Archives for Position Papers

Minimum carbon pricing is distortive and not needed – why free price formation should remain a cornerstone of the EU ETS’ volume-based cap-and-trade mechanism

Brussels, 30 November 2020 | The EU Emissions Trading System (EU ETS) is a cornerstone of the EU’s policy to combat climate change and the key carbon pricing instrument for reducing greenhouse gas emissions cost efficiently. While the main variant in terms of carbon pricing is a cap and trade system such as the EU ETS, other variants exist. The concept of a carbon price floor, for example, is regularly advertised as a way to improve investment certainty by reducing carbon price risk, decreasing the cost of capital and facilitating access to finance. Additionally, the price floor argument has been
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Moving towards full market integration of renewables – the most cost-efficient way to decarbonise the energy sector

Brussels, 20 November 2020 | Significant deployment of renewable energy sources (RES) is required to achieve the EU 2050 net zero target proposed in the Green Deal as well as the raised ambition of the EU 2030 targets. The recently published EU Offshore Renewable Energy Strategy sets out the scale of the challenge, estimating that an installed capacity of at least 300 GW of offshore wind alone will be needed by 2050. Energy markets will be vital to help achieve this scale-up at an acceptable cost. Despite the high fixed cost structure of renewables as well as the need for
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Six recommendations for a scaled-up Guarantees of Origin (GO) scheme to support decarbonisation

Brussels, 24 September 2020 | Achieving climate neutrality by 2050 will require many fundamental changes. In the energy sector, a significant shift towards renewable energy is already under way and will need to be accelerated. Guarantees of Origin (GOs) are currently a valuable tool for documenting the ‘green’ characteristics of renewable electricity, providing consumers with the means to send a signal to the market about their consumption preferences for renewable energy. Transparency on the generation source of energy enables consumers to drive decarbonisation efforts. At the same time, consumer demand for reliably certified energy is growing. RED II has extended
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Statement on the Electricity Bidding Zone Review (BZR) Methodology

Brussels, 25 August 2020 | Following referral on 7 July 2020 by all NRAs, ACER became competent to decide on the Bidding Zone Review (BZR) methodology i.e. the Proposal for the methodology and assumptions that are to be used in the bidding zone review process and for the alternative bidding zone configurations, pursuant to Article 14(5) of Regulation (EU) 2019/943 (BZR proposal). We welcome the fact that ACER are now assessing and deciding on key aspects of the proposed methodology, and fully support efforts to ensure a meaningful and effective review. The announcement that ACER will consider stakeholder feedback to
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Net zero at least cost: energy and emissions markets at the core of cost-efficient decarbonisation

Brussels, 17 February 2020 | Achieving a climate neutral economy by 2050 presents a significant challenge that will require fundamental changes across many sectors. Open, competitive, transparent and liquid power, gas and emissions markets are among the core tools necessary to reach the EU’s 2050 net zero target cost-efficiently. Agreement on the 2050 neutrality objective itself represents an important milestone which we explicitly welcome. To help achieve this, close attention must be paid to the instruments and mechanisms required, including how to trigger the necessary innovation and investment and to achieve decarbonisation at the least cost to the consumer, the
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A market-based approach to local flexibility – design principles

  Brussels, 12 February 2020 | Increasing the share of renewable energy generation in the energy mix is vital for decarbonisation, yet intermittent renewables such as wind and solar power can put pressure on the capacity of local and regional grids, requiring costly grid management measures from the network operators, both TSOs and DSOs. At the same time, decentralised resources are being deployed at an increasing rate, including, among others, storage assets and electric vehicles interacting with the grid. Active customers will increasingly be able to offer demand-side flexibility, either directly or through aggregation services. Ways must be found of
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MiFIR Pre-Trade Transparency: Call for a Methodology for the Conversion of LIS Notional Values to Lots

Brussels, 15 July 2019 | Europex and its members are committed to working with ESMA and the NCAs to ensure that markets continue to become more transparent in line with the policy objectives of MiFID II/MiFIR. In this context, we take note of the recently published “ESMA Supervisory Briefing on compliance with MiFIR pre-trade transparency requirements in commodity derivatives” and welcome ESMA’s commitment to review the currently inappropriately calibrated pre-trade transparency regime. As stated at earlier occasions, the enforcement of full compliance should be postponed until after the review of RTS 2 as otherwise irreparable damages would be caused to
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The “Road from Sibiu”: making use of markets for a cost-efficient and innovation-driven transition to full climate neutrality by 2050

Brussels, 9 May 2019 | Today, a long and intense debate on the “Future of Europe” that started two years ago in Rome comes to a close at a European Council summit in Sibiu. One of the key topics of this strategic exchange has been Europe’s future climate and energy policy, notably with regard to the EU’s Clean Planet for All strategy and the overall United Nations Framework Convention on Climate Change process. In this context, we call upon the European leaders gathered today in Sibiu to keep up with their Paris commitments and to include a strong recognition of
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Article 13 (9) of the Electricity Regulation: The basic implementation phase for reconfigured bidding zones should be 24 instead of 12 months

Brussels, 8 November 2018 | Ensuring bidding zones are configured efficiently is necessary in order to address long-term structural congestion. However, any change to the configuration of bidding zones has a fundamental impact on the functioning of wholesale electricity markets. While the change itself, once implemented, may bring about overall benefits the transition process itself comes at a cost which is ultimately passed on to the electricity consumers. In order to minimise this cost and to leave the market enough time to adapt, the implementation phase needs to be appropriate and must guarantee a smooth transition. Recent experience has shown
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Capacity allocation in Article 14 of the Electricity Regulation recast: Setting the right principles to maximise transmission capacity available for trading in order to foster further market integration

Brussels, 8 November 2018 | In the EU’s internal energy market, the amount of trade between bidding zones is constrained by the amount of available cross-zonal transmission capacity. Maximising the amount of the cross-zonal capacity available to the market, while respecting necessary operational security standards, is therefore a prerequisite for achieving an efficient integrated internal energy market and realising the associated increase in welfare. In this context, the process to calculate and allocate capacity on the bidding zone borders is vitally important. However, there is significant scope to improve the current situation. The ACER 2017 Market Monitoring Report (MMR) compared
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