From the systemic point of view there is no reason, why gas would be treated differently, for the purposes of establishing a coherent regulatory regime for the integrity and transparency of the wholesale energy products, than other fuels for the production of the electricity - like coal, oil and even biomass.



The next object for possible consideration as regards the future scope of the draft REMIT (Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on energy market integrity and transparency {SEC(2010) 1510} {SEC(2010) 1511}) are EUAs. They obviously can’t be classified as strictly fuels for the production of electricity, but their role as an important (and sometimes crucial) input for electricity generation is unquestionable.


According to the Article 2(4) of the draft REMIT "wholesale energy products" means the following contracts and derivatives, irrespective of where and how they are traded:

(a) contracts for the supply of natural gas or electricity;

(b) derivatives relating to natural gas or electricity;

(c) contracts relating to the transportation of natural gas or electricity;

(d) derivatives relating to the transportation of natural gas or electricity.

Contracts for the supply of natural gas or electricity for the use of final consumers are not wholesale energy products.

Some citations

In the present post it is useful to make some extensive quotations, but the reasons for doing so and the conclusions will come at the end.

So, in the discussion paper for draft REMIT (Draft discussion paper by DG TREN on transparency and integrity of traded wholesale markets in electricity and gas published on 9 December 2009) EUAs are numerously mentioned as object of potential interest for inclusion into the category of “wholesale energy products”.

The instances are:


1. On page 5 (point 3.2 “Commodity scope”):


“The appropriate commodity coverage of a market integrity initiative needs to be assessed. It remains to be seen whether it is at this stage desirable to go beyond electricity and gas.

Limiting the scope to these two would facilitate the legal and institutional design of the market integrity initiative. At the same time the strong cross-commodity inter-linkages would suggest that at least carbon markets needed to be captured. As regional markets, electricity, gas and carbon would clearly be within EU jurisdictional reach. However the legal and institutional design of the new initiative would become more complex. Also new entities such as emitting industrials might need to be covered, at least as regards basic requirements such as record-keeping based e.g. on the advice of CESR and ERGEG, derived from requirements under MiFID. The cross-commodity interconnectedness would even suggest the broadening of the regime towards globally traded commodities such as coal and oil. Such level of ambition would however require a strategy for international regulatory cooperation in order to address the risk of regulatory arbitrage. Moreover it would seem obvious that the broader the commodity scope of the initiative is designed the heavier the transactional reporting burden would become for the undertakings concerned.”


2. On page 2 and 3 (point 1 “The policy case for a regulatory initiative”):


“The coincidence of the ongoing financial market regulatory reform debate, and preparations for the implementation of the 3rd IEM Package and revised EU ETS provide a good window of opportunity for the Commission to come forward with a legislative initiative covering traded wholesale markets for electricity and gas with the option to also include the EU ETS carbon market. To this end, the Commission is currently exploring possible design options for a tailor made market transparency & integrity regime which should improve confidence in traded energy markets by closing the existing regulatory gaps and leading to higher levels of liquidity and further integration of European energy markets.”



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