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Support for electricity from renewable energy sources

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Support for electricity from renewable energy sources

Outline of the Community (European Union) legislation about Support for electricity from renewable energy sources

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Renewable energy

Support for electricity from renewable energy sources

Document or Iniciative

Commission Communication of 7 December 2005 “The support of electricity from renewable energy sources” [COM(2005) 627 final – Official Journal C 49 of 28 February 2006].

Summary

This communication reports on the progress made in achieving the objectives set by the Member States in the field of renewable energies, as stipulated by the previous 2001 Directive. It focuses specifically on public support allocated to assist the market penetration of electricity produced from renewable energy sources (RES-E).

The existing support schemes cover the following:

  • feed-in tariffs exist in most of the Member States. These systems are characterised by a specific price, normally set for a period of around seven years, that must be paid by electricity companies, usually distributors, to domestic producers of green electricity;
  • the green certificate system, currently in force in Sweden, the United Kingdom, Italy, Belgium and Poland. RES-E is sold at the conventional market price. In order to finance the additional cost of producing green electricity, and to ensure that it is generated in sufficient quantities, all consumers are obliged to purchase a certain number of green certificates from RES-E producers according to a fixed percentage (quota) of their total electricity consumption/generation;
  • tendering systems exist in two Member States (Ireland and France). Under this procedure, the State issues a series of invitations to tender for the supply of RES-E, which will be sold at market price. The additional cost is passed on to the final consumer in the form of a special tax;
  • tax incentives used exclusively in Malta and Finland.

To assess the performance of these support schemes, it is necessary to:

  • take into account the substantial differences between the national, regional and agricultural resources of different Member States. The wider the gap between “generation costs” and “support”, the less the cost-efficient the system is;
  • take into account the effectiveness of the different support schemes. Effectiveness refers to the ability of a support scheme to deliver green electricity;
  • compare the profits from an investor perspective and compare effectiveness so as to indicate whether the success of a particular policy results above all from substantial financial incentives or whether there are other aspects that have had a crucial impact on market distribution in the countries in question.

The different forms of renewable energy affected by this support include:

  • wind energy, for which analyses show that support is too low for any take-off in a quarter of the Member States. Another quarter of Member States provide enough support but still obtain mediocre results. Feed-in tariffs are currently the most effective systems for wind energy in Germany, Denmark and Spain;
  • biomass forestry requires the use of straw, which is taken into account in analyses of biomass forestry. Denmark is the main country using this type of biomass. In close to half of all European countries, support for this form of renewable energy is still insufficient to develop this high potential sector;
  • the biogas sector is closely linked to environmental policy for waste treatment. In nearly 70% of cases not enough support is provided for the development of this technology;
  • the other renewable energy sources to benefit from this support are hydroelectricity and photovoltaic solar energy (especially in Germany). There are several other sources of renewable energy (geothermal, wave, tidal, solar thermal, etc) which, although they receive support in some Member States, have not yet been developed on an industrial scale.

Circulation of renewable energy on the internal market

These support schemes for RES-E cannot be separated from the internal electricity market. The compatibility of the different renewable energy support schemes with the development of the internal electricity market is essential in the medium and long term. Support for renewable sources of energy falls under the Community framework for State aid for environmental protection, whereas at the national level, the rules on State aid can influence the type of support scheme.

The Commission stresses that the market is dominated by one or several power companies that are too often vertically integrated. The existence of distribution and transport grid operators should guarantee all generators fair grid access, respecting the rules of competition. That is why the independence of these grid operators is vital to the proper functioning of the support schemes.

Governments must also ensure that consumers are informed of the way in which these support schemes for renewable energies affect consumers.

A distinction needs to be made between the physical trade in electricity and the green value of the electricity. RES-E is subject to the same restrictions as conventional electricity, including the mandatory disclosure system. This system makes it compulsory to inform consumers of the contribution of each energy source to the overall fuel mix.

The support covered by the Community framework for State aid for environmental protection may distort competition. These economic effects may however be justified and compensated for by the beneficial effects for the environment. Since the use of renewable energy sources is a priority for Community policy, the mentioned framework tends to favour support schemes. Some sixty support schemes for RES-E were already approved by the Commission during the period 2001 to 2004.

Towards a harmonisation of the rules?

Harmonisation between potential and actual development of renewable energies varies greatly among the Member States. In the short term, harmonisation seems unlikely. The Commission regards harmonisation of the rules in this sector as being desirable, as any changes to the system in the short term might disrupt some markets.

Achieving the potential benefits of harmonisation presupposes:

  • integration of renewable energies on the internal market, making the RES-E sector more competitive;
  • reduction of the forecast costs for RES-E to achieve its target share for 2010 on the basis of a harmonisation of systems such as green certificates and feed-in tariffs. These forecasts suppose the elimination of market distortions caused by support for conventional energy sources;
  • creation of a system of green certificates at the European level that would be more wide-ranging and therefore more liquid, making it possible to ensure greater price stability on national markets;
  • a common feed-in tariff system for the whole of Europe, bearing in mind the availability of resources at the local level. This could lower the cost of all RES technologies in the different Member States once installations are no longer reserved for only some of them.

Avoiding the potential disadvantages of harmonisation presupposes:

  • the absence of any significant fluctuation in the price of green certificates to avoid increasing investor uncertainty and holding back the development of RES;
  • costs linked to information on these technologies and keeping such costs low;
  • development of competitive technologies only, in the context of green certificates, as this system favours profitability above all else. Investment in other promising technologies would be insufficient.

Consideration must also be given to Member States that are importers of RES-E. There is a risk that they will not wish to pay the bill without also benefiting from the advantages at the local level to which they would have access if the renewable energy were being produced on their territory. In any case, the exporting countries may not wish to keep an excess capacity of RES if the public is opposed to building future RES installations on their territory.

Recommendations concerning administrative barriers and grid access

Such barriers appear when the project developers or investors disagree over the installation of new generation capacities or over grid access. The Commission has launched a public consultation into perceptions of these barriers and recommends that action be taken in relation to the following:

  • the large number of authorities involved (national, regional and local) and the lack of coordination between them leads to uncertainty in connection with investment. Single authorisation services should be set up;
  • it can take several years to obtain the necessary permits and this can completely freeze the development of the market. The Member States must set out clear guidelines and a precise division of responsibilities;
  • the insufficient attention given to RES in spatial planning, which must be improved by encouraging public authorities to anticipate future RES projects through the establishment of advance planning mechanisms. It is also important that the planning and authorisation process complies with European environmental legislation.

Grid access problems play a crucial role in the increase in RES-E generation. The Member States have largely put the necessary legislative provisions in place whereby grid operators guarantee transport and distribution. In the view of the Commission, transparent rules are required in order to meet and share out the necessary cost of investment in the grid, as the absence of such rules is the source of numerous difficulties.

Denmark, Finland, Germany and the Netherlands have established rules of good practice in relation to the sharing of the cost of the various investments that have to be made in the grid. Such good practice makes it possible to implement the “shallow” cost approach, under which grid connection costs are borne by project developments or shared with grid operators. These rules should be completely transparent and non-discriminatory.

The Commission stresses the necessity of developing grid infrastructure so as to be able to absorb the future increase in RES-E generation.

Lastly, the Commission recommends the establishment of a system to guarantee the origin of electricity generated from renewable energy sources in order to facilitate trade and ensure transparency for consumers.

Preference for a coordinated approach

In the view of the Commission, harmonisation is still at an experimental stage and it consequently advocates a coordinated approach to support schemes benefiting renewable energy sources, based on the following:

  • international cooperation which would certainly contribute to the development of the different support schemes in Europe, prior to undertaking partial harmonisation;
  • optimisation of national schemes that are indicative of the ineffectiveness of such systems, resulting in a rise in prices for consumers.

In order to optimise their national schemes, the Member States should take the following action:

  • consolidate the legislative framework and limit investment risks linked to the intermittent nature of national support schemes. The system must appear stable and financially viable in the long term in the eyes of economic operators in order to contribute to greater transparency in market prices;
  • encourage technological diversity even if RES technology appears to be the most competitive at present. Better use should be made of exemptions and tax reductions offered to renewable energy sources;
  • ensure compatibility with the internal electricity market with a view to integrating these support schemes in a liberalised energy market;
  • encourage employment and local and regional benefits;
  • work in unison with national energy efficiency and demand management schemes so as to avoid cancelling out the progress achieved by RES-E with an excessive increase in consumption.

Background

The Commission will closely monitor developments concerning European renewable energy policy. It will draw up a report by the end of 2007 at the latest on the levels envisaged by the national systems for promoting electricity from renewable energy sources. It will report on the drive towards the completion of the internal electricity market and further analyse the options for and the impact of possible harmonisation.

Related Acts

of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market [OJ L 283 of 27.10.2001]

 

Biomass Action Plan

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Biomass Action Plan

Outline of the Community (European Union) legislation about Biomass Action Plan

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Environment > Tackling climate change

Biomass Action Plan

Document or Iniciative

Communication from the Commission of 7 December 2005 – Biomass Action Plan [COM(2005) 628 final – Official Journal C 49 of 28.02.2005].

Summary

To cope with the increasing dependence on imported energy, the European Union (EU) must bring into play a new energy policy, the three main objectives of which are competitiveness, sustainable development and security of supply.

It is in this wider context of an integrated and coherent energy policy and, in particular, of promoting renewable energy sources that the Commission is presenting this Biomass Action Plan.

Biomass

Biomass, i.e. all organic plant and animal products used to produce energy (or in agriculture), currently accounts for around half (44 to 65%) of all renewable energy used in the EU.

Biomass currently meets 4% of the EU’s energy needs (69 million tonnes of oil equivalent (toe)). The aim is to increase biomass use to around 150 million toe by 2010.

An increase of this magnitude could bring such benefits as:

  • diversifying Europe’s energy supply;
  • significantly reducing greenhouse gas emissions * (209 million tonnes);
  • direct employment for 250 to 300 000 people;
  • potentially lowering the price of oil as a result of lower demand.

It is important to note that these benefits can probably be obtained without additional pollution or other forms of environmental damage.

The predicted cost of expenditure linked to renewable energy is estimated at EUR 9 billion per year.

The Commission identifies three sectors in which biomass use should be prioritised, namely heat production, electricity production and transport.

Biomass for heating

Heating is without a doubt the sector which uses the most biomass, and does so simply and cheaply in terms of technology. However, paradoxically, biomass is growing slowest in this sector.

The Commission plans to use various measures to improve this situation, including:

  • adopting new specific legislation on renewable energy in heating;
  • amending the Directive on the energy performance of buildings;
  • carrying out a study of how to improve the performance of household biomass boilers and reduce pollution.

However, it appears that renewable fuels are more suited for use in district heating * than individual heating. Their use should therefore be promoted by making them more competitive, cost-effective and convenient to use.

Electricity from biomass

The Commission points out that there are many ways of generating electricity from renewable energy sources. Attention should focus on the Directive on electricity from renewable energy sources in this area.

Using biofuels in transport

As with electricity production, the transport sector is also governed by Community legislation in the form of the Directive on biofuels for transport.

In accordance with this Directive, the Commission plans to present a report in 2006 on the implementation of the Directive, with a view to a possible revision. It will address the issues of:

  • national targets for the market share of biofuels;
  • the obligation to use biofuels;
  • implementing a system to certify conformity with biofuels standards.

The Commission is set to put forward a legislative proposal for the vehicle market aimed at encouraging public procurement of clean vehicles. The future strategy on the car industry, which should be published in 2006, provides for various measures concerning:

  • the use of biofuels;
  • establishing tax incentives;
  • providing consumer information;
  • reducing congestion.

In terms of balancing domestic production and imports of biofuels, the Commission’s approach is to:

  • propose the amendment of standard EN14214 to facilitate the use of a wider range of vegetable oils for biodiesel *, to the extent feasible without significant ill-effects on fuel performance;
  • address the issue of amending the biofuels directive so that only biofuels whose cultivation complies with minimum sustainability standards count towards its targets;
  • maintain market access conditions for imported bioethanol * that are no less favourable than those provided by the trade agreements currently in force;
  • pursue a balanced approach in ongoing free trade agreement negotiations with ethanol-producing countries/regions;
  • support developing countries that wish to produce biofuels and develop their domestic markets;

In terms of standards, the Commission is currently re-examining two areas of the fuel quality directive;

  • impact on health and the environment;
  • impact on the achievement of the objectives in the biofuels directive and the cost of achieving them.

The Commission also plans to remove unjustified or discriminatory technical barriers to using biofuels.

Lastly, as Europe is better at producing bioethanol than biodiesel, the Commission will encourage the use of ethanol (in place of methanol *) to reduce demand for diesel.

Stimulating biomass supply

In terms of agriculture, the reform of the Common Agricultural Policy (CAP) introduced a special “aid for energy crops”. In 2006 the Commission will evaluate the implementation of this and, if necessary, will put forward proposals reflecting the Union’s objectives in terms of biofuels. In addition to this the Commission will fund an information campaign on the priorities for energy crops and the prospects for exploiting them.

Statistics for forestry * show that around 35% of the annual growth in EU forests remains unused. To address this, the Commission is currently preparing an action plan, which should be adopted in 2006. The plan will, in particular, examine the matter of generating electricity from wood. The Commission will also review the impact of the energy use of wood and wood residues on forest-based industries.

Waste is also an underused energy resource. For this reason the Commission is currently developing a thematic strategy on preventing and recycling waste, and is preparing a proposal on the revision of the waste framework legislation.

Animal by-products not destined for human consumption are increasingly being recovered for energy. Consequently, the Commission plans to review the regulatory framework governing such production processes, so that new sources of energy may be opened up while maintaining current levels of protection for public and animal health.

The Commission is also paying particular attention to the adoption of European standards for solid biomass fuels in order to facilitate trade, develop markets and increase consumer confidence. The European Committee for Standardisation is working to define these standards.

Regarding supply, a European trading floor for pellets and chips has been initiated with support from the EU Intelligent Energy for Europe programme (2003-2006). The Commission will also look at how the results can be improved, with a view to possibly establishing a Community-wide trading system.

Lastly, action plans making it easier to evaluate biomass at various levels (physical and economic availability, priorities for use, measures to be taken, etc.) are encouraged by the Commission both at national and regional level.

Financing biomass

Supporting the development of renewable and alternative energy sources is a key objective for the structural and cohesion funds. The EU and the Member States must therefore promote the development of renewable energy sources through regional policy.

The Commission also points out that support for biomass production and use must comply with Community state aid policy.

Biomass and research

The Commission’s proposal for the Seventh Framework Programme gives a high priority to biomass research.

The Commission plans in particular to look at how best to take forward research into the optimisation of agricultural and woody crops for energy purposes, and into conversion processes.

Lastly, through the Intelligent energy for Europe programme (2007-2013), the Commission will support the dissemination of techniques that reflect European objectives for renewable energy.

Background

This Biomass Action Plan is part of the new EU energy policy set out in the Green Paper on energy published in March 2006. Most of the recommendations it contains were supported by EU Heads of State or Government at the spring European Council of 23 and 24 March 2006. Developing safe, competitive and sustainable energy is therefore one of the EU’s priorities in relaunching the Lisbon Strategy.

Key terms used in the act
  • The main greenhouse gases are water vapour, carbon dioxide (CO2), methane (CH4), nitrous oxide and ozone (O3).
  • District heating: collective heat distribution equipment for heat generated in the form of vapour or hot water by several production units.
  • Biodiesel: fuel obtained from vegetable or animal oil which has been transformed through a chemical process called transesterification.
  • Bioethanol: biofuel for use in petrol engines. Plants which contain saccharose (beetroots, sugar cane, etc.) or starch (wheat, maize, etc.) can be transformed to produce bioethanol. This is obtained by fermenting the sugar extract of sugary plants or by distilling starch from wheat or maize.
  • Methanol: methanol is also known as methyl alcohol or wood alcohol and its chemical formula is CH3OH. It is the simplest form of alcohol and is highly toxic. It is a light, volatile, transparent and inflammable liquid which is used as anti-freeze, a solvent, as fuel (in the North American Champcar world series since 1964), and to denature ethyl alcohol.
  • Forestry: this covers all practices by which goods are produced from forests in a reasonable and sustainable way.

Related Acts

Communication from the Commission to the Council and the European Parliament – The Renewable Energy Progress Report: Commission Report in accordance with Article 3 of Directive 2001/77/EC, Article 4(2) of Directive 2003/30/EC, and on the implementation of the EU Biomass Action Plan, COM(2005) 628 [

COM(2009) 192

final – Not published in the Official Journal].

This Report describes the progress made in the field of renewable energy. In the electricity sector, in particular, the renewable energy share has increased in some Member States. In addition, the transport sector has seen its renewable energy share increase by 1.6 points since 2004. In spite of this positive trend, the European Union is likely to fail to meet its 2010 renewable energy targets. It is therefore essential that the European Commission should continue to encourage Member States to apply the existing legislation and if necessary to initiate infringement proceedings in order to make further progress towards achieving these objectives.

Communication from the Commission of 19 October 2006 – Action Plan for Energy Efficiency: Realising the Potential [COM(2006) 545 final – Not published in the Official Journal].

Communication from the Commission of 26 May 2005 to the Council and the European Parliament, “The share of renewable energy in the EU” [COM(2004) 366 final – Not published in the Official Journal].

Renewable energy

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Renewable energy

Outline of the Community (European Union) legislation about Renewable energy

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Renewable energy

Renewable energy

Renewable sources of energy – wind power, solar power (thermal and photovoltaic), hydro-electric power, tidal power, geothermal energy and biomass – are an essential alternative to fossil fuels. Using these sources helps not only to reduce greenhouse gas emissions from energy generation and consumption but also to reduce the European Union’s (EU) dependence on imports of fossil fuels (in particular oil and gas).
In order to reach the ambitious target of a 20% share of energy from renewable sources in the overall energy mix, the EU plans to focus efforts on the electricity, heating and cooling sectors and on biofuels. In transport, which is almost exclusively dependent on oil, the Commission hopes that the share of biofuels in overall fuel consumption will be 10% by 2020.

POLICY ORIENTATIONS

  • Promotion of the use of energy from renewable sources
  • Renewable Energy Road Map
  • “Intelligent Energy for Europe” programme (2003-2006)
  • The Global Energy Efficiency and Renewable Energy Fund
  • Renewable energy: the share of renewable energy in the EU in 2004

ELECTRICITY

  • Renewable energy: the promotion of electricity from renewable energy sources
  • Support for electricity from renewable energy sources

HEATING AND COOLING

  • Biomass Action Plan

BIOFUELS

  • EU strategy for biofuels
  • Motor vehicles: use of biofuels

WIND ENERGY

  • Promotion of offshore wind energy

Nuclear energy

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Nuclear energy

Outline of the Community (European Union) legislation about Nuclear energy

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Nuclear energy

Nuclear energy

Nuclear power stations currently produce around a third of the electricity and 15% of the energy consumed in the European Union (EU). The sector represents a source of energy with low carbon levels and relatively stable costs, which makes it attractive from the point of view of security of supply and fighting climate change. It is up to each Member State, however, to decide whether or not to pursue the option of nuclear power. The ground for nuclear energy in Europe was laid in 1957 by the European Atomic Energy Community (Euratom). Its main functions consisted of furthering cooperation in the field of research, protecting the public by establishing common safety standards, ensuring an adequate and equitable supply of ores and nuclear fuel, monitoring the peaceful use of nuclear material, and cooperating with other countries and international organisations. Specific measures adopted at EU level are geared to protecting the health of those working in the sector and of the public at large, and protecting the environment from the risks associated with the use of nuclear fuel and the resulting waste.

EURATOM

  • Treaty establishing the European Atomic Energy Community (Euratom)
  • Euratom Supply Agency
  • Seventh Framework Programme: Euratom
  • Nuclear Illustrative Programme

NUCLEAR RESEARCH AND DEVELOPMENT

  • Joint Undertaking for ITER and the Development of Fusion Energy
  • ITER: Euratom/Japan agreement on nuclear fusion

NUCLEAR SAFETY

  • Nuclear non-proliferation
  • Dangers arising from ionising radiation
  • Safety of nuclear installations
  • Convention on Nuclear Safety
  • Convention on the Physical Protection of Nuclear Material and Nuclear Facilities
  • Control of high-activity sealed radioactive sources and orphan sources
  • Education and training in the nuclear energy field
  • Safeguarding nuclear materials
  • Cooperation with Non-EU Member Countries on nuclear safety
  • Operation and efficiency of facilities for monitoring the level of radioactivity in the air, water and soil – Report 1990-2007

NUCLEAR WASTE

  • Shipments of radioactive substances
  • Shipments of radioactive waste: supervision and control
  • Management of spent fuel and radioactive waste
  • European system for registration of carriers of radioactive materials (Proposal)

Prospects for the internal gas and electricity market

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Prospects for the internal gas and electricity market

Outline of the Community (European Union) legislation about Prospects for the internal gas and electricity market

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Internal energy market

Prospects for the internal gas and electricity market

New measures must be added to the existing rules of the internal gas and electricity market in order to guarantee its integral operation. An inventory of the market in fact reveals that there is still malfunctioning and that the current rules do not allow it to be corrected effectively.

Document or Iniciative

Communication from the Commission to the Council and the European Parliament of 10 January 2007 entitled “Prospects for the internal gas and electricity market” [COM(2006) 841 final – Not published in the Official Journal].

Summary

The aim of the European Union (EU) is to set up a truly competitive internal market for gas and electricity to offer consumers a real freedom of choice at fair, competitive prices, to stimulate clean energy production and to improve security of supply.

Although the internal energy market is well established, malfunctioning (identified by the sector inquiry into the gas and electricity markets) persists, preventing both consumers and the economy from getting the full benefit of the advantages of opening up the national gas and electricity markets.

As current rules do not allow effective correction of this malfunctioning, new measures must be taken as the final step in achieving integrated operation of the internal energy market in Europe.

Advantages of creating the internal energy market

The opening of national markets in gas and electricity to competition visibly gives consumers the freedom to choose their energy supplier and, therefore, the opportunity to make savings. It also improves the security of supply by encouraging, on the one hand, investment in facilities, so that interruptions to supply can be prevented, and, on the other hand, diversification of transport routes and energy sources. The existence of a truly competitive energy market also contributes to sustainable development, notably by enabling suppliers of electricity from renewable energy sources to enter the market.

Continued malfunctioning

In practice, the EU is still a long way from achieving its objective of a real internal market in which each consumer has the legal right to choose his supplier and exercise this right simply and effectively armed with the facts, and the current rules do not effectively prevent market malfunctioning.

The legal and functional unbundling of system operators vertically connected to suppliers and producers has proven insufficient to guarantee equal access to the networks. The traditional operators thus maintain their dominant position and new companies wishing to enter the market encounter many problems caused by discriminatory access conditions, lack of available network capacity, a lack of transparent data on the network situation and poor investment.

National regulators do not have the powers or independence necessary for succeeding in their mission. Their powers vary considerably from one Member State to the next, hindering cross-border trade and access to consumers in other Member States.

New set of rules for completion of the internal energy market

  • Provision of non-discriminatory access to the networks through unbundling

Current legal and functional unbundling has proven insufficient in removing the conflict of interests arising from vertical integration. Clearer separation between operation of transmission systems and production or supply activities must be introduced to ensure that operators maintain, operate and develop the networks in the general interest of the network users.

The separation may be based either on complete ownership unbundling, due to transmission system operators being both operators and owners of the system, or on introduction of an independent transmission system operator for maintenance, development and operation of the systems, which remain the property of the vertically integrated companies.

Complete ownership unbundling appears to be the most economically effective way to ensure development of a real internal energy market. Not only does it eliminate the different interests of system operators but also avoids the need for excessively detailed and complex regulations ensuring independence of vertically integrated system operators.

  • Strengthening of the role of regulators at national and Community level

The regulatory framework and therefore the powers of the regulators must be strengthened to ensure the conditions of transparency, stability and non-discrimination necessary for development of competition and for investment.

Better coordination of national regulators at European level is, in addition, needed to mitigate the market segmentation resulting from the regulatory differences between Member States. In this sense, it is possible either to improve the present approach, with the disadvantage of continuing to rely on voluntary agreements between 27 national regulators often with different interests, or to formalise the role of the European Regulators Group for Electricity and Gas (ERGEG) into a European Network of Independent Regulators (ERGEG +), or lastly to set up a new single body at Community level.

  • Cooperation of transmission system operators (TSOs)

To enable free circulation of gas and electricity within the EU, it is essential to establish compatible technical rules and regular exchange of information, increase investment in the network and, in particular, in cross-border interconnections, and move towards regional system operators.

  • Reduction in possibilities for unfair competition

Due to the monopolies held by the traditional operators before liberalisation, the lack of integration and their natural characteristics, in particular low elasticity of demand, the gas and electricity markets are particularly exposed to the risk of dominant positions.

Greater transparency, recourse to the ‘use-it-or-lose-it’ principle, genuine access to gas storage facilities and maintenance of incentives in favour of new storage capacities would facilitate the transition to a more competitive gas and electricity market.

  • Encouragement of investment in electricity power plants and gas infrastructures

Creating a stable environment for investment is a priority. Other factors may also influence investment, such as the award of emission certificates or specific incentive measures, for example for production of electricity from renewable energy sources.

  • Consumer protection

Consumer protection and public service obligations must be an integral part of the process of opening up the gas and electricity markets. An energy consumers’ charter must therefore protect their essential rights: the right to relevant information on the different suppliers and supply possibilities, the right to a straightforward procedure for changing supplier, protection against energy poverty for the most vulnerable consumers, protection against unfair commercial practices, etc.

Background

The internal energy market has been put in place gradually, starting with Directive 96/92/EC laying down rules for the internal market in electricity and Directive 98/30/EC laying down rules for the internal market in natural gas, which were replaced respectively by Directives 2003/54/EC and 2003/55/EC.

The Commission draws conclusions from the review of the internal gas and electricity market drawn up by its sector inquiry, and announces that a third legislative package will be added to the current rules.

Related Acts

Report from the Commission to the Council and the European Parliament – Progress in creating the internal gas and electricity market [COM(2008) 192 final – Not published in the Official Journal].

The report presents the progress made on the internal gas and electricity market since the opening of national markets to competition on the 1st July 2007. Among the main advances it highlights regional initiatives which have stimulated cross-border cooperation.

Three years after the deadline of July 2004 for implementation passed, it nevertheless appears that the requirements of the directives on electricity and gas have not been appropriately implemented in certain Member States.
A notable finding of this report is that regulatory oversight, unbundling and regulated supply tarifs, as well as the communication of Public Service Obligations, are not satisfactory.

Communication from the Commission to the European Council and the European Parliament of 10 January 2007 entitled “An energy policy for Europe” [COM(2007) 1 final – Not published in the Official Journal].

Communication from the Commission of 10 January 2003 entitled “Inquiry pursuant to Article 17 of Regulation (EC) No 1/2003 into the European gas and electricity sectors (Final Report)” [COM(2006) 851 final – Not published in the Official Journal]

Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC [Official Journal L 176, 15.7.2003].

Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC [Official Journal L 176, 15.7.2003].

Transparency of gas and electricity prices

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Transparency of gas and electricity prices

Outline of the Community (European Union) legislation about Transparency of gas and electricity prices

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Internal energy market

Transparency of gas and electricity prices

Document or Iniciative

Directive 2008/92/EC of the European Parliament and of the Council of 22 October 2008 concerning a Community procedure to improve the transparency of electricity and gas prices charged to industrial end-users (recast) (Text with EEA relevance).

Summary

This Directive aims at establishing a European procedure to ensure transparency of gas and electricity prices charged to end-users.

The procedure is necessary, insofar as this information enables consumers to choose between different energy providers and also between energy sources.

Information provided

The Member States shall ensure that the undertakings that provide industrial end-users with gas and electricity communicate the following information to Eurostat:

  • the prices and terms of sale of gas and electricity to industrial end-users;
  • the price systems in use;
  • the breakdown of consumers and the corresponding volumes by category of consumption to ensure the representativeness of these categories at national level.

Procedures framing gas and electricity prices

Prices reported must be the prices paid by industrial end-users buying natural gas distributed through mains, and buying electricity, for their own use. They are to be expressed in national currency per gigajoule (for gas) and per kilowatt-hour (kWh) (for electricity).

These prices must include all charges payable, such as network charges and energy used, rebates or premiums. Initial connection charges are not to be included.

Three levels of price are to be provided:

  • prices excluding taxes and levies;
  • prices excluding VAT and other recoverable taxes;
  • prices including all taxes, levies and VAT.

These prices are collected twice per year (January and July) whereas the method of calculation and a description of the taxes levied on sales of gas and electricity to end-users are to be transmitted once per year (in January).

Information on the procedures framing gas and electricity prices is to be communicated by an independent statistical body.

This Directive repeals Directive 90/377/EEC.

Reference

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 2008/92/EC

27.11.2008

–

OJ L 298 of 7.11.2008

This summary is for information only. It is not designed to interpret or replace the reference document, which remains the only binding legal text.

Sustainable power generation from fossil fuels

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Sustainable power generation from fossil fuels

Outline of the Community (European Union) legislation about Sustainable power generation from fossil fuels

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > European energy policy

Sustainable power generation from fossil fuels

Document or Iniciative

Commission Communication of 10 January 2007 “Sustainable power generation from fossil fuels: aiming for near-zero emissions from coal after 2020” [COM(2006) 843 final – Not published in the Official Journal].

Summary

The large-scale use of fossil fuels (oil, natural gas and coal) is the main cause of man-made climate change resulting from the CO2 emissions produced. The power generation sector accounts for a major proportion of these emissions and the upward trend is set to continue in future.

Over 50% of EU electricity comes from fossil fuels, mainly coal, which accounts for about 30% of overall electricity generation in the EU. To help secure the EU’s energy supply, coal will continue to play a key role in the energy sources used. In 2005 CO2 emissions from coal-based electricity generation accounted for 70% of total CO2 emissions due to electricity generation in the EU, and 24% of CO2 emissions from all sectors taken together.

These energy sources, particularly coal, will also become more and more important in power generation in certain parts of the world over the coming decades (China and India in particular) as a result of the significant rise in demand for energy.

It is therefore essential for the EU to set up the right framework now for the development and distribution of sustainable coal technologies, and thus limit CO2 emissions from the use of coal for electricity generation.

The improvements already made in coal technologies (increase in energy efficiency and a reduction in acid rain and local atmospheric pollution due to SO2, NOx and particulate emissions) show that significant technological progress is possible, in particular by applying the principle of carbon capture and storage (CCS).

Technologies for the sustainable use of fossil fuels

Technologies for the sustainable use of coal will be based on an optimum combination of ‘clean coal’ technologies (improving yield and reducing atmospheric emissions) and CCS technologies. Continued development of these technologies and demonstrating their commercial viability will lead to their large-scale use.

To achieve this, a substantial increase in funding for research is required for the development of technological demonstration projects at both national and Community level. Routine cooperation between the industrial sector and the pubic authorities is called for, via a coordination and support structure based on the Zero Emission Fossil Fuel Power Plant Technology Platform launched in 2006. The Commission is also to study what other appropriate demonstration measures should be taken in the short term.

The best available technology will have to be used for modernising the EU’s stock of coal-fired power plants, enabling CO2 emissions generated by them to be cut by 20% by 2020. The Commission will assess whether using the best available technology is effective and will consider proposing the adoption of legally binding instruments to promote it where necessary.

A framework for developing these technologies

The EU needs a regulatory and economic framework that rewards low-carbon technologies. It will have to ensure the long-term use of sustainable coal technologies to promote investment and the transition to such technologies.

The Commission therefore recommends:

  • assessing the potential risks involved in carbon capture and storage, a process which will involve public internet-based consultation;
  • proposing requirements for using these technologies, allowing the risks to be properly managed;
  • incorporating these requirements into the existing regulatory framework, i.e. the greenhouse gas emission quota exchange system and the Environmental Impact Assessment (SK) (SL) (FI) and Integrated Pollution Prevention and Control Directives.

The Commission also thinks that new coal-fired power plants should be built with CCS systems by 2020 and that existing plants should be gradually retrofitted. Incentives could be provided (by adopting legally binding objectives and setting up EU storage sites, for example).

The EU will also continue its efforts at international level to conclude an agreement to limit the rise in the Earth’s temperature to 2°C above pre-industrial levels. CCS will be one of the options to be used in this connection. The EU will support the amendment of some of the existing international agreements and conventions to reduce the barriers to CCS technologies (for example under the seabed).

Costs and benefits of sustainable fossil fuels technologies

The construction of new CCS-ready plants should not necessarily lead to additional costs, while the construction of plants for the industrial-scale demonstration of sustainable coal use will require substantial financial resources, as will the retrofitting of existing power plants after 2020.

CCS technologies are as yet too costly for large-scale use. However, technological improvements over the coming years and the side benefits of CCS should limit the rise in the cost of electricity from plants using these technologies to 10% of current levels by 2020 or even fully cancel them out. Also, the potential rise in the cost of electricity generated in coal-fired plants should not translate, at least not fully, into higher electricity prices for consumers.

The Commission thinks that any negative environmental effects of CCS will stem mainly from potential leakage. However, the International Panel on Climate Change (IPCC) concludes that the proportion of CO2 retained in well-selected and well-managed storage sites is very likely to exceed 99% over 100 years.

The sustainable use of fossil fuels, in particular CCS, will make it possible to eliminate up to 90% of the carbon emissions from fossil-fuel power plants, i.e. an overall reduction in CO2 emissions in the 27 EU Member States of 27 to 30% by 2030 compared to 2000. The use of appropriate technologies will also enable the atmospheric pollutants traditionally associated with coal combustion, including NOx and SO2, to be reduced, thus resulting in lower local environmental and health costs.

If the EU can display strong international leadership in the development of sustainable fossil fuel technologies, this will enable it to create jobs and export its technology, and will have a positive knock-on effect on third countries. To achieve this, there will need to be close cooperation, particularly at technological and trade level, with coal-using countries, including China, the United States, India and the developing countries.

Background

The Communication is part of the “energy package” published by the Commission in January 2007, which sets out a new European energy policy with quantified targets.

Related Acts

Commission Communication of 10 January 2007 on an Energy Policy for Europe [COM(2007) 1 final – Not published in the Official Journal].

This Communication is the main feature of the package of measures presented by the Commission in January 2007 (the “energy package”). After reviewing the energy challenges facing Europe, in particular climate change and the EU’s security of supply, the Commission details a number of actions relating, among other things, to the internal energy market, security of supply, energy efficiency, renewable energy sources, energy technologies and international energy policy.

Commission Communication of 10 January 2007 “Limiting Global Climate Change to 2 degrees Celsius – The way ahead for 2020 and beyond” [COM(2007) 2 final – Not published in the Official Journal].

In this Communication the Commission looks at the costs and benefits of tackling climate change and recommends a number of measures to limit global warming to 2° Celsius. Some of the measures apply to the European Union alone (binding greenhouse gas emission targets and the adoption of energy measures, among others) while others are international in outlook (in particular, negotiation of an international agreement).

Commissionof 8 March 2006 “A European Strategy for Sustainable, Competitive and Secure Energy” [COM(2006) 105 final – Not published in the Official Journal].

With this Green Paper the Commission maps out a genuine European energy policy to meet the numerous challenges in terms of supply and the impact on growth and the environment in Europe.

 

Strategic Energy Technology Plan

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Strategic Energy Technology Plan

Outline of the Community (European Union) legislation about Strategic Energy Technology Plan

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Research and innovation > Research in support of other policies

Strategic Energy Technology Plan (SET Plan)

The Commission presents a strategic plan to accelerate the development and deployment of cost-effective low carbon technologies. This plan comprises measures relating to planning, implementation, resources and international cooperation in the field of energy technology.

Document or Iniciative

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 22 November 2007 entitled: “A European strategic energy technology plan (SET Plan) – Towards a low carbon future” [COM(2007) 723 final – Not published in the Official Journal].

Summary

Energy technology is vital if Europe’s objectives for 2020 and 2050 as regards the fight against climate change, security of energy supply and competitiveness of European companies are to be fulfilled.

However, certain constraints hamper the development and widespread application of energy technologies, be they the chronic underinvestment that has affected this sector since the 1980s, significant delays in the marketing of new products, the additional cost often involved without always giving better energy output, legal and administrative obstacle, or their social acceptability.

In addition, faced with competition from certain industrialised countries and emergent economies, the European Union (EU) Member States must adopt an effective joint approach on the subject of energy technologies. The timing of the adoption of such an approach will also determine whether European objectives are met.

The strategic energy technology plan (SET plan) presented by the Commission aims to help achieve European objectives and face up to the challenges of this sector:

  • in the short term by increasing research to reduce costs and improve performance of existing technologies, and by encouraging the commercial implementation of these technologies. Activities at this level should in particular involve second-generation biofuels, capture, transport and storage of carbon, integration of renewable energy sources into the electricity network and energy efficiency in construction, transport and industry;
  • in the longer term by supporting development of a new generation of low carbon technologies. The activities to be carried out should focus, among other things, on the competitiveness of new technologies relating to renewable energies, energy storage, sustainability of fission energy, fusion energy, and the development of Trans-European Energy networks.

Implementation of this SET plan will involve collective effort and activities in the private sector, the Member States and the EU, as well as internationally.

The SET plan first of all proposes a new governance method for energy technologies, based on joint strategic planning.

With this in mind, a steering group, created by the Commission in 2008 and made up of representatives of the Member States, will improve coherence by developing joint actions, making resources available and evaluating progress. Also, a European summit on energy technologies is planned for 2009. Furthermore, the Commission will set up a European information system, comprising technology mapping and capacity mapping.

The SET plan also improves the effectiveness of the implementation of the jointly decided actions, so as to take full advantage of the possibilities offered by the European research area and the internal market.

The Commission will therefore gradually launch new European industrial initiatives, in wind energy, solar energy, bio-energy, capture, transport and storage of CO², the electricity network and nuclear fission, which will take the form of public-private partnerships or joint programmes between Member States. Furthermore, the Commission wants to create a European energy research alliance to better coordinate, in terms of programming, the efforts of research centres and universities. A prospective approach will also be adopted to prepare the future development of Trans-European energy networks and systems.

An increase in resources, both financial and human, is another major element of the SET plan. Investment in research and innovation must increase at Community level, through the research framework programme of the “Intelligent Energy – Europe” programme and the European Investment Bank, as well as in the Member States, in order to double the overall effort made in the EU within three years. A communication from the Commission will be issued in 2008 on the subject of funding of low carbon technologies. In addition, the training of energy researchers will be promoted and new research and training opportunities will be created, to increase the number and quality of engineers and researchers.

Finally, the SET plan makes provision for intensified international cooperation, in order to promote the development, marketing, deployment and accessibility of low carbon technologies worldwide. The EU should speak more often with one voice on this matter. Cooperation with developed countries will involve public interest research and long-term exploratory research. As for developing countries and emergent economies, cooperation should allow their sustainable development while creating opportunities for European companies; cooperation could be involved, for example, in networking of research centres, large-scale demonstration projects and increased use of the mechanisms of the Kyoto Protocol.

Related Acts

Communication from the Commission of 10 January 2007 entitled: “Towards a European Strategic Energy Technology Plan” [
COM(2006) 847 final

– Not published in the Official Journal].