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EU’s Internal Energy Market in Crisis, Danish Lobby Group Says

The European Commission must take action to prop up carbon prices and safeguard the cornerstone of the bloc’s crisis-struck internal energy market, the Danish Energy Association said.

The carbon trading system in the bloc has “almost collapsed,” Ulrich Bang, director of EU affairs at the lobby group, said today in an e-mailed note.

Prices in the world’s largest cap-and-trade program fell to a record 5.99 euros ($7.77) a metric ton in April, and permits for December were unchanged at 7.80 euros at 12 p.m. today on the ICE Futures Europe Exchange in London. This compares with a price of nearly 30 euros in 2008, Bang said.

“Based on that, not much money will be invested in green technology,” he said.

The European Commission, the EU regulator, wants to create a single regional power and gas market by 2014. Low carbon prices, combined with a series of other problems, make this a remote prospect, the Danish lobby group said.

“The EU’s internal energy market is in a state of crisis,” Bang said. “Member states do not comply with directives, while constantly introducing new subsidy mechanisms that distort competition.”

The EU’s internal market is often presented as the bloc’s biggest success story in the past 20 years, Bang said.

“There is a long way to go before we have an internal electricity and gas market in the EU,” he said.

To contact the reporter on this story: Torsten Fagerholm in Helsinki at tfagerholm@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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