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Carbon Market:
Commission's carbon market report due in two weeks
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The European Commission is still working on the forthcoming carbon market report due in mid-November. The two billion allowances surplus is the most significant challenge that the Commission is facing. Also under assessment is the potential 30 percent CO2 emission reduction target, the withdrawal of a number of allowances, stricter access to Kyoto credits, a larger number of sectors covered, a carbon floor price, a reserve of allowances as well as more stringent annual Emission Trading System (ETS) caps.
As all operators are awaiting the Commission's decision, EU Emissions Allowances (EUAs) were traded between seven and eight euros in the past few weeks. On the basis of market reaction, the price will either drop, in the case of the Commission's proposal being too moderate, or greatly increase if too stringent measures are introduced.
With regards to the Kyoto protocol, Commissioner Hedegaard has presented the annual EU's progress report, which confirms the EU is on track to meet its target. In 27 Member States, CO2 emissions have dropped by 18 percent since 1990. However, Italy and, to a lesser extent, Spain are unlikely to meet their domestic targets.
The European Environment Agency (EEA) argued that Belgium, Ireland, Greece, Spain, Luxembourg and Malta will not reach their respective 2020 climate targets for sectors not covered by the ETS (e.g. agriculture, housing, etc). Although these countries have already adopted new measures, as the original actions were not enough, they will not be able to meet their targets and will have to introduce new plans in order to achieve their goals. In addition to this, another eight countries, notably Denmark, France, Italy, Austria, Slovenia, Finland, Estonia and Latvia are also not on track to meet their targets. Nevertheless the European Environment Agency (EEA) believes they will be able to resolve this situation with the supplementary measures they have planned.
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Power Market:
Poland and Slovenia referred to the Court of Justice
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Poland and Slovenia have been referred to the Court of Justice by the European Commission for not completely transposing the EU internal energy market legislation. While Poland has been referred to the court for not implementing the Directive for the liberalisation of the power market, Slovenia is accused of failing to implement both the gas and power Directives. The Commission has proposed daily fines of more than €80,000 for Poland and €10,000 for Slovenia.
A progress report on the Baltic Energy Market Interconnection Plan has just been published. Complete enforcement of the third energy package is considered as a high priority. Interconnection infrastructures and wind farm development plans have consistently progressed. Nevertheless, relevant investments are required to properly end the isolation of the Baltic States and Finland. The report emphasises the importance for the whole region of the intra-Baltic gas and a Liquefied Natural Gas terminal.
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Renewables:
Photovoltaic (PV) power plant closer to consumption hubs
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The European Photovoltaic Industry Association (EPIA) published a report proposing to build more PV power plants closer to where power is consumed, rather than simply in areas where the sun shines the most. Although this would require 10 percent more installed capacity, it could reduce energy surplus trading by over 70 percent. Also, distributed PV power generation associated with stronger self-consumption in rural areas would further free spare capacity on the grid. In accordance with this, the Italian Agency for sustainable economic development (ENEA) presented a report highlighting Italian progress towards 2020 renewable energy targets.
The document recognises that Italy is going to exceed its intermediate target for 2016 and reports that wholesale domestic power prices are still high in comparison to other European countries. Around €180 billion will be required to upgrade its domestic energy infrastructures and around two thirds of that should be devoted to renewables and energy efficient projects.
In parallel, the conservative German government is planning to reduce subsidies to wind and biomass as a second step, after the June cut for PV power plants, to reform incentive mechanisms for renewables. The reform would also include measures to expand energy storage and improve power supply. Environment minister Altmaier has also showed his willingness to raise the country's renewable energy target to 40 percent by 2020.
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Energy Efficiency:
EU energy intensity dropped by 12 percent
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The European Alliance of Companies for Energy Efficiency in Buildings (EuroACE) together with the Copenhagen Economics Institute presented a report on eco-renovation in the building sector showing how European governments could save up to €75 billion in energy bills by 2020. Further development of eco-renovation plans in Europe could introduce over one million jobs in the next eight years. In addition to this, introducing additional ad hoc income and corporate taxes as well as lowering renovation programme costs would potentially lead governments to obtain over €100 billion by 2017, to be invested in a number of areas, including energy efficiency.
The European Commission has published the energy intensive scoreboard, demonstrating that final energy consumption, along with carbon intensity, dropped by 12 percent in the first decade of the 2000s. There are still consistent gaps between Member States, for example Eastern European countries spend on average twenty times what Ireland consumes for the same activity. Bulgaria is still the most energy intensive country in the whole union.
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Gas:
MEPs calls for stricter measures on offshore oil activities
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After several months of discussions, the European Parliament Energy Committee has approved a report, backing the rapporteur's, Ivo Belet (EPP-DE, BE), request for a Directive introducing stricter measures for offshore oil activities. MEPs have also declined the suggestion from the Environment Committee to ban oil and gas drilling in the Artic. Also the report recommends companies willing to drill below the seabed should operate a risk assessment, have an emergency plan and be liable to pay any damage. Green and environmental groups strongly criticised the outcome of the vote. They were disappointed with safety verifications and stated that the financial guarantees requested from operators were not enough.
At the yearly Eurogas conference, experts widely argued that the lack of harmonisation among Member States and frequent changes in political majorities do not provide the industry with enough certainty to plan future investments. In parallel, the European Network for Transmission Operators for Gas (ENTSOG) published a launch paper on the development of network codes on interoperability and data exchange rules following the Commission's request to develop Network Code on Interoperability and Data Exchange Rules for European Gas Transmission Networks by September 2013. From November 2012, stakeholders will be able to interact and work with ENTSOG to draft the final codes and rules due to the Commission by the autumn of 2013.
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Nuclear:
A revision of the Nuclear Safety Directive in 2013
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| The European Commission has presented the long awaited nuclear safety assessment report containing a list of recommendations to raise safety among nuclear power plants. The Report stresses current standards for flood risk are not enforced in two fifths of checked facilities. Member States do not implement current legislation consistently, and two countries in particular are yet to enforce the Nuclear Safety Directive. The Commission suggested that operators upgrade most of the reactors by 2015, estimating at the same time that €25billion would be required to upgrade all nuclear reactors.
Green groups and environment NGOs showed their disappointment as they have called for the shut-down of several reactors. Following this assessment, the Commission is likely to propose a revision of the Nuclear Safety Directive, including results coming from the assessment report, in the first semester of next year.
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Institutional Calendar
5 November - Foreign Affairs Committee, "Workshop on EU external policies for future energy security"
5 November - Meeting of the Industry, Energy and Research Committee
5-6 November - Meeting of the Environment, Public Health and Food Safety Committee
6 November - Meeting of the International Trade Committee
6-7 November - Meeting of the Foreign Affairs Committee
7-8 November - Mini Plenary Session of the European Parliament
9 November - Economic and Financial Affairs Council
12 November - Eurogroup
19 November - Foreign Affairs Council
19-22 November - Plenary session of the European Parliament (Strasbourg)
22-23 November -Extraordinary European Council
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Other Events
6 November - Friends of Europe, "A New EU Energy Policy For The 21st Century"
7 November - 87th General Assembly of the Council of European Energy Regulators (Limassol)
14 November - Institute for European Studies, "Role of Energy Efficiency Improvements On The Road To Decarbonisation"
20 November - Eurelectric, "Business as usual? Nuclear Energy After The Stress Tests"
21 November - ISEAP, "Pact of Islands: 2nd ISLE-PACT European Conference"
22 November - Institute for European Studies, "EU Gas Pipelines And Electricity Grids In 2050"
27 November - Institute for European Studies, "Evolving External Energy Interdependencies, Past Energy Partners"
28 November - IFRI, "Accessing Oil, Gas and Minerals in a Changing World"
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