EU Energy: Making Markets Work
It's ten years since the process of EU energy market deregulation began. Energy policy is now designed to actively pursue the three goals of competitiveness, sustainable development and security of supply. The period has resulted in a mass of initiatives, Directives and special forums that are now shaping policy designed to: Liberalise gas and electricity markets: Promote and support renewable, more efficient and other environmentally friendly sources of energy, together with energy efficiency: Develop the EU carbon trading mechanism (ETS).
By Guy Isherwood, Editor of Commodities Now.

Gas is the Key to Unlocking Energy Competition
It's ten years into EU energy market deregulation/liberalisation and nearly 20 since the privatisation of British Gas. But, with the exception of a few Member States, the competitive energy market envisioned by the European Commission has yet to materialise and the goal of full competition in gas and electricity markets by July 2007 risks becoming a fading dream. The initial findings of the Commission's inquiry into Europe's energy markets, published last month, confirm as much - if not in writing then certainly in sentiment. The question for Europe is, which way forward does it take now? Jeremy Wilcox looks at the latest round of political machinations surrounding EU energy policy and where they might, or should, lead.
By Jeremy Wilcox.

EU ETS - Moving From Politics to Markets
The main source for abatement of carbon dioxide (CO2) within the EU ETS is the potential to switch between coal-fired and gas-fired generation. For example, an average coal fired plant in the UK of 36% efficiency emitting 0.9 tonnes of CO2 per Megawatt hour (MWh) generated and an average combined cycle gas turbine (CCGT) plant with 49% efficiency emitting 0.45 tonnes of CO2/MWh generated, results in the ability to reduce emissions by switching between the coal and CCGT plant. Continued political uncertainty over the development of the EU ETS will only hold back its potential.
By Imtiaz ahmad, Morgan Stanley.

Carbon Moving Power Prices More Than Gas?
When power suppliers raise their prices, it is standard practice for them to blame this on the high oil price and its knock on effect on the gas market. Traditionally this makes sense, since UK and continental gas prices have moved in tandem since the opening of the Bacton/Zeebrugge interconnector in 1998 (the majority of European gas being firmly indexed to oil prices). So there were a few eyebrows raised when the large electricity suppliers said they were raising tariffs in line with the rising cost fuel costs of generation, namely gas. In a liberalised market this is all well and good; generators need to cover their costs and to make a margin to keep the lights on. However, is the gas price being used as an acceptable scapegoat for these increases, when actually, something else might be to blame: namely, the EU's Emission Trading Scheme (ETS).
By Scott Dendy, Editor of UK Powerfocus.

European Renewables
Renewable energy sources (RES) are essential to tackling climate change and now constitute 17% of world prime energy production - counting traditional biomass, large hydropower and 'new' renewables (small hydro, modern biomass, wind, solar, geothermal and biofuels). But ambitious emission targets in the EU-25 will not be met unless RES are rapidly expanded or a wholesale explosion of nuclear energy generation takes place - an unlikely prospect. Renewable markets in the EU are some of the most advanced and herald the promise to replace a significant proportion of the fossil fuels used to produce energy. But ambitious targets need to be followed through by policy makers.
By Guy Isherwood, Editor of Commodities Now.

EU Emissions Market: One Year On
The first phase of the EU emissions trading scheme was always meant to be a 'learn by doing' exercise, with the suggestion that the real market would start in 2008. While it is true that all involved are working in a new marketplace, there is no scope for participants to get this part wrong.
By Andreas Arvanitakis, Point Carbon.

JI & CDM - Chances & Risks Within the EU ETS
Emissions trading in Europe is now a reality with volumes increasing daily. The EU Emissions Trading Scheme (EU ETS) is almost fully operational with many of the various Member States' registries now online. Energy and industrial companies, brokers, banks and others now participate in the EU ETS which began formal operations in January. Past discussion put the main emphasis on the National Allocation Plans (NAPs) of Member States which define the total amount of allocated allowances ('macro-level') and specify the allocation of allowances to the individual installations ('micro-level'). Now the trading of allowances has become the focus of attention. Due to the relatively high prices of the EU Allowances (EUAs) the project based mechanisms, Joint Implementation (JI) projects and the Clean Development Mechanism (CDM) and their utilisation within the EU ETS are becoming more important.
By Markus Krause, Clifford Chance.