EU energy problems threaten chems sector - Cefic

16 February 2006 15:42  [Source: ICIS news]

LONDON (ICIS news)--Deficiencies in the European energy markets pose an immediate threat to the global competitiveness of the European chemical industry, the European Chemical Industry Council (Cefic) stressed on Thursday.

 

Cefic confirmed the findings of the European Commission (EC) report on the sector, published on Thursday, and called for more stringent market liberalisation measures. The EC report identified serious malfunctions in the EU energy market.

 

“True competition between energy suppliers and a fair, transparent price formation are still lacking,” said Cefic director general Alain Perroy. “In this situation, the effects of the EU Emissions Trading Scheme (ETS) on power prices are creating additional unfair pressures," he added.

 

“Making energy markets really work is crucial to our competitiveness and thus to sustainable jobs. It is all the more vital to our industry as we are the largest energy consumer among EU manufacturing sectors,” Perroy declared.

 

Cefic said in a statement that dominance of a few generators in each regional market represented a major obstacle to competitive prices in the electricity and gas markets.

 

The Council said efforts to increase insufficient cross-border capacities, harmonised grid access regimes and transparency within grids for establishing competition may not be sufficient to overcome the problem of market dominance. It added, however, that energy release programmes limiting the market share of presently dominant suppliers on a national level could significantly contribute to the development of competition.

 

Cefic called for strict pricing monitoring by EU and national authorities and a speeding up of energy markets liberalisations in member states.

 

The UK Chemical Industries Association (CIA) welcomed on Thursday the preliminary findings of the EC inquiry. Despite UK gas prices up to double those on the Continent, import capacity has been far from fully used, it said. The interaction between the UK’s liberalised gas market with the largely unliberalised Continental markets is generally blamed for the shortfall in gas imports into the UK, the Association added.

 

“The main issue this winter has been the operation of the interconnector,” said Stephen Elliott, CIA’s acting director general. “Low flow rates during November, with rapid draw down from storage to fill the gap, set market sentiment for the whole winter.”

By: Anna Jagger
+44 20 8652 3214

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