There is always something new in the energy dossier. I shall be looking at a few of the more significant developments without returning to the fundamental considerations developed two weeks ago (EUROPE 9345, 9346 and 9347), which, as far as I can see, remain entirely valid.
Political resolve is (finally) announced. For those who have not been fully focused on these issues, I would first of all like to draw attention to the determination shown by the president of the EU Energy Council, German Economy Minister Michael Glos. When speaking to MEPs early this week, he said his prime objective was to strengthen the Union's ability to speak with a single voice with energy producing third countries (see Emmanuel Hagry's report in our bulletin No. 9355). This might at first sight seem banal, but it is not really if one recalls that the main reason for the scepticism surrounding European uncertainty in this area lay in the tendency of member states to act each on their own account, with exclusively national interests in mind. Today, the minister of one of the countries reproached precisely for its national self-centredness now places the single European voice at the top of his list of objectives in his capacity as president.
This significant turning point had been heralded by the stance adopted by Chancellor Angela Merkel in an interview with several journalists from several member states. On the subject of energy, she had said: “I think that, initially, each member state did indeed think only of its own interests. But, today, we can really see that supply security cannot be achieved unless we all work together. The first step would be a common position with regard to Russia (…). Some member states will find this easy, others more difficult, but there is no alternative”. Ms Merkel had been adamant about the need, first of all, to resolve “a whole series of questions” concerning Poland, failing which there would be no new EU/Russia agreement. Those who expected real political resolve to be expressed making the intention of acting effectively on energy security credible can note this first step - which carries a lot of weight.
Mr Glos also announced to MEPs that the German EU presidency would continue to pursue the aim of an international agreement (beyond the EU framework) on energy efficiency, and that it would take on board the European Commission's guidelines for a two-stage approach for reducing CO2 emissions by 2020, that is, 20% reduction as an independent commitment of the EU, 30% if the other industrialised countries and emerging countries accept a similar commitment.
Different concepts of the single market. The minister, however, above all said that Germany would not, during its presidency, settle the most controversial aspect of the Commission's communication on energy, that concerning unbundling between production activities and networks. The Commission has adopted the principle of separation, that it believes is indispensable for the creation of a genuine single market for energy, but leaving two options open: unbundling of production installation ownership and network ownership, and the less radical formula that isolates network management, but not necessarily their ownership. Neelie Kroes, European Competition Commissioner, cannot hide the fact that she believes only the first formula will allow the common energy market to work correctly. President Barroso acknowledged the fact that the Commission considers this as preferable and, in his interview with Agence Europe on 15 January, Energy Commissioner Andris Piebalgs expressed the same preference, going on to add, however, that he remains “open to discussion” (see our bulletin No.9344).
France challenges the very principle of unbundling. Back in December, before the Commission made its choice, the deputy industry minister, François Loos, had defended his country's model for the management of the internal energy market, including the “regulated tariff” mechanism. He stressed that the price of electricity in France is among the lowest in the world, and that energy independence is particularly high there. Consumers enjoy direct advantages, which is the aim of any competition policy. The central point of Mr Loos' argument is that the advantages enjoyed by the economy and consumers essentially derive from “sufficient and less expensive production capacities” (which is possible if producers are able to invest), and that, furthermore, the environmental conditions of production are at least as important as competition. Commissioner Piebalgs was in Paris on 17 January to personally defend unbundling, and Mr Loos announced that he would be presenting further proposals on the matter to the Energy Council on 15 February, in Brussels (see our Bulletin, No. 9347).
Too ideological? Etienne Davignon had at the same time stressed that, in Belgium, mergers between electricity producers (of which there were many in the past) had taken place for “valid economic reasons”, especially that of being able to finance nuclear power plants, which not only cost a great deal but which take a long while to redeem the outlay. He said: “Concentration is not in order to block the market but to be able to ensure investment”. Showing wisdom and moderation, the viscount had commented: “At European level, the Commission is seeking a way between historical reality and the resolve to safeguard competition. It is no easy matter”. He had nonetheless said that: “In some cases, the Commission is exaggerating. Banning a producer from holding a stake in distribution activity is exaggerated because distribution is regulated: if regulation works, it is not very important to know who the shareholder is. The network manager will do his job within the limits allowed by the regulation”. In his view, producers do not intend to maintain obstacles to market opening (it is not in their interest if they themselves wish to move on to other markets); their concern is to keep regular sources of profit”. Mr Davignon went on to conclude: “Europe adopts a somewhat ideological stance”.
Ms Kroes, for her part, bases her arguments on the conclusions of the inquiry report denouncing the incorrect functioning of the European energy market to the detriment of enterprise and consumers in general (see the summary on this by Christopher Dickson and Emmanuel Hagry in our bulletin, No. 9341).
As one can see, the “internal market” aspect of energy policy is the subject of doctrinal divergence, and one can understand why the Council president has simply announced his intention to “initiate a debate without prejudice on all possible options (…) and to discuss the advantages and disadvantages” of each, while pointing out that, in his view, one must first of all make all the existing rules work before starting up a new system.
From the nuclear option to hydrogen. There is the same division over the nuclear option. The Commission, as one knows, has not made a choice, confirming that it is up to each member state to choose. It has insisted, however, figures in hand, on the advantages of nuclear power for reducing climate risks and CO2 emissions. This presentation by the Commission met with disapproval from the adversaries and defenders of nuclear power alike. The former accuse the Commission of having neglected the risks and uncertainties inherent to this form of energy, thus forgetting its security obligations and the protection of future generations, while the latter reproach the Commission for not having had the courage to set targets for reducing harmful emissions (that nuclear power avoids). Debates are particularly heated at both national and member state level, and they also cover the possible construction of new power plants and the extension of the working life of existing power plants.
The new elements which appear from time to time sometimes go one way, sometimes the other. That is why, more often than not, it is unfortunately impossible for non-specialists to form an opinion. Although experiments described by the magazine, “Nature”, indicate that zircon (in which long duration nuclear waste could be stored) loses its perfect crystalline structure after 210 years, and its stability after 1,400 years (whereas plutonium needs 24,110 years to lose half its radioactivity), what is the answer? All the more as at the same time we are hearing more and more often that waste is now well under control.
The battle will continue to rage far above our heads until political decisions have to be made. And, in some cases, objective knowledge will not be determining.
The same uncertainties surround the possible future of hydrogen as a clean and performant energy source,, as even specialists and scientists have questions to be answered (see our European Library No. 712 of 12 December). Let us therefore leave such aspects to one side as they will not be answered for years to come - let us stick with the here and now.
Additional confusion. I would therefore invite you to give your attention to two texts by Aminata Niang published in yesterday's bulletin, concerning:
a) the campaign launched by the European Parliament Greens on the risk of excessive biofuel development, that could entail the destruction of tropical forests and food shortages. It is right to alert the public to this, but I believe these risks can be kept under control;
b) the initiatives and the intentions of the European Commission regarding the quality of fuel for vehicles and recourse to the regulatory method for fixing new CO2 emissions ceilings for cars, with a binding timetable. Motor vehicle producers have already reacted forcefully to this - a tricky dossier to be followed closely. (F.R.)