EC Announces Plans To Reform Electricity Market in 2023
On 18 October, the European Commission (Commission) published its 2023 Work Programme (Programme). Amongst other initiatives, the Commission proposes the creation of a European hydrogen bank and a comprehensive reform of the EU electricity market in the upcoming year. Both initiatives will be presented within the European Green Deal framework in the course of 2023.
The creation of a European hydrogen bank, already mentioned by Commission President Von der Leyen in September in the State of the Union speech, intends to foster investment in hydrogen projects and help boost the European Union’s green hydrogen economy. According to the Programme, the bank will be endowed with €3 billion of capital to achieve its goals. The Programme, however, does not confirm whether the initiative, which is set to be published in the third quarter of 2023, will come in the form of a legislative or non-legislative proposal.
Moreover, as regards other EU hydrogen market developments, the Commission is calling on European co-legislators to take swift action and reach an agreement in 2023 on the Commission’s proposals for a regulation on internal markets for renewable and natural gases and for hydrogen; and for a directive on common rules for internal markets in renewable and natural gases and in hydrogen.
As for the comprehensive reform of the EU electricity market, the Commission’s actions are intended to help the European Union prepare to better navigate future energy price volatility, ensure affordable electricity bills, and prepare the European Union for the industrial transformation necessary to achieve its decarbonisation goals by 2050. The proposal will also address the decoupling effect of gas prices on electricity prices. The reform of the EU electricity market is due to be presented in the first quarter of 2023 as a legislative initiative accompanied by an impact assessment.
The Programme also explains that, in order to complement the Commission’s recent intervention in the energy markets with emergency measures addressing the rise of energy prices and supporting the fight against the climate crisis, it is key to strengthen the EU’s resilience and response capacities of critical infrastructure. The latter is at the heart of a five-step plan1 announced by Commission President Von der Leyen at the European Parliament’s plenary session on 5 October. Building on such plan, the Commission further published on 18 October, a proposal for a council recommendation aiming at maximising and accelerating the work to protect critical infrastructure in three priority areas: preparedness, response, and international cooperation.
Energy Policy and legislation will continue to be a major issue in 2023 for the European Union, both because of the European Green Deal’s objectives and the current geopolitical developments heavily affecting Europe’s energy supply, affordability, and structural resilience.
Kathleen Keating and Paula Esteban Gómez also contributed to this article.
1 The five-step plan consists of enhancing preparedness; working with member states to stress test their critical infrastructure, starting with the energy sector and then followed by other high-risk sectors; increasing the response capacity specially through the EU Civil Protection Mechanism; making good use of satellite capacity to detect potential threats; and strengthening cooperation with the North Atlantic Treaty Organization and key partners on the resilience of critical infrastructure.