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Europe needs single energy policy and regulator say manufacturers

Out-Law News | 18 Mar 2014 | 10:11 am | 2 min. read

The European Union needs a single energy policy and a single energy regulator if it is to protect its economy, a European manufacturing lobby group has said.

The trading bloc should also promote the exploration and exploitation of shale gas, according to the European Round Table of Industrialists (ERT). It should further rethink its carbon emissions trading system (ETS) and prioritise the development of a 'smart grid', using new technology to create a more cost effective system for delivering energy to consumers.

"The uncertainty over energy prices and supply means lower investment will have a serious impact on Europe’s industrial performance,” said ERT head Leif Johansson according to the Financial Times. "We need a European energy policy and a single European regulator.”

Johansson, who is also chairman of pharmaceuticals company AstraZeneca and telecommunications giant Ericsson, made his comments at a meeting of the ERT in Brussels, where he warned that the lack of a coordinated energy policy is putting the European economy at risk. Ten of the 73 recommendations the lobby group made to German chancellor Angela Merkel, French president François Hollande and European Commission president José Manuel Barroso focused on energy issues. “Energy was the highest up on that list of recommendations,” said Johansson.

Johansson's calls come against a background of rising energy costs in recent years in Europe, while the US shale revolution has resulted in the price of natural gas falling by as much as 80%, according to the Daily Telegraph.

ERT vice-chairman Benoit Potier said that Europe's carbon emissions trading system (ETS) is not fit for purpose, and that proposed reforms will not change that. But he added that a tax on carbon emissions was not an alternative the ERT would recommended. “We all recognise that the ETS doesn’t work. We have never taken a long-term investment decision based on CO2 because its cost is too volatile. The proposed reform is a fix to a system that doesn’t work," he said.

Potier, who is also chief executive of France’s Air Liquide, said that the structure of the EU would complicate the creation of a single European energy policy. “It is not helpful at the European Commission governance level that there are separate commissioners for energy, for the environment and for climate change. Europe needs to think with one mind on energy," he said.

Potier said that the lack of a clear European energy strategy resulted in counterproductive outcomes, such as increased imports of US coal.  “Europe needs to increase, not decrease, its dependency on natural gas. We should promote the exploration and exploitation of shale gas.”

The ERT's calls for the development of a 'smart grid' reflect those of the UK's Smart Grid Forum (SGF), which is made up of representatives from electricity network companies, consumer groups and energy suppliers.

Last month the SGF published its its 'smart grid vision and routemap' (59-page / 1.37MB PDF), which said that "by 2050, smart grids will reduce the cost of additional distribution reinforcement needed to accommodate the connection of low carbon technologies such as heat pumps, solar PV and electric vehicles by between £2.5 billion and £12bn."

The ERT comprises 50 chief executives and chairmen of Europe’s leading industrial and technological companies. Its calls reflect concerns about the rising cost of manufacturing in Europe which were expressed by some politicians in Europe last year. European industry commissioner Antonio Tajani, speaking during the Ambrosetti forum of global policy-makers at Lake Como last September, said that rising energy costs are creating "a systemic industrial massacre" in Europe, where manufacturers face sharp increases in energy costs, compared to their counterparts in the US.

According to the Daily Telegraph he said: "I am in favour of a green agenda, but we can't be religious about this. We need a new energy policy. We have to stop pretending, because we can't sacrifice Europe's industry for climate goals that are not realistic, and are not being enforced worldwide."

Paulo Savona, head of Italy's Fondo Interbancario said at the time: "The loss of competitiveness is frightening. When people choose whether to invest in Europe or the US, what they think about most is the cost of energy."