The European Industry needs affordable energy. CEPI calls upon on the European Commission and Member States to urgently address the increasing costs differences in energy costs compared to North America resulting from the shale gas boom.
While gas prices in Europe have doubled since 2003, and expected to keep growing, shale gas in North America has brought gas prices to extraordinary low levels.
European Commissioner Oettinger recently answered the European Parliament that “According to the International Energy Agency, natural gas prices for industry in the first quarter of 2012 were on average 241 per cent higher in EU OECD than in the US “.
This situation is unsustainable. The competitiveness of industry is seriously at risk. Even for single companies, the costs differences are tens of millions of euros a year, compared to competitors buying gas in the USA.
If nothing is done, the growing price gap will soon make most of the investments in Europe – including low-carbon technologies – simply economically unattractive. With some sectors of the European industrial base already moving to North America, the European Pulp and Paper Industry has the strong will to stay in Europe and keep jobs and value creation here. Energy costs in Europe are however becoming unsustainably uncompetitive.
Fourty percent of our energy needs are natural gas, next to the over 50% bioenergy in our fuel mix. Many of the most efficient power plants run on natural gas. We do not call for low prices per se. We need affordable energy, comparable to competitors.
A European Gas Strategy is needed. We call on Heads of Governments and Ministers for Energy & Environment, the European Commission and Members of the European Parliament to urgently discuss this issue and come up with concrete measures and defined timelines as soon as possible.
The European Gas Strategy should take, as a starting point, the following key aspects:
1. A truly pan-European gas market
Recent ACER and European Commission reports confirm that we’re still far from achieving the goal of one single gas market. More competition and removal of trans-boundary charges for intra-EU gas transport are necessary sine qua non conditions. We urge the Commission to start a renewed sectorial investigation into the gas sector to find all obstacles to lower gas prices in Europe.
2. Decoupling of natural gas prices from oil prices.
There might have been historic reasons for linking gas to oil prices, but these reasons are no longer there. Natural gas is nowadays a commodity traded in a liquid market, and should be treated as such. We ask the European Commission and member state to provide the right policy conditions and remove barriers to allow for a real gas to gas market to materialise.
3. Removal of bottlenecks in gas supply
LNG terminals and gas pipelines are crucial to diversify the sources of gas supply. Investments should be promoted and facilitated. We urge the European Commission to put free trade in US natural gas as a prerequisite for the cross Atlantic free trade agreement.
4. Promote increased access to domestic gas resources
Governments need to take concrete actions to ensure that the potential for domestic gas production is maximised, to strengthen Europe’s position when negotiating gas prices with third countries. Europe needs to tap into its domestic gas production, including EU shale gas when and where possible, in a sustainable way. Policymakers need to set an enabling framework to do so.
5. Lower prices from the world markets.
Europe needs to put in all its power to allow not only US gas to come to Europe, but also to allow for gas from other producing countries to come in at lower prices.
6. Lower taxation on natural gas use or full exclusions for industry from energy taxation and costs from energy-related policies, to be allowed in the EU Energy Tax directive and state aid guidelines as long as the price differences with North America remain.
We need to mitigate the gas price gap between Europe and the rest of the world.
We need Europe to step up and urgently find answers to these challenges.
The EU and its Member States should consider impacts on energy prices and the affordability of energy when preparing, adopting and implementing related policies. Completing the EU internal energy market to enhance competition and cross-border trade in energy, developing new sources of energy, and further diversifying energy supplies to the EU will have beneficial effects on prices.
CEPI therefore calls on Member States in particular, to urgently address this issue already at the upcoming Competitiveness Council (29-30 May), and European Council (30 May).
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For more information, please contact Daniela Haiduc at firstname.lastname@example.org  mobile: +32 473562936
Note to the Editor
CEPI aisbl - The Confederation of European Paper Industries
The Confederation of European Paper Industries (CEPI) is a Brussels-based non-profit organisation regrouping the European pulp and paper industry and championing industry’s achievements and the benefits of its products. Through its 18 member countries (17 European Union members plus Norway) CEPI represents some 520 pulp, paper and board producing companies across Europe, ranging from small and medium sized companies to multi-nationals, and 1000 paper mills. Together they represent 25% of world production.
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