last exit to get european energy markets right contribution to ifiec annual meeting, feb 06 claude...
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Last exit to get European Energy markets right
contribution to IFIEC annual meeting, Feb 06
Claude Turmes, MEP
The actual mechanisms in the EU energy and gas market is not less than the biggest ever
transfer of economic value from the broader public and business to the benefit of a
happy few
Problems in the EU electricity market
. Market dominance instead of competitive behaviour
. Free CO2 allocations fully priced
. Market imperfection (marginal cost price signal from power exchanges do not reflect real cost structure)
. Base-load power stations not rightly priced
. National CO2 Allocation Plans manipulated
. Gas market not functioning
Competition?
CO2 allowances and electricity prices
Source: WVM 2005
wind fall profits
EnBW; EON, RWE, Vattenfall Europe
EDF Sum
2005
Nuclear 2,2 5,0 7,2
Lignite 1,0 - 1,0
2006
Nuclear 3,0 8,0 11,0
Lignite 2,0 - 2,0
Sum 8,2 13,0 21,2
EU emissions trading scheme
Streamlining of NAPs is crucial
-242
-49-37
501
0
-40
-413
-2
240 0
37
133
-12
-141
0 0
64
-992
-787
164
-367
-250
-1,000
-800
-600
-400
-200
0
200
400
600
Germany Spain Italy Netherlands Poland UK Auction
EU
A/G
Wh
Lignite power plant
Hard coal power plant
Natural gas power plant
Natural gas CHP
No
info
rmat
ion
avai
labl
e
Allocation to new entrants in NAP-1 (w/o transfer rule)
• Solutions:
1) windfall profit tax on electricity companies
redistributed to- favour new entrance (indu cogen)- finance „electricity savings in a hurry“- selective tax cuts to customers most hurt- …
• Solutions:
2) brake up dominance of electricity oligopolies
by stringent mesures:
. electricity and gas release programs
. strict merger control (abolish 2/3 rule)
. third directive (ownership unbundling, access gas storage, harmonisation of powers regulators, divestment obligations)
• Solutions
3) for big indu consumers:
- EU trading platform for big energy consumers (ex. baseload Gas and Elec for 5 years duration with upfront payment to enter, dominating players excluded, )
- put an end to „national indu protection agreements“ (Spain, Italy, France,…)
• strengthen the ETS:
1) ETS 2008 -2012- auctioning maximum- no technology and fuel specific benchmarks
– ETS post 2012- target 2020 for CO2- European not national scheme
Recent Emission TrendsGlobal
0
10
20
30
40
50
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Gt
CO
2
Africa
Central Planned Asia (beyond 2002: China)
Far East (beyond 2002: East & South Asia)
Middle East
Central & South America (/w Mexico)
Ocenania (beyond 2002: OECD Pacific)
(Former) Central Planned Europe
Western Europe (incl. Germany)
North America (USA and Canada)
???
Business as usual projection
The 2°CChallenge
competition of big European industry is not THE only problem
the real BIG problems are:
- halt climate change
- get out of oil
- get out of nuclear
LET‘s join forces
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