Germany and France have been arguing for months about the reform of the electricity market – it’s about the promotion of nuclear energy and cheap electricity for their own industry. Now Eurelectric President Leonhard Birnbaum is calling on Paris and Berlin to find a quick solution. “As a European energy association, we have no interest in seeing the electricity market reform fail over issues that are actually beyond the question of market design“, says Eurelectric’s head, who has been in office since June, in our interview – exclusively in this issue.
The discussion in Brussels no longer revolves around electricity market design; it has become a debate about industrial policy, complains the energy manager, who is also known for his clear words as CEO of Eon. All in all, he says, the Commission lacks focus, and the State of the Union speech by von der Leyen was a very long list. “But what are the two or three things that really count?“, asks Birnbaum provocatively.
Currently, he said, the economy is being overwhelmed by a flood of regulations that don’t reveal any priorities at all: “Can we drop a few legislative projects?” Read the full interview to find out what Birnbaum wants to focus on as Eurelectric president.
Mr. Birnbaum, does the future of European industry depend solely on low energy prices?
In my view, the problems facing European industry are more diverse. We clearly have a problem between the world’s major power blocs. And we are not suitably positioned for this, either geopolitically or institutionally. We are not innovative enough as one Europe. We don’t have sufficient infrastructure. We are too dependent on the Anglo-Saxon capital markets for our financing options.
And the European Single Market?
True, we have 400 million customers. But then look at the digital markets, where we have managed to atomize the European market with 27 interpretations of the General Data Protection Regulation. New business models are therefore taking hold in the US, which we then have to adopt. For some sectors, energy prices may be decisive, but if we reduce the issue of competitiveness to energy costs, we make it too easy for ourselves.
It is precisely these energy-intensive sectors that the Federal Minister of Economic Affairs and the minister presidents are worried about. They want to subsidize the price of electricity for a few years until renewable energies push the price down – to five or six cents. How long would this bridging phase be?
In the end, a subsidized industrial electricity price is a political decision. You just have to answer three questions. The first one you just asked: How long will it take? At the moment, the hope is that after five or six years, the bridge will be superfluous because fossil will then be more expensive than renewables. Maybe, but I don’t want to participate in that speculation. The second question is: If the bridge becomes longer, how do I get off the payments again? That is the question with every subsidy once it has been introduced. And third, is this the best use of the financial resources? And who pays? The customers who don’t benefit naturally have to bear higher costs.
The German move is also justified by concerns that France will support its industry even more in the future via the electricity price. Paris is trying to do this via the electricity market reform currently underway in the EU. Do you share these concerns?
Energy policy in Brussels no longer revolves around electricity market design at all; it has become a debate on industrial policy. We are witnessing a discussion about the industrial electricity price between Germany and France. As the European Energy Association, we have no interest in seeing the electricity market reform fail on issues that are actually beyond the question of market design.
In short, it is about the modernization of power plants via state-backed Contracts for Difference and the redistribution of profits – especially from the operation of nuclear power plants.
Eurelectric does not want differential contracts to be applied retroactively to existing generation capacity. We have said that from the beginning. But now there is this sub-topic: What about the profits of nuclear power plants that get a lifetime extension? Is that new capacity because, after all, it wouldn’t have been available otherwise? I hope that France and Germany will find a way that clears the discussion for both sides. As an energy company, we want the debate on electricity market design to be concluded quickly.
Leaving aside the special case of nuclear power, who should receive the proceeds from new power plants if electricity prices rise exorbitantly again? The Commission wanted a split among all electricity customers. Others want the revenues to go to industry. In the end, it could be left up to national governments.
I think it would be difficult for each member state to decide for itself how to distribute revenue from contracts for differences. Strengthening the European market must be in the interest of all Europeans, and the price of electricity will affect more and more goods. If I give EU countries very large degrees of freedom to influence prices for end customers, then I must at least be aware that this will have a massive impact on the Internal Market.
With the electricity market reform, the question of capacity markets for controllable power plants has also boiled up again. Poland even wants to continue to provide state support for old coal-fired power plants. Can’t the country secure its supply in a more climate-friendly way?
I have been told that Poland would actually have problems in the short term if it took its old coal-fired power plants out of the system. That’s why I think the transitional exemption from the CO2 limits is an acceptable wish. Poland is, after all, making an energy transition, and with renewables as well – not just nuclear, which is coming at some point. And the Poles do not want to create a backup with gas capacities, as we are discussing in Germany. That’s also because of the country’s sensitivity to ensuring its independence. I would not turn the question of capacity mechanisms for Polish coal-fired power plants into a fundamental discussion for Europe. Poland can clarify this bilaterally with the Commission.
So the issue of CO2 limits for capacity mechanisms should not be addressed by the amendment to the Electricity Market Regulation?
The question should at least not block the amendment.
You mentioned the plans of the German Ministry of Economic Affairs for new gas-fired power plants. There is a European procedure for introducing capacity mechanisms, but it takes years. Has Germany simply slept through the introduction of capacity markets?
Let’s put it this way: Germany has focused a lot on shutdowns and is obviously very late to the party. If we still want to have the capacity of gas-fired power plants that is now under discussion ready by 2030, then it’s really time to get projects underway. But I don’t have a clear idea of how the examination of capacity mechanisms can be accelerated in Brussels.
What is currently being accelerated at the EU level is the expansion of renewable energies and electricity grids. Are the facilitations from the Renewable Energies Directive sufficient for the necessary speed?
It is a helpful step in the right direction, but it is not enough on its own. We don’t need selective exceptions, we need a simplification of the system across the board – and at all levels. Just one example from the wind industry: For transports of rotor blades, you can’t get permits from the federal highway authority in an acceptable amount of time. This continues with various other federal agencies, the permitting authorities in 16 states, the DIN committees. We need a different mindset everywhere. We have to make things possible. The chancellor talks about the pace of Germany. And in day-to-day business, I have to deal with authorities who say: I have my regulations, sorry.
Back to the European level once again: In Strasbourg, the President of the Commission proclaimed a new phase of the Green Deal. What does it mean for the next European legislature if energy policy is more strongly influenced by industrial policy?
The energy crisis has shifted the balance. The Green Deal was very much focused on sustainability. Now it’s no longer the only thing we can worry about. That doesn’t mean we don’t want to do an energy turnaround anymore; that will continue. But it’s just not the case that everything will automatically be good if we only take care of the energy transition. If I may take the liberty of giving some advice, it would be nice if the Europeans would show some priorities. Is it possible to drop a few legislative projects now and then? If everything is important, nothing is important. That’s an iron-clad rule. Ms. von der Leyen’s speech was a very long list. But what are the two or three things that really count?
I’m sure you have an idea.
As Eurelectric President, I have three priorities. One is security of supply. With the energy crisis, it’s back on the agenda. Number two, we need better infrastructure. I’m not just saying that for the energy industry. It also applies to digital infrastructure. And number three: we need a fair distribution of risks and benefits. I don’t really care what priorities the Commission sets itself, as long as it sets them. But at the moment, we are being overwhelmed by a flood of regulations in all kinds of areas that don’t reveal any priorities at all. I would like to see priorities like that.
“The language is the soul of a country and deserves a lot of attention”, once declared the Catalan writer Mercè Rodoreda. She said this with great love for the Catalan language, the cornerstone of our country, Catalonia, which sustains and holds us together and defines us as Europeans, like all Romance languages.
A language that can look back on a history of more than a thousand years, that contributes to the cultural and linguistic diversity and enrichment of Europe, and that is by no means spoken only by a minority, but rather has maintained its full vitality and is one of the 15 most spoken official languages of the continent.
Catalan, like all languages, deserves great attention. For the Government of Catalonia, the protection, promotion and comprehensive normalization of the language is an absolute priority. Therefore, we have been asking for years what will be debated next Sept. 19 in the General Affairs Council of the European Union. Namely, that Catalan be included as an official language of the European Union, which requires a unanimous decision of the 27 member states.
For Europe and Catalan society, this is an excellent opportunity to correct a major historical anomaly and guarantee the linguistic rights of millions of European citizens, putting them on an equal footing with the vast majority of European citizens, something that has not happened until now.
We Catalans are aware that this opportunity might be received suspiciously in some places in Europe. However, we are not asking for preferential treatment, only for linguistic equality. We are Europeans, we believe in Europe and we just want to speak to Europe the way almost all our fellow citizens do: in our language.
Catalonia has suffered for centuries from an exclusionary Spanish nationalism that has used all the instruments of the state to push back the other historical languages. From Franco’s rule, the Catalan language was banned and persecuted, as one of the instruments of the dictatorship to suppress any difference. Even today there are some Spanish parties that want to prevent a complete normalization of our languages. It is the same attitude – against equality, multilingualism and diversity – that has caused so many conflicts in Spain and in Europe itself, and that deviates from the values of the Union. We in Catalonia, together with Europe, want to prevent this exclusionary attitude from continuing to succeed.
Some voices have raised financial difficulties as an argument against the recognition of additional official languages. We believe that the protection of citizens’ rights should not depend on financial issues. In any case, however, we recall that the annual expenditure of the institutions for translations represents only 0.2 percent of the Community budget and that new technologies can reduce costs considerably in the coming years. Moreover, the Government of Catalonia is at the disposal of the European institutions in the search for mechanisms to overcome all obstacles.
Other voices suggest that limits should be placed on the inclusion of additional official languages. This is a questionable argument because the only condition for inclusion in the circle of official languages of the European Union is to be an official language in a member state. There are currently only five languages in Europe that are not yet official languages of the Union, despite their status as official languages in a member state. One of these is Catalan. It is a full official language in several areas of the Spanish state and is spoken by more people than some of the languages already included among the official languages of the European institutions.
Furthermore, we are aware that there is a misconception that this is a temporary demand by the Spanish government, which is currently chairing the Council, due to the complex political situation following the elections to the Spanish Parliament during the negotiations to form a new government. This is completely false. The demand for the inclusion of Catalan as an official language of the European institutions is a promise made by the Spanish government more than a year ago during the negotiations between the governments of Spain and Catalonia to resolve the sovereignty conflict between the parties, which is now to be fulfilled. The desire to be able to speak our language in Europe is a long-standing demand, based on the deep pro-European conviction of Catalan society and justified by the recognition of our Statute of Autonomy.
The General Affairs Council of the European Union will not debate the re-election of Pedro Sánchez as head of the Spanish government on Sept. 19. This is not its authority and not its task. The Council is debating the recognition of the linguistic rights of ten million European citizens. This is the only perspective that should guide its decision. At stake is the European Union’s commitment to freedom, equality and multilingualism under the motto that unites us: United in diversity.
We Catalans are not asking to be an exception, we are asking exactly the opposite, that is, we no longer want to be an exception.
Pere Aragonès i Garcia is President of the Government of Catalonia
Germany and France have been arguing for months about the reform of the electricity market – it’s about the promotion of nuclear energy and cheap electricity for their own industry. Now Eurelectric President Leonhard Birnbaum is calling on Paris and Berlin to find a quick solution. “As a European energy association, we have no interest in seeing the electricity market reform fail over issues that are actually beyond the question of market design“, says Eurelectric’s head, who has been in office since June, in our interview – exclusively in this issue.
The discussion in Brussels no longer revolves around electricity market design; it has become a debate about industrial policy, complains the energy manager, who is also known for his clear words as CEO of Eon. All in all, he says, the Commission lacks focus, and the State of the Union speech by von der Leyen was a very long list. “But what are the two or three things that really count?“, asks Birnbaum provocatively.
Currently, he said, the economy is being overwhelmed by a flood of regulations that don’t reveal any priorities at all: “Can we drop a few legislative projects?” Read the full interview to find out what Birnbaum wants to focus on as Eurelectric president.
Mr. Birnbaum, does the future of European industry depend solely on low energy prices?
In my view, the problems facing European industry are more diverse. We clearly have a problem between the world’s major power blocs. And we are not suitably positioned for this, either geopolitically or institutionally. We are not innovative enough as one Europe. We don’t have sufficient infrastructure. We are too dependent on the Anglo-Saxon capital markets for our financing options.
And the European Single Market?
True, we have 400 million customers. But then look at the digital markets, where we have managed to atomize the European market with 27 interpretations of the General Data Protection Regulation. New business models are therefore taking hold in the US, which we then have to adopt. For some sectors, energy prices may be decisive, but if we reduce the issue of competitiveness to energy costs, we make it too easy for ourselves.
It is precisely these energy-intensive sectors that the Federal Minister of Economic Affairs and the minister presidents are worried about. They want to subsidize the price of electricity for a few years until renewable energies push the price down – to five or six cents. How long would this bridging phase be?
In the end, a subsidized industrial electricity price is a political decision. You just have to answer three questions. The first one you just asked: How long will it take? At the moment, the hope is that after five or six years, the bridge will be superfluous because fossil will then be more expensive than renewables. Maybe, but I don’t want to participate in that speculation. The second question is: If the bridge becomes longer, how do I get off the payments again? That is the question with every subsidy once it has been introduced. And third, is this the best use of the financial resources? And who pays? The customers who don’t benefit naturally have to bear higher costs.
The German move is also justified by concerns that France will support its industry even more in the future via the electricity price. Paris is trying to do this via the electricity market reform currently underway in the EU. Do you share these concerns?
Energy policy in Brussels no longer revolves around electricity market design at all; it has become a debate on industrial policy. We are witnessing a discussion about the industrial electricity price between Germany and France. As the European Energy Association, we have no interest in seeing the electricity market reform fail on issues that are actually beyond the question of market design.
In short, it is about the modernization of power plants via state-backed Contracts for Difference and the redistribution of profits – especially from the operation of nuclear power plants.
Eurelectric does not want differential contracts to be applied retroactively to existing generation capacity. We have said that from the beginning. But now there is this sub-topic: What about the profits of nuclear power plants that get a lifetime extension? Is that new capacity because, after all, it wouldn’t have been available otherwise? I hope that France and Germany will find a way that clears the discussion for both sides. As an energy company, we want the debate on electricity market design to be concluded quickly.
Leaving aside the special case of nuclear power, who should receive the proceeds from new power plants if electricity prices rise exorbitantly again? The Commission wanted a split among all electricity customers. Others want the revenues to go to industry. In the end, it could be left up to national governments.
I think it would be difficult for each member state to decide for itself how to distribute revenue from contracts for differences. Strengthening the European market must be in the interest of all Europeans, and the price of electricity will affect more and more goods. If I give EU countries very large degrees of freedom to influence prices for end customers, then I must at least be aware that this will have a massive impact on the Internal Market.
With the electricity market reform, the question of capacity markets for controllable power plants has also boiled up again. Poland even wants to continue to provide state support for old coal-fired power plants. Can’t the country secure its supply in a more climate-friendly way?
I have been told that Poland would actually have problems in the short term if it took its old coal-fired power plants out of the system. That’s why I think the transitional exemption from the CO2 limits is an acceptable wish. Poland is, after all, making an energy transition, and with renewables as well – not just nuclear, which is coming at some point. And the Poles do not want to create a backup with gas capacities, as we are discussing in Germany. That’s also because of the country’s sensitivity to ensuring its independence. I would not turn the question of capacity mechanisms for Polish coal-fired power plants into a fundamental discussion for Europe. Poland can clarify this bilaterally with the Commission.
So the issue of CO2 limits for capacity mechanisms should not be addressed by the amendment to the Electricity Market Regulation?
The question should at least not block the amendment.
You mentioned the plans of the German Ministry of Economic Affairs for new gas-fired power plants. There is a European procedure for introducing capacity mechanisms, but it takes years. Has Germany simply slept through the introduction of capacity markets?
Let’s put it this way: Germany has focused a lot on shutdowns and is obviously very late to the party. If we still want to have the capacity of gas-fired power plants that is now under discussion ready by 2030, then it’s really time to get projects underway. But I don’t have a clear idea of how the examination of capacity mechanisms can be accelerated in Brussels.
What is currently being accelerated at the EU level is the expansion of renewable energies and electricity grids. Are the facilitations from the Renewable Energies Directive sufficient for the necessary speed?
It is a helpful step in the right direction, but it is not enough on its own. We don’t need selective exceptions, we need a simplification of the system across the board – and at all levels. Just one example from the wind industry: For transports of rotor blades, you can’t get permits from the federal highway authority in an acceptable amount of time. This continues with various other federal agencies, the permitting authorities in 16 states, the DIN committees. We need a different mindset everywhere. We have to make things possible. The chancellor talks about the pace of Germany. And in day-to-day business, I have to deal with authorities who say: I have my regulations, sorry.
Back to the European level once again: In Strasbourg, the President of the Commission proclaimed a new phase of the Green Deal. What does it mean for the next European legislature if energy policy is more strongly influenced by industrial policy?
The energy crisis has shifted the balance. The Green Deal was very much focused on sustainability. Now it’s no longer the only thing we can worry about. That doesn’t mean we don’t want to do an energy turnaround anymore; that will continue. But it’s just not the case that everything will automatically be good if we only take care of the energy transition. If I may take the liberty of giving some advice, it would be nice if the Europeans would show some priorities. Is it possible to drop a few legislative projects now and then? If everything is important, nothing is important. That’s an iron-clad rule. Ms. von der Leyen’s speech was a very long list. But what are the two or three things that really count?
I’m sure you have an idea.
As Eurelectric President, I have three priorities. One is security of supply. With the energy crisis, it’s back on the agenda. Number two, we need better infrastructure. I’m not just saying that for the energy industry. It also applies to digital infrastructure. And number three: we need a fair distribution of risks and benefits. I don’t really care what priorities the Commission sets itself, as long as it sets them. But at the moment, we are being overwhelmed by a flood of regulations in all kinds of areas that don’t reveal any priorities at all. I would like to see priorities like that.
“The language is the soul of a country and deserves a lot of attention”, once declared the Catalan writer Mercè Rodoreda. She said this with great love for the Catalan language, the cornerstone of our country, Catalonia, which sustains and holds us together and defines us as Europeans, like all Romance languages.
A language that can look back on a history of more than a thousand years, that contributes to the cultural and linguistic diversity and enrichment of Europe, and that is by no means spoken only by a minority, but rather has maintained its full vitality and is one of the 15 most spoken official languages of the continent.
Catalan, like all languages, deserves great attention. For the Government of Catalonia, the protection, promotion and comprehensive normalization of the language is an absolute priority. Therefore, we have been asking for years what will be debated next Sept. 19 in the General Affairs Council of the European Union. Namely, that Catalan be included as an official language of the European Union, which requires a unanimous decision of the 27 member states.
For Europe and Catalan society, this is an excellent opportunity to correct a major historical anomaly and guarantee the linguistic rights of millions of European citizens, putting them on an equal footing with the vast majority of European citizens, something that has not happened until now.
We Catalans are aware that this opportunity might be received suspiciously in some places in Europe. However, we are not asking for preferential treatment, only for linguistic equality. We are Europeans, we believe in Europe and we just want to speak to Europe the way almost all our fellow citizens do: in our language.
Catalonia has suffered for centuries from an exclusionary Spanish nationalism that has used all the instruments of the state to push back the other historical languages. From Franco’s rule, the Catalan language was banned and persecuted, as one of the instruments of the dictatorship to suppress any difference. Even today there are some Spanish parties that want to prevent a complete normalization of our languages. It is the same attitude – against equality, multilingualism and diversity – that has caused so many conflicts in Spain and in Europe itself, and that deviates from the values of the Union. We in Catalonia, together with Europe, want to prevent this exclusionary attitude from continuing to succeed.
Some voices have raised financial difficulties as an argument against the recognition of additional official languages. We believe that the protection of citizens’ rights should not depend on financial issues. In any case, however, we recall that the annual expenditure of the institutions for translations represents only 0.2 percent of the Community budget and that new technologies can reduce costs considerably in the coming years. Moreover, the Government of Catalonia is at the disposal of the European institutions in the search for mechanisms to overcome all obstacles.
Other voices suggest that limits should be placed on the inclusion of additional official languages. This is a questionable argument because the only condition for inclusion in the circle of official languages of the European Union is to be an official language in a member state. There are currently only five languages in Europe that are not yet official languages of the Union, despite their status as official languages in a member state. One of these is Catalan. It is a full official language in several areas of the Spanish state and is spoken by more people than some of the languages already included among the official languages of the European institutions.
Furthermore, we are aware that there is a misconception that this is a temporary demand by the Spanish government, which is currently chairing the Council, due to the complex political situation following the elections to the Spanish Parliament during the negotiations to form a new government. This is completely false. The demand for the inclusion of Catalan as an official language of the European institutions is a promise made by the Spanish government more than a year ago during the negotiations between the governments of Spain and Catalonia to resolve the sovereignty conflict between the parties, which is now to be fulfilled. The desire to be able to speak our language in Europe is a long-standing demand, based on the deep pro-European conviction of Catalan society and justified by the recognition of our Statute of Autonomy.
The General Affairs Council of the European Union will not debate the re-election of Pedro Sánchez as head of the Spanish government on Sept. 19. This is not its authority and not its task. The Council is debating the recognition of the linguistic rights of ten million European citizens. This is the only perspective that should guide its decision. At stake is the European Union’s commitment to freedom, equality and multilingualism under the motto that unites us: United in diversity.
We Catalans are not asking to be an exception, we are asking exactly the opposite, that is, we no longer want to be an exception.
Pere Aragonès i Garcia is President of the Government of Catalonia
