On January 22nd the European Commission (EC) released their White Paper on the 2030 climate and energy framework, in which they discuss amongst many other things, energy markets.
The EC’s energy price and cost analysis is clear. It outlines that for manufacturing sectors, differences in tax structure and labour costs, as well as shifting consumer trends and local market conditions, are far more relevant factors in investment decisions than increases in energy prices and climate policies in Europe.
The analysis of the EC confirms that energy prices have increased in Europe for the last 5 years, 4% per year on average for household consumers and 3.5% annually for industry.
It also reveals that renewable energies support is far from being the main cause of this trend. In fact, the low running cost of variable renewables helps to bring energy prices down in the wholesale market. As the Commission highlights, it is the lack of competition (market concentration of a few large companies ), the lack of grid infrastructure, and the lack of an interconnected market that stops these benefits being passed on to the consumer. The European Commission is again very clear when they state: “The major contributor to energy price increases is the commodity price of fuel,” something over which European energy policy has very little influence.
Energy efficiency will help to reduce dependence on fossil fuels imports, as gas, coal and oil prices are expected to continue to rise. Meanwhile shale gas explorations in Europe would not have any impact on energy prices.. All these facts are confirmed by the Commission’s own documents (i.e. the communication on Shale gas published on the same day). We therefore cannot understand why the EC is not putting forward ambitious and binding targets for renewables and energy savings in their 2030 framework proposal. Can anybody explain such a contradictory set of messages?
