zyla, and Briritt Chililds, Centre for Strategic & International Studies (CSIS), February 2008

In the years to come, the world must meet the energy needs of a growing and developing world population while mitigating the impacts of global climate change. This policy brief seeks to establish a framework for considering the complex and evolving links between energy security and climate change, and identifies three challenges:

Entry-Exit Transmission Pricing with Notional Hubs: Can it Deliver a Pan-European Wholesale Market in Gas?

By Paul Hunt, Oxford Institute for Energy Studies (OIES), February 2008

The European Commission has designated entry-exit tariff design as "best practice" methodology to be adopted in all gas markets throughout the Union. In this paper, Paul Hunt draws attention to the limitations of entry-exit methodology which has been devised to compensate for the failure to develop primary and secondary transmission capacity markets but, by definition, is incapable of doing so. He concludes that, without very substantial amendments, entry-exit cannot deliver a pan-European wholesale market in gas.

Nobody knows if this is a good deal for the consumer: Germany debates unbundling

By Stefan Nicola, European Energy Review, January - February 2008

The European Commission has proposed an extensive overhaul of Europe’s energy market with the aim to improve competition, spark infrastructure investments and create a cross-border European power market.

A debate on energy policy: The pros and cons of the Commission's Third Package

European Energy Review, January - February 2007

In the following pages, European Energy Review presents four views on the EU’s energy policy, as laid down in the Third Package. Lars Kjølbye, Head of the Energy Unit in the Competition Directorate of the Commission, and Robin Cohen of Deloitte, argue about the pros and cons of unbundling. Anders Åslund, senior fellow at the Peterson Institute for International Economics, defends the policy of ‘reciprocity’ towards Gazprom. Reinier Zwitserloot, ceo of oil and gas producer Wintershall, warns that Europe’s ‘anti-Gazprom’ policy endangers security of supply.

The dream and the reality

By Claudia Kemfert, European Energy Review, January - February 2008

The German government never misses an opportunity to highlight the importance of climate protection in international fora. It has also set itself highly ambitious climate targets. But Germany today would not have been able to meet the Kyoto targets if it had not been for the German reunification. And it will not be able to realize its targets, unless it manages to create a coherent and integrated climate and energy policy.

Europe, Emissions and Echternach – assessing Brussels’ January 2008 package.

By David Buchan, Oxford Institute for Energy Studies, January 2008

The European Commission has proposed a very ambitious overhaul of its climate change policies. But the renewable energy target could prove a distracting sideshow to the main task of reducing emissions.

Europe, the EU and its 2050 energy storylines

By Jacques de Jong and Ed Weeda, Clingendael International Energy Programme, December 2007

This paper seeks to explore some of the conditions under which energy policy will be formulated in and by the EU over the next 40 years or so. The development of energy policy at the EU level is addressed from a wider historical perspective, taking into account a number factors that influence both the EU project and its energy supply security.

Putting coal to the test: Is coal fired generation clean, competitive and secure?

By Stijn van den Heuvel and Jacques de Jong, Clingendael International Energy Programme, December 2007

The current plans to build five additional coal-fired power stations in the Netherlands sparked a debate as to whether this is the right direction for Dutch power companies to be heading. In this CIEP Briefing Paper Stijn van den Heuvel and Jacques de Jong assess the role of coal fired power generation in the wider Northwest European context. The three priorities of energy policy - clean, competitive and secure - are taken as a starting point for the analysis.

Energy security of supply under EU climate policies

By H. Groenenberg & B.J.H.W. Wetzelaer, Energy research Centre of the Netherlands, November 2007

The implications of various climate policies for the security of supply in the EU-25 were investigated. The security of supply was quantified using the Supply/Demand (S/D) Index. This index aggregates quantitative information on a country’s energy system into one single figure. It takes a value between 0 and 100, with higher values indicating a more secure energy system.

The 'Regional Approach' in Establishing the Internal EU Electricity Market

By Jacques de Jong, Clingendael International Energy Programme, December 2004

In this Clingendael Energy Paper Jacques de Jong compares recent approaches for the integration of electricity markets in the United States with the developments in the European Union, examining how the integration processes in both regions can benefit from the various experiences made.

Eon’s bombshell: dealing with the European Commission

by Stefan Nicola

Eon’s unexpected deal with the European Commission over its network assets is deplored by some, lauded by others. ‘By giving in about the power grids, they have protected their gas assets.’

Biofuels: the 10% question

by Gert van Wijland

The European Union is divided over the thorny issue of biofuels admission and designation. Should the EU hold to its target of 10 percent biofuels blending by 2020 – or will that actually have a negative impact on the environment? Nor does science have the answers – the conflicting testimonies of scientific researchers are driving Euro MPs crazy.

EU climate and energy package: action, at last

by Hughes Belin

The climate and energy proposals put forward by the European Commission on January 23, are perhaps the most important plans to come out of Brussels since José Manuel Barroso became president of the Commission in 2004. The European energy sector will never be the same again.

Debate on the Third Package

by Robin Cohen, Lars Kjølbye, Reinier Zwitserloot, Anders Åslund

In the following pages, European Energy Review presents four views on the EU’s energy policy, as laid down in the Third Package. Lars Kjølbye, Head of the Energy Unit in the Competition Directorate of the Commission, and Robin Cohen of Deloitte, argue about the pros and cons of unbundling. Anders Åslund, senior fellow at the Peterson Institute for International Economics, defends the policy of ‘reciprocity’ towards Gazprom. Reinier Zwitserloot, ceo of oil and gas producer Wintershall, warns that Europe’s ‘anti-Gazprom’ policy endangers security of supply. The articles by Kjølbye and Cohen first appeared in Energy Viewpoints, a publication of the APX Group.

The doubtful benefits of unbundling

by Stefan Nicola

Nowhere does unbundling meet with so much resistance as in Germany. The problem is, nobody really knows whether it is good or bad. ‘One would like to have numbers to fall back on.’

World Energy Outlook: Emission impossible?

by Alex Forbes

The latest IEA-projections cast grave doubt on our ability to achieve a sustainable future. EU policy might well be ‘too little, too late’.

Security of Supply: The real threat

by Gerrit Buist

The real threat to the EU’s security of supply does not come from the east, but from within our system.

Crusading against vertical integration

by David Buchan

Brussels sticks to its view that ‘unbundling’ must be a cornerstone of the new market order. Is the Commission fighting the wrong fight?