Novinky z EU

On 13 May in Brussels EURELECTRIC launched the key messages from Power Choices Reloaded study. The study builds on Power Choices 2009, both using the PRIMES economic model developed by Professor Pantelis Capros at the University of Athens (also used by the European Commission for its 2050 Roadmaps)...

In April 2012 the European Commission announced a “two-step” plan for strengthening the EU Emissions Trading Scheme (ETS): first, a “back-loading” of EUA auctions, and second, “structural measures”.
On 16 April MEPs voted against opening negotiations on the back-loading with the Council. Instead, they sent the proposal back to the Parliament’s Environment Committee to be re-considered. These were narrow votes, with tiny majorities – and the result is on-going uncertainty. The rapporteur, MEP Matthias Groote (S&D, Germany), now has two months to table a new back-loading report to the Committee. This could likely be voted in June and go to the Parliament plenary in September (all dates to be confirmed).
Meanwhile, the Irish Presidency of the Council has announced that Member States “will continue working to agree their position” – aiming for mid-May – and ETS reform is on the agenda for the 18 June Environment Council meeting.
While it is hard to judge exactly how either the Parliament or the Council will now vote, it is clear that the negative vote and the plunging EUA price shocked many EU decision-makers, so that previous opponents of ETS reform are now talking about compromise.
The most interesting news concerns structural measures. At a stakeholder meeting on 19 April, the Commission Director-General for Climate, Jos Delbeke, told participants, that he sees good support for both an early revision of the ETS annual linear reduction factor to align the ETS cap with the EU 2050 goal, and for a one-off “retirement” (cancellation) of EUAs in trading period 3, to resolve the short-term over-supply crisis. Delbeke also said that DGs Climate and Enterprise are starting work on the 2014 review of the ETS carbon leakage provisions, because free allocations based on a 2008 projection for a €30 EUA price are not compatible with a €3 price. He said that either the ETS must be strengthened or the leakage provisions must be adjusted.

28/03/2013
The German Energiewende targets a 50% share of renewables in the energy system by 2030. Meanwhile flexible conventional power stations are increasingly incapable of generating sufficient earnings to maintain their economic operation, raising generation adequacy concerns for the coming years. Against this background, a new study conducted on behalf of German association VKU[1] this month presented their vision of a sustainable German energy market design. Reaching across all stages of the value chain, the concept aims to guarantee security of supply for customers at acceptable prices, promote a sustainable energy system and establish reliable investment conditions for the energy sector over the long term. Key recommendations include the introduction of an output-based market, promotion of technology-specific cost subsidies, and network regulation that will allow more intelligent investment.

At a time of heated debate about capacity remuneration mechanisms (CRM) at EU level,[2] the report sees the establishment of a capacity market as a cornerstone for ensuring that existing power stations remain in the network and that investment in assured power station and storage continues. Operators who agree to be available in case of shortages would be awarded so-called output certificates, whose price would result from trading in a marketplace set up specifically for this purpose. In addition, consumers able to lower their assured output requirement by reducing their power consumption during periods of shortages would have the incentive to be more flexible and thus achieve cost savings. VKU expects that additional assured output will be needed by the end of the decade and thus calls for establishment of such a capacity market within three years at the latest.

Secondly, renewable energies (RES) should bear appropriate responsibility for the proper functioning of the overall system, which is currently not the case. The authors believe that further support is needed until the respective technologies are competitive. However, future support should be awarded based on tenders. The quantity of renewable energy capacities would be determined by the State according to technologies and regions. In their bids, investors should consider the revenues they expect to generate through the sales of energy over the period of the tender. The support would be granted as an investment cost subsidy spread over the depreciation period of the plant, thereby providing an incentive to keep the plant in operation. By supporting installed output rather than generated electricity, such support could be compatible with the capacity mechanism. The study assumes that RES would respond to price signals on the market in the same way as conventional plants. Plants set up previously should be ‘grandfathered’ and receive the compensation promised under the Renewable Energy Law.\r

On 14 February 2013, the European Commission adopted a new proposal for a financial transaction tax (FTT). The proposed directive was requested by 11 member states that wish to proceed with this tax, which was first put forward by the Commission in September 2011. At that time, a lack of consensus between all 27 member states prevented further progress. The tax will therefore now be implemented under ‘enhanced cooperation’, applying only to the 11 countries in question, which nevertheless represent two thirds of the EU’s GDP. The tax is expected to deliver annual revenues of €30-35bn.

The objectives of this new directive remain the same as those of the original proposal. They are threefold: 1) to avoid the fragmentation of the Single Market that an uncoordinated patchwork of national FTTs would create 2) to ensure that the financial sector makes a fair and substantial contribution to public finances and covering the cost of the crisis and 3) to create disincentives for speculative financial transactions which do not contribute to the efficiency of transactions carried out by financial institutions on all financial instruments and markets with an established link to the FTT-zone, with tax rates of 0.1% for shares and bonds and 0.01% for derivatives. Day-to-day financial activities of ordinary financial markets or to the real economy.

The scope of the FTT also mirrors the 2011 proposal. Taxes will be levied on all citizens and businesses are excluded, in order to protect the real economy. As before, the ‘residence principle’ will apply: the tax will be due if any party to the transaction is established in a participating member state, regardless of where the transaction takes
place. This is the case both if a financial institution engaged in the transaction is, itself, established in the FTT-zone, or if it is acting on behalf of a party established in that jurisdiction. As a further safeguard against avoidance of the tax, the new proposal adds the ‘issuance principle’: financial instruments issued in the 11 participating member states will be taxed when traded, even if those trading them are not established within the FTT-zone. Furthermore, explicit antiabuse provisions are now included.