"Energy: Choices for Europe"

Berlin, May 3, 2007

A Debate at ESMT on European Energy Policies

On March 2, 2007, a panel headed by Mario Monti, chairman of the Brussels think tank BRUEGEL and a former EU commissioner, met at ESMT European School of Management and Technology in Berlin. Alongside Monti and ESMT President Lars-Hendrik Röller, the participants were Christoph Dänzer-Vanotti, board-member of E.ON AG, Andreas Schuseil, Director General for Energy in the German Ministry of Economics and Technology, and Heinz Hilbrecht, Director for “Conventional Energy Sources” at the European Commission.

To start the discussion, ESMT President Röller introduced a study undertaken jointly by ESMT and BRUEGEL, “Energy: Choices for Europe.” The study analyzes the European energy market; it concludes by underscoring the strong need for a common European energy policy. BRUEGEL-head Monti described the debate’s present status in optimistic terms: “Europe stands at the forefront when it comes to shaping energy policies.”

Christof Dänzer-Vanotti welcomed the idea that the optimal energy mix of the future has to be defined from a European perspective. In E.ON’s view, he indicated, the era of national champions is drawing to an end—but this in no way means a less secure supply of energy. Dänzer-Vanotti here pointed to a difficult trade-off between supply-security and managing global warming: as a coal-producing country that also wants to close down its nuclear power plants, Germany is especially affected by this conflict. The E.ON board member expressed concern that the German Federal Republic was facing an insoluble dilemma. He identified problems between competition and global-warming management as representing another such trade-off from E.ON’s perspective. For Dänzer-Vanotti, there are clear connections: “If we want to achieve a change in behavior, the costs of CO2 emissions will have to be factored in for both companies and consumers.”

German energy policy director Andreas Schuseil warned of the danger that a “free rider” system could emerge, with national priority conflicts having negative consequences in the European domestic markets. What needed to be absolutely avoided was simply postponing any confrontation with Europe’s problems in energy acquisition and safeguarding.

Lars-Hendrik Röller, Heinz Hilbrecht, Mario Monti, Christoph Dänzer-Vanotti, Andreas Schuseil during the discussion

Heinz Hilbrecht, Director for “Conventional Energy Sources” at the European Commission, praised the ESMT/BRUEGEL study for clarifying the energy policy problems in a specialized framework. Hilbrecht expressed pleasure at the commission’s progress in the realms of sustainability, security of supply, and competitiveness: “One of the most positive surprises over the past years has been that these goals work well together.” He encouraged the energy industry to continue developing emission-reduced coal-burning power plants and carbon capture and storage (CCS), in order to actually introduce the technology by 2015: “Coal will only have a future if it’s more or less CO2-free.”

Hilbrecht did not pass over the trade-off between short-term costs and long-term benefits. But he emphasized that immediately changing the energy structures and reducing CO2 emissions would cost merely 0.5%-1.0% of GDP. After 2020, these costs would run between 5% and 20% of GDP. The EU official expressly mentioned both conventional and renewable sources as part of a promising energy mix; he emphasized that setting binding goals was extremely important. According to Hilbrecht, if Europe speaks in one voice regarding general energy policies, then it will also be able to appear more unified to the outside world: “We will only acquire strong external policies once we have strong internal policies.”

In conclusion, Mario Monti recalled the last century’s debates about currency. For the BRUEGEL chairman, the success of the currency-unification process and its present acceleration offer grounds for an optimistic sense that in the field of energy policy as well, everything is possible. The energy-policy crisis—or the “wake-up call,” as ESMT President Lars-Hendrik Röller put it—with rapid price increases, occasional supply problems, and heightening awareness of global warming, might mean that the right conditions are present for a common European energy policy. 

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