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And EuropeLuxembourg says “no” to a major reform of the electricity market
LUXEMBOURG – Luxembourg opposes the overhaul of the electricity market rules envisaged by the European Commission. The Ministry of Energy fears to “stifle investment in renewables”.
While the European Commission is preparing an overhaul of the rules of the European electricity market to better cushion consumer bills in the face of soaring prices, seven countries, including Denmark, Germany and Luxembourg, favor simple adjustments. They wrote a joint letter last week to make their voices heard.
Asked to justify this position, the Luxembourg Ministry of Energy assumes and defends targeted alterations to the system in place. “The energy crisis was not caused by a market design failure per se, but by a supply crisis (Russian gas cut, low availability of nuclear and hydropower),” the ministry said. for whom “the basic market mechanism has continued to operate, allowing security of supply across Europe (through efficient distribution of supply and demand or through European solidarity).
No harmonized implementation
Luxembourg therefore pleads for an in-depth analysis “of the elements of the market that really need to be revised” and underlines that “any reform effort must focus on putting in place the right investment signals to ensure the massive deployment of renewable energies and energy savings”. Among the strong measures, Luxembourg, like the other signatories of the letter, does not want an extension of a temporary EU measure which recovers the exceptional income of energy producers other than gas.
“The inframarginal ceiling was part of the emergency measures in response to the energy crisis, specifies the ministry. Yet these measures have not been implemented in a harmonized way, which risks fragmenting the internal energy market and suspending or discouraging much-needed investment in additional renewable capacity to reduce our dependence on regard to imports of fossil fuels.
Target taxation
According to Luxembourg, there are other means for Member States to act on these “exceptional revenues. Governments can resort to fiscal policies, which can be oriented in a very targeted way without jeopardizing the necessary investments in additional renewable capacities”.
And the ministry concludes: “The work of recent years might be compromised and risk leading to a fragmentation of the European internal market, which might in turn pose a threat to market liquidity, cross-border flows and, ultimately account, security of supply and high prices. Cross-border flows have brought in 34 billion euros per year over the last decade, compared to a situation without cross-border flows”.
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