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Interview with Commissioner Piebalgs (29 March 2007) 1. The European Council has clearly called for a third liberalisation package. Six months ago this would not have been expected. How do you see this developing? When will the package be put forward, and what do you expect it to contain? It is absolutely correct that this represents a major step forwards; Member States now all recognise that the present state of play on Europe's gas and electricity markets is no longer acceptable. Put quite simply, it is failing to deliver the levels of effective competition that our citizens and businesses have every right to expect. In addition, I detect a clear change of view in many of Europe's major gas and electricity companies. The reaction to the lack of effective competition presently characterising the EU's markets has been to implement far-reaching price caps in many Member States. Whilst I understand why some governments resort to this instrument, it cannot be the way forward. Generalised price caps can only raise entry barriers, preventing the development of real competition and, over time, leading to under-investment. The real priority has, therefore, to be the rapid creation of real Europe-wide - and this means cross-border - competition. I am determined that by the end of this Commission it is possible to state, unequivocally, that all the structural measures are in place to ensure the rapid completion of Europe's energy markets. This means that difficult decisions will now need to be taken during the next year - both by the Community institutions and by the Member States. I intend to table a new proposal, in the form of a draft Directive, before the end of the year. At present, we are carrying out detailed impact assessments on the precise measures that will be proposed, but the Strategic Energy Review clearly points out how the Commission considers that we now need to proceed. 2. The Council failed to agree on the proposal for ownership unbundling. You have said that your basic objective is to create a real, integrated and competitive European Market. How do you think that further progress can be made? First of all it is absolutely wrong to consider that the European Council has rejected ownership unbundling - this question is completely open. The Commission has a clear view on this, which will not change. Ownership unbundling is by far the best manner to remove the possibility and incentive for vertically integrated companies to frustrate the abilities of rivals to compete. Equally importantly, it is the only way to really overcome the disincentive on network and generation investment by incumbents that results from a combination of vertical integration and market power. This debate is far from over. In the Strategic Energy Review the Commission proposed two options - ownership unbundling (the preferred option) and a strengthened form of Independent System Operator, "what we call, ISO+". In this latter option the operation of the transmission grid, including maintenance and development, must be entrusted to a completely independently run third company - a form of blind trustee over the assets. I should emphasise that the "ISO+" model is very much a second best as it fails to completely overcome the problems connected to investment incentives and also requires much more intrusive and expensive regulation - at both national and EU level - as well as the greater continued use of competition policy instruments. As yet I have not seen any alternative model to ownership unbundling and the ISO+ that provides equivalent guarantees in terms of non-discrimination and investment incentives. I think that as the debate continues, it will become clearer and clearer that courageous decisions are necessary here. 3. The Council appears to have supported your proposal for a type of ERGEG+ model to facilitate cross-border trade. How do you expect this to work in practice? What is needed is a clear and effective decision-making procedure to enable the mechanisms and rules necessary to make cross-border trade in electricity and gas work properly. The present arrangements have not succeeded. We need really harmonised congestion management mechanisms, gas standards, network security standards, exchange rules, balancing arrangements, capacity allocation mechanisms to name just a few. Equally, the network operators - through ETSO and GTE - need to collaborate better - one cannot set such rules in a vacuum. There are a number of possible options, from formalising the role and decision-making powers of ERGEG in a type of European Central Bank model, to setting up an entirely new body. For the Commission, this is not the most important question; we simply need a mechanism that will enable effective decisions to be taken quickly. This is the question on which we are focussing over the next few months. 4. The Council has endorsed a 20% renewable target and 10% minimum biofuels targets for each Member State. This is a tremendous change in approach by the Member States given the fact that the last time that they had to address the issue of renewables targets - the Biofuels Directive - they rejected binding targets practically by unanimity. How do you expect that this will be translated into reality - when can we expect a new renewables Directive? First of all, it is right that the acceptance by Member States of legally binding targets is an enormous change. This shows how much the debate on climate change and energy security has moved on in the last year or two. This is concrete evidence of real commitment by Europe to lead from the front. I am absolutely convinced that by the end of this decade this decision will be vindicated as being of enormous benefit to the EU. I expect the table a new renewables Directive, covering not just national targets but equally the measures that will help Member States take the concrete measures to meet them, later this year. 5. The Council has also endorsed your energy efficiency proposals - improving Europe's energy efficiency by 20% by 2020. What are your priorities in order to make this a reality? I have four main priorities. Firstly, to speed up the use of the Eco-Design Directive so that improved energy efficiency minimum requirements can be introduced for a wide range of equipment. This can make a real difference. Obviously, this cannot be done overnight, we have to get the standards right. Nonetheless, by the end of the Commission I would like to see new standards in place for a wide range of products, from street to domestic lighting, white goods, stand-by equipment to mobile phone chargers. Secondly, I want to look again at the Buildings Directive (so it can cover more premises without however creating bureaucracy) and the energy labelling Directive. Third, I want to tackle the transport sector through car energy efficiency and by other means. Fourth, I think the proposal in the Commission's Strategic Energy Review for an international agreement on energy efficiency - if successful - has the potential of massive savings of CO2. If we could achieve an agreement at the Beijing Olympics, establishing for example a mechanism for setting international minimum energy efficiency requirements for an increasing variety of internationally traded products, this would be a fantastic achievement. 6. You have described the Commission's proposals as a "new industrial revolution". This is another way of saying that the 20% renewable and 20% energy efficiency targets are incredibly ambitious. How do you think that they will be achieved in practice? It is common ground that if we are to prevent the worse effects of global warming, the cuts in greenhouse gas emissions that the developed world will need to make by 2050 is by over 50% of 1990 levels - and probably by significantly more than this. This is no longer an option. It is an obligation to our children and grandchildren. Remember that if we fail do deal with climate change we will be leaving them with a legacy that they can do absolutely nothing about- the CO2 that we emit today will stay in the Earth's atmosphere for 100 years. With this in mind these targets have to be met. They are ambitious, they can be achieved, but it will require a real determination by all levels of European politics, and by every citizen. I see this as an opportunity for Europe. Alternative - and green - energy is probably the world's fastest growing market today, and this is just the tip of the iceberg. Renewable energy produces exponentially more high quality jobs in Europe than importing more gas, oil and coal. If we succeed in becoming recognised world leaders in the area the rewards will be enormous. 7. The European Council has endorsed the Commission's ambitious approach to carbon sequestration - up to 12 Carbon Capture and Sequestration demonstration plants by 2020. How do you plan to turn intention into reality? Without carbon capture and storage the world will not succeed in bringing climate change under control. Europe - let alone the developing world - will never meet the targets that we need to agree for the post-Kyoto period. I am particularly pleased that the European Council has endorsed the Commission's vision on this. Like with renewable energy, those who master this technology and become world leaders in this area will reap huge rewards later. Later this year we will publish a first paper on how this might be achieved, and I hope to reach definite conclusions and table a concrete proposal in 2008. Whilst we have still to decide precisely how to meet this objective it is clear that this is a huge challenge. We will need to combine the talents and resources of Community institutions, the Member States and industry.  Other articles from March: List all messages of the previous month: February 2007 List all messages of the next month: April 2007 |