Europe’s battered utilities redouble EU lobbying efforts

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Leading European energy companies have once again come together to lobby policy-makers in Brussels for changes in energy policy to address what they have previously described as the “perilous situation facing the energy sector”.

Faced with what they say is the failure of existing policy, the heads of nine companies – Enel, Eni, E.ON, Gas Natural Fenosa, GasTerra, GDF Suez, Iberdrola, RWE and Vattenfall – have together formulated a series of proposals aimed at “re-building Europe’s energy policy”.

2030 policy framework: The initiative is partly a plea for changes to current policies but the companies involved are also keenly aware that the European Commission is working on formulating a 2030 policy framework for climate and energy. A consultation exercise, which began with the publishing of a Green Paper in March, ended in the first week of July.

Announcing its consultation, the commission said: “On the basis of the views expressed by member states, EU institutions and stakeholders, the commission intends to table the EU's 2030 framework for climate and energy policies by the end of this year.”

Thus the comment by the companies that: “These concrete proposals are also being presented to key European heads of state or government with a view to enhancing the prospects for the February and March 2014 European Council meetings dedicated to energy issues.”

The proposals cover three overarching objectives: “to limit soaring energy bills”, “to guarantee a reliable electricity and gas supply”, and “to reinforce Europe’s climate ambition”. They were presented to a European Parliament hearing earlier this month – attended by the European Commissioner for Energy, Günther Oettinger – by the CEO of GDF Suez, Gérard Mestrallet, and Eni’s  CEO, Paulo Scaroni. The hearing was a follow-up to a meeting before the European Council in May, attended by the CEOs of eight of the companies; Vattenfall, a Swedish energy company active in several EU countries, is a recent addition to the group.

Highlighting risks: The companies are increasingly concerned that their efforts to attract private-sector investors have been hampered by current uncertainty over the likely return on investments, partly because of “the lack of a clear, foreseeable and objective energy policy framework based on stable and predictable regulation”.

“As a result,” they claim, “European industry can neither fulfil its potential as a source of growth and employment nor play a key role in establishing a dialogue with producing countries. Energy security of supply is no longer guaranteed, carbon dioxide emissions are currently on the rise, investments in the sector are not happening, and energy bills are rising sharply.”

Among the policies proposed to limit energy bills, the companies propose that consumer bills should reflect “the market-based cost of energy”, rather than bills being used as “vehicles for financing other policies”. They argue that the least mature renewable energy technologies should be supported by enhancing R&D efforts rather than by production subsidies. The most mature technologies should become part of the “regular market process”. In short, the companies feel that subsidies have become over-generous and unsustainable.

Proposals regarding supply reliability include “utilising all existing power capacity supply contributing to the security of supply rather than subsidising new capacity construction that may undermine a level playing field between competitive technologies”. The companies would also like the establishment of guidelines for capacity payments to be speeded up. A further proposal is that gas supply should be diversified by routes and sources, including through unconventional production, such as shale gas.

As for climate ambitions, a primary concern is the need to fix the currently ineffectual carbon market by implementing measures to re-balance supply and demand, and by expanding the market’s application to include other carbon dioxide emitting sectors. The companies would also like to see an “ambitious but realistic” target for greenhouse gas emissions reduction by 2030.

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