Environmental protection should not unduly burden electricity industry, says industry body

Although the industry body believes that current moves by the European Commission to accelerate the liberalisation of the EU electricity and gas markets, are realistic, Eurelectric has outlined a number of key concerns, which, it says, would hinder electricity companies’ efforts to take part in the process. Eurelectric has requested urgent talks with the European Commission in order to help define the approach needed to speed up market liberalisation in a consistent manner.

According to Eurelectric, the establishment of a competitive European electricity market is making rapid progress, with lower electricity prices and consistently high standards which are good for European businesses and for individual customers.

Eurelectric is concerned, however, that any new legal measures for environmental protection should not hamper the electricity industry, and all sectors should be expected to assume their fair share of the load. Burdens such as environmental taxation, says Eurelectric, tend to create an un-level playing field, and can have a damaging effect on the competitiveness of EU industry.

“In general, environmental taxation is a blunt instrument which doesn’t target the behaviour you want to change,” a Eurelectric spokesman told edie, explaining that such taxation is usually used purely for raising government revenue. “We believe that voluntary agreements between individuals and authorities are better than measures such as environmental taxation. We believe it’s important to influence the behaviour of customers and end-users. This can be done through market means.”

The promotion of renewable energy sources should be harmonised with the full opening of electricity markets in order to avoid artificial distortions, says Eurelectric. EU-wide implementation of market-based instruments, such as tradable certificates, would usefully create competitive cost-pressures among renewable energy sources.

“A market-based approach is the only sustainable way to support RES, and will prove the most effective in the medium and longer term,” John Traynor, Energy Policy Advisor at Eurelectric explained to edie. “It means that RES technology cost decreases – as for wind turbines – will be reflected in decreasing costs for renewable electricity and not just pocketed by RES investors who are otherwise – as in Germany – over-compensated.”

These cost decreases are not visible in the German system of feed-in tariffs, which result in huge hand-outs to renewable energy producers, and result in a smaller number of renewable energy generating companies receiving financial assistance. A far fairer method of establishing energy sources, says Eurelectric, would be through a system of tradable green certificates(see related story), the value of which should reflect how difficult it is to make cheap renewable energy. An example of such a system is found in the Netherlands, where consumers receive tax exemptions if they are able to prove their use of renewable energy through the presentation of a green certificate (see related story).

Though combined heat and power facilities have a role within a European energy policy, admits Eurelectric, inefficient and uneconomic installations should be avoided.

The key principles which Eurolectric believes must be met in a liberalised energy market are:

• clear rules for cross-border transmission charging and congestion management;
• all players to compete on equal terms;
• a stable market framework;
• avoidance of excessive regulation, as well as efforts to reduce regulatory burdens as competition becomes established;
• safeguard of public service duties;
• market structures that encourage new investment where needed;
• conditions for environmental protection.

If market forces are to play a greater role in the electricity sector, it is clear that intervention by the authorities will have to be less than in the past, says Eurelectric. Energy policy should work with the market, rather than against it.