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The European Energy Challenge And Why It’s Time to Complete The Internal Energy Market By Dr.-Ing. Dr. rer.pol. Tobias Paulun


ON NOVEMBER 15TH the European Commission


presented a communiqué assessing the state of play of the European internal energy market, which it deems necessary to be completed by 2014. The communication titled “Making the Internal Energy Market Work”, specifically states that:


“An efficient, interconnected and transparent


European internal energy market will offer citizens and businesses secure and sustainable energy supplies at lowest possible cost.”


The communiqué calls on Member States to step up


their efforts to transpose and implement the existing EU internal energy market rules. Energy Commissioner Günther Oettinger said, “when it comes to gas and electricity, citizens and businesses are interested in two things – security of supply at any time and affordable price. We will best achieve this with a functioning European energy market.” Procedure-wise, the 3rd


energy market package


(Directives 2009/72/EC and 2009/73/EC) is the cornerstone of the integration of the gas and electricity market. It requires: (i) The unbundling of networks (the separation of network activities for electricity and gas from generation, production and supply);


(ii) Consumer protection assurances (particularly with regard to Member States’ obligation to protect vulnerable consumers, provide transparent billing and contractual information to consumers, establish a Single Point of Contact and an Alternative Dispute Resolution mechanism for the out-of-Court solution of disputes); and


(iii) The independent nature and powers of the national regulatory authorities.


So, the questions are, “what is the internal market,


where is it, and is it still the central priority in reaching the goal?” The communiqué represents a clear statement of intent from the EC. However, in reality, what we are seeing is an increase in discussions on energy politics and rules at national level, rather than on a collective level. For example, capacity mechanisms for investments


in the power sector and support schemes for renewable energy projects have both been implemented mainly on a national basis as opposed to a European level. Whilst there has been some progress, which has undoubtedly been made, there is still a significant gap and disparity between what is talked about in terms of European


goals and what is in reality implemented on a national scale in order to reach that overall conjoined European objective. To this extent, it is extremely important to address whether in actuality, Europe can keep up the momentum towards market integration, particularly given that 2014 is only a year away. After all, the Energy Commission has a continuum of directives, policies and regulations which indeed demands this. They always have done and will continue to do so. Take cost as an example. It would be clearly much


more straightforward and economical for all market participants if measures were to be implemented on a European level as opposed to ‘going it alone’ on a national level. From an EEX perspective, the market has historically always been truly European. With market participants currently trading from as many as 22 mainly European countries with a wide distribution of trading volumes, we are already aligned to the EC objectives. This is true of our asset class trades such as the gas and emissions markets. As an exchange, we have implemented effective cross-border cooperations and partnerships, such as the current development of a pan-European gas offering with France’s Powernext.


... there is little clarity as to a real


desire among Member States for full European harmonisation


However, major challenges remain. Not least from


a political and regulatory perspective, there is little clarity as to a real desire among Member States for full European harmonisation or whether some aspects of market design should remain at a national level. Clearly, we know that from a market perspective, there is a propensity – and capacity – for it to function at a European level. What is unclear is how domestic actions will really propel the Europeanisation of the market as a whole. It’s not enough for the EC to simply champion a deadline-driven European cause and expect definitive success. There needs to be proactive encouragement through the development of incentivised tools to induce positive outcomes. One area is how credibly the Commission can cultivate instruments to promote investment in sustainable, secure and competitive energy. A critical factor brings the issue back to national versus European. If investors have any doubt that the market will be ‘allowed’ to function on a European level through unilateral domestic policy, they will


December 2012 35


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