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European Energy: Green Paper (again)

by afew Sat Sep 23rd, 2006 at 05:27:21 AM EST

OK, this is completely crazy, but I'm putting this up for discussion in hopes we might make a submission of it for the Energy Green Paper Consultation, that closes on Sunday 24th. What I've done is in the form of sections, or blocks, around a theme. The blocks may need linking.

Writeboards opened to comment and discuss drafting: Section 1 is Energy GP One, PW energygp1 ; Section 2 is Energy GP Two, PW energygp2 ; Sections 3 & 4 are Energy GP 3, PW energygp3.

from the diaries. - Jérôme


1. The interference of market ideology

The Green Paper contains substantial propositions, but far too much of it consists of unexamined and unargued assertions of an ideological nature. Getting at the substance involves sorting and setting aside political slogans ("energy for growth and jobs", "the new energy landscape of the 21st century"), and a relentless ideological overlay, which gives the reader the impression a technical document has been rewritten by the revolutionary market theory komissars.

Market ideology assertions are most often stated with no discussion or justification. For example, in the introduction, (page 3), in a series of bullet points that lay out undeniable facts like

·    Our import dependency is rising
·    Global demand for energy is rising
·    Oil and gas prices are rising

we are told :

Europe has not yet developed fully competitive internal energy markets. Only when such markets exist will EU citizens and businesses enjoy all the benefits of security of supply and lower prices. (...) Furthermore, the consolidation of the energy sector should be market driven...

This is presented as a declaration of fact, when it is a debatable, and far from generally accepted, proposition. On page 4 it is indeed offered as a question:

Is there agreement on the fundamental importance of a genuine single market to support a common European strategy for energy?

but, on page 18, an unequivocal response is given:

The EU needs to complete the internal gas and electricity markets.
(...)
These must be addressed as a priority; the Commission will reach final conclusions on any additional measures that need to be taken to ensure the rapid completion of genuinely competitive, European-wide electricity and gas markets, and present concrete proposals by the end of this year.

This has now become a declaration of intent to act rapidly. Between the two, the only justification for the need for further liberalisation lies in sermonising of this kind :

Sustainable, competitive and secure energy will not be achieved without open and competitive energy markets, based on competition between companies looking to become European-wide competitors rather than dominant national players. Open markets, not protectionism, will strenghten Europe and allow it to tackle its problems. A truly competitive single European electricity and gas market would bring down prices, improve security of supply1 and boost competitiveness. It would also help the environment, as companies react to competition by closing energy inefficient plant.

Definition of a European Commission Green Paper:

Green papers are discussion papers published by the Commission on a specific policy area. Primarily they are documents addressed to interested parties - organisations and individuals - who are invited to participate in a process of consultation and debate. In some cases they provide an impetus for subsequent legislation. The consultations can be accessed on the Your voice in Europe site.

White papers are documents containing proposals for Community action in a specific area. They sometimes follow a green paper published to launch a consultation process at European level. While green papers set out a range of ideas presented for public discussion and debate, white papers contain an official set of proposals in specific policy areas and are used as vehicles for their development.
(bolding mine)

We complained elsewhere about the biased nature of the Public Consultation on the Energy Green Paper. Just as a reminder, the issue of the internal energy market is presented in the Consultation in Question 1 :

1. In order to achieve the goal of a genuine single market, what new measures should be taken...?

The single market is not presented as a subject for discussion. It is a predefined goal, assent for which is assumed.

The Energy Directorate seems to have confused green paper with white, and public consultation with a manipulative online poll.

2. Beneath the claptrap, contradictions

The Green Paper claims that the energy situation calls for treatment at EU level, with which we wouldn't disagree. It proposes:

·    EU-level regulation and regulatory bodies
·    EU-level support and information bodies
·    a single electricity grid and a harmonised gas infrastructure
·    EU-level negotiation with foreign suppliers
·    EU-wide incentives for innovation
·    EU intervention in energy efficiency
·    EU intervention in biomass use

all of which make sense. But at the same time there is the insistence on pure market theory:

·    further liberalisation is said to be absolutely necessary
·    huge investment is to be provided by market forces
·    public investment at MS, regional, or local level is not mentioned
·    current big MS-based "champions" are to give way to "companies looking to become European-wide competitors".

On this last point, Commission President Barroso made clear, in an interview with the Financial Times, 11/09/2006, that

Europe's national energy giants need to be exposed to greater competition or broken up to transform the sector (...)

new laws are the only way to guarantee increased access to Europe's energy market, and to give muscle to regulators to break the grip of monopolistic suppliers. (...)

Aides say he wants to create a framework where four or five big pan-European energy companies compete across borders for retail customers and carry enough clout to drive hard bargains with suppliers.
(bolding mine)


(Once again, we are forced to note that no discussion is on offer and the Commission intends to move ahead with a pre-determined agenda).

There is in fact a proposal here to shift huge power to EU level while forcing Member States to open their markets to a new private-capital oligopoly. This is based on the reasonable proposition that the energy sector is strategic for the EU as a whole; but it denies Member States the right to define it as a nationally strategic sector and to make policy accordingly. On the one hand, we are requested to accept "competition" between Member States in fiscal and social matters, on the other, that "competition" in energy means four or five big new private corporations and no say (or very little) for Member States. This appears ideologically driven and contradictory.

A further contradiction between up-graded public intervention at EU level, and down-graded public intervention at national, regional, and local levels, appears when investment is considered. The Green Paper makes the case for a need, over twenty years, of a one trillion euro investment, mostly required for replacing plant. Its constant assumption is that markets will provide this investment, indeed, that markets will make the right choices. Yet market investment in energy is not technologically neutral. Public investment bears less financial cost (interest rate, typically, at 5%), than private (with a typical interest rate of several points more). Private investment also calls for as high a return on investment (ROI) as possible, and as soon as possible. Private investment in electricity generation, where a great deal of investment needs to take place according to the Green Paper,  is naturally skewed away from  high-capital-outlay projects (renewables, nuclear) towards lower-capital-outlay projects (coal but above all gas).

Who is to invest in electricity generation that provides reasonable, stable prices over the long term (because fuel costs play little or no part in fixing the final Kwh price of renewables or nuclear), when private capital will tend to go towards gas, which offers less stability and the prospect of increasing prices? Why should Member States (and regions and local authorities) be asked to provide balance here, when the Commission is proposing to take away a very substantial part of their power to make policy choices?

3. What we don't have - and illusions about what we might have

The EU's indigenous sources cover about half of its energy consumption at the moment. This will drop considerably as indigenous fuels like oil and natural gas dwindle, and as demand (as projected by the Green Paper) rises. Renewables and nuclear are "indigenous" energy sources, of course, and biomass (including second-generation biofuels) can be developed. But, by and large, we depend on imports, and will do so increasingly.
Imports mean oil, literally, and oil, figuratively, since natural gas prices tend to follow the price of oil. The Green Paper offers some wishful thinking on the future availability of oil (120mbd global production in 20-25 years), but admits:

it remains an open question at which price oil will be made available
to the global market under a "1.5-2% annual increase" scenario. (Working Document, p. 20)

Yet oil consumption is predicted at a similar level in 2030 as in 2000, with natural gas at a much higher level (and imported gas at double its present level):

Free-market choices show in this graph: a substantial share for coal, and more gas (both offering a quicker and better ROI in electricity generation). The share of imported gas is really important, because it leads logically to another of the Green Paper's main propositions: negotiating new partnerships - presumably with long-term price agreements - with foreign partners, above all Russia, our principal gas supplier. Negotiating at EU level is not necessarily a bad idea, and neither is entering into long-term price agreements. But the assumption that the EU is going to go on getting low-priced gas as a result of this is extremely likely to turn out to be false. To put it baldly, there is no reason why Russia should agree to arrangements that go against its interest. Oil prices are likely to rise over the coming 20-25 years, and so are gas prices.

This is all the more significant in that gas, thanks to an investment playing field tilted in favour of private finance, will take up a greater share of electricity generation, and this, through marginal cost pricing, is likely to draw electricity prices higher – despite the contention (repeated in the Green Paper), that markets bring prices down.

By basing policy on over-optimistic assumptions about future prices, and by its insistence on market investment mechanisms, the Commission is driving the EU into the wall.

The Number One plank

The essential, N° 1 plank of an EU energy policy is lacking: demand reduction. This certainly includes energy efficiency, and the Green Paper makes good proposals in that field – though more teeth might be indicated, with clear standards set, and the car industry in particular required to follow.

But energy efficiency will not be enough. If we wish to be free of dependence on imports and of rising prices, then we will simply have to reduce energy consumption.

This means a different transport policy. It is surprising that the Energy Green Paper makes no mention of this. It is urgent to make an absolute priority of rail and water for freight (with an end to all talk of prioritising air and road), and to invest in first-rate, attractive public passenger transport.

It also means tax incentives to reduce energy consumption. It means Community-wide programmes to inform and explain, and to start genuine public discussion of the issues. The institutions of the EU and those of Member States should work together on this with NGOs and representatives of civil society.

We have a choice between carrying this out in an open, democratic manner, with public involvement in building stable, long-term policy, or finding ourselves abruptly obliged to think again by price rises that force the issue (while hurting the least fortunate of our fellow-citizens). In the latter case, it is much less likely that demand reduction will find acceptance and support from the majority.

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Sorry this is late, I just couldn't get to it before.

I'm writing the last bits now.

For Jerome's take, see this diary.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 10:22:15 AM EST
It reads very well - but then I'm intimately familiar with the issues. It would be great if non-specialists could comment on how easily understanble this is.

I can take some time this week-end to work on something.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Sep 22nd, 2006 at 10:47:58 AM EST
[ Parent ]
If it's a paper for the Consultation, I think we can assume they're supposed to understand what it says.

But, if any of it were to be useful for a broader documant, (thinking of Energize Europe), yes, then it would be useful to know how understandable this is and how much explanatory text to add.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 11:24:31 AM EST
[ Parent ]
the real cost of electricity

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Sep 22nd, 2006 at 10:50:13 AM EST
[ Parent ]
Recommended.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 11:51:28 AM EST
[ Parent ]
The first section is up in writeboard, PW energygp1.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 12:10:14 PM EST
Section Two is here, PW energygp2.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 12:23:49 PM EST
[ Parent ]
Section Three, PW energygp3.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 01:00:08 PM EST
[ Parent ]
I added the fourth section into the third.

So there are three writeboard pages in all.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 01:12:26 PM EST
[ Parent ]
What's the status of the open letter?

Those whom the Gods wish to destroy They first make mad. — Euripides
by Migeru (migeru at eurotrib dot com) on Fri Sep 22nd, 2006 at 12:14:01 PM EST
You mean what reactions have we had? None, to date.

The letter was sent to Piebalg's "own" e-mail address and to DG-TREN; to Wallström's "own" address, her site contact, and her press assistant; to the chairs of the ITRE Committee of the EP.

Alex and I sent the French version to seven French MEPs, of whom two are on the ITRE Committee.

Afaik, no one volunteered to send the English version to UK or Irish MEPs.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 12:29:44 PM EST
[ Parent ]
Well, I meant the distribution list. But knowing there's been no reaction is good, too.

Those whom the Gods wish to destroy They first make mad. — Euripides
by Migeru (migeru at eurotrib dot com) on Fri Sep 22nd, 2006 at 12:31:06 PM EST
[ Parent ]
I think I said I would translate this into Swedish a bit ago. I killed a few hours on this and came up with pretty much nothing. I think it might be to hard for me to translate into a language which, though my mother tongue,  I haven't spoken or written in much for quite a number of years. Sorry.
by someone (s0me1smail(a)gmail(d)com) on Fri Sep 22nd, 2006 at 12:39:40 PM EST
[ Parent ]
No problem, someone. Alex and I found it hard to translate. Thanks for trying.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 12:44:26 PM EST
[ Parent ]
Send me both versions,  next week I see personally our green MEP, I'll shove it under his nose.

The struggle of man against tyranny is the struggle of memory against forgetting.(Kundera)
by Elco B (elcob at scarlet dot be) on Fri Sep 22nd, 2006 at 12:41:21 PM EST
[ Parent ]
Done.

Thanks.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 12:50:58 PM EST
[ Parent ]
(OT to the thrust of the diary...)

Afew, the reason I didn't send a copy to Caroline Lucas (my MEP) is that...I didn't know how to phrase my introduction.

I understand in a very roundabout (round and round!) way the issues, but as I said before, I wouldn't be comfortable debating the issues (due to my lack of knowledge.)

But as a front man for an ET-agreed letter ("For all comments or extra details please refer to ET [name diary, person etc.."), I'm happy to send it off to her.

So, a paragraph...

Dear Caroline (Ms. Lucas?)

Please note...(ach, I'm stuck at the beginning!)...As a member of European Tribune (no)...European Tribune is...(no!)...You may be aware that the Green Paper on...("You may be aware"..?!)

Hmmm...

Dear Ms. Lucas,

The following letter has been sent to [Commissioners?] [the Rt. Hon.  an honorific here?] Piebalg and Wallstrom regarding [one sentence outlining the point of the letter.]

I hope you are also interested in....[see what I mean?  Sommat along these lines.]

Could you please contact...[request for her to follow up with the Commissioners if interested...wording...wording!]

Yours,

rhg

--------------------

But first things first (the contents of this diary.)

(After that, if you still think it would be useful for me to send a copy to Caroline, help re: the above would be gratefully received.)

(Also, a standard(ish) paragraph could be used by anyone else who wanted to contact their MEP.)

(A bottle of whatever dings your bell for all the hard work you've put in.)

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Sat Sep 23rd, 2006 at 06:35:52 AM EST
[ Parent ]
Caroline Lucas was one of the MEPs I thought it might be worth contacting. There's a session in Strasbourg starting on Monday (I think), so it would be a good time to send things out in hopes (hope keeps you alive, as the French say) some of them may react to this and even talk about it (but that is probably a lot to hope for...)

In fact, a good reason for sending out copies to MEPs is that this is leverage on the Commissioners -- the letter is out there and can't be as easily ignored. (Same logic applies to sending to two commissioners).

This is the covering e-mail I sent to French MEPs, roughly translated into English :

I live and vote in South-East England, which you represent for the Green Party in the European Parliament. I'd like to let you know the indignation (or some such word) I feel about the public consultation organised by the European Commission's DG-TREN on the Energy Green Paper.

I'm a member of an international forum for civic debate, The European Tribune, (http://www.eurotrib.com), where, along with political, social, and cultural topics, energy and the environment receive considerable attention. Hoping to make a collective contribution to to the Green Paper Public Consultation, we were astonished by the procedure -- in our view, restrictive and partial -- set up by DG-TREN. In protest, I and a dozen other EU citizens signed (13/09/2006) an open letter to Energy Commissioner Andris Piebalgs, and Communication Commissioner Margot Wallström. A copy of the Open Letter is attached as a pdf file. It explains in more detail our objections to the limits imposed on citizens' expression and what we see as a manipulative way of questioning opinion.

I'd be interested to hear your reactions about this, and would like to ask you, if you share our opinion of the consultation procedure, to make your views known to the two commissioners concerned, and also to other MEPs. At The European Tribune, we think this is a matter of democracy. European citizens should not be kept out, by means of a skewed online poll, of a vital debate to which big private interests have, no doubt, easier and less transparent access.

You could copy in the list of signatories from the bottom of the Open Letter, saying : "Here is the list of signatories" or something less obvious as wished. The list, with a number of different countries lined up, might help to make the reader look twice.

Embed a link to ET where it's mentioned. I don't know if it's worth putting up links to diaries. Don't want it to look too spammy.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Sep 23rd, 2006 at 08:39:48 AM EST
[ Parent ]
BTW, Caroline Lucas has two e-mail addresses given here. It would be worth sending it to both.

I just remembered that Caroline Lucas is on the Industry, Trade, Research, and Energy (ITRE) Committee of the EP. The chair and two of the vice-chairs of this committee have been sent the letter, as have two French Socialist members.

You could include, before the final paragraph, something to this effect:

"Several members of the EP's ITRE Committee, of which you are a member, have been sent a copy of the Open Letter (including the chair and vice-chairs)."

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Sep 23rd, 2006 at 09:11:35 AM EST
[ Parent ]
Confirmation here that the EP will be sitting in Strasbourg next week, from Monday 25th to Thursday 29th.

So it's still time to buzz MEPs with the Open Letter, if anyone can do it.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Sep 23rd, 2006 at 01:12:59 PM EST
[ Parent ]
Gah, I meant to, it just slipped my mind.

I'll mail you, if you think it's not too late.

by Metatone (metatone [a|t] gmail (dot) com) on Sat Sep 23rd, 2006 at 09:05:42 AM EST
[ Parent ]
It's not too late -- particularly sent to a europarl e-mail address.  

Shall I send it to your gmail account or wait for your mail?

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Sep 23rd, 2006 at 09:20:30 AM EST
[ Parent ]
Feel free to send it to the gmail.
by Metatone (metatone [a|t] gmail (dot) com) on Sat Sep 23rd, 2006 at 09:38:31 AM EST
[ Parent ]
Recommendation to Priority area 1, item (iii) (Investment in generation capacity): Given high capital expenditures (and therefore sensitivity to interest rate movements) involved in construction of carbon-friendly nuclear (and wind) power plants, EU should pay an explicit attention to and undertake efforts to facilitate liquidity in the interest rate swap markets.

Priority area 6, (ii) (a). Green Paper recommendations here are already partly obsolete, as Russia expressed its displeasure with the current Energy Charter, and especially the Transit Protocol. Instead, "the EU should have a policy of non-interference with purchase of domestic energy assets by foreign suppliers, combined with a rigorous implementation of the existing anti-monopoly laws". As this is a stated goal of Gazprom in particular, reciprocal steps are bound to happen. "The Commission agreement to consider energy security of producers as well as consumers, and to relax its objections to long-term contracts, should be applauded;  joint efforts towards monitoring of the transit conditions in non-EU countries would serve to increase the mutual trust as well".

by Sargon on Fri Sep 22nd, 2006 at 12:29:07 PM EST
Thanks, Sargon. I'll leave the interest rate swap markets to those who understand them better than I do!

The point on Russia is well taken. For the moment I have simply written that Russia cannot be expected to act against its own interest. A number of things have happened since the publication of the Green Paper to show that Russia will not in fact do so.

One such event was Barroso's visit to Putin, after which Putin was so annoyed he made his Chinese overtures in Beijing.

The main thing is that the idea the EU is going to strongarm its way into Russian gas is a non-starter.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 22nd, 2006 at 12:41:21 PM EST
[ Parent ]
afew, you know I greatly appreciate/admire your efforts on this issue.

But you should also know that I'm totally under-qualified to talk about energy policing. I have a few ideas, but each time I look them up I find that people have had them before, long before.

So instead of chipping in, I'll just come up with a few trivialities about energy conservation / recuperation:

  1. In Départements of France, such as Vendée, where it's customary to "faire la bise" (kiss on the cheeks to say hello or bye) with 4 kisses, reduce it down mandatorily to 2. I thought of this yesterday when a couple of friends dropped me home and I kissed each of them goodbye twice (as is customary in Toulouse) with their car engine still running.

  2. Install hot water recuperation pipes in showers so that used water that's still hot can be used to regenerate some energy. And perhaps faucets for hot water recuperation too, so that when you have someone over, to whom you propose a tea, and they say first say "ok", but once the water is boiling say "changed my mind / shit got to go", you can at least pour the unused hot water into that faucet.

  3. Install energy generation mechanisms on steps of staircases everywhere (ie. you push on it when lifting your leg). Since everyone's getting fatter, the extra effort required to climb up the stairs should be met not with extra food consumption but better health ... and energy.

  4. While we're on stairs, ban escalators (or at least put them ALL on "stop mode when unused", something you see here and there ... if it's proven that starting them up again and detecting motion doesn't consume as much as letting them run all the time, at peak usage times).
 
by Alex in Toulouse on Sat Sep 23rd, 2006 at 01:43:16 PM EST
I have circulated a draft of the energy policy paper by email to those I know can and want to help on the topic. If you have been forgotten, please drop a line to afew or me to get a copy. The requirement is that we need input by tomorrow to send something out tomorrow night or on Monday at the latest.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Sep 23rd, 2006 at 02:13:47 PM EST
ok, I'm interested to see that draft, email adress below works.

The struggle of man against tyranny is the struggle of memory against forgetting.(Kundera)
by Elco B (elcob at scarlet dot be) on Sat Sep 23rd, 2006 at 02:38:25 PM EST
[ Parent ]
well done guys, esp afew!

i've sent a link (and invitation to participate) to alfonso pecoraro scanio, the green party leader here in italy.

if someone wants to write hime directly, his email is a.pecoraroscanio@verdi.it

i read the comments to his latest blog entry about renewables.

many are pissed at his voting for a pardon and jail release that included a crew of whitecollar criminals, that apparently only di pietro voted against.

others castigate him for not doing more for ev etc.

comments don't show up immediately..

mmm, maybe i should hip them to scoop too!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Sep 24th, 2006 at 03:50:33 AM EST
We need just one bit of input to finish off the first section of the current draft (over at writeboard)
we are told:
Europe has not yet developed fully competitive internal energy markets. Only when such markets exist will EU citizens and businesses enjoy all the benefits of security of supply and lower prices. (...) Furthermore, the consolidation of the energy sector should be market driven...
This is presented as a declaration of fact, when it is a debatable, and far from generally accepted, proposition. [Some references would be useful here. Do any of the FT's more sensible columnists have something that could be quoted?]


Those whom the Gods wish to destroy They first make mad. — Euripides
by Migeru (migeru at eurotrib dot com) on Sun Sep 24th, 2006 at 09:06:46 AM EST
Look here for engineer's view, which probably could be cited at this point.
Deregulation of the electric power industry was a bad idea. It resulted in a complete industry restructuring, an increase in costs, and a decline in reliability. While the prior procedures had problems, mostly caused by poor regulatory procedures, doing away with regulation was not the answer, improved regulation was. If a car has a transmission problem, you don't solve the problem by replacing the engine.
Academic economists are mostly pro-deregulation, but claim that it was never done properly, at least in the USA, see arguments by a notable proponent Lynne Kiesling from NorthWestern U.
by Sargon on Sun Sep 24th, 2006 at 10:54:36 AM EST
[ Parent ]


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