No. 5 (42) ▪ May 2016 www.ceep.be ▪ No. 5 (42) ▪ May 2016 ALSO IN THIS ISSUE Jadwiga Wiśniewska, MEP The European steel sector in a crisis: from ambition to absurdity in the labyrinth of reforms▪page 2 COVER STORY Infrastructure is central to all of our energy objectives Dominique Ristori Europe can only be achi eved through better cross-border co- Director General at the European Commission, DG Energy operation. To implem ent the Energy Union, it will be essential to en- “The development of infrastructure networks is essential sure that action at EU, regional and national level is cohesive to complete European integration and in particular to and defined with common objectives in mind. Enhanced better connect economies of Central Europe with the rest regional cooperation between Member States will also be of the European Union,” Dominique Ristori, Director important for achieving the objectives of the Energy Union as General at the European Commission, DG Energy, wrote highlighted in the Energy Security Package adopted on Feb- in anexclusive message to CEEP members. ruary the 16th, 2016. More interconnections are still needed in specific regions. One of the priorities of the Junck er Commission is the There are several actions at European level to address the creation of a resilient European Energy Union with a forward infrastructure challenge. The second list of Projects of Com- looking climate change policy. In February 2015 the European mon Interest (PCIs) adopted in November 2015 sets out those Commission presented the Energy Union Strategy with a full projec ts that are urgently needed to achi eve our energy list of actions to be taken over the next five years. The funda- policy targets.1 Many of these PCIs are of direct rel evanc e to mental goal of the Energy Union is to ensure that the EU con- enhancing energy security in Central and Eastern Europe. sumers – businesses and citizens – will have acc ess to secure, These projects will enable the gradual build-up of the sustainable, competitive and affordable energy. Energy Union by integrating the energy markets and diver- Infrastructure is central to all of our energy objectives. This sifying the energy sources. PCIs benefit from accelerated per- is the case for energy security, or to provide affordable energy mitting proc edures and im proved regulatory conditions and to all or to meet our renewable energy targets. That is why may also be eligible for financial support from the Connecting modern energy infrastructure and interconnections are a k ey Europe Facility (CEF). They will also begi n to see benefits from element of this strategy. the instruments developed under the European Fund for Stra- To upgrade Europe's infrastructure, it has been estimated tegic Investments in 2016. that around EUR 200 billion is needed during the current In such a process, involvement of rel evant stak eholders is decade for transmission grids and gas pipelines. Not all inves- also important. CEEP is well plac ed to provide detail ed ana- tments are commercially viable how ever and the market alo- lyses on how industrial consumers see the bottl enecks in ne is likely to only provide half of the necessary investment. infrastructure development, in particular concerning projec t The developm ent of infrastructure networks is essential to and financial engineering, and the possibility of investm ent complete European integration and in particular to better con- project pooling at a regional scale. ■ nect economies of Central Europe with the rest of the Euro- 1 In November 2015, the Commission adopted the updated list of (195) Projects of Common pean Union. The large scale infrastructure projects needed in Interest (PCIs) (108 for electricity, 77 for gas, 7 for oil and 3 for smart grids projects) 1 No. 5 (42) ▪ May 2016 OPINION The European steel sector in a crisis: from ambition to absurdity in the labyrinth of reforms Jadwiga Wiśniewska of China as the main causes of this situation. In the face of Member of the European Parliament such policies, the steel sector is rather powerless, and grant- ing China the status of a market economy – which Beijing has The reform of the EU Emissions Trading Scheme (ETS), been seeking for a long time – would only further deepen which is to take place in the next decade, will mean only this crisis. In practice, such a decision would relieve the Euro- a deepening of the current problems for the steel sector pean Commission of its right to impose hi gher tariffs on Chi- throughout the European Union. nese goods, whereas 80% of current European anti-dumping actions are tak en against China. Previously, even photovoltaic An unrealistic ambition panels that are used for the production of green energy ‘Ambitious’ is a special word for the European Union’s cli- across the EU, were covered by one of these proceedi ngs. mate policy. Not only due to its declension in the EU’s docu- The irony is the fact that during production of these PV panels ments, but also because it usually stands for ‘unrealistic’. For in China, emissions are twice as high as in European factories. over 20 years, the EU concept to create the most environ- mentally-fri endly economy in the world has not changed, and assumes that building its position will be based on more and more abstract goals to reduce carbon dioxide emissions. The EU does not see that the global climate summit in Paris res- tored the two-pillar format, which is the only scientifically le- gitimate, way of thinking about the protection of the atmos- phere. In Paris, it was agreed that the necessary actions would involve both the reduction of emissions, as w ell as the natural absorption of CO2. Meanwhile, the EU's climate policy obses- sively focuses on solutions of the first group. As a result, the pace at which the EU is running for the title of ‘green l eader’ turns out to be truly lethal, and European industry bec omes its main victim. The British warning The European producers operating in the energy-inten- sive industries have long since come to terms with the idea that the increase in costs, associated with restrictive climate policy, will not allow them to becom e global leaders in this Without reflection on the industry. The data leaves no illusions: between 1995 and 2015, industrialisation shifted from Europe to the United Sta- consequences of actions taken, tes and Asia, whilst global emissions increased during this pe- the European Union runs riod by one-third. When strict environmental requirem ents are paired with difficult market conditions, the situation beco- the risk that its climate policy, mes dramatic. R ecent news from the UK mentions closing steel mills which provided 15,000 work plac es. It is impossible instead of being regarded as not to draw conclusions from these events. In comparison, ‘ambitious’, will be referred to the whole of the Polish steel industry directly employs 22,000 people, and one job in the steel industry creates another 5 in as ‘absurd’. The only question related sectors, such as mining, transport, and the coke indus- try. In Poland, this translates into a further 100,000 jobs. is whether or not it is too late Chinese free market? A selective image The reasons for the decision to close steel mills in the UK It is surprising that the EU is still not ready to openly admit have never been a secret: these are over-production and high that ideas have consequences, and the fight against global imports of Chinese steel, as w ell as the costs of climate policy warming is not a glorious exc eption among them. R epre- and high energy prices. Meanwhil e, the European Union, as sentatives of the European Commission in public statem ents always in the case of compl ex economic phenomena, perce- selectively present the effects of climate policy, denying at ives the entire situation in the most typical way – unilaterally. every juncture that the competitiveness of the EU economy is During the last m eeting of the European Parliament, Jean- weakened. At the same tim e, in the rec ent communication of Claude Junck er assured everyone that he recognises the se- the European Commission, we read that one of the reasons rious problems faced by the European steel industry, but for the price advantage of steel products imported from Chi- simultaneously, he pointed at the aggressive pricing policies na, is the ”less ambitious climate policy of some countries ▶ 2 No. 5 (42) ▪ May 2016 OPINION CONTINUED further restrictions. Sectors at risk of carbon leakage outside the Union – that is, among others, the steel sec tor – are to outside the EU.” It is also worth noting that calling China a receive free allowances by ref erenc e to the results of some of country with ”not a particularly ambitious” approach to envi- the most efficient installations (i.e. system of benchmarking). ronmental protection, is an understatem ent with regard to it Their emissions are generally lower than the EU average, and being the largest CO2 produc er in the world, and the main thus, do not reflect the capabilities of the entire sector. Even a ‘brakeman’ of a global climate agreem ent. Without a real, and cursory analysis, shows that the regulatory system of the EU's not specifically declared, reduction of carbon emissions, climate policy is ‘byzantine’. Its consequenc es have a real China’s shameful position will not change. financial dimension. The entry into force of the proposal in its present form, will lead to the steel industry receiving 40% less Labyrinth of ambitious reforms emissions permits by the end of 2030.