2 Directorate General for Energy and Transport I. OBJECTIVES AND CHALLENGES Communications of the Commission: “An Energy Policy for Europe” and the Energy.

2Directorate General for Energy and Transport

I. OBJECTIVES AND CHALLENGESI. OBJECTIVES AND CHALLENGES

Communications of the Commission:

““An Energy Policy for Europe”An Energy Policy for Europe” and and the Energy Package 2007the Energy Package 2007

““Limiting Global Climate Change to 2°C:Limiting Global Climate Change to 2°C: The way ahead for the EU and the The way ahead for the EU and the

WorldWorld f for 2020 and beyond”or 2020 and beyond”


3

Competitiveness“LISBON”

•Renewable energy•Energy efficiency•Nuclear•Research and innovation•Emission trading

•International Dialogue•European stock management (oil/gas)•Refining capacity and energy storage •Diversification

•Internal Market•Interconnections (Trans-European networks) •European electricity and gas network•Research and innovation

•Clean coal•Carbon sequestration•Alternative fuels•Energy efficiency•Nuclear

Sustainable Development

“KYOTO” Security of supply

FULLY FULLY

BALANCED BALANCED

INTEGRATEDINTEGRATED

AND AND

MUTUALLY REINFORCEDMUTUALLY REINFORCED

THE THREE CHALLENGESTHE THREE CHALLENGES


INTEGRATING INTEGRATING ENERGY & ENVIRONMENTENERGY & ENVIRONMENT

Meeting the 2°c objective and Meeting the 2°c objective and responsibility of the responsibility of the developed countries to act in developed countries to act in breaking the international breaking the international deadlock for post-2012deadlock for post-2012


THE STRATEGIC OBJECTIVETHE STRATEGIC OBJECTIVE

20% 20% unilateral EU reduction unilateral EU reduction of GHG of GHG by 2020by 2020

30 % GHG reduction in the 30 % GHG reduction in the framework of an framework of an international agreementinternational agreement

EENERGY FOR A CHANGING WORLDNERGY FOR A CHANGING WORLD


THE KEY DRIVERS 3x20% by 2020THE KEY DRIVERS 3x20% by 2020

20% by 2020 EFFICIENCY20% by 2020 EFFICIENCY

BIO-FUELSBIO-FUELS

Min 10% bindingMin 10% binding

E-ELECTRICITYE-ELECTRICITY

MS bindingMS binding

targettarget

HEATING & COOLINGHEATING & COOLING

MS bindingMS bindingtargettarget

By 2020 binding 20% RENEWABLES By 2020 binding 20% RENEWABLES

at EU levelat EU level

NATIONAL TARGETS and ACTION PLANS NATIONAL TARGETS and ACTION PLANS

By 2020 20% EU GHGBy 2020 20% EU GHG


II. THE ACTION PLAN II. THE ACTION PLAN

ActionsActions for afor a

„„post -industrial post -industrial revolution“revolution“


1. 1. Internal Energy MarketInternal Energy Market

The Challenges:The Challenges: Incomplete and incorrect transposition: 26 Incomplete and incorrect transposition: 26

infringement cases against 16 MSinfringement cases against 16 MS Different powers and competences of Different powers and competences of

regulatorsregulators Markets are not integrated sufficiently – Markets are not integrated sufficiently –

national markets concentrated;national markets concentrated; Lack of cross border capacity and need for Lack of cross border capacity and need for

interconnections;interconnections; Incompatible market design in some cases Incompatible market design in some cases

– e.g. balancing, transmission tariff – e.g. balancing, transmission tariff regimesregimes

Limited wholesale tradingLimited wholesale trading


Concentration of Concentration of national gas marketsnational gas markets

BelgiumFranceHungaryPoland

AustriaDenmarkGermany

ItalyNL

UK

0 20 40 60 80 100

Incumbent(s) share of available gas in %


UK – fairly competitive market

SPAIN - duopolyFRANCE - single dominance

GERMANY - oligopoly

Concentration in electricity Concentration in electricity marketsmarkets


Estimated hours of congestion as a percentage of all hours, Jan-May 2005

0

25

50

75

100

SK -HU

FR -CH

DE -DK

NL -BE

FR -UK

DE -NL (1)

FR -ES

CZ -DE

NL -DE (1)

BE -NL

DE -FR (1)

CZ -AT

DE -CZ (1)

UK -FR

FR -DE

Selection of borders

Hou

rs w

hen

requ

este

d ca

pac

ity e

xcee

ds

avai

labl

e ca

paci

ty a

s a

perc

enta

ge o

f al

l hou

rs

NL DE FR CZ

Electricity interconnectors are often chronically congested


Average industrial electricity prices 2002-2006

Member States with regulated tariffs such as France and Spain are not representatives

Euro/MWh net of tax

Belgium

DenmarkGermany

Italy

Hungary

Czech RepFinland

UK

Sweden

0 20 40 60 80 100

Prices for commercial Prices for commercial electricity userselectricity users


Internal Market – Policy Actions (1)Internal Market – Policy Actions (1)

Enhancing the role of national regulators and Enhancing the role of national regulators and reinforcing co-ordination of regulators at EU levelreinforcing co-ordination of regulators at EU level Options: cooperation between national regulators;

ERGEG+; a new, single Community body

Interconnection : more co-ordination between Interconnection : more co-ordination between TSO’sTSO’s Binding network security standardsBinding network security standards Assessment of Investment needsAssessment of Investment needs

Non-discriminatory access to networks through Non-discriminatory access to networks through efficient unbundlingefficient unbundling Options: Ownership unbundling as the most efficient

means/Independent System Operator (ISO) second-best


Ownership unbundling : Ownership unbundling : major points of criticismmajor points of criticism

“Trip into unchartered waters”? In many Member States already applied successfully (13 MS in

electricity, 6 MS in gas)

Expropriation? increased shareholder value by resolving the conflict of interest

and providing new focus

Less investment? TSO no longer stymied by producer interest, more investment in

UK, NL (LNG) and Northern Europe (Interconnections)

Weaker position vis-à-vis gas supply countries? Today‘s national orientation is weakening the EU („asset swaps“),

ownership unbundling is a means to protect networks.

More regulation can achieve the same objectives? Limitation of entrepreneurial freedoms;

a regulator in each board meeting?


Internal Market – Policy Actions (2)Internal Market – Policy Actions (2)

Transparency of the marketTransparency of the market

Energy Customers CharterEnergy Customers Charter


Priority Interconnection PlanPriority Interconnection Plan

Policy Actions for Infrastructure:Policy Actions for Infrastructure:

Continuous identification of missing Continuous identification of missing infrastructureinfrastructure

European coordinators for 4 priority projects:European coordinators for 4 priority projects: Power-Link Germany, Poland Lithuania, Connections to off-shore wind power Northern Europe, Electricity interconnections France-Spain, Nabucco pipeline

TEN-projects of “European interest” - planning TEN-projects of “European interest” - planning

and approval procedures for maximum 5 yearsand approval procedures for maximum 5 years

Increased fundingIncreased funding of Trans European Energy of Trans European Energy

Networks (TEN-E)Networks (TEN-E)


2. Solidarity in Security of Supply2. Solidarity in Security of Supply

A fully functioning internal energy A fully functioning internal energy market is the best guarantee of market is the best guarantee of supply security.supply security.

Electricity and Gas Electricity and Gas InterconnectionsInterconnections

Gas Coordination GroupGas Coordination Group

Oil Supply GroupOil Supply Group

Energy Correspondents NetworkEnergy Correspondents Network

Communication on strategic Communication on strategic stocksstocks


33.. Energy Efficiency (1)Energy Efficiency (1)

Energy Efficiency Action PlanEnergy Efficiency Action Plan (adopted on 19 October 2006)(adopted on 19 October 2006)

Saving 20% by 2020 Realising the Potential:Saving 20% by 2020 Realising the Potential: Improving the efficiency of heat and

electricity generation, tranmission and distribution

Transport : fuel efficient cars; better use of public transport; introduction of biofuels

Buildings : improving the energy performance of the EU’s building stock

Appliances : tougher standards and better labelling


Structural Funds and the EIB/EBRD to Structural Funds and the EIB/EBRD to support energy efficiencysupport energy efficiency

Facilitating investments and financial Facilitating investments and financial incentives for energy efficiency in incentives for energy efficiency in cooperation with financial institutions, cooperation with financial institutions, including new Member Statesincluding new Member States

International agreement on energy International agreement on energy efficiency (improved, internationally efficiency (improved, internationally agreed minimum energy efficiency agreed minimum energy efficiency standards for a wide range of products standards for a wide range of products and equiment and a process for the and equiment and a process for the gradual raising of these standards) with gradual raising of these standards) with IEA countries, Russia, China and India.IEA countries, Russia, China and India.

33.. Energy Efficiency (2)Energy Efficiency (2)


44.. Renewable Energy SourcesRenewable Energy Sources

Necessary to increase the level of Necessary to increase the level of renewable energy in the EU’s overall renewable energy in the EU’s overall mixmix

European Council agreed on a binding European Council agreed on a binding overall 20% target by 2020 and a overall 20% target by 2020 and a 10% minimum binding target for biofuels

Member States set national targets and action plans on:

RES in electricity Heating and cooling

Biofuels


5. Research and Technology 5. Research and Technology (1)(1)

STRATEGIC PLAN by end 2007STRATEGIC PLAN by end 2007Promotion of technologies to support EPE and the Promotion of technologies to support EPE and the low-carbon energy economy with 20% 2020 RES low-carbon energy economy with 20% 2020 RES targettarget

Second generation biofuels, Second generation biofuels, photovoltaic, photovoltaic, large-scale offshore-wind, large-scale offshore-wind, hydrogen fuel hydrogen fuel cells,cells,

Generation IV fission power, fusion energy,Generation IV fission power, fusion energy,

Energy efficient transports, appliances and Energy efficient transports, appliances and industrial systems,industrial systems,

Sustainable coal and gas: to make plants Sustainable coal and gas: to make plants CCS ready by 2020.CCS ready by 2020.


Up to 12 industrial-scale demonstration Up to 12 industrial-scale demonstration facilities of sustainable power generation facilities of sustainable power generation from fossil fuel in Europe (“Early mover from fossil fuel in Europe (“Early mover incentives”, Technology platform, Pooling incentives”, Technology platform, Pooling of EU and MS Funds, Joint Undertakings)of EU and MS Funds, Joint Undertakings)

Improvement of the legal framework (CCS Improvement of the legal framework (CCS in ETS)in ETS) and public acceptance and public acceptance

Clear timeframe for installation of CO2 Clear timeframe for installation of CO2 capture & storage CCS for coal- and gas-capture & storage CCS for coal- and gas-fired power plantsfired power plants

CCS for new fossil fuel plant after CCS for new fossil fuel plant after 2020 2020 RETROFITTING of existing plantsRETROFITTING of existing plants

5. Research and Technology 5. Research and Technology (2) (2)Sustainable Fossil FuelsSustainable Fossil Fuels


66. Future of Nuclear. Future of Nuclear

Around 1/3 of the electricity and 15% Around 1/3 of the electricity and 15% of the EU energy mixof the EU energy mix

CO2-free source with importanceCO2-free source with importance in in low emission scenarioslow emission scenarios

Concerns on nuclear waste and Concerns on nuclear waste and decommissioningdecommissioning

Phasing-out of nuclear energy = Phasing-out of nuclear energy = phasing-in of other C02 free energy phasing-in of other C02 free energy sourcessources

Policy Actions:Policy Actions:Commission proposes to establish anCommission proposes to establish anEU High Level Group on Nuclear SafetyEU High Level Group on Nuclear Safetyand Security and High Level Group onand Security and High Level Group onInnovative SystemsInnovative Systems


77. International Energy Policy. International Energy Policy (1) (1)Regional Energy TrendsRegional Energy Trends

OilOil¾ of increase (2003-2030) in

developing regions, especially AsiaChina oil demand increased 2.5 times

since 1993, when first became net oil importer

Natural GasNatural GasGrowth in every regionFastest in India and China

CoalCoal Increase rapidly in China and India (in

2030, both 48% share of world coal demand), notably for power generation


77. International Energy Policy. International Energy Policy (2) (2)

COOPERATION WITH KEY ENERGY COOPERATION WITH KEY ENERGY PRODUCERS, TRANSIT COUNTRIES AND PRODUCERS, TRANSIT COUNTRIES AND CONSUMERS:CONSUMERS:

Through OPEC, GCC, with Central Asia (e.g. MoU Azerbaijan, Kazakhstan), Baku Initiative, Latin America, Caribbean, Africa-Europe Partnership

EU RUSSIA ENERGY COOPERATION:EU RUSSIA ENERGY COOPERATION:Energy partnership in the framework of the post-PCA agreement


77. International Energy Policy. International Energy Policy (3) (3)

ENERGY RELATIONS WITH EU NEIGHBOURS:Norway, European Neighbourhood Policy,Euromed, Mashrek/ Magreb, Turkey, Energy Community (South-East Europe)

NEGOTIATIONS & AGREEMENTS NEGOTIATIONS & AGREEMENTS on climate, trade and technology: on climate, trade and technology: Post-2012 climate regime, World Bank Gas Post-2012 climate regime, World Bank Gas Flaring Reduction Partnership, Extractive Flaring Reduction Partnership, Extractive Industries Transparency InitiativeIndustries Transparency Initiative, Energy Charter, extension of ETS to global partners, energy efficiency agreement.


III. THE WAY AHEADIII. THE WAY AHEAD

European Council: 8-9 March 2007European Council: 8-9 March 2007 =>Consensus on an Action Plan on An =>Consensus on an Action Plan on An

Energy Policy for EuropeEnergy Policy for Europe European Parliament : resolution of 14 European Parliament : resolution of 14

December 2006; resolution on Energy December 2006; resolution on Energy Package expected for July 2007Package expected for July 2007

Legislative proposals to be tabled by Legislative proposals to be tabled by the Commission after this summerthe Commission after this summer

UNFCCC & Kyoto Protocol processesUNFCCC & Kyoto Protocol processes G-8G-8


INFORMATION & DOCUMENTATIONINFORMATION & DOCUMENTATION

All documents on the climate and energy package are available on:

http://ec.europa.eu/energy/energy_policy/index_en.htm

2 Directorate General for Energy and Transport I. OBJECTIVES AND CHALLENGES Communications of the Commission: “An Energy Policy for Europe” and the Energy.

Documents

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