Europe Risks Energy Crisis From Green Subsidies, CEOs Warn
The heads of 10 of Europe’s biggest utilities called on the European Union to overhaul its energy and climate policies and curb green subsidies that sap the region’s competitiveness.
The companies, which include Germany’s EON SE, RWE AG (RWE), and France’s GDF Suez (GSZ) and represent half the region’s generation capacity, warned that current policies are discouraging investors and steering Europe towards an energy crisis.
“In the EU, companies pay three times the price of gas in America, twice the price of power,”Eni SpA (ENI) Chief Executive Officer Paolo Scaroni said at a press conference in Brussels today. “How can we dream of an industrial renaissance with such a differential?”
Enel SpA (ENEL) Chief Executive Officer Fulvio Conti called for an end to “Robin Hood” taxes and aid. “I’d rather see the Sheriff of Nottingham for most of the legislation. Let’s restore normal and eliminate state intervention and subsidies.”
The EU started a debate in March on a new set of climate and energy rules as the 28-nation bloc seeks to ensure security of supply and cut greenhouse gases. A framework for the decade to 2030 is needed to give investors legal certainty, spur innovation and prepare for a global climate deal, the European Commission said in a consultation paper at the time.
At the same time, the EU is considering options to overhaul the 53 billion-euro ($72 billion) carbon market after emission-permit prices slumped to a low of 2.46 euros in April amid a record glut of permits.
In addition to broader reforms in coming years, the emissions-trading system needs a short-term fix, GDF CEO Gerard Mestrallet said. “Without a carbon signal, we will not have any visibility, and we will not be in a position to invest.”
The collapse of the carbon price has made coal, the dirtiest source of power, also one of the cheapest. The switch to coal and requirements to buy renewable power have sapped the profitability of natural-gas-fired plants, leading to the widespread shutdown of combined-cycle gas turbine plants, which are among the cleanest.
Fifty-one gigawatts of the bloc’s electricity capacity is mothballed, equivalent to the combined capacity of Belgium, the Czech Republic and Portugal, the utilities said in a brochure given to reporters today.
Energy consumers should be billed only for energy, said EON CEO Johannes Teyssen who also is president of the Eurelectric industry lobby. At present European consumers help pay for subsidies to promote renewable-power generation through larger energy bills.
“More than 50 percent of the bill European consumers are paying today has nothing to do with power generation and networks, and that’s because of political decisions,” said Iberdrola’s Ignacio Galan. “That has already created a lot of distortions.”
Energy bills rose 17 percent in four years for domestic consumers and 21 percent for industrial consumers, the utilities said today in the brochure.