EU Energy Policy Blog

Since the Copenhagen conference of December 2009, the actors involved in climate negotiations seem be engaged in a game of mistigri, in which everyone is in a hurry to pass on any card that exposes them to the slightest commitment. The overall result is that deadlines are being pushed back, and the prospect of an international agreement coming into force from 2020 now seems optimistic in the extreme. The economic crisis has accentuated this turning away from the climate issue, or at least its decline in policy makers’ scale of priorities. A curious semantic shift has accompanied this phenomenon: there is much less talk of global warming, while the media have turned their attention to the concept of energy transition. This shift is not innocuous, and may lead, if this novel concept is not defined more rigorously, to a justification of our collective resignation in the face of climate risk.
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The European Commission’s proposal is supposed to deliver more cross-border electricity transmission.It is an extension of the current system of national-welfare centred regulations, a system which does not target the optimisation of the EU electricity network, and as such is inconsistent with a truly single market. However, the integrated first-best solution – a single European system operator, regulated by a single regulator, which develops the network in coordination with generators and consumers – appears politically infeasible. To overcome this, we propose a bold blueprint for a European system to fund and incentivise infrastructure development. The approach is fourfold: (1) implement vertical unbundling; (2) add a European system-management layer; (3) establish a stringent planning process; and (4) phase-in European cost-sharing.
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Cost Benefit Analysis has proven to be a useful tool to support the economic appraisal of important projects in many sectors. Recently, a single Cost Benefit Analysis method has been proposed at EU level to evaluate and compare electricity transmission and storage projects from different countries, which is unprecedented anywhere in the world. Continue reading »

Harmonisation in matter of capacity adequacy is not on the 2014 agenda of electricity markets integration. But the Council of European Energy Regulators (CEER), the European Commission and different European bodies of stakeholders have engaged reflections on this issue. A guideline of good practices on generation adequacy and capacity remuneration mechanisms initiated by the CEER is currently in discussion. The DG Energy is partly focusing the redaction of its next October Internal market communication on capacity remuneration mechanisms. Free trading and cross-border contracting on capacity rights are on the top of the list. Continue reading »

Biofuels are a key component of the EU strategy to improve the efficiency in transport, one of the sectors with a larger energy use and carbon emissions in Europe, and for which the European Commission has set very ambitious reduction objectives Continue reading »

Market coupling is one of the key-policies for achieving the EU single electricity market. The EU Commission praises the price-lowering effects of market integration in the first draft of the Internal Market Communication of August 30th: “wholesale electricity prices in the EU have risen much less thanks to competition facilitated by increasing cross-border trading and market integration”. Continue reading »

While politicians are trying to figure out how to get the economy growing again, a growing number of energy efficiency experts are working equally hard to bring energy demand growth to a permanent halt. We are, of course, not talking about the developing world, but the advance economies that use large amounts of energy on a per capita basis, and by some measures, have already reached or may bed approaching demand saturation levels.

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Buildings account for 40% of the total energy consumption of the EU and they are one of the most significant sources of greenhouse gas emissions (36% of the EU total). In order to achieve the 2050 EU building sector target, the energy performance of existing buildings will need to be improved substantially.

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Over the last few years we have been observing an irrational political confrontation between European and Russian energy strategies, something not even heard of at the times of the USSR. So let’s look at the irrationality of these confrontations from an economic perspective. Yes, Russia and Europe participate in a kind of monopolistic-monopsonistic relationship (where each side either has control of supply or control of demand) – these are naturally prone to debates about the division of the economic surplus, as both sides want to get the best possible deal out of it. But it should be possible even in these circumstances to come to some kind of rational equilibrium, where both sides benefit equally.
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The year 2012 has been declared the International Year of Sustainable Energy for All by the UN, and is part of the Sustainable Energy for All initiative by UN Secretary-General Ban Ki-moon. This is an attempt to raise energy poverty on the international political agenda and to provide opportunities for business, government and civil society to partner for achieving the target of sustainable energy for all by 2030. Three objectives have been highlighted under this initiative, which are to be achieved by 2030: ensuring universal access to energy; doubling the global rate of improvement in energy efficiency; and doubling the share of renewables in the global energy mix.

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