Will there ever be a European Gas and Electricity Market ?
A year ago, I would have responded to this question rather positively. Nowadays, I am not so sure. My relative optimism before was based on the replacement of a group of monopoly-holding (at least regionally) national operators, by an oligopoly of operators with a sizeable proportion of their activity outside of their countries of origin. These included EON, EdF, RWE, ENEL, GDFSuez, IBERDROLA, VATTENFALL and others.
However, the trend has recently reversed: EON has sold its British, Italian and Central European distribution activities. EdF has ceased its distribution in Great Britain with the sale of British Energy, and more importantly in Germany has sold EnBW.
Why this reversal? The big groups have noticed that the states would not relinquish their roles in choosing production investments; that the public authorities, either national, regional or both, were persisting in intervening with sale prices; and that the prospects for profitable distribution were unfavourable. Moreover, decisions regarding intra-European networks take too long. And there were often inconsistencies in energy policies both within and between countries.
What to do from here? In this necessarily short editorial, I will sketch an adaptation of the EU energy policy which would be beneficial:
• Reinsert at the center of the EU strategy the objective of competitiveness:
o Admit that two national production models will exist side by side: one without nuclear power or preparing to cease nuclear activity, the other with nuclear power and having the aim of obtaining a quasi-renewable source with Generation IV.
o Treat all electricity equally, regardless of its source, in terms of transport, distribution and international networks.
o Enhance the powers of European transport and networking organisations with the aim of optimising the total cost of electricity provision (necessarily taking into account the irregularity of certain renewable sources).
o Prohibit governments from exerting any influence over wholesale or industrial markets and work progressively towards a total liberalisation of domestic prices.
o Efficiently manage the carbon market in the sectors covered by the EU Emission Trading Scheme (with an horizon longer than 2020 and price floors) and look into introducing a tax for other emissions.
I will add that in the 3*20, the key objective seems to be the reduction of greenhouse gas emissions on European soil. To include with this the savings caused by CDMs is a dangerous hypocrisy which will lead to the attainment of illusory objectives which will have been stripped of all sense.
Related centers and programs
Discover our other research centers and programsFind out more
Discover all our analysesThe Aluminum Value Chain: A Key Component of Europe’s Strategic Autonomy and Carbon Neutrality
The United States of America (US), Canada and the European Union (EU) all now consider aluminum as strategic. This metal is indeed increasingly used, especially for the energy transition, be it for electric vehicles (EVs), electricity grids, wind turbines or solar panels.
The EU Green Deal External Impacts: Views from China, India, South Africa, Türkiye and the United States
Ahead of June 2024 European elections and against the backdrop of growing geopolitical and geoeconomic frictions, if not tensions, between the EU and some of its largest trade partners, not least based on the external impacts of the European Green Deal (EGD), Ifri chose to collect views and analyses from leading experts from China, India, South Africa, Türkiye and the United States of America (US) on how they assess bilateral relations in the field of energy and climate, and what issues and opportunities they envisage going forward.
Electric Vehicles: A Strong and Still Understated Performance
Electric vehicles (EVs) are better for the climate – even in worst-case scenarios. Across its life cycle, a typical European electric car produces less greenhouse gas (GHG) and air pollutants or noise than its petrol or diesel equivalent. Emissions are usually higher in the production phase, but these are more than offset over time by lower emissions in the use phase. According to the European Environment Agency’s report on electric vehicles, life cycle GHG emissions of EVs are about 17-30% lower than those of petrol and diesel cars.
How Can the Green Deal Adapt to a Brutal World?
The European Green Deal has not been planned for the current extraordinarily deteriorated internal and external environment. Russia’s war in Ukraine, higher interest rates, inflation, strained public finances, weakened value chains, and lack of crucial skills pose unprecedented challenges.