Fortum’s CEO Tapio Kuula: Strong Leadership Needed To Build European Energy Markets

“EU Commission should take a strong leadership to bring member states back on track to reach fully functioning internal energy market by 2014 as decided last year. Regarding the EU decarbonisation strategy, the focus should be on setting ambitious CO2 targets for 2030. That would give a very positive signal to the CO2 market and be a strong incentive for low-carbon investments”, said Fortum’s President and CEO Tapio Kuula at Eurelectric Annual Conference in Malta today.

European leaders decided last year that fully functioning internal energy market should be in place by 2014.

“European Member States are, however, developing national strategies and mechanisms, which compromise rather than support the target”, Mr. Kuula said referring to the recent development of so-called capacity remuneration mechanisms in several Member States. National mechanisms threaten the functioning of the internal energy market.

Mr. Kuula highlighted the importance of putting agreed decisions into effect. Cost-effective transition towards low-carbon energy future is possible with well functioning markets and better cross-border transmission infrastructure. In the long term this will benefit energy consumers, producers and the society as a whole.

Referring to debate ongoing on the EU’s post-2020 energy and climate policy targets, Mr. Kuula said that “CO2 reduction should be the central target and driver for the post-2020 policy framework. Other targets, if needed at all, must be seen in relation to that and focus on eliminating the obstacles faced by e.g. renewable energy sources and energy efficiency. As we have learned, overlapping targets and measures tend to water down the effectiveness of each other and should be avoided in the future.”

Investment decisions in the energy sector have long-term implications. Strategic planning is getting more and more difficult as overlapping EU steering mechanisms together with national and even retroactive changes to the existing support schemes increase regulatory and political uncertainty. In addition, governments are innovating new energy related tax measures to balance their budgets by establishing incentives that contradict with energy and climate policy targets and create distortions in the market.

“Investment environment has become very challenging at a time when massive investments – which create growth and jobs – both in low-carbon energy generation and transmission infrastructure are needed”, Mr Kuula concluded.