A new European Commission report on fair competition fails to fully account for the EU’s energy needs and climate commitments. The EU must decarbonise and has pledged to go greener, both at COP21 and in its own climate and energy policy. But the first findings of an inquiry into competitiveness in the energy market ignore this. Commissioner Vestager is looking at capacity mechanisms, which are used to make sure countries have enough energy in the grid. Capacity mechanisms distort the market, so they are illegal unless they help achieve other EU goals.
ClientEarth Lawyer Maria Kleis said: “Vestager is looking at state aid from a purely competition perspective. But nothing operates in a vacuum. Her findings make no sense when viewed alongside the EU’s climate and energy policy, and its international commitments to decarbonise.”
EU energy needs must not come second to competition
The UK market was not part of Vestager’s investigation. However, DG Competition frequently offers it as an example of a good capacity mechanism. The UK’s system is currently facing heavy criticism, and is being revised by the government. With an going court case against it, using the UK capacity mechanism as a positive example is shortsighted and misleading.
Countries and companies have seized on this interim report as proof that their approach is right. In fact, Vestager says nothing about whether specific capacity mechanisms will be approved – though she does give an idea of which might be most problematic from DG Competition’s point of view.
The initial findings are open for comment until 6 July 2016, with the final report expected later this year. It will be the definitive guidance document on energy market mechanisms, so it is vital that it reflects Europe’s need to decarbonise, not just competition concerns.