Liberalised and efficient electricity and gas markets
The liberalisation of electricity and gas markets at European level and the competition that should come from it are the best guarantees to obtain competitive prices and to ensure appropriate security of supply. essenscia recommends degressivity and a total cap on all additional charges and taxes – be they motivated by environmental, social or political reasons – at federal and regional levels.
Context
Until recently, electricity and gas were subject to a regulated monopoly within the European Union. At the end of 1996 and in mid-1998, two directives for the liberalisation of electricity and gas markets were approved. At the beginning of 2007, the European Commission published its « Energy Package », which contained numerous recommendations for the security of supply, climate policy and competitiveness of liberalised markets. A third energy legislative package is expected by the end of 2007. The European authorities have a strong desire for the rapid and effective implementation of a single energy market, in order to avoid being confronted with 27 different national markets.
Importance for chemistry and life sciences industries
Electricity and gas represent a significant portion (an average of 15 to 25%) of the cost of products coming from the energy-intensive basic chemical industry. For some products such as ammonia, chlorine, industrial gases, etc, this share can be even twice as much - or higher. A durable and secure supply of energy is therefore vital for the competitiveness of businesses in this sector. In this respect, it is important to note that various charges and taxes will increase the final price of electricity by 2010 from 0€ to 15€/MWh.
Sector’s position
essenscia is convinced that the liberalisation of the electricity and gas markets at the European level and the resulting competition between producers and suppliers are the best guarantees to obtain competitive prices and to ensure the adequate appropriate security of supply. Today, energy-intensive industries in Belgium and Europe are threatened by several deficiencies in the energy markets and call for appropriate temporary measures.
As far as various additional costs are concerned (green and CHP certificates, financing of the local authorities and the public social welfare (CPAS)…), essenscia has never been opposed to the objectives of these measures, but has opposed their financing, which was proportional to consumption quantities and thus unfair for large consumers. We have always suggested the alternative of financing by the general budgets of the State. Energy efficiency benchmarking and auditing voluntary agreements, in which the authorities undertake to limit the passing on of additional costs linked to energy measures to signatory companies of the agreement, are other possible solutions.
Despite some openings (such as degressivity and the cap on the “cotisation fédérale” (federal tax), the partial exemption from green certificates for large consumers and the promised cancellation of the so-called “Elia tax” (which finances Flemish communes), additional charges and costs are still a heavy burden on companies. essenscia insists on the rapid and coordinated establishment of a total cap on all these taxes.
essenscia also asks for an harmonised energy policy at the European level that integrates competitiveness, security of supply and a realistic climate policy.
Recommendations
To improve the current liberalisation process in Belgium (a transit country par excellence) its neighbouring countries, and throughout Europe, essenscia puts forward 10 propositions :
1. to secure nondiscriminatory access to gas and electricity transport grids
2. to harmonise operational rules of all national transport system operators
3. to ensure the independence of all regulators
4. to impose information transparency on all dominant players and all national transport system operators
5. to reduce step by step the dominance of incumbents
6. to guarantee balanced price-making mechanisms
7. to stimulate new investment
8. to diversify the primary energy sources for electricity production
9. to solve issues related to L gas
10. to guarantee access to gas storage capacities for industrial customers
Additionally, essencia proposes :
• to organise degressivity and a total cap on all additional costs and taxes – be they motivated by environmental, social or political reasons – at federal and regional levels.
• to find preventive and curative solutions for the unintended impact of « windfall profits » following the introduction of the European Emission Trading System (EU ETS)
• to quickly implement recommendations recently developed by the European Commission in its « energy package » in operational measures at the Belgian level.
Contacts :
Els Brouwers, ebrouwers@essenscia.be , tel 02 238 97 38
Isabelle Chaput, ichaput@essenscia.be , tel 02 238 97 67
Peter Claes, pclaes@essenscia.be , tel 02 238 97 35
Patrick Degand, pdegand@essenscia.be , tel 02 238 98 51