EU needs to shake up energy markets: Draghi report
The EU should take measures in energy markets that are "dominated by vested interests", including antitrust investigations, a report from former European Central Bank president Mario Draghi found today.
The call came as part of Draghi's report into the EU's future competitiveness, which was requested last year by European Commission president Ursula von der Leyen. It identified cost-efficient decarbonisation as a major challenge, and said the bloc must focus on accelerated innovation and growth and overcome geopolitical dependence and vulnerability.
The report, which runs to more than 300 pages, says the EU should carry out antitrust investigation into electricity and gas markets, and into energy imports, to deter "anti-competitive behaviour and tacit collusion" among companies, it said.
There should be a common maximum level of energy surcharges in the EU covering all energy taxes, levies and network charges, the report found.
Draghi — a former Italian prime minister — put forward specific proposals for energy markets including the development of an EU-level gas strategy, progressively moving away from spot-linked sourcing and increasing EU bargaining power, and reinforcing long-term contracts. He argues for decoupling inframarginal generation from natural gas prices through long-term power purchasing agreements (PPAs) and contracts for difference (CfDs).
Draghi wants compensation mechanisms for offering flexibility on markets as well as joint purchasing of energy in addition to demand aggregation. Other ideas tackle speculative behaviour via position limits and dynamic caps as well as an EU trading rule book with "an obligation to trade in the EU".
A further proposal is a review of a so-called "ancillary activities" exemption, under EU financial regulation, whereby non-financials, typically energy, firms can trade energy derivatives more freely without being authorised as investment companies.
Speaking alongside Draghi today, von der Leyen noted the need to shift away from fossil fuels and support industry through decarbonisation, also by bringing down energy prices. Draghi's report noted the difficulty of cutting emissions in hard-to-abate industries, as well as in the transport sector.
Planning is crucial, the report noted. For industry, it recommended "a mixed strategy that combines different policy tools and approaches for different industries", importing some "necessary technology" while ensuring the bloc retains some manufacturing capacity.
It called for "a joint decarbonisation and competitiveness plan where all policies are aligned behind the EU's objectives."
Von der Leyen did not react to specific proposals put forward by Draghi, and she is not obligated to act on the report's proposals.
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Venezuelan vote ends in opposition leader's exile
Venezuelan vote ends in opposition leader's exile
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Brazil to build on G20 for climate leadership role
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Cop 29 boost key to setting much-awaited 2035 targets
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