The first episode of the new season of #FSRDebates hosted by Andris Piebalgs and Christopher Jones will focus on the revised Renewable Energy Directive (REDIII).

In September, the European Parliament cast its final vote on the revised Renewable Energy Directive (REDIII), marking the conclusion of its legislative process. The importance of REDIII cannot be overstated as it stands at the forefront of the European Union’s commitment to achieving climate neutrality by 2050. This directive represents more than just an aspirational guideline; it embodies the EU’s transformative journey towards a novel economic model, one which is in harmony with the environment.

 The ambitions of REDIII are indeed commendable. The directive has set forth a binding target which stipulates that by 2030, at least 42.5% of the EU’s energy consumption must be derived from renewable sources. To provide a perspective on its ambitious nature, in 2021, this figure stood at just 21.8%. Beyond this overarching goal, REDIII is comprehensive in its approach, advocating for an accelerated adoption of renewables across various sectors such as industry, transport, buildings, and heating and cooling.

 However, as with any directive, its impact lies not in its drafting but in its implementation. Once REDIII is published, the onus will be on EU Member States to incorporate its provisions into their national laws. The pertinent questions arise: Will this transposition be both swift and ambitious? Can Member States promptly initiate the requisite actions to bring about this green revolution?

 Unfortunately, concerns linger. A recent special report by the European Court of Auditors cast a shadow of doubt, indicating a potential gap between ambitions and actions. The report highlighted a concerning trend where the lofty goals for 2030 may not be met.

 Thus, as we acknowledge the final vote on REDIII, it is crucial for stakeholders, policymakers, and citizens alike to engage in introspection. We must not only recognize the key provisions of this revised directive but also ponder upon the steps essential for mobilizing the required actions and finance. The vision for a greener Europe hinges on the breakthrough penetration of renewable energy across all sectors of the economy. While the directive lays the path, the journey to a sustainable European Union will require collective resolve, effort, and action.

The debate will reflect on key provisions of REDIII, challenges reflected in ECA’s Report and discuss how to get ambitions transformed in reality.

Draft programme

Moderator: Marzia Sesini, FSR

Keynote Presentation on REDIII

Edith Hofer, European Commission

ECA’s Report on Climate and energy targets

Lorenzo Pirelli, ECA

Debate

Christopher Jones, FSR

Jesse Scott, Hertie School 

Pieter de Pous, E3G

James Watson, Eurogas 

This episode of #FSRDebates is jointly organised by the Florence School of Regulation (FSR) and the International Energy Agency (IEA).

This debate will offer the occasion to present and discuss the recently published IEA Italy Energy Policies Review Report, which analyses the Italian energy and climate policies in response to the energy crisis and the wider climate goals. 

Background

Italy has raised its climate ambitions by aiming for carbon neutrality by 2050, and the country is on track to reach its 2030 targets for emissions reductions and energy efficiency. The government has taken encouraging initial steps to overcome the long permitting procedures, administrative burdens and increasing local opposition that have delayed new renewable installations.   

In 2022, Italy successfully reduced its reliance on Russian natural gas imports, by signing new contracts with alternative suppliers, making use of the pipeline and LNG infrastructure that it has built up over the last decade. Reducing overall demand for natural gas through an accelerated shift to alternative energy sources and a stronger focus on energy efficiency, especially in the building sector, will not only further strengthen energy security, but also help the country meet its climate targets. 

Draft Programme

14.00 – 14.05 Introduction to the Debate  

Ilaria Conti | Florence School of Regulation  

1405 – 14.20    The IEA Italy Energy Policies Review 2023: main findings

Alessio Scanziani | IEA  

14.20  – 14.30 The regulator’s perspective

Clara Poletti | ARERA

Discussion: Introductory Remarks and Comments

Moderator:  Alberto Pototschnig | Florence School of Regulation  

14.30 – 15.00 FSR Donors’ roundtable 

Panellists

Giulia Branzi | SNAM

Fabio Bulgarelli | Terna

Claudia Squeglia | ENI

15.00 – 15.20 Q&A from the audience

15.20 – 15.30 Concluding remarks
Ilaria Conti | Florence School of Regulation
Alberto Pototschnig | Florence School of Regulation 

The momentum behind CCS is growing rapidly. Following the Commission’s Sustainable Carbon Cycles Communication in December 2021, which underlined the need for large scale CCS to deliver the negative emissions that the EU will increasing need to meet its GHG ambitions, Commissioner Simson noted that ‘no CCUS no net-zero’ during the last CCUS Forum in October 2022. The Commission has now committed to issuing a CCUS Strategy later this year. The CCUS Forum Vision Working Group has tabled a detailed paper with concrete suggestions for the Strategy, and the Infrastructure Group is currently finalising its report. Now the Commission’s Net-Zero Industry Act proposal has proposed an EU-binding target for ensuring the availability of 50 MT of CO2 storage in the EU by 2030, and suggested binding investment obligations on EU oil and gas producers to achieve this. This target may well increase once it applies to Norway, as the NZIA would have EEA relevance.

The debate will address this momentum, look at what should be in the Commission CCUS Strategy, unpick the Commission’s NZIA storage proposal, consider the investment, regulatory, and infrastructure challenges, and ask ‘what needs to be done, when, and by who?

Watch the recording:

Programme

Opening: Ilaria Conti

In the next episode of the #FSRDebates series, we will focus on the EU energy platform.

Established in reaction to the Russia-Ukraine war as an instrument to stabilise prices by providing alternatives to Russian gas supplies, the EU Energy platform in 2022 facilitated the signature of Memoranda of Understanding with several key gas exporting partner countries and enhanced international outreach to support the REPowerEU Plan.

The first round of joint gas purchases on 16th May this year successfully managed to attract bids from 25 companies, totaling more than 13.4 billion cubic meters of gas (bcm) – even more than the 11.6 bcm of joint demand that EU companies submitted through the recently established AggregateEU mechanism.

The whole operation has been brought to completion via AggregateEU, a mechanism by the service provider PRISMA, and concerns an overall volume of 10.9 bcm. This covers 8.7 bcm of gas via pipeline and 2.2 bcm of LNG.

In 2023 plans, the Platform is due to focus on organising demand aggregation and joint purchasing of gas for coming winter’s (2023-2024) gas storage filling season.

Moreover, EU Commission Vice President Maroš Šefčovič said the gas scheme would act as a “blueprint” for a “new market” for critical materials as well as hydrogen, that will help decarbonise energy-intensive industries.

The European Commission is leading the management of the platform, and acts to provide guidance between EU countries and the industry to ensure that the joint purchasing mechanism is well implemented and that it complies with EU competition rules.

Did the Platform meet the expectations so far? Is its success an evidence that solidarity can work in Europe? Are other commodities as suitable as gas for joint purchasing?

Programme

Introduction to the Debate

Ilaria Conti | Florence School of Regulation

The EU Energy platform

Cristina Lobillo | DG ENER

Setting up the platform: the challenges

Falk Porzig, PRISMA

Panel Discussion

Moderator: Alberto Pototschnig | Florence School of Regulation

Introductory remarks from the panellists

Carola Millgramm, E-Control

Peter Claes, IFIEC

Doug Wood, EFET

James Watson, Eurogas

Polls and Q&A

Concluding remarks

Ilaria Conti | Florence School of Regulation

Alberto Pototschnig | Florence School of Regulation

The EU has the most developed natural gas network in the world. It constitutes more than 200000 km of transmission pipelines, over 2 million km of distribution networks, and more than 20000 compressor and pressure reduction stations. The value of the total infrastructure investments is at least 250 billion Euro. 40% of households are connected to the gas network. In short, the EU gas network is capable of transporting and storing large quantities of energy and is well connected to the final consumers.

The EU has committed to achieving climate neutrality by 2050. To meet this objective it is intended to strongly reduce natural gas consumption, and based on Commission modeling this may already reduce gas demand by 25% by 2030, progressively shifting to use renewable and low-carbon hydrogen and biomethane.

At the same time the Commission is giving increasing importance to the rapid development of a CCS grid and storage, scheduling a CCS Strategy for later this year and proposing a EU 50 MT target for CO2 storage by 2030 as well as legal obligations on oil and gas companies to invest by this date.

Whilst the future hydrogen grids and CO2 network will be made up of a mix of new and old pipes, repurposing significant part of the existing gas grid will obviously play a major role.

The European gas networks will require major adaptations to meet this energy transition. And this adaptation should be done in full conformity with continuing safety of supply and minimal costs.

Against this background, National Regulatory Authorities will need to take decisions on the repurposing, de-commissioning, replacement, and extended use of individual existing EU’s gas systems assets. To do this in a consistent and wise way is a considerable challenge.

The FSR Policy debate will reflect on current knowledge and future challenges, asking whether the framework currently being finalized will deliver, and asking what is next and what still needs to be done.

Structure

Introduction   Andris Piebalgs | FSR

Presentation of the DNV Study “Future regulatory decisions on natural gas networks: repurposing, decommissioning and reinvestments” Dr. Konstantin Petrov | DNV

Discussion

Christopher Jones | FSR

Walter Boltz |

Sara Piskor | ENTSOG

Q&A with the audience

Conclusions  Andris Piebalgs | FSR

This episode of #FSRDebates will consider which role Contracts for Difference could play in the future market design and how they can be designed to ensure the active participation of contracted resources in the short-term markets.

Background

The current electricity market design in the EU, reflecting the Electricity Target Model (ETM) developed in the late 2000’s and enshrined in the Third Energy Legislative Package, focuses on short-term markets to deliver an efficient market outcome in the short term and resource adequacy in the long term. In the forward timeframe, the aim of the ETM and of legislation has been more on the instruments to allocate the available cross-zonal interconnection capacity. It was in fact considered that short-term markets provide the necessary price signals to promote investments in the resources required to guarantee adequacy. In fact, the current legislation prescribes strict rules for the implementation of Capacity Remuneration Mechanism.

Other long-term instruments have been neglected by EU legislation. No provisions have been introduced to support the liquidity of long-term electricity (forward or futures) markets, with the results that liquidity of the markets for these instruments is limited to horizons of up to one year and only in a few jurisdictions, and it has been decreasing over the last year. Contracts for Difference (CfDs) have been used in some countries for supporting the development of renewable-based generation, but again there was no effort to harmonise their use.

However, the increasing penetration of variable renewable energy (VRE) sources in the electricity system is leading to more volatile prices, with the likely prospect of more frequent instances of low prices accompanied by infrequent price spikes, already brought the policy and regulatory debate to reconsider the role of long-term instruments and markets. The recent developments in the electricity markets, exacerbated by the impact on energy markets of the war of aggression in Ukraine, with much higher and more volatile prices than in the past years, apart from creating more risk for investors and market participants in the electricity sector, has created additional attention to the issue of whether the current market design should be complemented by other instruments, addressing the longer-term timeframe and supporting resource adequacy.

A much wider role of CfDs is now being considered. The challenge is to ensure that their design does not weaken the incentives for the contracted resources actively to participate in the short-term markets.

Introduction to the Debate and Opening Presentations

14.00 – 14.05   Introduction to the Debate

Alberto Pototschnig | Florence School of Regulation

14.05 – 14.15   The policy perspective

Paula Ceballos Coloma | Policy Officer, Internal Energy Market, DG ENER, European Commission

14.15 – 14.25   The role and design of Contracts for Difference: an academic perspective

Lena Kitzing | Head of Section, Wind and Energy Systems, DTU

Panel Discussion: Introductory Remarks, Polls, and Comments

Moderator: Ilaria Conti | Florence School of Regulation

14.25 – 14.50   Introductory remarks from the panellists

Juan José Alba Rios | Issue manager of market design, Eurelectric
Peter Claes | Vice-President, IFIEC
Clara Poletti | Chair of the Board of Regulators, ACER

14.50 – 14.55   Polls

14.55 – 15.20   Comments on the polls outcome and Q&A from the audience
Panellists

15.20 – 15.30   Concluding remarks
Ilaria Conti | Florence School of Regulation
Alberto Pototschnig | Florence School of Regulation

In this episode of FSR debates, we will look at a new tool designed by the UNEP International Methane Emissions Observatory for addressing climate warming.

Background

Methane is a powerful greenhouse gas responsible for over one-quarter of the climate warming we are experiencing today.

While emissions associated with fossil fuel sector have the greatest potential for cost-effective mitigation, global methane emissions from the energy sector continued to increase reaching 135 million tonnes in 2022, according to the 2023 edition of the flagship International Energy Agency’s (IEA) publication – Global Methane Tracker. The single largest methane release into the atmosphere by explosion of the Nord Stream pipeline last year is what normal oil and gas operations around the world release every single day. Timely detection and reduction of large emission sources is one of the most cost-effective methane reduction strategies.

To this objective the UNEP International Methane Emissions Observatory (IMEO) designed the Methane Alert and Response System (MARS) – the first global system that connects satellite methane detection to transparent notification process that promote on-the-ground emissions mitigation efforts. MARS harnesses state-of-the-art satellite data to identify major emissions events, activate its partners to notify relevant stakeholders, and support and track progress towards mitigation. Current satellite technology allows MARS to now tackle the largest emission sources, responsible for around 10% of emissions. As the technology quickly improves, the system will integrate additional data from the rapidly expanding system of methane-detecting satellites to include lower-emitting and area sources and more frequent detection. This will allow MARS to expand the system into the agricultural and waste sectors in the future.

Agenda

Opening remarks

Christopher Jones, Florence School of Regulation

UNEP International Methane Emission Observatory (IMEO) and analysis of the methane release at Nord Stream incident

Andreea Calcan, UNEP

Satellite Data and the Methane Alert and Response System

Cynthia Randles, UNEP

From data to action

K.C. Michaels, IEA

Q&A Moderated by James Kneebone, Florence School of Regulation

Closing Remarks

Tibor Stelbaczky, EEAS

With the global energy crisis and even more since Russia’s unlawful invasion of Ukraine, EU gas markets underwent an unprecedented period of extreme price volatility leading to record-breaking price peaks. Additionally, the gradually reduced flow of gas from Russia (going from approximately 40% of total EU gas consumption in 2020 to less than 9% at present) posed urgent questions regarding security of supply. Considering the large dependence of Europe on Russian gas imports and the overall tight gas market at global level, unable to provide a real replacement for Russian gas supply, the risk of energy shortages during the winter ahead was a real, tangible, dramatic one. 

Europe responded to this dramatic threat with a number of initiatives addressing the emergency, while at the same time taking into account a medium-long term scenario. Diversification strategies, a revised regulation for gas storage, increased targets for biomethane and renewable hydrogen and a number of other EU regulatory and practical initiatives were undertaken as to tackle and mitigate the potentially detrimental effects of the energy crisis.  

According to the recent IEA Energy Outlook “there remain huge uncertainties over how this energy crisis will evolve and for how long fossil fuel prices will remain elevated, and the risks of further energy disruption and geopolitical fragmentation are high”. Also, the role of investments has been and will remain crucial: “The world has not been investing enough in energy in recent years […]. A smooth and secure energy transition will require a major uptick in clean energy investment flows”.  

Speaking at a press conference about the outlook on EU gas supply in 2023, the President of the European Commission Ursula von der Leyen gave an overview of EU actions to address the energy crisis so far, as well as the planned strands of work in 2023. “Russia’s blackmail has failed” she reassured, and “we are safe for this winter”.  

With the emergency for this winter finally behind us, which lessons have we learnt? What is the energy outlook for Europe in the next months? Which instruments or activities should Europe prioritise as to secure a safe winter 2023/2024? 

Against this background, the Debate will explore the current outlook for European gas markets and will aim at identifying which are the priority actions and initiatives to be undertaken in the next months as to ensure security of supply to Europe. 

On the occasion of International Women’s Day, this debate aims at maximising the contributions of female speakers, with the scope of “shedding a light” on their knowledge as subject matter experts. 

Draft Programme

Introduction to the Debate and Opening Presentations

14.00 – 14.05   Introduction to the Debate

Ilaria Conti | Florence School of Regulation

14.05 – 14.15   The gas market demand and supply outlook

Sylvia Beyer | IEA

14.15 – 14.30  The EU policy perspective

Monika Zsigri | EU Commission‘s DG ENER

Panel Discussion: Introductory Remarks, Polls and Comments

Moderator: Alberto Pototschnig | Florence School of Regulation

14.30 – 14.50   Introductory remarks from the panellists

Boyana Achovski | GIE

Annegret Groebel | CEER

Eva Hennig | Eurogas

14.50 – 14.55   Polls

14.55 – 15.20   Comments on the polls outcome and Q&A from the audience
Panellists

15.20 – 15.30   Concluding remarks
Ilaria Conti | Florence School of Regulation
Alberto Pototschnig | Florence School of Regulation

In an effort to bring some clarity to the evolving landscape of industrial policy going into 2023, we dedicate this instalment of FSR Debates to what is happening in the US and EU.

There has been much consternation in Europe about the US Inflation Reduction Act (IRA) and the impact it could have on the competitiveness of European industry. The European Commission is responding with its own measures, including revised State Aid Guidance to allow Member States to match the subsidies of third countries. These exchanges come in the midst of an energy crisis which has hit energy-intensive industries in energy import-dependent regions especially hard, Europe has seen a major reduction in industrial output over the past year as a result.

As emissions targets squeeze and technological cycles close, industry are taking their next investment decisions, looking at where the strongest case is to establish the next generation of industrial value chains. Clean energy vectors such as renewable hydrogen will be amongst the key components for the buildout of these economies, and as such, their cost-effectiveness and availability will contribute to the decision-making of industrial players.

 “We are not exaggerating when we say that European industry — starting with the energy-intensive industries on the frontline — is facing an existential crisis.” (Luc Triangle, IndustriALL)

To open the session, Laima Eicke will cover the factors for success in different segments of industrial value chains based on her recent paper published with Nicola de Blasio. She will detail different classifications of countries based on their assets and limitations, as well as providing some case study examples – including Germany, the US, and Thailand. In the second part of the debate, the floor will be opened for debate amongst our panelists, covering expertise from around the world, with a focus on Europe and the US. The last minutes will be left for Q&A from the audience.

Programme

Introduction and moderation

Ilaria Conti | FSR

Keynote presentation

Laima Eicke | IASS, Harvard

Discussants

Michael Mehling | MIT, University of Strathclyde Law School

Matthew Bravante | BNEF

Laima Eicke | IASS, Harvard

Ruud Kempener | European Commission

Andris Piebalgs | FSR

Conclusions

Christopher Jones | FSR

This debate will explore the state of the art in the development of prosumption and will aim at identifying any remaining barriers and the ways to overcome them.

The energy transition, to achieve the ambitious energy and climate goals to which the European Union has committed, requires a significant increase in the share of renewables in final energy consumption over the next years. As has been the case so far, the electricity sector is expected to contribute more than proportionally to the overall target, with renewables expected to cover 70% or more of final electricity consumption by 2030.

The greater penetration of renewables in the electricity generation mix will be achieved partly with large-scale installations – for example, large offshore wind parks –, but a substantial contribution is also expected to come from distributed, small-scale installations. These will include installations at end-consumers’ premises. In such cases, consumers turn into ‘prosumers’, i.e. consumers which produce part or all of the electricity they consume, and possibly sell the excess electricity.

The current EU legal framework provides specific rights and obligations for prosumers, as active consumers, in particular in Article 15 of the Electricity Directive.

There are different forms of prosumption, ranging from individual households to collective prosumers in one building, from small and medium enterprises and public institutions to energy communities and cooperatives. The number of prosumers is increasing rapidly, at least in some countries. Moreover, there seem to be enormous potentials for electricity production from prosumers, mostly based on renewable energies. Estimates quoted by the European Environment Agency suggest that the share of total electricity demand in the EU, which could be covered by electricity production by prosumers could technically exceed 60% by 2050, with shares for individual Member States ranging from 26% in Malta to 77% in Cyprus.

Prosumption is expected to deliver benefits in different dimensions, but its development appears to be hampered by barriers. The European Environment Agency has identified barriers of five types: (i) regulatory barriers; (ii) financial barriers; (iii) technical barriers; (iv) social barriers; and (v) lack of knowledge and expertise.

Programme

 Introduction to the Debate and Opening Presentations

 14.00 – 14.05 Introduction to the Debate

Alberto Pototschnig | Florence School of Regulation (FSR)

14.05 – 14.15     The policy perspective

Adela Tesarova | Head of Unit, Consumers, Local Initiatives, Just Transition, DG ENER, European Commission

14.15 – 14.25     Energy prosumers in Europe

Javier Esparrago | Energy and Environment, European Environment Agency

Panel Discussion: Introductory Remarks, Polls and Comments

Moderator: Ilaria Conti | FSR

14.25 – 14.50     Introductory remarks from the panellists

Alessandro De Cristofaro | EnelX

Edwin Edelenbos| Netbeheer Nederland

Natalie McCoy | Customers and Retail Markets Working Group Co-Chair, CEER

14.50 – 14.55     Polls

14.55 – 15.20     Comments on the outcome of the polls and Q&A from the audience

Panellists

15.20 – 15.30     Concluding remarks

Ilaria Conti | FSR

Alberto Pototschnig | FSR

The Fit for 55 package is a set of proposals for European Union (EU) legislation to put the EU on the path to becoming climate neutral by 2050. The European Commission tabled the proposals in July and December 2021.

In May 2022, the REPowerEU communication proposed amendments in response to the energy crisis provoked by Russia’s aggression in Ukraine. The EU legislators have concluded a number of legislative files at the end of 2022, and others are under negotiation. Several additional proposals, such as electricity market reform, are expected to be tabled by the EU Commission in the first quarter of 2023. Even with some elements missing, the new shape of the EU’s energy policy is emerging.

This FSR Debate will feature an overview of what can be expected in 2023, the key challenges facing the co-legislators in reaching an agreement, and the main options.

The debate panellists will be asked what they think the legislators should do: What are the key elements of this new design? What impact will it make on stakeholders? Where do the legislators still need to pick the best choice?

Keynote presentation 

Christopher Jones | FSR

Discussants

Ilaria Conti | FSR

Lisa Fischer | E3G

Jesse Scott | Hertie School

Andris Piebalgs | FSR

Ronnie Belmans | FSR