1. Notat
European Commission
Dok. ansvarlig: CRO
Sekretær: cro
Sagsnr: 06/264
Doknr: 12
20-09-2006
Reply to the public hearing from the Association of Danish Energy
Companies on the Green Paper on a European Strategy for Sustainable,
Competitive and Secure Energy”
The Association of Danish Energy Companies hereby thanks the EU Commission for the opportunity to
comment on the important Green Paper on a coherent European energy policy.
Principal statements
Full and successful implementation of the European energy markets is a pivotal objective of the
European Union. We strongly support the Commission in its efforts towards opening the European
energy markets and recommend that new steps be considered that will deliver further progress both
on the regional and on the pan-European level.
- To obtain that goal it is vital with a non-discriminatory Emission Trading System in the EU after 2012,
covering a minimum of 10 year time horizon. The system should ensure equal treatment across
Europe irrespectable of location and should therefore not allow national differences in the allocation
principles. Concrete initiatives must be taken already now to remove the distortion of competition
inherent in the present system. It must also be a priority to make the Emission Trading System global
in the post-2012 phase.
- A stable long term regulatory framework must be ensured together with confidence in the price
formation and a clear division of roles, so that the market can and will ensure the right investments.
Together we must construct a positive investment- friendly business climate.
- Market design must be identical across borders. All suppliers must have equal and fair access to the
North European market. There is an urgent need to change the price regulation contained in the
obligations for the public service supplier (regulated retail prices) so that these prices does not
undermine the creation of a well-functioning end-user market.
- The adequate security of supply should be obtained through market based mechanisms and not by
imposing forceful limits on the producers’ choice of technology and fuel. The market ought to be able
to reward security of supply and investors have an incentive to spread investment risks.
- There is a need for closer regional coordination of System Operators and Regulators based on
common EU-rules and guidelines. Concrete results are more important than institutional set-ups.

2. 2
Further explanation of the principal statements
Full implementation af the internal energy markets
The most important principal priority for the work of Europe in the energy area in the years to come must
still be to create the optimum market design for the liberalised energy markets. It is a huge project that is
initiated and which must be completed in a proper manner in the coming years. The European energy
companies should be encompassed by equal and fair rules and a level playing field across Europe.
The further development of transparent and liquid wholesale markets is key and to that end we support
the Eurelectric Roadmap towards a pan-European Electricity market.
Improving the Emission Trading System
Equal rules across Europe is far from the case today. Especially concerning the environmental regulation,
in particular the national implementation of the Emission Trading System is so lop-sided that it has a
fundamental influence on where in Europe the investments in new power plant capacity will be made in
the coming years. This is a very serious market failure that should be corrected as soon as possible. In
the longer term the present directive should be replaced by a new directive that secures equal, simple
and transparent rules for all the European companies.
It is vital with a non-discriminating Emission Trading System in the EU after 2012, where the companies
are treated equally across Europe and with targets for the next 10 years as a minimum.
One result must be to create the right incentives for investments in low-emission power plants. There is a
need to further improve the investment climate for new environment friendly energy in Europe by
establishing and enforcing a predictable regulatory framework. Non discriminatory access to the grid is
essential in this context.
A market based common environmental regulation is therefore an important integrated part of a coherent
European energy policy, and cannot be treated as separated environment policy in the decision making
process.
Work has to be done on making the Emission Trading System apply worldwide in the long term.
Furthermore the EU must make it a high priority to create a fully global treaty to combat climate change.
Climate chance must be at the centre of the EU external relations policy.
Changing the Supply Obligation Regulation
All European end-users of energy must be ensured an offer for a secure electricity product at a
reasonable price. However, this consumer consideration can far from justify the comprehensive regulation
of the retail market that can be seen in several European countries. The regulation must be so open and
flexible that it ensures a real option for product innovation, a reasonable rate of return and a true
European end-user market with a more efficient competition.

3. 3
All suppliers shall have equal and fair access to the North European market in within a scope of very few
years.
Investments in new production to be decided by the market players
Long term scopes has to be ensured, confidence in the price formation in a transparent and liquid retail
market and a clear division of roles is vital, so that the market can and will ensure the right investments.
The right security of supply should be obtained through development of flexible products and by using all
the possibilities in the electric system - not by imposing limits on the manufacturers’ technology and
choice of fuel. The market ought to reward security of supply through the common European market
framework. The EU should play a facilitating role, aiming at keeping all options open. Market players
should have an incentive to diversify fuels and technologies as a natural mean to managing risk.
The challenges we face today in the energy field require innovative solutions. Innovation is needed on a
technological, institutional and company level and the EU strategy should actively support innovation in al
these areas.
Closer co-ordination between system operators and more efficient use of interconnectors across borders
In order to enhance the market functionality there is now a need for closely regional co-ordination
between system operators and regulators based on common EU-regulation and guidelines. It’s very
important, that the TSO’s behave in a non-discriminatory way in their daily behaviour, and aim at optimis-
ing the use of existing transmission lines within and across borders.
These goals must be made a reality within a few years. In order to reach fast progress we suggest a
pragmatic approach is taken from the Commission side.
In order to ensure the optimal use of the existing capacity on the cross-border interconnectors implicit
auctions should be applied on all borders where there are sufficient liquid power exchanges on both sides
of the border.