1 dr. annette loske vik verband der industriellen energie- und kraftwirtschaft german federation of...
TRANSCRIPT
1
Dr. Annette LoskeVIK Verband der Industriellen Energie- und Kraftwirtschaft
German Federation of Industrial Energy Consumers
IFIEC Europe Chairwoman of WP Climate and Efficiency
Aspects of Climate Change and Environmental Aspects of Climate Change and Environmental PoliciesPolicies
Consequences for the Industrial Energy Consequences for the Industrial Energy Consumers in Germany and the EUConsumers in Germany and the EU
Sept. 14, 2005AEM-SVSE Conference, Prague
2
Federation of intensive industrial energy consumers (member companies primarily from sectors, in which energy costs really matter like chemicals, steel, non-ferrous metalls, glass, paper, cement etc.)
VIK membership represents about 80 percent of the German industrial energy consumption
Representative for the interests of the members towards the policy, the administration, the economy and the legislation in Germany and the EU
Consultant for the member companies in all energy, environmental and water related issues
Member if IFIEC Europe – the European federation of industrial energy consumers
VIK Verband der Industriellen VIK Verband der Industriellen Energie- und Kraftwirtschaft e. V.Energie- und Kraftwirtschaft e. V.
3
Climate Change Policy The EU Emissions Trading Scheme - Its Impact on the
Electricity Price
Renewable Energies Policy The Consequences for Industrial Energy Consumers
AGENDAAGENDA
4
Industrial Energy Users‘ warning about the Industrial Energy Users‘ warning about the threat of excessive price effects from EU ETSthreat of excessive price effects from EU ETS
Mechanism: The inherent flaw Effect: Excessive price effect
5
Price Development for Electricity Futures at the German Power Exchange EEX
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Jan04
Feb04
März04
April04
Mai04
Juni04
Juli04
Aug04
Sept04
Okt04
Nov04
Dez04
Jan05
Feb05
März05
April05
Mai05
Juni05
Juli05
Aug05
€/M
Wh
2005 2006 2007 2008 2009 2010 2011
Electricity Price Development Electricity Price Development since start of EU ETSsince start of EU ETS
6
Price Development on the Price Development on the COCO22-Certificates-Market-Certificates-Market
EEX CO2 - Index
5,00
7,50
10,00
12,50
15,00
17,50
20,00
22,50
25,00
27,50
30,00
25.1
0.20
04
01.1
1.20
04
08.1
1.20
04
15.1
1.20
04
22.1
1.20
04
29.1
1.20
04
06.1
2.20
04
13.1
2.20
04
20.1
2.20
04
28.1
2.20
04
05.0
1.20
05
12.0
1.20
05
19.0
1.20
05
26.0
1.20
05
02.0
2.20
05
09.0
2.20
05
16.0
2.20
05
23.0
2.20
05
02.0
3.20
05
09.0
3.20
05
16.0
3.20
05
23.0
3.20
05
01.0
4.20
05
08.0
4.20
05
15.0
4.20
05
22.0
4.20
05
29.0
4.20
05
09.0
5.20
05
17.0
5.20
05
24.0
5.20
05
31.0
5.20
05
07.0
6.20
05
14.0
6.20
05
21.0
6.20
05
28.0
6.20
05
05.0
7.20
05
12.0
7.20
05
19.0
7.20
05
26.0
7.20
05
02.0
8.20
05
09.0
8.20
05
16.0
8.20
05
23.0
8.20
05
30.0
8.20
05
€/t
Tagesnotierung Index Monatsdurchschnitt Index A. Loske 02.09.2005
7
30
32
34
36
38
40
42
44
46
48
25.1
0.20
04
08.1
1.20
04
22.1
1.20
04
06.1
2.20
04
20.1
2.20
04
05.0
1.20
05
19.0
1.20
05
02.0
2.20
05
16.0
2.20
05
02.0
3.20
05
16.0
3.20
05
01.0
4.20
05
15.0
4.20
05
29.0
4.20
05
16.0
5.20
05
30.0
5.20
05
13.0
6.20
05
27.0
6.20
05
11.0
7.20
05
25.0
7.20
05
08.0
8.20
05
22.0
8.20
05
Ele
ctri
city
Pri
ce, €
/MW
h
0
5
10
15
20
25
30
35
CO
2-Certificatesp
rice, €/t
Baseload Electricity Contract in 2006 CO2-Certifikatsprice
Correlation between Electricity and CO2-Certificates-Prices
Correlation: 0,98
Is there a link?Is there a link?
8
The major flaws in the EU ETS - 1The major flaws in the EU ETS - 1
Electricity Price Increases provide Windfall Profits for the Electricity Industry
Quantity:
RWE Trading: 1 € price increase in CO2-market leads to at least 0.49 € electricity price increaseprice increase since start of EU ETS about 16 €/t:
about 8 €/MWh price effect on electricity price
RWE – Harry Roels: 16 million t CO2 certificates purchase need per year, i.e. cost of 350 million € at 22 € per t CO2, about 1.8 €/MWh real cost from EU ETS for RWE
„The important point is not the windfall profit for utilities, but the other side of this coin – the windfall loss for electricity intensive industries that compete globally“ (analyst from Markedskraft)
9
The major flaws in the EU ETS - 2The major flaws in the EU ETS - 2
Missing Stimulation of Investment into CO2 Emissions Reduction Measures negative consequences from reduction measures within the scheme in the
form of less allowances granted in future polluter-earns-principle consequence of the current ET regime EU ET scheme reason for inactivity regarding climate change measures
within industry
Freezing Market Shares – Conflict with Competition Rules When incumbent players are granted allowances based on
grandfathering, i.e. their historical market share, any new player seeking market share will: cause to his competitor retaining revenues for allowances not used,
and have to buy the allowances necessary for his production.
Significant disadvantages for potential “winners” and significant advantages for potential “losers”
10
An Alternative ApproachAn Alternative Approach
Option of an output related CO2 emissions regime, granting allowances ex post adjusted, i.e. only depending on actual production based on a
relevant performance standard(at least or in the first step: for electricity industry)
Opportunity cost principle would not apply, since the opportunity “to use or to sell” would not exist.
The situation for the electricity producers changes from: if electricity is produced and delivered, the relevant amount of allowances can
not be marketed (in the present ex ante cap and trade system), to only if electricity is produced and delivered, the free amount of allowances
resulting from better efficiency can be marketed.
Allowances could be marketed only in case of a CO2 efficiency level higher than the established performance standards.
Output related system really gives incentives for CO2 improvement measures and rewards the more efficient player in the market. The polluter pays-principle is followed.
No freezing of market share. New entrants with more efficient technologies not hindered but rewarded by exceeding certificates compared to the benchmark
11
Correcting the failures of the Correcting the failures of the EU Emissions Trading SchemeEU Emissions Trading Scheme
Not only cosmetics and minor changes to the system for the next trading period !
Healing the major flaws of the system urgently !
Otherwise EU ETS has no chance to be accepted by others and to be exported to other parts of the world !
Urgent action needed:Current monitoring processNew NAPs for 2008 – 2012 to be presented mid 2006
Pressure from ÉU Member States is needed!
12
The Failure of the EU ETS and the Market The Failure of the EU ETS and the Market Power in the Electricity MarketPower in the Electricity Market
Thesis: Only in a market without functioning competition, the companies can really price in the EU ETS opportunity costs!
VIK has launched a complaint at the Federal Cartel Office to investigate a potential abuse of market power in the area of electricity prices and CO2-opportunity costs
Federal Cartel Office has opened an official investigation against RWE and E.on
13
Climate Change Policy The EU Emissions Trading Scheme - Its Impact on the
Electricity Price
Renewable Energies Policy The Consequences for Industrial Energy Consumers
AGENDAAGENDA
14
Renewable Energies in the EURenewable Energies in the EUVolume DevelopmentVolume Development
0
10
20
30
40
50
60
70
80
Austri
a
Belgium
Czech
Rep
.
Denm
ark
Estlan
d
Finlan
d
Franc
e
Germ
any
Greec
e
Hunga
ry
Irelan
dIta
ly
Latvi
a
Lithu
ania
Luxe
mbu
rg
Nethe
rland
s
Poland
Portu
gal
Slow. R
ep.
Slowen
ia
Sweden
United
King
dom
Per
cen
t o
f C
on
sum
pti
on
1997 (Basis Year of EU Dir.) 2002 2003 2010 Target acc. To EU Dir.
15
National measures installed with the objective to meet the targets
Often financed through surcharge on electricity price
In the meantime: in most of the EU Member States special regimes for energy intensive industrial comsumers
However: Financial burden for industrial consumers stays Substantial Unequal
Implementing the EU DirectiveImplementing the EU Directive
16
Renewable Energies in the EURenewable Energies in the EUThe Cost Burden for Industrial ConsumersThe Cost Burden for Industrial Consumers
0
1
2
3
4
5
6
7
8
9
10
11
12
13
Austria
Belgiu
m
Czech
Rep
.
Denm
ark
Finla
nd
France
Germ
any
Italy
Nether
lands
Sweden UK
€/M
Wh
50 GWh/a 100 GWh/a 150 GWh/a
Direct RES Surcharges on the Electricity Price for Industrial Consumers, 2004
Source: IFIEC Europe Survey
17
The German SituationThe German Situation
3,33
2,01
2,00
2,39
4,21
2,02
2,16
2,80
2,66
2,30
2,74
3,21
3,60
2,68
3,05
3,48
3,47
0,69
0,930,91
0,83
0,70
0,79
0,55
0,48
0,53
0,660,63
0,45
0,37
0,41
0,31
0,22
0,28
0,39
0,61
0,56
0,510,47
0,500,47
0,360,34
0,39
0,460,43
0,34
0,29
0,210,220,17
0,21
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
4,50
Q1
- 2
00
1
Q2
- 2
00
1
Q3
- 2
00
1
Q4
- 2
00
1
Q1
- 2
00
2
Q2
- 2
00
2
Q3
- 2
00
2
Q4
- 2
00
2
Q1
- 2
00
3
Q2
- 2
00
3
Q3
- 2
00
3
Q4
- 2
00
3
Q1
- 2
00
4
Q2
- 2
00
4
Q3
- 2
00
4
Q4
- 2
00
4
Q1
- 2
00
5
Q2
- 2
00
5
0,00
0,10
0,20
0,30
0,40
0,50
0,60
0,70
0,80
0,90
1,00Quartalspreis EEX-Base [ct/kWh]
Rechn. Erhöhung (VDN) [ct/kWh]
Weitergabe an Endkunden [ct/kWh]
ct/kWh ct/kWh
Development of RES SurchargeBased on German feed-in tariff system
German Hardship Regime
Hardship Regime Reduction
1st Regime: Since July 2003:consumption > 100 GWh and share of electricity costs at least 20 percent of the gross value added (“Bruttowertschöpfung”)reduced rate of 0.5 €/MWhfor consumption beyond 100 GWh
2nd Regime: Since Jan. 2005:consumption > 10 GWh and share of electricity cost at least 15 percent of gross value addedreduced rate of minimum 0.5 €/MWh for 90 % of consumption or for 100 % with the criteria of 1st regime; rate calculated based on a maximum of 10 percent surcharge increase for the other consumers, resulting in fact in about 0.11Ct/MWh in 2005
59 TWh (about 25 percent of industrial electricity consumption) benefit from 2nd special regime
18
Renewable Energies in the EURenewable Energies in the EUThe Cost Burden for Industrial ConsumersThe Cost Burden for Industrial Consumers
These direct costs are only one part of the burden package
Further environmentally founded surchargesExamples: Austria: CHP surcharge 1.5 €/MWh Denmark: CHP surcharge of 5.3 €/MWh for first 100 GWh/a Germany: CHP surcharge of 0.5 or 0.25 €/MWh and Ecotax of 12.3 €/MWh
(partial recompensation) Finland: Energy tax 4.2 €/MWh France: CSPE Package (public service obligation and environmental
purposes) 4.5 €/MWh
Necessary grid investments and reserve capacity requirements Dena grid study in Germany: 850 km additional TS lines necessary till 2015 –
1.1 billion € investment leading to 3.6 to 4.6 €/MWh for non-privileged consumers and 1.5 €/MWh for priviledged consumers
Much more investment with start of off-shore wind program beyond 2015
19
Electricity is an important production input in manufacturing industries
Financial burdens put on it means a significant distortion in the competitiveness
Achievement of the EU Lisbon Strategy („more and better jobs in a more dynamic, innovative and attractive Europe“) is only possible with a sound EU industrial basis
EU industry‘s high efficiency standards in manufacturing must be understood as a major contribution to the EU‘s climate change policy but not as a threat to it!
ConclusionsConclusions
20
For further questions:For further questions: Dr. Annette Loske
VIK Verband der Industriellen Energie- und Kraftwirtschaft e.V.
Richard-Wagner-Straße 41
D-45128 Essen
Tel.: ++49-201-810 84-22
FAX: ++49-201-810 84-30
E.Mail: [email protected]
Internet: www.vik.de