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LQD Europe's two-faced approach to Energy Policy

by melo Mon Apr 28th, 2014 at 04:49:18 PM EST

Beppe Grillo's Blog

We have to be very careful to ensure that these funds are not handed out to the energy giants. If they mistakenly invested their money into fossil fuels, then that's their problem. Any small Italian businessman who makes a bad investment certainly cannot demand that the State reimburse his losses so we don't see why De Benedetti, Conti and Enel should be allowed to do so. Angelo Consoli, Director of Jeremy Rifkin's European Office

(more below...)

Beppe Grillo's Blog

"In Brussels, the European Commission has done a sleight of hand with regard to energy policies.
As many of you are aware, one of the few areas of intervention within the European Union in which the European Union's policy has been virtuous is precisely the area of Energy, with the famous energy and climate package approved back in 2007. The twenty, twenty, twenty package was a parcel of measures aimed at a twenty percent increase in energy efficiency, a twenty percent decrease in greenhouse gas emissions and twenty percent energy from renewable sources throughout Europe.
This package was approved during the German Presidency of the EU in 2007 and became a European law. This also led to the birth of all the virtuous policies, the energy account and the funding for the renewable energy industry. These policies were then applied rather badly because, here in Italy, we went more for the large industrial scale renewable energy sources, in other words huge wind farms and huge solar power farms rather than small wind turbines and small solar panels meant for individual households, however, just as we are now finally getting to these as well, this next bit of news broke today. The Competition Commissioner and Spanish socialist Joaquìn Almùnia has intervened after receiving reports that, in fact, the Germans have been giving discounts to their energy devouring industries. In other words, those firms that use huge quantities of electricity have been granted an exemption from having to pay that portion of their electricity bills that is destined for funding renewable energy sources.
This constitutes State Aid, which is illegal in terms of the European Treaty (instituted by the European Union Commission). This action had to be halted and the large German industrial users should be forced to pay back all the money that the state had granted them by the back door.
Furthermore, the German State was, and still is giving money to the large petroleum companies (something that they're trying to do here in Italy as well), which have gone overboard with their investments in turbogas for example, just like Sorgenia has done here in Italy, and they are now finding themselves indebted to the banks and with plants that don't work, whereas the renewable energy sources such as solar power and more specifically wind power, work very well and are able to supplement and provide electricity grid support during times of peak energy demand.
So this amounts to two different types of State subsidy, namely exemption from that part of energy bills designed to cover the incentives paid to fund renewable energy sources, and the so-called "capacity payment" which is a payment based on the petroleum companies' installed capacity. In other words, the State pays the companies for doing nothing, which is effectively a subsidy, or Government Grant. When this alleged infringement of the rules was reported to the European Commission, instead of saying "Yes, this is State Aid, repay the illegal funds immediately", (since this involves mainly the Germans) The Commission turned around and said that it's all right, it is permissible! This type of State Aid is permissible! What that means is that the lid of Pandora's Box has now been opened in the sense that all the voracious Energy users throughout Europe will be exempted from paying the contributions to fund renewable energy sources which, thanks to Commissioner Almunia's decision, will now be penalised and it will no longer be possible to provide small scale users with subsidised small and very small renewable energy systems, which was only just beginning to happen, in other words, abandoning the idea of large-scale plants that forms the crux of Jeremy Rifkin's proposed Third Industrial Revolution that Beppe Grillo often mentions in his addresses. So, now that we were just getting around to this, suddenly we close the stable door after the horse has bolted and we now allow the capacity payments and even the exemptions, even retroactively, to German and European energy guzzlers.
This is all totally illegal because these are decisions that lie within the scope of energy policy and have nothing to do with competition policy, so it was not Commissioner Almùnia's place to make this type of decision but rather Commissioner Oettinger and therefore we, as CETRI -Circolo Europeo per la Terza Rivoluzione Industriale (literally the European Circle for the Third Industrial Revolution), have decided to take the case to the European Court of Justice to protect the prerogative of the European Commission, which is the only institution that can decide whether or not to penalise renewable energy sources or whether or not to favour fossil fuels. We believe that the way to go is totally the opposite. We should charge very high prices to those who use fossil fuels and charge little or nothing to those who use renewable energy, in other words, make the non-virtuous pay, not reward them! Now, this "capacity payment" is supposedly classified as State Aid, however, in terms of this knee-jerk decision made by Commissioner Almùnia, it is no longer... let's say illegal. So it is now permissible and what's the bet we will soon see the Renzi government giving generous handouts to players like Sorgenia, Edipower, Enel, etc., merely to keep their turbogas power stations available if not actually functioning. The truth is that they want to help these companies repay their debts to the banks and that is something we really need to be on the lookout for.
But now that the European Commission appears to be doing a total about turn and I'm asking all the Five Star Movement's spokesmen and all the candidates standing for election in the upcoming European elections to stand by us in this legal challenge that we are going to be a mounting with Naples Attorney Roberto Ionta to prevent the destruction of one of the few good things that the European Union has done so far, namely the energy policy, prevent it being destroyed by the fossil fuels lobbies which are uninspiringly known as the "Magritte Group" simply because the major European petroleum companies' representatives met at the Magritte Museum in Brussels to come up with this strategy. So we are proposing to do two things. The first is to launch this legal challenge and the second is then to keep our ears open in both the Chamber and the Senate in order to pick up exactly when the "capacity payments", in other words these subsidies to De Benedetti and to Sorgenia, make their appearance, because the European Commission didn't say that this had to be done, but merely that it was now permissible. So if it is now permissible, we will undoubtedly see Renzi doing just that. This is exactly what was being speculated in Sergio Rizzo's article in the Corriere della Sera of the 2nd March, namely that "one of the main reasons for Letta's replacement by Renzi was precisely the Energy companies' need to get this subsidy that was still believed to be illegal at that stage in terms of the European anti-trust regulations, after which would come the rescue of Sorgenia with an intervention by Eni via the appointment of an Eni Chairman who would be willing to carry out this manoeuvre".

Your thoughts?

Hmm it's a bit more complicated than that.

The starting point is the Energiewende, and the resulting massive build-out of solar and wind in Germany, effectively subsidised by guaranteed uptake of their electricity at a guaranteed price. To a lesser extent, in Spain, Italy etc. also.

Because of the EU-mandated free energy market, spot prices can go low or negative when renewable generation is high. This means that many fossil plants run a lot less often than their financial model requires, i.e. they lose money.

In these circumstances, the owners of these plants may well wish to close them down. The problem with that is that their electricity is needed in order to meet peak load, at least at those times when renewables aren't producing enough.

So the capacity payments are a means of overcoming this problem : payments for keeping the capacity available : and may well be a rational way of keeping the lights on.

I think the EU energy market needs a radical redesign, but I'm not sure what the new parameters should be.

The industry exemptions in Germany are pretty scandalous, as they are a subsidy to private enterprise and exports at the expense of other consumers. I don't see how that squares with EU state-aid rules.

But the huge scandal in EU electricity generation is American coal. In the US, no new coal plants are being built, and many existing ones are facing closure (strong environmentalist opposition and EPA clean-air regulations). The slack is taken up by shale gas, of course, but when that runs out, it will switch to renewables. Meanwhile, the EU sucks up the excess coal, having failed to implement the same environmental standards as the US (and having a failed cap-and-trade system as an excuse for a clean-air policy).

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Tue Apr 29th, 2014 at 04:13:00 AM EST
One of the areas needing additional development is small scale wind power. At present it is not particularly competitive, except for areas where there is no grid. And the wind energy potential for Italy is not outstanding, as in the North Sea. But industrial and home solar should be highly competitive in Italy by now. How is home solar treated by government and industry?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 29th, 2014 at 12:27:59 PM EST

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