The Impact of Liberalisation on the Environmental Performance
The Impact of Liberalisation on the Environmental Performance of the Electricity Sector in Germany
Aim: to Answer the Following Questions during this Presentation: • How is the German Electricity sector administered? • Why did Germany Liberalise the electricity sector ? • What options did Germany select within EU Directive? • What were the results of Liberalisation?
German Electricity Sector Governance Ministry for Economics & Technology Ministry for Environment, Nature Conservation & Nuclear Safety Ministry for Education, Science, Research & technology Federal Cartel Office Responsible for Energy Policy Responsible for Environmental/ Energy Policy Co-ordinates energy research and development Controls Fair Competition & mergers Federal Level Länder Governments Implement law and grant licenses in their Länder Ministries of Economics/Environment Authorise single buyers, transit tariffs, supply tariffs
• • • Key Environmental/Electricity Legislation 5 laws - restrict emissions 4 Key laws that subsidise renewable energy and combined heat and power. Tax on Electricity - Eco tax & Tax on Gas Subsidies for energy efficiency programs. Voluntary agreements - phase out nuclear & reduce GHG emissions
Liberalisation Objectives in Germany • Political Objectives - to support EU unification and to promote diversification of energy supply • Socio-economic Objectives - to reduce costs of electricity and improve efficiency in East. • Environmental Objectives - to support the introduction of renewable energy and reduce GHG emissions.
Key milestones in German Liberalisation Process • 1989 - Federation Regulation on electricity Tariffs • 1998 - Energy law • 1999 - Amendment to the 1958 Act Against Restraints of Competition.
Extent Germany implemented EU Directive Requirement -Third Party Access - Competition restrictions noted - Regulator - Transmission System Operator - Permitted Reason to deny Access - Transmission charges - Market Opening - Tender or Authorisation - Unbundling of TSO - Supply unbundling How Implemented in German - Negotiated Third Party Access - Network access restrictions in E. - Federal Cartel Office - (TSO)8 transmission operators - Lack of capacity & Reciprocity - Point Tariff - Full market opening (1998) - Authorisation - Management is unbundled - Full unbundling Source: Adapted from Table by Euro. Electric in article ‘Implementation of the Internal Electricity Market Directive
Results of German Electricity Sector liberalisation • • • Access to the Grid Number of Players in the market Price of Electricity Finance and Risk Environmental Performance
No. of Players in the Market
No. of Players in the Market (cont)
The Price of Electricity
Finance and Risk has: 1. made it less attractive to invest in coal, nuclear, hydro and 2. changed Behaviour of players in the market: • Expansion within the usual segment of business • Growth by investing in non-electric utilities • International Expansion
Environmental Performance in the German Electricity Sector • • • Reduced Emissions CO 2 Reduced emission SO 2 and Nox Increase No. of Renewable Energy Constant Energy Efficiency Reduced Costs to German Government
Emissions of CO 2 Ministry for Economy & Technology 2001
SO 2 and Nox Emissions from the electricity Sector Ministry for Economy & Technology 2001
Environmental Performance in the German Electricity Sector • • • Reduced Emissions CO 2 Reduced emission SO 2 and Nox Increase No. of Renewable Energy Constant Energy Efficiency Reduced Costs to German Government
1990 Damage Costs: NOX, SO 2, NMVOC, NH 3 [European Commission 1998].
Conclusions • Environmental Performance • Transparency • Access to Grid • Ownership • Price of Electricity • Finance and Risk
The key aspects of liberalisation, if any, that have affected the environmental impact of electricity systems? Due to Germany‘s strong environmental regulation, Liberalisation has had a limited impact on the environmental performance of the electricity sector.
What are environmental/energy/technological policies implemented to control environmental impact? • Strong emission controls • Support to E. Germany to improve technology • Subsidies to support renewable energy, CHP, and energy efficiency. • Taxes • Voluntary Agreements with Business
Why are these Policies Successful? • Effective enforcement • Increasing environmental awareness leading to public support for strong governement actions • Culture where high level of State/Gov. intervention is considered good.
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