Mr Martin Crouch, ERGEG Electricity Regulatory Forum 2009 Florence, 5 June 2009 Status Review of Sustainable Development in the Energy Sector

2 Agenda What is sustainable development? Themes: Managing the transition to a low carbon economy in the energy sector Monitoring gas and electricity prices, customer choice and access to affordable energy Ensuring a secure and reliable gas and electricity supply in Europe Conclusion

3 What is sustainable development? The key objective is to assess the progress Europe has made in working towards the development of sustainable internal energy markets Focuses on an assessment of sustainable development which examines economic, social and environmental perspectives This assessment reflects the position taken by various European and international institutions (Brundtland Commission, UK, World Bank, EC)

4 Agenda What is sustainable development? Themes: Managing the transition to a low carbon economy in the energy sector Monitoring gas and electricity prices, customer choice and access to affordable energy Ensuring a secure and reliable gas and electricity supply in Europe Conclusion

5 Contribution of gas and electricity sectors to total GHG emissions, EU- 27 Total emissions have declined slightly but gas and electricity emissions have been stable. Contribution of gas and electricity emissions to total emissions has been about 27% over the period. Source: European Environment Agency

6 Evolution of carbon price Since beginning of Phase 2, carbon price remained above €20/tCO2 due to a more ambitious emissions ceiling than Phase 1. More recently, carbon price has declined due to decreasing demand and cuts in production. Source: European Climate Exchange

7 Proportion of electricity generation from renewables Proportion varies considerably across countries. The EU, as a group, has some way to go to achieve its 2010 targets. Source: Eurostat

8 Final energy and electricity consumption, EU-27 Final energy consumption has increased slowly but a more rapid increased occurred in final electricity consumption. Source: Eurostat

9 Agenda What is sustainable development? Themes: Managing the transition to a low carbon economy in the energy sector Monitoring gas and electricity prices, customer choice and access to affordable energy Ensuring a secure and reliable gas and electricity supply in Europe Conclusion

10 Household electricity prices, 2007 Electricity, cents/kWhGas, cents/GJ The share of taxes in household electricity and gas prices varies considerably across countries reflecting different policy priorities. Source: Eurostat

11 Household income and prices, EU-15 Electricity prices increased from Gas prices were more volatile but experienced a steep rise in Source: Eurostat

12 Agenda What is sustainable development? Themes: Managing the transition to a low carbon economy in the energy sector Monitoring gas and electricity prices, customer choice and access to affordable energy Ensuring a secure and reliable gas and electricity supply in Europe Conclusion

13 Energy dependency: Net imports as percent of energy consumption*, 2006 The more a country relies on imports to meet its energy demand, the greater its vulnerability to external supply disruptions. As a group, the EU imports a little over 50% of the energy it consumes. * Energy dependency includes all energy delivered to final consumer’s door (in industry, transport, households and other sectors) for all energy uses. Source: Eurostat

14 Electricity security of supply: Interconnection capacity as percent of total installed generation capacity, 2007 Five countries are below the 10% target established at the 2002 EU Summit in Barcelona. Source: CEER members

15 Gas security of supply: Storage capacity as percent of annual demand, 2007 Taken together, European storage capacity was equal to about 16% of annual European demand in Source: Global Markets Direct – Europe UGS Industry Report May 2008

16 Agenda What is sustainable development? Themes: Managing the transition to a low carbon economy in the energy sector Monitoring gas and electricity prices, customer choice and access to affordable energy Ensuring a secure and reliable gas and electricity supply in Europe Conclusion

17 Conclusion This is the first review on sustainable development that CEER has conducted The aim is to periodically update it to monitor the progress Europe is making in achieving its sustainability goals Feedback is appreciated on structure, content and indicators as well as work that CEER should undertake in this area. Feedback should be received by the end of the 2 nd quarter of 2009 to: The report can be found at: regulators.eu/portal/page/portal/EER_HOME/EER_PUBLICATIONS/ CEER_ERGEG_PAPERS/Cross-Sectoral 17

18 Thank you for your attention! Mark your diary for the World Forum on Energy Regulation IV October 18-21, 2009 Athens, Greece