Taxes and Subsidies in a Liberalised Market

9Feb
1999

Speaker: Dr. Eberhard Meller, General Executive Manager of VDEW, presented the guiding principles for a harmonisation of energy taxes.

In particular, harmonisation should:
• consider existing national charges to avoid trade distortions
• ensure relative competitiveness between gas, oil and electricity
• encourage the use of efficient electrical processes which can reduce primary energy input
• result in a clear and reliable framework entailing minimum bureaucracy.

Another potential source for distortions in the energy market being price-subsidised electricity production on the basis of renewable energies, Meller regretted that up to now the European Commission has failed to fulfill its commitment to come up with a directive concerning common rules for the treatment of priority production in a free market environment.
Against this background he presented three models under discussion in the German electricity industry, notably :
• renewables surcharge
• voluntary agreement
• marketplace model

During the debate, comments and questions concentrated on the elements of the marketplace model:
• Electricity from renewables is purchased and sold in the marketplace
• Obligation for the final customer to cover a certain percentage of his electricity consumption with electricity produced on the basis of renewables
• Possibility for the final customer to transfer this obligation to his supplier
• Percentage (quota) fixed by the government
• Pricing according to supply and demand
• Trade can be integrated in the “conventional” marketplace (power exchange)

In comparison to feed-in models this approach offers the advantage to be market-oriented, to facilitate cross-border trade with electricity from renewables and thus to fit in the functioning of the internal energy market. Precondition for the implementation of such or similar models, however, would be a clear definition of the product by European-wide certification.

MEPs generally welcomed the constructive contribution on behalf of the German Electricity Industry to the difficult discussions on how to improve and harmonise access for renewables to the market.

Dr. Rolf Linkohr, President of FEE, encouraged all partners to continue and strengthen efforts to analyse, compare and evaluate the different models in order to rapidly come to a workable European structure.