3.3.2016   

EN

Official Journal of the European Union

C 82/1

Rapporteur:

Daniel MAREELS

1.1.

The EESC welcomes the proposals to establish a system of ‘simple, transparent and standardised’ securitisation (STS securitisations) and to amend the framework in respect of prudential requirements for credit institutions and investment firms. These proposals fit within the broader context of the Action Plan on Building a Capital Markets Union  (1).

1.2.

The Committee welcomes the fact that the proposals on securitisation have been published swiftly, and simultaneously with the action plan to build a Capital Markets Union. It is important to take action on this in the short term. That should enable significant additional resources to be generated for bank funding. That is very important, for SMEs and households in particular.

1.3.

In the current European financial system, bank loans currently account for 75-80 % of the total funding of the economy and in the future SMEs and households will undoubtedly remain largely dependent on bank funding. Reviving securitisation markets could unlock an additional amount of credit for the private sector of EUR 100 to 150 billion, representing a 1,6 % increase in credit to EU firms and households. Furthermore, given their huge role in the European economy, the EESC has previously underlined the importance of securitisation as regards SMEs.

1.4.

With regard to bank funding, the Committee believes that this goes hand in hand with market-based funding, which is to be further developed within the Capital Markets Union. The two forms of funding should be considered complementary rather than competing.

1.5.

The Committee believes that taking a holistic approach should be a key priority. In establishing the new securitisation framework, the EU should proceed on a sustainable and thorough basis and seek to strike the right balance. At all levels, all the required objectives and the interests of all stakeholders should be taken into account. In this regard, the efforts being made to enhance the stability of the financial system are appreciated, as is the approach taken whereby investors have both rights and obligations.

1.6.

To revive securitisation the rules need to be sufficiently broad. The STS criteria should be realistic and feasible for all banks, both the large banks and the small local banks, which are involved in issuing bank loans. Securitisation should be equally attractive to investors. If successful, it could make an important contribution to ensuring better funding of the economy, increasing investment and boosting growth. At the same time, there should be clarity as to the risk involved and who bears that risk, taking account of the whole chain from the issuer to the investor. The important thing now is that the mistakes of the past are not repeated.

1.7.

The principles of security, transparency and enforcement should all feature in the new framework, in order to bolster confidence in the new markets. Supervision by both the ECB and national supervisory authorities should be developed appropriately, and the international dimension must not be overlooked.

1.8.

Due to the complexity and risk involved, the Committee concurs with the view that small investors and consumers should not have access to securitisation. The Committee believes, however, that the current non-binding approach is not sufficient and calls for a formal prohibition to be explicitly included in the texts.

1.9.

It is proposed that the system be assessed after a period of four years. The Committee would prefer to see this assessment happen sooner. A period of 2 years would be appropriate.

1.10.

In the Committee’s view, it is very important that EU policy makers play a key role in the international and global debate on securitisation in order to safeguard the European acquis and ensure sufficient harmonisation at international level.

2.1.

Upon taking office, the Juncker Commission set itself three top priorities: growth, jobs and investment.

2.2.

To achieve this, it drew up an Investment Plan for Europe based on 3 pillars:

2.3.

With its action plan to build a Capital Markets Union, published on 30 September 2015, the Commission is seeking to mobilise capital in Europe, create a single capital market and achieve a major part of the third pillar of its Investment Plan by 2019.

2.4.

The proposals on securitisation  (3) were put forward simultaneously with the action plan. They comprise a legislative package of two proposals, which deal with each individual aspect:

2.4.1.

firstly, a proposal on securitisation. The proposed regulation covers the development of a common substantive securitisation framework for all participants in this market and the identification of a subset of transactions meeting certain eligibility criteria: ‘simple, transparent and standardised securitisation’ or ‘STS-securitisation’; (4)  (5) and

2.4.2.

secondly, a proposal to amend the existing regulatory framework on capital requirements for credit institutions and investment firms (the Capital Requirements Regulation (‘CRR’)), which aims to provide for a more risk-sensitive prudential treatment of STS securitisations (6), so that the specific features of STS securitisations are duly taken into consideration.

2.4.3.

While the first proposal includes a number of provisions applicable to all securitisations, above all it also creates a specific framework for STS-securitisations. ‘STS’ refers to the process through which the securitisation is structured and not the underlying credit quality of the assets involved.

2.4.4.

The second, complementary, proposal concerns the prudential treatment of securitisations, to better reflect their specific features. In particular, it sets out the capital requirements for positions in securitisations, including a more risk-sensitive treatment for STS securitisations.

3.1.

The EESC welcomes the fact that the proposals on securitisation have been published simultaneously with the action plan to build a Capital Markets Union. It is now important to move quickly here. Indeed, Europe’s economies remain hugely dependent on bank funding. In the European financial system, bank loans account for 75-80 % of the total funding of the economy (7). The Committee believes that bank- and market-based funding go hand in hand and should be considered complementary to each other.

3.2.

Furthermore, investment levels remain well below what they were prior to the economic and financial crisis. While gross domestic product (GDP) and private consumption in the EU were in the second quarter of 2014 roughly at the same level as in 2007, total investment was about 15 % below 2007 figures (8).

3.3.

The EESC has previously underlined the importance of securitisation, particularly as regards SMEs, which remain dependent on bank funding (9). SMEs play an important role in the European economy as they account for more than 98 % of Europe’s businesses, provide more than 67 % of private sector jobs in the EU and account for 58 % of gross value added produced by businesses in the EU (10).

3.4.

In addition, SME loan securitisation is currently very limited, in contrast to property securitisation, which suffered little from the financial crisis. For the time being, SMEs account for only 8 % of the securitisation market, as against 58 % for RMBS (11). The Committee considers, therefore, that there should be a particular emphasis on SME-backed securitisation under the strategy for establishing a single capital market.

3.5.

Reviving the securitisation market, and particularly the SME segment, is important. In the Investment Plan for Europe, establishing a sustainable market for high-quality securitisation was listed as one of the five areas where short-term action was needed. If the securitisation market were to return to pre-crisis average issuance levels and new issuance were used by credit institutions to provide new credit, this would unlock an additional amount of credit for the private sector ranging from EUR 100 to 150 billion. This would represent a 1,6 % increase in credit to EU firms and households (12).

3.6.

The EESC has previously advocated a revival of this market, albeit subject to certain conditions. It believes that, in order to avoid the past mistakes of the US, the use of securitisation should be properly regulated (13). Also, to achieve a sustainable high-quality securitisation market, basic structures must be promoted, with short chains of intermediaries to link borrowers and savers directly (14).

3.7.

In the EESC’s view, it is now important to take a holistic approach and proceed on a sustainable and thorough basis, taking into account and striking the right balance between all of the required objectives and the interests of all stakeholders. Any action taken should have positive and beneficial effects for the financing of the economy (see above), for the stability of the financial system and for the interests of investors.

3.8.

Opting for a regulation to achieve this initiative is a good choice in the Committee’s view, if the aim here really is to build a single market. The rules need to be sufficiently broad and attractive to investors, so that, in practice, they can have the desired effect.

3.9.

The Committee acknowledges the efforts being made to enhance the stability of the financial system and the potential contained therein. Thus, a number of transparency obligations are provided for in the proposals and they facilitate a broader, more efficient distribution of risk across multiple players both within and outside the financial sector.

3.10.

The EESC attaches importance to these transparency obligations, given that a lack of transparency and standardisation constitute one of the biggest obstacles to the development of the securitisation market. The basic principle of distinguishing between the various categories of securitised products and the introduction of simple, transparent and standardised products is thus considered a suitable means of increasing investor confidence and reviving the market.

3.11.

The risk retention requirement obliges the originators themselves to retain a minimum level of risk in the portfolio, and the Committee deems this to be an appropriate general principle. It is also stated that a recurrence of the ‘originate to distribute’ models must be prevented.

3.12.

Investors have both rights and obligations. Responsibility lies with investors, not least as regards the due diligence obligation they have towards securitisations in which they are going to invest. Otherwise, if all responsibility were transferred to the supervisory authorities and governments, an undesirable ‘moral hazard’ issue would arise.

3.13.

Securitisation transactions and markets can, in certain circumstances, entail some risk, as the mistakes made in the recent past have clearly shown. In proceeding to revive the securitisation market, it is crucial that past mistakes are not repeated, as indeed was expressly stated by the Commission in its Investment Plan in late 2014. In the new environment, there should be clarity as to the risk involved and who bears that risk. With the harmonisation of reporting standards, the submission of more structured data and the use of standard templates, it will be possible to increase investor confidence and enhance risk assessment. Combined with better quality data, this should help to largely do away with the need for the involvement of external credit rating agencies.

3.14.

The principles of security, transparency and enforcement should all feature in the new framework, which may also benefit confidence in the new markets. Supervision should be developed appropriately and the international dimension must not be overlooked.

3.15.

Furthermore, the Committee welcomes the principle whereby these transactions and markets are restricted to professional and institutional investors, banks and other long-term investors. The draft texts put forward the view that small investors and consumers should not have access to this market. Given the complexity of the issue and the risks involved, this is the right approach, but the Committee calls for this to be formally incorporated into the texts as an express prohibition.

3.16.

This Committee is aware that these proposals are limited to promoting the harmonisation of a number of key elements in the securitisation markets and do not prejudge further complementary market-led harmonisation of processes and practices in these markets. All efforts in this area warrant careful attention, monitoring and evaluation.

3.17.

As regards the review of this initiative, which is to take place four years after its entry into force, the Committee would advocate shortening this period to two years, in order to maximise its chances of success.

3.18.

Furthermore, it is important that EU policy makers play a key role in the international debate on this issue, in particular in the discussions in Basel (15) on developing a prudential framework for simple, transparent and standardised securitisations, in order to ensure sufficient harmonisation at international level.

3.3.2016   

EN

Official Journal of the European Union

C 82/6

Rapporteur:

Emilio FATOVIC

1.1.

The EESC supports the Commission’s proposal to establish a framework for energy labelling in the belief that, if properly implemented and combined with the Directive on Ecodesign, it could have a positive impact on the environment, consumers, businesses and workers.

1.2.

The Committee believes that the proposal addresses the main problems relating to current legislation, including effective enforcement, efficient market monitoring and the right of consumers to receive clear, comprehensible and comparable information. In particular, the EESC calls on the Commission to continue the process of standardising and simplifying energy classes for all product categories.

1.3.

The EESC agrees with using a regulation, as opposed to a directive, as an instrument designed to ensure effective and uniform implementation of the legislation across the whole of Europe.

1.4.

In the Committee’s view, it was the right choice to set up a product database, a tool that will help make market surveillance more effective. The EESC nevertheless considers it essential to introduce stricter controls on products on sale to check that the characteristics of the product actually correspond to those shown on the label.

1.5.

The EESC calls on the Commission to devise and fund common standardised training courses for all workers and others involved in surveillance and monitoring.

1.6.

The EESC endorses the decision to revert to the previous A-G energy scale, which is easier for consumers to understand, and to introduce a colour scale from green to red to identify more clearly a product’s energy efficiency.

1.7.

The Committee proposes producing a new graphic design for the energy label to combat counterfeiting and avoid creating confusion among consumers, particularly during the transitional period. It would also suggest greying out the colour scale for classes where there are no products on the market, or where rescaling has taken place or as a result of the limits imposed by the Ecodesign Directive.

1.8.

The EESC proposes including other information of relevance to consumers in the new label, such as the minimum life-expectancy of products and the energy consumption of the product in the course of its lifecycle, also taking into consideration their carbon footprint. This information is essential in order to make energy products in different classes genuinely comparable cost-wise and prevent and discourage planned product obsolescence.

1.9.

The EESC considers that to leave an aspect as crucial as the adoption of a system of penalties to the individual Member States would result in uneven enforcement of the rules, defeating the purpose of replacing the directive with a regulation.

1.10.

The Committee believes that, in line with the principle of subsidiarity, the EU will have to take action to make high energy efficiency products more readily accessible to the more disadvantaged social groups as a means of tackling the phenomenon of energy poverty.

1.11.

The EESC believes that just as the ‘design for all’ principle promotes the design of products that can be used by everyone, so too should labels be increasingly easy to understand for everyone, taking into particular consideration the needs of people with disabilities.

1.12.

The Committee calls on the EU to take action to prevent any additional costs under the new labelling system from being automatically passed on to retailers or end users.

1.13.

The EESC regrets that there is no ad hoc strategy for online commerce, and would on the contrary consider this a necessity, as it is one of the areas where enforcement is widely neglected. It hopes, in particular, for prompt action to regulate online marketplaces, where the most serious infringements of the obligation to display energy labels occur.

1.14.

The EESC notes the absence of ad hoc measures for ‘reprocessed’ energy products. The EESC considers it particularly important to regulate the marketing of such products where they are on sale in specialist outlets, to avoid creating legal loopholes and above all to promote greater integration between strategies on energy efficiency and on the circular economy.

1.15.

The Committee calls on the European Commission to pay particular attention to products imported from third countries, in order to protect European products from possible forms of unfair competition or fraud where labels are patently forged.

1.16.

The EESC believes that the European Union will only be able to achieve its energy efficiency targets if consumers are actively involved. For this reason, it requests that organised civil society work alongside national governments in order to launch more effective and widespread information and awareness-raising activities, including for individual retailers.

1.17.

The Committee supports the proposal to make it mandatory for advertisements to include the energy label for each individual product or, where this is not feasible, at least the energy class, in order to better inform consumers and raise their awareness.

1.18.

The EESC believes that a single week, at the end of the transition period, does not allow enough time to switch permanently to products labelled under the new system. It therefore requests that the period be extended to 30 days.

1.19.

The EESC urges the Commission to adopt a more prudent and measured approach to delegated acts. In particular, it hopes that delegated acts will be clearly defined, that scrutiny by the Parliament will be guaranteed and, above all, that the adoption of delegated acts will always be subject to proper consultation and involvement of Member States, the EESC and stakeholders.

1.20.

The EESC considers the period of 8 years for reviewing the framework for labelling to be appropriate, but would however propose carrying out a mid-term impact assessment.

1.21.

The Committee considers it crucial that an unequivocal, stable rescaling mechanism be designed so that subsequent rescaling made necessary by technological developments on the market is inexpensive, precise and unambiguous. It would therefore propose rescaling only when products in energy class A represent at least 20 % of the market.

2.1.

On 25 February 2015, the European Commission published the Energy Union Package, which consists of three communications:

2.2.

The Energy Union strategy, based on a holistic approach, aims to improve security, sustainability and competitiveness of energy supply, and is made up of five components:

2.3.

The Regulation setting a framework for energy efficiency labelling and repealing Directive 2010/30/EU (2) is part of the above strategy.

2.4.

The new framework for labelling has a close relation in Directive 2009/125/EC on Ecodesign (3). According to the climate and energy commissioner, Miguel Arias Cañete, by jointly implementing the two provisions, ‘Europe 2020 will save as much energy as is used every year in Italy, the equivalent of 166 million tonnes of oil’, with a major impact on CO2 reduction.

2.5.

The new Regulation takes into account, inter alia, the findings of the ex-post evaluation of the current legislation, the results of consultations with the public and stakeholders and a specific impact assessment (4).

3.1.

The Commission’s proposal now for the first time takes the form of a regulation and no longer that of a directive, the aim being to simplify the regulatory environment for the Member States and businesses, and above all to ensure that the principles contained in it will be uniformly implemented and enforced across the European Union.

3.2.

The proposal envisages creating a product database to make market surveillance more effective. The onus will be on manufacturers to enter a range of information in the database. It is important to stress that at the present time this information already has to be supplied by businesses on request by national market surveillance authorities. For this reason the European Commission estimates that additional costs to businesses will be minimal (5).

3.3.

The proposal seeks to revise the existing energy scale, introduced under Directive 2010/30/EU, for two reasons:

The Commission therefore proposes reverting to the previous A to G scale as it is considered easier to understand, which will mean ‘rescaling’ all products currently on the market. Classes A and B will be left free, to avoid the problem of immediately filling the top classes (6). For the purpose of making labels more complete and comprehensive, a colour scale going from green to red will be introduced on labels to indicate products that are more or less efficient in energy terms.

3.4.

The proposal provides for a 6-month transition period in which the products on sale today will be available with a dual label in order to carry out the ‘rescaling’ process properly, without creating further confusion among consumers. In addition, Member States will have to organise ad hoc campaigns in this phase to inform consumers about the new labelling system.

3.5.

According to the Commission, the respective Member States should continue to be responsible both for monitoring and for laying down a system of penalties (7).

3.6.

The Commission is granted the power to adopt delegated acts to ensure that the legislation is correctly implemented. This power may be revoked at any time by the Council and the Parliament. The Commission will have to ensure, for each delegated act, that there is balanced participation on the part of Member States’ representatives and stakeholders with an interest in the specific product category. Member States and stakeholders will be brought together in an ad hoc consultative forum.

3.7.

The next assessment of the labelling framework is expected to take place in 8 years’ time. The labels of products already on the market will be reviewed within 5 years, whereas a precise time frame has not been established for rescaling products put on the market after the regulation has been adopted.

4.1.

The EESC welcomes the Commission’s proposal, which stems from the realisation that energy labelling has a positive impact on the environment, consumers, European businesses and employment levels (8).

4.2.

The EESC attaches an important strategic role to the new labelling system, in addition to a purely technical one, since it affects, directly and indirectly, the fields of energy, internal trade, technological development, the environment and, more generally, the process of sustainable development.

4.3.

The EESC recognises that the proposal has the merit of addressing the main problems arising from the current legislation, although in some instances it lacks ambition and vision. For example, the proposal focuses on solving immediate problems of an imperative nature but fails to envisage possible future developments in energy trade and production.

4.4.

The EESC calls on the Commission to continue the process of standardising and simplifying energy classes for all product categories. This will play an important part in encouraging consumers to be more selective in their purchases, promoting higher quality products.

4.5.

The EESC supports the use of a regulation, as opposed to a directive, as an instrument designed to ensure effective and prompt implementation of the legislation in a uniform manner across the whole of Europe. Selective use of this instrument is crucial also from the perspective of an efficient process of European integration.

4.5.1.

The Committee supports the proposal to set up a product database, a tool that is essential if market surveillance is to be made more effective. Indeed, it notes that in many European states, consumer associations have repeatedly raised the issue of the non-implementation of the previous Directive 2010/30/EU and, as a result, the presence on the market of products that did not bear labels on energy consumption. This also needs to be done to ensure that there really is a level playing field in competition between products on the internal market.

4.6.

However, the EESC considers that building a product database is important but not decisive when it comes to proper market surveillance, and hopes that the authorities concerned will introduce stricter controls on products on sale to check that the characteristics of products actually correspond to those shown on their labels.

4.7.

In view of the highly technical nature of market monitoring and surveillance, the EESC calls on the Commission to devise standardised and common training courses for workers and others involved in market surveillance and monitoring, with specific funding lines, so that the regulation can be implemented with due speed and effectiveness in all Member States.

4.8.

The EESC agrees with the decision to revert to the previous energy scale A-G, as this is easier for consumers to understand. The Committee points out, by way of example, that there is a difference in energy consumption of 42 % between a refrigerator in class A+++ and one in class A+, and yet the current labelling system does not make it immediately apparent that there is a difference in terms of energy efficiency and costs. As a result, for certain product categories, the principle of ‘spending more to spend less’ prevails, allowing consumers to recover the cost of higher category products within a short period of time. This, however, means that labels need to be clearer, more comprehensible and more comparable.

4.9.

The EESC considers that the prime objective of this proposal is to ensure that it is applied evenly across Europe. However, to make such a crucial aspect as the adoption of a system of penalties a matter for the individual Member States will result in uneven enforcement of the rules, defeating the purpose of replacing the directive with a regulation.

4.10.

Overall, the EESC takes the view that the new structure of the labelling system will be able to:

4.10.1.

ensure that consumers receive more accurate, relevant and comparable information on the energy consumption and efficiency of all products sold in the EU, enabling them to make purchases that are informed, cost-effective in the long run and environmentally friendly;

4.10.2.

improve free movement of products while ensuring a level playing-field. This will also strengthen the competitiveness of European firms by providing them with an incentive to innovate, as they will have the advantage of gaining access to the market before non-Member State firms, with the prospect of higher profit margins;

4.10.3.

bolster employment levels, provided that European companies commit to halting relocation of production, thus indirectly helping to relaunch European production and domestic consumption.

5.1.

The EESC believes that the new labelling system is an improvement on current legislation but does not address all the information needs of consumers. With this in mind, the EESC proposes including other data in the label, such as the minimum life-expectancy of products (9) and their energy consumption in the course of the lifecycle, also taking into consideration their carbon footprint. This information is essential when it comes to making energy products in different classes genuinely comparable cost-wise and prevent and discourage planned product obsolescence.

5.1.1.

Further information that would be useful though not indispensable for consumers, such as the additional energy cost generated by products used in home automation, could be made available through a dedicated website on product energy efficiency or by applying a QR-code to the label so that each product is easily accessible from tablets and smartphones, as has already been done for similar purposes with other commercial products, with a view to gradually introducing the action plan on the internet of Things (10).

5.2.

The Committee proposes producing a new graphic design for the energy label to prevent counterfeiting and avoid confusion among consumers, particularly during the transitional period. It also suggests greying out the colour scale for classes where there are no products on the market, so as not to discourage consumers from purchasing. This should be done both for the lower classes, where products have been taken off the market by the Ecodesign Directive, and for the higher ones, either because they have not yet been attained by products on the market or as a result of the rescaling process.

5.3.

The EESC reminds the Commission of what it has already stated in opinion TEN/516 (11) and, in particular, of the problem of energy poverty affecting over 50 million citizens across the whole of the EU. This means that, in accordance with the principle of subsidiarity, the Union will have to do everything possible to make high energy efficiency products accessible to the poorest and most deprived social groups. At the same time, the European Union must take action to prevent any additional costs under the new labelling system from being automatically passed on to retailers or end users.

5.3.1.

Many European States have already successfully introduced good practices in subsidiarity and accessibility of energy products. One of these is the possibility of deducting the cost of energy products in the top classes in income tax statements. Nevertheless, over and above national good practices, however useful and important they may be, the EESC hopes that the European Union and the European Council, in particular, given the importance of the challenge of energy efficiency, will put their weight behind the subsidiarity principle in practice and take measures to create a single strategy to involve all Europeans in the ‘energy revolution’.

5.4.

The EESC believes that just as the ‘design for all’ principle promotes the design of products that can be used by everyone, so too should labels be increasingly easy to understand for everyone, taking into particular consideration the needs of people with disabilities.

5.5.

The EESC regrets the absence of a specific strategy for online commerce, as turnover is growing constantly and, to date, it is one of the areas where comparability of products and in particular market surveillance are the most complex and difficult. As reported by the MarketWatch observatory, only 23 % of products sold online bear the correct label. This represents a market distortion, to the obvious detriment of firms and consumers.

5.5.1.

The Committee notes that not enough has been done to link the proposed new regulation with the current Commission Delegated Regulation (EU) No 518/2014 with regard to labelling of energy-related products on the internet, which entered into force on 1 January 2015. This regulation, among others, stipulates that the label is compulsory for new products but not for those already on the market, where it is only voluntary. Furthermore, it does not address the problem of online marketplaces, where the consumer often inadvertently buys goods offered for sale by third party advertisers and where the site bears no liability for false or incorrect advertisements.

5.6.

The EESC notes that neither the current nor the new system of labelling broach the subject of ‘reprocessed’ energy products. In this respect the EESC considers it correct and necessary to regulate the marketing of such products, particularly where they are sold by specialist outlets, to avoid creating legal loopholes and above all to link the Ecodesign Directive more closely with the Commission communication Towards a circular economy  (12). The EESC would also refer here to the positions it has already taken in the past against planned obsolescence, where it encourages the marketing of more durable and resilient products (13).

5.7.

The EESC calls on the European Commission to pay particular attention to products imported from third countries, in order to protect European products from possible forms of unfair competition. In particular, the Committee calls on the Commission to launch a major campaign against counterfeit labels, making labels difficult to forge, by tightening controls on subjective and objective compliance and, where labels are patently counterfeit, by imposing penalties on the importer and withdrawing the product from the market.

5.8.

The EESC would emphasise that educating consumers in how to purchase and use products in full knowledge of the facts is crucial to achieving the European Union’s energy efficiency objectives. The Member States are rightly expected to play a key role through ad hoc information and awareness raising campaigns. However, the EESC wishes to see the active involvement of organised civil society both at national and European levels with a view to communicating more effectively and extensively (14), including with individual retailers.

5.8.1.

The Committee supports the Commission’s proposal to make it mandatory for advertisements to include the energy label for each individual product or, where this is not feasible, at least the energy class, so that consumers are better informed and more aware when purchasing and using energy products (15).

5.9.

The EESC highlights the need to review some aspects of the transition period necessary for the ‘rescaling’ of products. The regulation specifies that on expiry of the 6-month period referred to above, 1 week is sufficient to move from a system of dual labelling to one with where only products labelled under the new system remain. This time limit risks being far too short and unrealistic, which is why the Committee is requesting it to be extended to 30 days, the amount of time granted by law to businesses for carrying out their inventories.

5.10.

The EESC urges the Commission to take a more prudent and measured approach to delegated acts. In particular, it hopes that delegated acts will be clearly defined, that scrutiny by the Parliament will be guaranteed and, above all, that the adoption of delegated acts will always be subject to proper consultation and involvement of Member States, the EESC and stakeholders (16).

5.11.

The EESC is in favour of setting up an ad hoc consultative forum in order to establish a structured dialogue between the Commission, the Member States and stakeholders.

5.12.

The EESC considers the period of 8 years laid down for the review of the labelling framework to be reasonable, although it would advocate a thorough assessment in the medium term to evaluate comprehensively the impact and the actual state of implementation. An initiative of this kind is considered all the more appropriate given that the present proposal aims to move from a directive to a regulation.

5.13.

The Committee considers it crucial that an unequivocal, stable rescaling mechanism be designed so that subsequent rescaling made necessary by technological developments on the market is inexpensive, precise and unambiguous. It would therefore propose rescaling only when products in energy class A represent at least 20 % of the market.

3.3.2016   

EN

Official Journal of the European Union

C 82/13

Rapporteur:

Mr Lutz RIBBE

1.1.

The EESC welcomes the communication and supports many of the proposals put forward, which are the logical outcome of the discussions on the European Energy Union.

1.2.

The market improvements which the communication outlines, including intraday trade, getting rid of rules which distort competition, demand-side management and creating the right price signals are in principle appropriate and important measures for redesigning the energy market, which in future will be more strongly geared to the specific nature of variable, decentrally produced renewable energies (VRE).

1.3.

The safe and affordable supply of businesses and households with (cleaner) energy provides a vital basis for the economy and people in today’s society. In principle, therefore, the supply of energy is a matter for the whole of society and ensuring this supply requires a careful balance between the market and regulation. To date, this has not been properly discussed at the political level and nor does the communication do so.

1.4.

The goal of a low-carbon energy supply, with a high proportion of adjustable renewable energy sources, can only be achieved in the short to medium term if all market participants (including new ones) have at their disposal enough options that afford flexibility, such as sufficient storage capacity, flexible, consumer-friendly demand options and flexible power generation technologies (e.g. cogeneration), as well as adequately upgraded and interconnected power distribution infrastructure. Other conditions are that consumers must receive adequate, timely and correct information, they must have the chance to develop their own marketing opportunities and the necessary investments in technology and infrastructure should pay off. None of this is currently the case.

1.5.

Price signals are important, since the transformation of the current system will require large investment. With exchange prices currently standing at 30 or 40 EUR/MWh, investments cannot be refinanced, whether they be in new electricity production capacity or in storage technologies. Such exchange prices are only attainable because, among other things, a lot of electricity from power plants whose costs have been paid off is coming onto the market and subsidies are being paid for electricity produced from coal, nuclear power and renewable energy. In other words, today’s exchange prices do not even reflect the real cost structure. Prices on the electricity exchange provide a distorted picture of actual energy costs due to subsidies and over-regulation. The correct signals for the large investments necessary for transforming the existing system can only be achieved with realistic and transparent prices.

1.6.

Completely new approaches to pricing are therefore needed in order to create an economic basis for the new network quality (including demand-side management and storage) that is desired. One approach would be to gear the regulatory elements more towards the desired innovations and to better assess the stability of the system.

1.7.

In future, prices must reflect the true overall costs of electricity generation, supply and disposal, including the negative external effects (e.g. CO2 emissions). Pricing must be realistic. This also means that the Commission should adapt its own subsidy system and that the ongoing practice of setting prices at national level should be abolished. The Commission has yet to produce a coherent plan for this.

1.8.

The big technical challenge posed by the new energy system is that electrical energy will in future no longer be centrally managed and flow from large power stations to consumers (‘top-down approach’). Instead, new ‘production and supply islands’ will emerge which must be interconnected (‘bottom-up approach’) and will be based on a large number of decentralised renewable energy sources — some of which will be variable —, with demand-side management (including storage) and local/regional marketing playing a key role.

1.9.

The EESC has on a number of occasions stressed that such new, decentralised energy systems provide opportunities — and not only in terms of public approval of the necessary structural changes and required investments (1). In terms of the regional economy, too, new prospects and new opportunities for value added may emerge outside the familiar systems. New technologies are making it possible to re-establish a link between regional development and energy policy. What is more, interconnected supply islands provide greater safeguards against possible attacks on key infrastructure.

1.10.

The Commission therefore needs to think about the trading system in terms of the energy infrastructure required without attempting to make the necessary changes to energy infrastructure compatible with the current trading system. It also needs to consider together with market operators what changes to energy infrastructure and the trading system would create the conditions to bring about a more diverse, flexible, consumer-centred and cost-effective energy system.

1.11.

The EESC welcomes not just the Commission’s statements on the new range of stakeholders, but regards as even more important the active involvement of consumers (i.e. businesses, citizens, municipal utility companies, etc.) in production and direct local or regional marketing. If businesses, members of the public or any municipal utility companies were to decide today to use local and regional energy sources, in the form of jointly coordinated solar or wind installations, for example, then it should be much easier for them to use the generated energy directly without going through an exchange or traders, and/or to market this energy directly without difficulty. Here too, the Commission document leaves many questions unanswered.

1.12.

The Commission has on several occasions underlined the fact that renewable energy still faces obstacles which must be removed and that renewable energy sources must be promoted in accordance with the market requirements and on a regional basis. The EESC agrees with this but notes that the extension of the market and reduced regulation will not of itself lead to an increase in renewable energy production. Unfortunately, however, the communication provides no indication of what exactly the Commission has in mind to address this.

2.1.

In its Political Guidelines, the Juncker Commission made the development of a resilient Energy Union with a forward-looking climate policy one of its strategic objectives.

2.2.

This ambition was confirmed in the Commission Work Programme for 2015 (2) and further detailed in the framework strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy (3): alongside a reliable and affordable energy supply, the aim is to create a sustainable and environmentally friendly energy system with strong market competition and innovation. The framework strategy places special emphasis on the public taking an active role in the new design of the energy system. The reorganisation of the energy market, particularly the electricity market, is an important step towards achieving these objectives.

2.3.

The public consultation launched together with the publication of the Commission communication should help overcome a number of significant challenges which stand in the way of building a sustainable energy system.

2.4.

According to the European Commission, these challenges are linked to the fact that: ‘The existing market concept dates from an era in which large-scale, centralised power plants, largely fuelled by fossil fuels, had the key aim of supplying every home and business in a limited area — typically a Member State — with as much electricity as they wanted, and in which consumers — households, businesses and industry — were perceived as passive.’ The Commission’s aim is a ‘fundamental transformation of Europe’s energy system’, with a more decentralised electricity generation system based firmly on variable energy sources, where there are many more market participants with changing roles and where demand-side management poses a new and important challenge.

2.5.

The Commission singles out the following specific challenges:

2.6.

The Commission has come up with a series of measures in order to tackle these challenges:

3.1.

Many fundamental changes are needed in order to achieve the aims of the European Energy Union. They include, as the Commission explains, a complete overhaul of the way in which the electricity market is designed.

3.2.

These changes will only meet with sufficient public approval if a) there is a very active and well organised consultation process with stakeholders and civil society and b) they are accepted as active partners in this process, not just parties to be consulted.

3.3.

The EESC has described how this process might look in a study (4) evaluating the European Commission’s ‘stakeholder’ consultation process. It would also draw attention to its European Energy Dialogue initiative.

3.4.

The market improvements which the communication outlines, including intraday trade, getting rid of rules which distort and prevent competition, demand-side management and creating the right price signals, are appropriate and important measures for redesigning the energy market, which in future will be more strongly geared to the specific nature of variable renewable energies (VRE). It is only in this way that the objectives of the European Energy Union — which have been welcomed by the EESC — can be achieved and a cost-effective, environmentally friendly, secure and affordable supply be guaranteed for households and the economy.

3.5.

The EESC underlines the particular importance of intraday trade as a way of ensuring meaningful trade involving VREs.

3.6.

It welcomes the fact that the communication restates the main principles of the ‘new energy system’ and sees these as the right signal to be sending to all market participants and to society as a whole. They include:

3.7.

The safe and affordable supply of businesses and households with cleaner energy provides a vital basis for the economy and people in today’s society. In principle, therefore, the supply of energy is a matter for the whole of society and ensuring this supply requires a careful balance between the market and regulation. To date, this has not been properly discussed at the political level and nor does the communication do so. For example, the question of whether it would be better to place transmission and distribution networks under public control — in a similar way to motorways, the rail network or the water supply — may not be decided in Brussels, but it can be discussed here. Energy policy covers the establishment of a clear framework and regulatory oversight. It also includes consumer protection and the protection of particularly vulnerable social groups.

3.8.

The EESC would like to refrain from commenting positively on the many good measures outlined by the Commission, including its critical stance on spare capacity. Instead, it would like to look at some of the issues which it believes may not have been sufficiently taken into account by the Commission or barely addressed at all.

4.1.

The EESC fully agrees with the Commission that ‘a fundamental transformation of Europe’s energy system’ is crucial. From the Committee’s perspective, however, the solutions set out in the communication represent less a ‘fundamental transformation’ than an adaptation of the existing system or an addition to it.

4.2.

The EESC would like to draw particular attention to the fact that a ‘fundamental transformation’ may entail more than just linking up national systems to form a European network, reforming existing markets and trading systems and significantly increasing the share of renewable energies. A whole new energy system, with a much larger, more decentralised range of stakeholders, must be designed and developed. This means not only upgrading existing transmission and distribution networks, but also underpinning them with new, technically sophisticated infrastructure. To some extent, this new network should be based on entirely new and more diversified trade, networking and marketing systems. The current traditional energy sources will play a bridging role here.

4.3.

The goal of a low-carbon energy supply, with a high proportion of adjustable energy sources, can only be achieved in the short to medium term if

All of this is currently not the case.

4.4.1.

The Commission stresses the importance of price signals, which should a) encourage consumers to play an active role in the energy market and b) create incentives for business to invest in new, low-carbon energy technologies. Such price signals are important, since the redesign of the current system will require large investment. With exchange prices currently at 30 or 40 EUR/MWh, which are of course advantageous for consumers insofar as they are actually passed on to them, investments cannot be refinanced, whether they be in new electricity production capacity or in storage technologies. Such exchange prices are currently only attainable because, among other things, a lot of electricity from power plants whose costs have been paid off is coming onto the market and high subsidies are being paid for electricity produced from coal, nuclear power and renewable energy. Today’s exchange prices do not therefore reflect the real cost structure. Prices on the electricity exchange provide a distorted picture of actual energy costs due to subsidies and over-regulation. The correct signals for the large investments necessary for transforming the existing system can only be achieved with realistic and transparent prices.

4.4.2.

The Commission communication pays too little attention to the implications of renewable energies’ specific cost structure: in the case of zero marginal costs for renewable energy sources and electrical storage devices, wholesale markets no longer provide positive price signals. This has two implications. First, if wholesale prices provide no signals for the short-term allocation of electricity, these must be established through other arrangements, such as subsidies. Secondly, zero marginal costs require entirely new refinancing mechanisms for VRE and electrical storage devices.

4.4.3.

Completely new approaches to pricing are needed in order to create an economic basis for the new network quality that is desired (including demand-side management and storage). One approach might be to redesign the regulatory elements of the final consumer price, particularly in relation to the electricity tax and transmission fees. Reorganising the financing of common costs in the energy system should be explored.

4.4.4.

In order for prices to accurately reflect all costs of supplying electricity, the EESC also calls on the Commission to set about ensuring clear cost transparency as part of an EU-wide harmonised approach. The comparable costs identified should reflect the true overall costs of electricity generation, supply and disposal. These costs must also include negative external effects (e.g. CO2 emissions) and subsidies. In this connection, the EESC draws attention to its previous opinions (7) and statements and continues to strongly urge the Commission to make good on its promise to fully internalise in prices the overall costs (including externalities) of production up to and inclusive of disposal and to prohibit any direct or indirect competition over subsidies between different energy sources.

4.4.5.

Aside from the actual costs, the framework should be designed in such a way that prices and service provision are given as much consideration as measures to avoid greenhouse gas emissions and the creation of the high-quality jobs that are needed. Prices must reflect the fact that there will be periods of high supply and low demand and, conversely, periods of high demand and more limited supply. Only if prices reflect the true reality of costs and if services and reductions are passed on to consumers in full will the Commission’s plans for adjustment, demand-side management, more flexible power plants and storage come to fruition.

4.4.6.

The EESC agrees with the Commission that regulated prices should be abolished. It is right to allow prices to be set freely — whether higher or lower. This enables the market to react as necessary and supports flexibility options such as demand-side management and storage devices. The EESC views the specifications included in the EU subsidy guidelines, according to which no subsidies should be paid when there are negative electricity prices, as a massive market intervention which unilaterally puts renewable energies at a disadvantage and benefits technologies which damage the environment and have high marginal costs. The current subsidies offset the poor performance of price signals, particularly as a result of the failure to internalise external costs. The European Commission could rectify this itself by reforming its guidelines on subsidies. The EESC expects the Commission to come up with a plan both to tackle the causes of negative prices and to make subsidies unnecessary in the future.

4.4.7.

Among other things, the Commission document addresses the need to improve the emissions trading system. The EESC has issued an own-initiative opinion on the subject (8). It stresses, however, that even with rigorous reform only some of the external costs of fossil fuels are factored into prices. The International Monetary Fund estimates fossil fuel subsidies in the EU at a total of USD 330 bn annually and describes these as inefficient, a brake on innovation, fiscally damaging, socially unjust and environmentally disastrous (9).

4.4.8.

No new market set-up, however good it is, can compensate for the incorrect price signals and problems caused by this.

4.4.9.

The Commission has on several occasions underlined the fact that renewable energy still faces obstacles which must be removed and that renewable energy sources must be promoted in accordance with market requirements and on a regional basis. The EESC agrees with this. Unfortunately, however, the communication provides too few indications of what exactly the Commission has in mind to address this.

4.5.1.

The title of the communication is ‘a new energy market design’. However, the paper focusses almost exclusively on the likely and — what it deems to be — necessary changes to electricity grids, markets and the trade in electricity. Chapter 5 even refers to a ‘consultative Communication on electricity market design’.

4.5.2.

This clear focus on the electricity grid and the electricity market does not properly address the main challenge actually facing European energy policy. Discussions need to take greater account of heating and transport, especially as there are likely to be substantially more links between these three areas in future, which will generate opportunities and reduce the number of problems (watchwords: Wind-Power to Heat, Power to Gas/Hydrogen, electro-mobility).

4.5.3.

Convergence of electricity with heating and mobility is much easier in decentralised power systems than in a centralised system. Heat and mobility are by their very nature geared towards decentralised systems, meaning that they can be developed more easily as flexible options for electricity, provided that electricity can be marketed directly and in a decentralised way. The task of transforming the electricity market is therefore closely linked to the development of decentralised marketing options for electricity from VRE, which must also include the use of heat and mobility applications.

4.5.4.

As regards the electricity market, the Commission puts forward numerous proposals on new structures in the existing trade system, primarily in the area of exchange-based trade. It goes without saying that greater diversity in the current energy trade at local, regional, national and European level is desirable and important. Under no circumstances, however, must everything be channelled through exchanges and traders. The Commission, however, has nothing to say about this.

4.5.5.

If businesses, members of the public or any municipal utility companies were to decide today to use local and regional energy sources, in the form of jointly coordinated solar or wind installations, for example, then it should be much easier for them to use the generated energy directly without going through an exchange or traders and/or to market this energy directly without difficulty.

4.5.6.

However, proposals on how emerging new forms of direct decentralised usage or local direct marketing (B to B) should be supported are few and far between. Equally, little attention is given to local forms of trade and changes to the type of energy (storage devices).

4.6.1.

The Commission communication makes reference to the integration of renewable energy into the electricity supply system, the need to ‘adapt market design to renewables’ and to the creation of ‘a market fit for renewables’. The EESC would like to make clear that, in its view, the main challenge is not the ‘integration’ of renewable energies into the existing electricity supply system, even if renewable energies must play the key role over the long term.

4.6.2.

The big technical challenge posed by the new energy system — which the Commission should get across more forcefully in the consultation process — is that in future electrical energy will no longer be centrally managed and flow from large power stations to consumers (‘top-down approach’). Instead, new ‘production and supply islands’ will emerge which must be interconnected (‘bottom-up approach’) and will be based on a large number of decentralised renewable energy sources — some of which will be variable —, with demand-side management (including storage) playing a key role.

4.6.3.

In connection with the desire for a new range of stakeholders, this will mean that, alongside established (wholesale) trading structures, to some extent completely new decentralised forms of marketing and energy management systems will need to be established.

4.6.4.

Waves of innovation in the IT sector, in production and storage technology, in the distribution system and in buildings technology have given rise to many such ‘production and supply islands’, which even a few years ago seemed inconceivable. Individuals, businesses, associations (such as energy cooperatives) or municipalities (municipal utility companies) have created their own self-sufficient or partly self-sufficient solutions, which means they are much less dependent on traditional (and more flexible) supplies and trade flows. It is important to see the parallels between technical/technological and social/sociological developments. Both are pointing in the same direction, namely towards greater autonomy and self-regulating decentralised network units.

4.6.5.

It begins at grassroots level: even now completely new structures are being developed, as the example of photovoltaic systems shows. Even five years ago, the use of PV electricity was not financially attractive for individuals. The electricity generated was simply fed into the grid. This situation has completely changed in the meantime. For financial reasons, rooftop solar panels are no longer used unless they are designed to ensure that the electricity they generate is fully utilised. This has led to increased demand for — and thus further development of — storage technologies. As a result, new PV installations help to relieve the burden on the grid and contribute to network balancing. In connection with, for example, the likely introduction of electro-mobility or the link-up with heat production, completely new, additional opportunities are opening up for decentralised energy generation and use.

4.6.6.

However, consumers who produce and use their own electricity and wish to give any surplus to fellow residents or neighbours, for example, no longer ‘participate actively in the market’ in the traditional sense. Unfortunately, the Commission document does not describe how the framework should be specifically changed in order to promote such systems.

4.6.7.

Nor does the communication adequately explain which specific obstacles renewable energies still face.

4.6.8.

The EESC has on a number of occasions stressed that such new, decentralised energy systems provide opportunities — and not only in terms of public approval of the necessary structural changes and required investments. In terms of the regional economy, too, new prospects and new opportunities for value added may emerge outside the familiar systems. New technologies are making it possible to re-establish a link between regional development and energy policy and to comply more effectively with the enhanced safety standards for key infrastructure.

4.6.9.

Increased local production and direct marketing should therefore be welcomed because they can reduce grid losses. On this point, the German Federal Network Agency explains that (10): ‘It is obvious that the transformation of the energy system can best succeed by close cooperation among all those involved […] We should welcome approaches maximising energy consumption at the source. This has always been the principle of energy supply as it keeps grid losses to a minimum.’

4.6.10.

The Commission therefore needs to think about the trading system in terms of the desired energy infrastructure without attempting to make the necessary changes to energy infrastructure compatible with the current trading system.

4.6.11.

Account should also be taken however of the experience of many countries where some market players, such as strategic investors, have cherry-picked sections of the energy production sector in order to just maximise their profits, whilst refusing to invest in security of supply, innovation and maintenance, passing these costs on to its customers.

4.7.1.

It cannot be the objective of a new EU energy policy to have as many self-sufficient supply areas as possible, cut off from the interconnected system. The goal must be to create the highest possible number of effective, competitive ‘production and supply islands’ which are in the proximity of consumers and to link these up to a European network. This should also be done bearing in mind that, while the EU’s role is to ensure energy security, the actual task of supplying energy is the responsibility of local and regional authorities.

4.7.2.

These smaller grid units will emerge in large numbers if there are the right conditions and the right price signals. While they will produce an optimal economic balance between independent generation and consumption, these units must be linked up to neighbouring or overarching networks in order to make positive or negative control energy available.

4.7.3.

Demand-side management will play a key role within these systems, but also more generally; the EESC sees storage technologies as part of this. Storage devices will assume an important role in the network, since from a technical point of view they will be both counter-cyclical consumers and producers.

4.7.4.

National network operators, national regulators and the EU have an important role to play in creating and entrenching this broad range of stakeholders, ensuring a level playing field and coordinating systems. The energy supply systems of the future need a well-coordinated energy management system across Europe (comparable to the air traffic system, for example) which provides an overview of the state of all interconnected ‘production and supply islands’ and, where necessary, any incidents which occur. This will enable an automatic or manual intervention to be carried to safeguard network stability and safety if exceptional circumstances arise.

4.7.5.

This cooperation can only work through comprehensive and well-designed transmission and distribution networks. Particularly in view of the lack of price-based investment incentives mentioned above, this also entails making greater use of public funds, such as those of the Connecting Europe Facility, to create cross-border electricity networks, instead of focussing on gas and oil infrastructure, for example.

4.7.6.

The EESC agrees with the Commission that system operators must ‘be neutral market facilitators to enable the development of market-based services to consumers’. The Commission should spell out what it plans to change in order to achieve that objective and make clearer the role and responsibilities of distribution system operators as well as regulatory bodies.

3.3.2016   

EN

Official Journal of the European Union

C 82/22

Rapporteur:

Lutz RIBBE

1.1.

The EESC welcomes the Commission’s analysis and firmly supports its proposals. It is high time to place consumers at the heart of European energy policy and to provide them with comprehensive opportunities for active participation.

1.2.

The obstacles ‘preventing consumers from self-generation and self-consumption’ addressed in the Commission communication are therefore an issue that urgently needs to be resolved. Unfortunately, however, the document does not explain in sufficient detail where and how these obstacles arise and what must be done to eliminate them. The Commission should produce a separate document to this end.

1.3.

The EESC considers the Commission’s approach — recognising local conditions, taking them more into account and promoting them, and supporting the involvement of local market participants — to be correct.

1.4.

The question of how to design energy systems is of strategic importance. What is needed is competition to design the most efficient overall system. This goes far beyond production and conventional marketing.

1.5.

Demand response will play a central role. To this end, the technical conditions (smart meters, smart grids) must first of all be established on the consumer side and should be understood and financed as part of grid development.

1.6.

Demand response systems could be used by consumers to do more than just adapt their energy consumption and thereby save money. As the Commission quite rightly points out, ‘the combination of decentralised generation and storage options with demand side flexibility can further enable consumers to become their own suppliers and managers for (a part of) their energy needs, becoming producers and consumers and reduce their energy bills’ (1) (‘prosumers’).

1.7.

New incentive schemes must be developed that reward efforts to design self-consumption, direct supply, storage of surplus energy and the provision of control power, i.e. active load management for all market participants, in a way which benefits the system.

1.8.

The benefits of the new prosumer approach described by the Commission show that this is more than merely a complement to the ‘centralised generation sources’. This is about the freedom of consumers, i.e. businesses, the public, public utility companies, etc. to choose to also play an active role in the energy system of the future through active generation, self-consumption, storage and self-marketing.

1.9.

The Commission does not adequately define self-production and self-consumption in its communication. The examples listed show that it has a very limited understanding of the ‘prosumer approach’. In the EESC’s view, self-production and self-consumption must be interpreted much more broadly than simply self-produced and self-consumed electricity from a private generator behind the meter.

1.10.

Other forms of more broadly defined community prosumer structures are emerging but are being seriously impeded. The implementation of novel business models would enhance the new, active role of consumers and open up completely new opportunities to add value. It is essential that they are taken into account in a ‘new deal for energy consumers’.

1.11.

More broadly defined forms of self-production and self-supply that use the public grid — in exchange for a fee, obviously — also enable tenants, smaller businesses or members of cooperatives to play an active and responsible role in the energy market and to earn and/or save money. A narrow definition of the terms self-generation and self-consumption is therefore unjust in social policy terms and economically discriminatory.

1.12.

The decentralised energy system the Commission aspires to also requires decentralised approaches to markets (2). The consumer should be free to choose not only the distributor but also the energy producer.

2.1.

The Energy Union Strategic Framework sets out the vision of an Energy Union ‘with citizens at its core, where citizens take ownership of the energy transition, benefit from new technologies to reduce their bills, participate actively in the market, and where vulnerable consumers are protected’ (3).

2.2.

While the energy sector in Europe has been transformed in recent years, consumers, i.e. private households, businesses and industry, have been and continue to be prevented from reaping the full benefits of the current transition in the energy sector, i.e. controlling their energy consumption and reducing their energy bills. The factors causing this include:

2.3.

The new electricity market design (4), the use of new technologies, as well as new and innovative energy service companies are supposed to enable all consumers to participate fully in the energy transition with a view to better managing their consumption through energy-efficient solutions and thereby saving money and reducing overall energy consumption.

2.4.

At the same time, the role of the consumer is also set to change; not only will consumers be able to respond better and more flexibly to electricity supplies and services and benefit accordingly, they will also be able to take on an active role as energy producers.

2.5.

The Commission talks about a ‘three-pillar strategy’ consisting of

and which is due to be implemented through a 10-point action plan.

3.1.

The EESC expressly welcomes the Commission’s analysis and firmly supports its proposals. It is high time to put consumers at the heart of European and Member State energy policy, as significant progress on many objectives on the road to a sustainable and resource-efficient energy supply can only win acceptance and be achieved if consumers from all sections of society are fully able to play an active and responsible role with regard to the overarching energy and environmental objectives.

3.2.

The EESC notes that in many Member States’ energy systems, the structural and strategic importance of consumers is severely limited due to inadequate regulatory frameworks. These frameworks reflect the insufficient political understanding of the active role of consumers that has existed until now. In this context, the proposals appear to be suited to implementing the objectives set (including reducing energy consumption through increased energy efficiency and conservation, switching energy production to clean energy sources, adapting consumption more effectively to greater fluctuations in energy output in the future, reducing the strain on the grid and grid efficiency through demand side management, increasing the number of players) in a way that is transparent and cost-effective for the consumer.

3.3.

However, giving consumers more rights and opportunities also means making it clear to them that they too have a responsibility and must accept the need for adaptation. For many people this is something new.

3.4.

This responsibility cannot be imposed. It must be learned and developed in practice by all stakeholders (including policy-makers). There is therefore an urgent need to broaden consumer participation in decisions regarding energy and in investment in generating units, in energy grids (including smart grid applications) and in storage systems and management.

3.5.

Energy costs for end-users must be both affordable (the problems of competitiveness and energy poverty) and fair (for a fair distribution of costs and benefits). Energy prices and technologies have in the past often favoured those with specific knowledge and expertise, skills and financial and technical resources and with the ability to put these to use. A system that does not attempt to address this imbalance undermines the trust of disadvantaged consumers in the market.

3.6.

The EESC agrees with the Commission that energy poverty — a growing social problem — is best addressed directly through social policy measures. Nevertheless, it is important that the ‘new deal for energy consumers’ should also aim to eliminate imbalances and inequalities in the market.

3.7.

The communication correctly states in clear terms that — aside from access to information — the real key factor for consumer decision-making is the (gross) final price. Whilst there is now much greater awareness of climate change issues and a positive attitude towards renewables amongst the public, it is primarily price which determines whether or not energy is saved, whether energy efficiency measures are implemented and whether environmentally-friendly energy sources are used. Above all, it is necessary to ensure that vulnerable consumers are not exposed to extreme price spikes and that (technical) mechanisms are established that pass the desired advantages on to them virtually automatically.

3.8.

There is a new development whereby consumers are not only demanding regionally produced agricultural products but also ‘regional power’ from renewable energy facilities. The regulatory regime almost across the board is preventing this increased demand from being satisfied by energy companies — especially those that allow consumers to have a direct influence on business decisions, such as community energy companies or certain local government services.

3.9.

This is unsatisfactory on two counts. Firstly, the market outcome is inefficient as consumer preferences and needs are not catered for. Secondly, regional green energy offers improve how energy is regarded more generally and encourage energy consumers to undertake more extensive energy-saving and efficiency measures and to use flexible options to balance out fluctuations in the production of renewable energy.

3.10.

The EESC considers the Commission’s approach — understanding local conditions, taking them more into account and promoting them, supporting the involvement of local market participants more intensively, partly in order to be able to offer real prices determined at the point of consumption, rather than at the point of production — to be important.

3.11.

The question of how to design energy systems is of strategic importance. What is needed is competition to design the most efficient overall system. This goes far beyond production and conventional marketing. Therefore, unbalanced commitments to particular market or system configurations, of the kind made by individual Member States are often premature. It is, in particular, important to get away from the tendency to consider production and marketing separately, as well as from the sectoral division between electricity, heating and transport.

3.12.

Energy systems must be evaluated according to the extent to which they fulfil these requirements. Consumers have always been more integrated in the relevant regional processes for heat and transport — in contrast to electricity. More progress towards energy and environmental objectives will be made if there is a willingness to configure energy systems on the basis of consumer integration and participation and the convergence of the electricity, heating and transport sectors. In view of this, there is much to be said in favour of decentralised energy systems. The EESC refers here to its opinion on a new energy market design (5).

3.13.

Great attention should be paid to the user-friendliness of the new systems. They must be simple and transparent and must not under any circumstances overwhelm the consumer. The necessary technical resources are now available to ensure this.

3.14.

First of all, however, it will be necessary to establish a unified European framework, through which all costs associated with energy production, including external costs, are fully incorporated into the energy price. Full true-cost pricing is called for (6). Consumers must be able to interpret retail prices easily and reliably. Market regulation, however transparent, flexible and open, cannot compensate for incorrect price signals resulting from direct or indirect subsidies for particular energy sources.

4.1.1.

The role of the consumer in the energy sector could change profoundly in the years to come, provided there is the political will. It is therefore entirely appropriate that the greater part of the Commission communication is devoted to this section. This is not simply a matter of technical and commercial law-related issues, but rather of fundamental structural changes which will lead to more democratic energy processes.

4.1.2.

Enabling consumers to better manage their consumption independently requires first and foremost that the technical and economic conditions be met, in addition to better information. Situations where individual consumption is not or cannot be determined (and therefore billed) should be remedied as quickly as possible. Where new meters need to be installed, these should automatically be ‘smart meters’.

4.1.3.

Consumption data should be improved quickly in line with the Commission’s plans, which also require that the approximately 28 % of consumers who will probably still be without access to ‘smart meters’ after 2020 be given the right to apply for one. The economic conditions will only be in place once all potential savings remain with the end customer and are not offset by new flat-rate fees.

4.1.4.

In order to achieve a swift take-up of smart meters, this must be cost-neutral for the consumer. The cost of installing them should be included in the network costs. Unified and stringent frameworks on data protection and transmission protocols must be put in place for manufacturers.

4.1.5.

However, cost neutrality is only one essential and necessary criterion for encouraging consumers to accept smart meters. There must also be a high level of trust in the network operators, suppliers and distributors that collect and analyse the data. The further removed consumers are from these companies, the harder it is to establish this trust. For the EESC, it goes without saying that the highest level of data protection must apply for consumers, meaning among other things that consumers must have full access to all data.

4.1.6.

Nowadays, a number of options are already available to consumers looking for cheaper supply on existing markets. The Commission’s statement that ‘making the switch needs to be technically easy, quick and reliable’ should be self-evident in a Europe that was created to promote the free movement of goods. Therefore, the removal of switching fees and penalties should not ‘be considered’ (7), but carried out!

4.1.7.

The possibility of choosing a supplier and negotiating the terms of the contract are key elements of market competition. The frequency of switching supplier serves as an indicator in this respect. More and more people are switching supplier, however in many Member States switching rates are very low (8). This is due to insufficient consumer information and other existing market barriers.

4.1.8.

Although switching supplier is an important tool for consumers, it is not possible to determine how well competition is functioning based solely on the switching rate and prices. Customer satisfaction, local links as well as social involvement at a local level are already an increasingly important factor when choosing a supplier, as is the local availability of representatives of the supplier. Users are increasingly concerned not only about how their electricity is produced, but also where and by whom. It is therefore important that the consumer should be free to choose not only the electricity distributor but also the energy producer.

4.1.9.

There will therefore be competition both in terms of price and quality. If network costs and production costs are transparent, electricity that was marginally more expensive to produce but which has lower transport costs could on balance still end up being cheaper. However, this requires distance-based pricing in the network cost component, as well as the possibility of directly and personally marketing self-generated electricity from renewable energy sources under fair competitive conditions.

4.1.10.

The Committee agrees with the Commission that social, structural and regional policy objectives cannot be achieved through state-controlled or state-regulated energy prices.

4.1.11.

The EESC believes that the statements relating to ‘demand response’, ‘self-generation and self-consumption’ and ‘increasing consumer participation through intermediation and collective schemes’ are absolutely key as this opens up entirely new developments.

4.2.1.

The successes described in the Commission document relating to existing demand response, e.g. through dynamic pricing (in energy supply agreements) and flexible, automated demand response systems provide striking evidence for the statement that ‘energy efficiency and demand response are often better options for balancing supply and demand than building or keeping in operation more power plants or network lines’ (9).

4.2.2.

However, there will only be active participation of end-users if the benefits of flexible tariffs offset the necessary investment costs within a reasonable time-frame. Price signals must therefore be correct, i.e. periods of high energy supply and lower demand (e.g. during windy or sunny periods) or of high demand and reduced supply must be reflected in selectable end-user prices.

4.2.3.

Customers must be made aware of price signals — as automatically as possible — so they can make use of them. This requires systems to be as self-regulating as possible. Otherwise only customers with technical expertise would benefit. It must be left to consumers to decide the extent to which they wish to participate in these markets.

4.2.4.

It is to be expected that these ‘new, active consumers’ will participate more intensively in demand response, the more directly involved they are in making decisions regarding infrastructure measures and in investments and the management of generation systems, grids and storage. For this reason, all forms of civic participation as well as civic energy and other community-organised prosumer structures are very important elements of the electricity market. However, this is not sufficiently addressed in the Commission’s communication.

4.3.1.

Demand response systems could be used by consumers to do more than just adapt their energy consumption. As the Commission quite rightly points out, ‘the combination of decentralised generation and storage options with demand side flexibility can further enable consumers to become their own suppliers and managers for (a part of) their energy needs, becoming producers and consumers and reduce their energy bills’ (10).

4.3.2.

However, this will only be possible if there is a genuinely new market design tailored to the formal objectives and no attempt is made to simply transform the existing system so that the new energies can be incorporated into it (11).

4.3.3.

New incentive schemes must be developed that reward efforts to design self-consumption, direct supply, storage of surplus energy and the provision of control power in a way which benefits the system. This requires not only redefining criteria for what is meant by benefiting the system; it also requires a new vision of what could constitute an ‘energy system of the future’ in an increasingly decentralised energy landscape. In any case, it is unacceptable to cling to a concept of a system inherited from an age in which conventional nuclear and coal-fired power stations provided baseload capacity on a permanent basis.

4.3.4.

In its communication the Commission sets out other advantages of decentralised generation of renewable energy, including being able to reduce grid losses and congestion and thereby save on network costs in the long term. The EESC shares this view; however these benefits have so far not been sufficiently recognised and taken into account in the Member States.

4.3.5.

The detailed description of the benefits of this new approach in the working document (12) which accompanies the communication shows that this ‘prosumer approach’ is more than merely a useful complement to the ‘centralised generation sources’. This is about the consumer’s freedom to choose to play an active role in the energy system of the future through self-generation, self-consumption, storage and self-marketing.

4.3.6.

However, the Commission does not adequately define self-production and self-consumption in its communication. In fact, the examples (13) quoted in the working document appended to the communication show that it has a very limited understanding of self-production and self-consumption. In the EESC’s view, this must be interpreted more broadly than simply self-produced electricity from a private generator behind the meter, for example PV power from a household rooftop system: i.e. power produced without using or being transmitted through a public grid. The assumed identification of the system operator with the end-user should be abandoned, since this only covers a specific type of self-supply.

4.3.7.

More broadly defined prosumer structures are emerging but are still being seriously impeded. This includes for example the business model whereby energy cooperatives market their electricity directly to their members or where community energy companies supply their electricity to consumers in the local area, without going via the energy market or distributors. The implementation of models such as these would greatly enhance the new active role of the consumer and open up completely new business models and must be taken into account in a ‘new deal’ for energy consumers.

4.3.8.

The broadening of the definition of self-generation and self-consumption is also important because the narrow interpretation used to date (based on identification of the system operator with the end-consumer) only targets a particular group of ‘active consumers’. As such, the only consumers able to engage in self-generation and self-consumption are those with sufficient capital to invest in generating facilities or, more importantly, sufficient space (e.g. in or on buildings) to install them. For example, tenants would in effect be excluded. The same problem applies to industrial consumers, particularly smaller firms and those that do not have their own extensive premises.

4.3.9.

On the other hand, more broadly defined forms of self-generation and self-supply that use the public grid — in exchange for a fee, obviously — constitute models that also enable tenants, smaller firms, members of cooperatives, etc. to play an active and responsible role as prosumers in the energy market and to earn and/or save money. A narrow definition of the terms self-generation and self-consumption is therefore unjust in social policy terms and economically discriminatory.

4.4.1.

The Commission also talks about ‘collective schemes and community initiatives’ that ‘have been emerging with increasing frequency in a number of Member States. More and more consumers engage in collective self-generation and cooperative schemes to better manage their energy consumption. This innovation by consumers leads to innovation for consumers and opens up new business models. Energy services companies, aggregators, brokers, data handling companies, other intermediary companies and frequently also consumer organisations are emerging to help consumers achieve better energy deals while relieving them from administrative procedures and cumbersome research. … This also opens new opportunities for local communities and authorities whose regional and local energy initiatives can provide a valuable link between decision-makers, citizens and innovators at the local level’ (14).

4.4.2.

The study carried out by the EESC on civic energy (15) highlights that a range of additional benefits can also be cited (e.g. increased public support for new plants, development opportunities for regional economies, funding for investments). In all Member States visited, the EESC identified a high level of willingness on the part of civil society to actively support private sector and/or community models, and/or to implement these themselves. However, these initiatives often fail to due to legal requirements, bureaucracy or as a result of other intended or unintended discrimination.

4.4.3.

One example: individuals who collectively operate a civic wind turbine are often unable to directly access and use their own electricity and instead must place it on the market via distributors and subsequently buy it back themselves. This is not what the EESC understands by ‘active market participation’.

4.4.4.

In the introduction to the communication, the Commission states that obstacles ‘preventing consumers from self-generation and self-consumption’ are an issue that needs to be addressed, but does not explain in sufficient detail where and how these obstacles arise and what must be done to eliminate them. Experience from many Member States shows that national regulatory bodies often effectively prevent self-generation, self-consumption, self-supply or direct supply, or at least create economic or bureaucratic obstacles; examples for this include Spain and Germany. The Committee therefore calls on the Commission to draw up a specific paper to be included in the consultation process, building on the working document (16) appended to the communication and describing what intended or unintended disadvantages are encountered by prosumer approaches, what bureaucratic hurdles exist and how existing discrimination is to be eliminated.

4.4.5.

The discussion on the role of intermediaries should also look at the independence of large distributors. In order to preserve this, a further discussion on the business models of intermediaries and the question as to who their clients are would be useful.

5.1.

The new energy system is growing from the bottom up. Networked devices become smart homes, which become smart buildings, which in turn become active network components. Smart houses effectively form the basis of the new energy system and are also a good place for new active ‘consumers’ to learn and gain experience. Better information must be provided about the many possibilities that already exist.

6.1.

Standardised, reliable data protection directives are the foundation of and a prerequisite for the rapid, future-proof roll-out of modern communication systems. The following must be specified:

6.2.

For the EESC, it is essential that consumers are and remain owners of their data and that they have full control of and access to it, in order to be able to verify, correct, delete it and transfer it in the event of switching supplier.