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Stichting European Federation of Energy Traders (We operate under the name Energy Traders Europe)

Energy Traders Europe

Energy Traders Europe promotes competition and transparency in European energy markets, representing over 170 companies trading gas, electricity, carbon and renewable energy certificates.

Lobbying Activity

Meeting with Monika Zsigri (Head of Unit Energy)

11 Dec 2025 · Presentation of position paper and priorities

Meeting with Nicolás González Casares (Member of the European Parliament)

10 Dec 2025 · Gas & electricity markets

Meeting with Mechthild Woersdoerfer (Deputy Director-General Energy) and

3 Dec 2025 · Implementation of the Methane Regulation 2024/1787 (EUMR)

Meeting with Johannes Ten Broeke (Cabinet of Commissioner Wopke Hoekstra)

2 Dec 2025 · Action plan for affordable energy: Gas Market Task Force

Meeting with Andreas Glück (Member of the European Parliament)

12 Nov 2025 · Climate and Energy Policy

Meeting with Lauro Panella (Cabinet of Commissioner Maria Luís Albuquerque), Philippe Thill (Cabinet of Commissioner Maria Luís Albuquerque)

7 Nov 2025 · Competitiveness and Simplification

Meeting with Anna Stürgkh (Member of the European Parliament) and Hydrogen Europe and Stadtwerke München GmbH

4 Nov 2025 · General Exchange

Meeting with Kitti Nyitrai (Head of Unit Energy) and FuelsEurope and

3 Nov 2025 · EU Methane regulation import requirements

Meeting with Stéphane Séjourné (Executive Vice-President) and

28 Oct 2025 · High Level Dialogue with Industry executives on the implementation of CBAM.

Meeting with Wopke Hoekstra (Commissioner) and

28 Oct 2025 · High Level Dialogue with Industry executives on the implementation of CBAM

Energy Traders Europe urges market-led approach to energy security

13 Oct 2025
Topic — The EU is updating its energy security laws for a decarbonised system.
Message — The group requests smart streamlining and market-based supply solutions. They argue for minimal, time-bound interventions that preserve price signals. They also oppose technology mandates and EU-wide gas storage targets.123
Why — Maintaining market signals allows members to trade efficiently without costly mandates.4
Impact — EU regulators would lose the authority to mandate specific technology or storage levels.5
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Energy Traders Europe urges early clarity on international carbon prices

25 Sept 2025
Topic — This regulation defines how carbon prices paid outside the EU reduce CBAM costs.
Message — Provide clarity on international carbon prices before 2026 to ensure import feasibility. Apply CBAM discounts to all electricity traded in countries with carbon pricing mechanisms. Aggregate multiple carbon pricing instruments into one price to reflect total costs paid.123
Why — This would eliminate financial uncertainty and lower compliance costs for electricity importers.4
Impact — The EU budget loses revenue if aggregated foreign prices completely offset CBAM levies.5
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Energy Traders Europe urges fairer carbon pricing for electricity imports.

25 Sept 2025
Topic — This consultation concerns the methodology for calculating embedded emissions for electricity imports.
Message — They request changing default emission factors from fossil fuels to average generation technologies. They also demand exempting transit flows and aligning data with electricity trading timeframes.123
Why — This would prevent excessive costs and avoid overestimating carbon intensity for importers.45
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Energy Traders Europe backs 90 percent 2040 climate target

17 Sept 2025
Topic — Amending the European Climate Law to establish a 2040 greenhouse gas target.
Message — The group supports the 90% reduction target while keeping the EU ETS central. They request clear rules for permanent removals and the ability to stack revenue streams.123
Why — This ensures a credible signal for investments and provides new market-based revenue streams.45
Impact — Firms favoring loose compliance rules lose as the group demands limits on carbon market flexibilities.6
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Energy Traders Europe seeks legal certainty for energy platforms

16 Sept 2025
Topic — New EU rules for supervising energy market inside information and reporting entities.
Message — Energy Traders Europe calls for legal guarantees that submitting data to platforms fulfills disclosure obligations. They advocate for flexible emergency disclosure channels and warning systems for reporting errors. They recommend avoiding mandatory reporting formats that could obstruct automated data processes.123
Why — This would provide energy traders with greater legal certainty and lower operational risks.4
Impact — New market entrants may face a competitive disadvantage if established platforms receive easier approval.5
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Energy Traders Europe: Reporting Rules Threaten EU Supply Security

16 Sept 2025
Topic — Revision of EU rules for reporting wholesale energy market data to ACER.
Message — Narrow the exposure reporting scope to avoid inflating limited provisions into complex requirements. Exclude sensitive and unpredictable 24-month production and consumption forecasts. Ensure a minimum 18-month lead time from final technical documentation.12
Why — This would reduce the reporting burden and prevent complexity for market participants.3
Impact — EU consumers may face higher energy costs and reduced security of supply.4
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Meeting with Tatyana Panova (Head of Unit Financial Stability, Financial Services and Capital Markets Union) and Eurelectric aisbl and

1 Sept 2025 · JEAG position on commodity derivatives consultation

Energy Traders Europe seeks proportional rules for electricity imports

26 Aug 2025
Topic — The consultation concerns extending the carbon border adjustment mechanism to downstream products and electricity imports.
Message — The organization requests that carbon price calculations reflect real-time hourly intensity and include all generation technologies. They also advocate for recognizing power purchase agreements concluded through intermediaries and virtual arrangements.123
Why — This would prevent excessive administrative burdens and avoid unjustified cost increases for European energy businesses.4
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Energy Traders Europe Urges Stable Rules for Carbon Markets

8 Jul 2025
Topic — Evaluation of the EU emissions trading system and market stability reserve.
Message — Energy Traders Europe advocates for a rule-based Market Stability Reserve with dynamic thresholds. They request direct integration of high-quality carbon removals into the existing emissions trading system. Additionally, they call for removing sectors from the Effort Sharing Regulation to prevent double coverage.123
Why — A more predictable carbon market would improve liquidity and reduce investment risks.45
Impact — National governments may find their domestic energy transition policies restricted or criticized.6
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Meeting with Annika Kroon (Head of Unit Mobility and Transport) and EUROGAS and

24 Jun 2025 · Certification of Biomethane in Europe

Meeting with Aleksandra Baranska (Cabinet of Executive Vice-President Teresa Ribera Rodríguez), Miguel Gil Tertre (Cabinet of Executive Vice-President Teresa Ribera Rodríguez), Thomas Auger (Cabinet of Executive Vice-President Teresa Ribera Rodríguez)

27 Mar 2025 · To hear interest representatives’ views on European energy markets.

Meeting with Jan Farský (Member of the European Parliament)

18 Mar 2025 · Trading with electricity in the context of rising electricity prices

Meeting with András Gyürk (Member of the European Parliament, Shadow rapporteur)

17 Mar 2025 · Natural gas storage and markets

Meeting with Jana Nagyová (Member of the European Parliament, Shadow rapporteur)

14 Feb 2025 · Energy trading

Meeting with Monika Zsigri (Head of Unit Energy)

13 Feb 2025 · Exchange on the extension of the emergency measures regarding gas security of supply

Meeting with Dan Jørgensen (Commissioner) and

30 Jan 2025 · Affordable Energy action Plan

Meeting with Andrea Wechsler (Member of the European Parliament) and The Coalition for Energy Savings

12 Dec 2024 · EU Energy and industry policy

Energy Traders Europe Urges Clear Low-Carbon Fuel Rules

25 Oct 2024
Topic — A consultation on the methodology for calculating greenhouse gas emissions for low-carbon fuels.
Message — The group calls for standardized certificates and cross-border recognition to minimize transaction costs. They argue that project-specific data should be used instead of default values for emissions. They also request a ten-year grandfathering period to provide regulatory certainty for investors.123
Why — Standardized rules and specific data reporting would lower compliance costs and trading burdens.4
Impact — Environmental groups lose as grandfathering allows plants to bypass stricter climate standards for years.5
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Meeting with Andrea Wechsler (Member of the European Parliament) and BUSINESSEUROPE and

23 Sept 2024 · EU Energy and Industry Policy

Energy Traders Europe urges harmonized EU biomethane trade rules

29 Jul 2024
Topic — Updating European rules for monitoring and reporting greenhouse gas emissions under the ETS.
Message — The federation requests consistent use of the Union Database to remove trade barriers. They seek to include bio-LNG and non-EU carbon storage within the regulation.123
Why — Universal certification would lower administrative costs and increase market liquidity for energy traders.45
Impact — National registries would lose the ability to impose unique domestic requirements on biomethane imports.6
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Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness) and Shell Companies and

10 Jun 2024 · review of the MiFID II commodities regime

Meeting with Ivan Štefanec (Member of the European Parliament)

10 Jan 2024 · General discussion / outlook for 2024

Energy Traders Europe demands standards for tradable carbon credits

31 Aug 2023
Topic — EU consultation on policy measures for industrial carbon capture, transport, and storage.
Message — The federation advocates for a technology-neutral approach incentivising all commercially ready solutions. They request standards for the generation of tradable carbon credits across borders.12
Why — Establishing a cross-border CO2 market would create lucrative new trading opportunities for members.3
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Response to Amendment of the Auctioning Rules in response to the ETS revision / Fit For 55

25 Aug 2023

We appreciate the opportunity to comment on the proposed updates to the emission allowances auctioning rules. In relation to RePowerEU, it is not clear when the Commission would look back at the amount raised to establish the remaining auction volumes required the proposal only states that the review will consider the revenue obtained, clearing price for preceding 6 months and the time remaining until 26th August. This could lead to perverse market signals and an untransparent approach to raising RePowerEU volumes as each market participant will be monitoring pricing and volumes sold on a daily basis to try and predict the remaining volumes. We would propose that the Commission reviews this periodically at specified intervals i.e., every quarter or 6 months, so that there is a clear and transparent look back period. Further comments: o Recital 15: It is not clear how it will be established whether the secondary market is sufficiently liquid. We would recommend providing further defined. o Article 8.4: Special derogation for ETS where auctions can be conducted at other frequencies in the first 6 auctions to improve participation in the market there is no details on how or when this would be decided. o Article 13.6: The Article states that where 75% of the Social Climate Fund revenue is not generated by June of each year, the initial annual volume for September- December of that year shall be increased. This is confusing as ETS auctions run on a calendar year basis. It is quite substantial for 75% to have to be raised by June of each year. We would also like to understand where the additional allowances will come from if 75% is not raised.
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Energy Traders Europe urges harmonized rules for cross-border biomethane

23 Aug 2023
Topic — The consultation updates rules for monitoring and reporting greenhouse gas emissions under the EU ETS.
Message — The organization calls for the EU gas grid to be treated as a single logistical facility to simplify cross-border biomethane trade. They request clear guidelines on documentation to avoid inconsistent national requirements and administrative burdens.12
Why — Harmonized rules would reduce administrative burdens and lower costs by offsetting emission allowance obligations.34
Impact — National authorities may lose the ability to impose fragmented and restrictive reporting requirements on energy traders.56
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Energy Traders Europe urges EU-UK carbon link to avoid CBAM

11 Jul 2023
Topic — New reporting requirements for carbon emissions on products imported into the EU.
Message — Policymakers should link the UK and EU ETS to ensure an exemption. The Commission should confirm day-ahead market coupling is sufficient for a CBAM exemption. No penalty should be imposed prior to the Commission flagging an issue.123
Why — Linking systems would remove administrative burdens and implementation challenges while enhancing market liquidity.45
Impact — Inefficient interconnector flows would translate into increased costs to consumers in neighboring markets.6
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Energy Traders Europe urges market-based reporting for biomethane

7 Jul 2023
Topic — EU consultation on mandatory sustainability reporting standards for large European companies.
Message — EFET asks for a clear option to use market-based instruments for reporting biomethane consumption. They demand coherence with existing EU laws to avoid conflicting accounting methodologies.12
Why — This protects the commercial viability of trading certificates in the voluntary biomethane market.3
Impact — Renewable energy producers lose investment if reporting rules discourage certificate-based biomethane purchases.4
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Meeting with Ruud Kempener (Cabinet of Commissioner Kadri Simson)

21 Jun 2023 · Hydrogen delegated act

Response to Revision of the EU’s electricity market design

23 May 2023

The European Federation of Energy Traders (EFET) welcomes the publication of the draft Regulation to improve the Unions electricity market design. The European Commissions proposals are a good basis for targeted evolutions of the European electricity market design. As the legislative process unfolds, attention should nonetheless be paid to the following: - Emergency measures need to be the exception to rebuild trust - Hedging in the market enables price stabilisation for consumers and revenue predictability for investors - Consumers have a central role to play in the transition and legislation needs to balance protection and active contribution - Flexibility in all its forms and available technologies is necessary to integrate renewables as they continue to grow As we debate the Commissions proposal it is vital that we keep in mind that a single, Europe-wide, well-functioning and well-regulated energy market is the best way to deliver Europes trio of energy policy objectives: security of supply, stable prices and rapid decarbonization Strengthening the existing market design and avoiding national/regional exemptions in legislation are essential to ensure that markets adapt to the changing needs of consumers and foster the development of renewables and other technologies needed for the energy transition. This review of the Electricity Regulation and Directive is an opportunity to rebuild the confidence which has been badly shaken over the past 18 months. So, as well as fine-tuning the Commissions proposals to make the regulation as effective as it can be, we must resist calls to: i) move away from a Europe-wide approach, ii) experiment with untested alternative solutions, and iii) make measures used in the crisis permanent. In addition to detailed amendments, we present in the attached document our general recommendations for the reform of electricity market design along the four lines highlighted above. These recommendations consider both the Commission proposals and the state of interinstitutional discussions as of late May 2023.
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Response to Interservice consultation on the electricity market design reform - REMIT

19 May 2023

EFET welcomes the publication of the draft Regulation on Wholesale Energy Market Integrity and Transparency (REMIT II). The further development of the REMIT framework is key to enhancing confidence in the integrity and transparency of EU wholesale energy markets. Still, certain areas of the proposal require changes to meet this objective: 1. There is a need for consistency between REMIT and the equivalent legislation for financial markets (MAR), but a simple cut & paste is not appropriate. EFET supports many of the measures to improve consistency between MAR and REMIT and to further improve transparency. However, as REMIT is tailor-made to the circumstances of the energy market, there is a need to calibrate changes to the specifics of the market. Changing the definition of energy traders (market participants) risks treating market participants in the same way as those that are operating marketplaces in Art. 2 (7); Art. 2 (8a); Art. 2 (20). Requiring disclosure of intermediate steps for inside information creates legal uncertainty and is inconsistent with the equivalent financial information (MAR) in Art. 2 (1) subpara. 3; Art. 4 (1), subpara. 1. The addition of contracts which may result in delivery in the Union for reporting would create significant red tape in Art. 2 (4). An obligation for 3rd country firms to declare an office in an EU member state is redundant, as there is already an obligation to register with a national authority in Art. 9 (1). 2. A stronger role for ACER in issuing guidance and greater transparency would strengthen market integrity, but we should avoid an overlap of duties between regulators. Improving cooperation, coordination and data exchange between energy and financial regulators in Art. 1(3) sub-para. 2; Art.10; new Art.10 (1a) and (2a); Art. 12 (a) sub-para. 2; Art. 16 (2) sub-para. 4, Art. 16 (3) point (e)) will aid efficiency. A significant overlap of supervisory and investigative powers between national regulatory authorities and ACER in Art. 13 (3) to (9); Art. 13 (a) to (d); Art. 12, (c) needs rethinking. Appropriate oversight of algorithmic trading is needed, but this should not hinder innovation in Art. 1 (2). Suspicious transactions and order reporting (STOR) arrangements require careful thought to ensure regulators receive appropriate notifications to help them better oversee the market in Art. 5a. Distribution System Operators, Storage System Operators, LNG System Operators are market participants and should be subject to the same obligations as others to disclose relevant information in Art. 2 (7). Put in place effective oversight of Inside Information Platforms and Registered Reporting Mechanisms as they are key parts of the disclosure and reporting infrastructure in Art. 4 (1) subpara. 2 and 3; Art. 4a; Art. 8 (5); Art. 9a. Any interpretive guidance from ACER that needs to become legally binding must be subject to approval of the European Commission and to consultation with interested parties in Art. 16b. 3. Embedding temporary crisis policy interventions in REMIT is not appropriate unless they are a permanent requirement. Increased transparency on LNG transactions reporting is supported, but the addition of an LNG Price Assessment and an LNG Benchmark is not appropriate under REMIT and would damage confidence in markets in Art. 2 (21) to (26); Art. 7a to 7d, Art. 8. Please see our detailed amendment suggestions and justifications in the annex.
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Energy Traders Europe backs EU-wide carbon removal certification framework

23 Mar 2023
Topic — A regulatory proposal for a framework to certify sustainable carbon removal activities.
Message — The group recommends fast-tracking methodologies for industrial removals and increasing 2030 targets. They also propose replacing the five-year recognition limit with regular reviews.12
Why — A common standard would enable the trading of certificates in liquid markets.3
Impact — Stricter sustainability criteria than existing rules could hinder negative emission technology developments.4
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Energy Traders Europe urges retention of intra-group reporting exemption

16 Mar 2023
Topic — A review of EU rules for central counterparties to enhance market liquidity and supervision.
Message — Energy Traders Europe supports changes to clearing thresholds and collateral rules to help manage the energy crisis. However, they strongly oppose removing reporting exemptions for transactions between companies within the same group.12
Why — These measures would provide relief from liquidity stress and avoid significant new compliance costs.34
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Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

10 Nov 2022 · Energy markets, MiFID II and EMIR

Meeting with Kadri Simson (Commissioner) and

26 Oct 2022 · Joint purchasing options.

Energy Traders Europe backs harmonised carbon removal certification

29 Apr 2022
Topic — Establishing a certification framework for industrial and ecosystem-based carbon removals.
Message — Energy Traders Europe calls for standardized carbon removal rules to expand voluntary markets. They propose making certificates freely tradable and eventually integrating them into the EU ETS.123
Why — A unified market would reduce barriers for traders moving carbon instruments between countries.4
Impact — Sellers of unverifiable carbon offsets will be disqualified from the regulated market.5
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Energy Traders Europe urges market-based renewable contract reforms

12 Apr 2022
Topic — EU guidance aiming to streamline permitting and support renewable Power Purchase Agreements
Message — The group advocates for competitive allocation schemes over administrative tariffs to encourage market-based deployment. They suggest standardizing contracts and ensuring producers receive Guarantees of Origin regardless of support.12
Why — Standardized contracts would lower entry barriers and transaction costs for energy traders.3
Impact — Consumers lose out when expensive administrative subsidies stifle cheaper market-based renewable energy competition.4
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Energy Traders Europe urges market-based PPAs to accelerate solar

12 Apr 2022
Topic — The strategy aims to unlock solar energy’s potential to meet EU climate targets.
Message — Promote renewable Power Purchase Agreements (PPAs) as a vital alternative to public subsidies. Member States should address barriers like administrative support schemes and restricted Guarantees of Origin.12
Why — Standardizing contracts would reduce transaction costs and simplify entry into the energy market.3
Impact — Developers lose access to administrative subsidies that offer higher returns than competitive markets.4
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Response to EMIR Targeted review

8 Mar 2022

EFET welcomes this opportunity for feedback on the EMIR Review/Clearing Strategy and proposes the following recommendations: Extend the list of eligible collateral. CCP should extend to a wider range the non-cash collateral demanded, not only for clearing members, but also for their clients (e.g., letters of credit, EUAs). EFET members do not dispose of same access to money market as clearing members. Additionally, that would free up more resources for investment. Increase transparency and accessibility of initial margin models and calculation tools. central counterparties (CCPs) should make margin models and calculation tools more transparent and accessible to the clients of the clearing members, in order to increase, at all levels, the ability to predict and plan for market stress scenarios and resulting impact on margin requirements. This can be implemented by: • Better accessibility to well explained risk models and margin calculation tools of CCPs; • Educational efforts by CCPs on margin practices in normal and stressed market conditions, specific means used to respond to extremely stressed markets, addition of concentration and/or supplementary margins; • Consultation of market participants on risk model design and review, as their deep expertise on commodity risk management models could be better employed; • Increase visibility of margin positions held by CCPs; • Standardized term sheet about CCPs rules and conditions would help to increase readability of the main characteristics of CCP models. This would also ease the comparison between CCPs when it comes to identical products; • CCP risk model design and review on a recurrent basis. Increase predictability of margin calls. Market participants (MPs) need real-time “as-is” margin calculation tools to verify short term liquidity demand. Additionally, MPs need to be able to run “what-if” scenarios, in order to be prepared for further extreme markets conditions and their impact on liquidity planning. This can be implemented by: • User friendly and standardized simulations tools offered by CCPs. Margin simulators are important tools for the preparedness of market participants. Clearing members and their clients need access to real-time calculations of initial and variation margin that include parameters such as planning, including liquidity planning; historical analysis; capabilities to respond timely to margin calls; “what-if” scenarios, in order to allow better mid-term liquidity planning. • Provide application program interfaces (APIs) to avoid high cost for accessing margin calculators, at times, prohibitive for medium sized and smaller clients. • Increase ability for clients to replicate margin calculations, including intraday margin call projections. Higher responsiveness to market conditions to mitigate the impact of volatility on liquidity demand. CCPs have specific rules under EMIR to update margin parameters depending on market conditions. EFET argues that CCPs should have more flexibility to adjust models regarding projection on volatility during stressed market conditions to mitigate impact on margin requirements and liquidity demand. This can be implemented by: • Review API tools to reduce impact of market stress on liquidity management; • Enhance collaboration between CCP, clearing members and clients to help clients (ultimate payers) to better forecast and manage liquidity requirements. • The pass-through of intraday calls from clearing members to clients, due to high variable margin movements within a business day, should be reviewed. • Reflection if there can be better use and calibration of default fund contribution. Finally, EFET strongly recommends a substantial increase of the EMIR clearing threshold for commodities to an internationally comparable and more systemic relevant level, necessary to facilitate the energy transition, enhance European competitiveness and improve market functioning, whilst safeguarding transparent and safe markets.
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Response to Carbon Border Adjustment Mechanism

8 Nov 2021

The European Federation of Energy Traders (EFET) welcomes the opportunity to provide our comments to the Commission consultation on strengthening the carbon border adjustment mechanism (CBAM). We believe that the CBAM should be linked with the EU ETS by way of matching the price of import certificates with the price of emission allowances. This design option will allow the CBAM to deliver on its main goal – ensuring that the price of imports reflects more accurately their carbon content – in an efficient and transparent way, while strengthening the international role of the EU ETS, the world’s largest emissions trading market. This approach will be in line with the 2030 Climate Target Plan, which foresees a reinforced role for the expanded and refined EU ETS as a key tool for cost-effective greenhouse gas emissions reduction. Introducing a CBAM linked with the EU ETS would therefore ensure full alignment of the CBAM with the existing energy and climate policy framework and carbon pricing in the EU. In order to ensure the efficient functioning of a CBAM linked with the EU ETS, its design should be based on the following principles: A. The introduction of a CBAM in a given sector must entail a gradual phase-out of free allocation in this sector. This principle is instrumental in delivering on one of the policy objectives of the CBAM - to provide an alternative to free allocation. Using the existing common EU benchmarks, standards and infrastructure designed to limit carbon leakage will help to reduce the administrative complexity of CBAM implementation and ensure its transparency. B. A decrease in free allocation should be matched by a corresponding increase in the auctioning share of the EUAs. Auctioning is the default method of allocating allowances within the EU ETS, which ensures transparency of allowances’ allocation and puts into practice the ‘polluter pays’ principles, without causing market distortions. The Commission’s communication on the EU budget powering the recovery plan for Europe recognises the important role of auction revenues generated by the EU ETS in supporting Europe’s economic recovery. More specifically, the communication estimates that the EU ETS could generate revenues for the EU budget of about EUR 10 billion, depending on the evolution of the carbon price and the expansion of the system to other sectors. We have noted the proposal of quarterly obligations on importers (art. 22) that diverges from the compliance requirements under the EU ETS. Given the initial intention of the CBAM to mirror EU ETS provisions, we would urge the Commission to further assess this additional requirement on importers and to maintain it only if a net benefit to the decarbonisation of imports is identified. On electricity, imports are charged by default values of emissions based on price-setting fossil fuels in the exporting country, and only upon request on lower embedded emissions. This may be appropriate, for instance, when using a PPA or a direct transmission line to the EU grid. We welcome the fact that countries that are part of or linked to the EU ETS (currently Iceland, Liechtenstein, Norway and Switzerland) are exempted. This should be extended by linking the UK and EU ETS and with the increased integration of the Western Balkans. The advantages of linkage are clear in terms of liquidity, price discovery, and the ability to attract abatement from across a larger area. It would also create a level playing field in terms of carbon pricing, avoiding competitive distortions, and leading to aligned cost implications for industry across the UK and the European Economic Area (EEA). This would be beneficial for international commerce, minimise the risk of carbon leakage, and lower the costs of achieving Net Zero.
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Response to Strengthing the Market Stability Reserve linked to the review of the EU Emissions Trading System

8 Nov 2021

The European Federation of Energy Traders (EFET) welcomes the opportunity to provide our comments to the Commission consultation on strengthening the market stability mechanism (Market Stability Reserve). Having entered into force in 2019, the MSR has proven to be an effective instrument. According to the latest EC report on the functioning of the EU carbon market, on the basis of the 2019 and 2020 total number of allowances in circulation (TNAC) and the revised legislation, the auctions in 2020 were reduced by nearly 35%. Auction volumes in 2021 will also be reduced following the same approach. The MSR review has to address the sharp increase in the EU emission allowances (EUA) surplus driven by the economic downturn caused by the Covid-19 pandemic, as well as the impacts of the overlapping energy and climate policies on the carbon market (i.e., the uptake of renewables and energy efficiency measures, as well as the coal phase out in Germany). EFET therefore welcomes the proposal to extend the withdrawal rate of 24% beyond 2023 until 2030. We also see room for a reduction of the upper limit for the MSR withdrawal, as the current limit of 833 mt does not align with utility hedging needs anymore. The MSR review should ultimately be part of a comprehensive EU ETS revision and be aligned with the strengthening of the EU ETS cap and the increase of the linear reduction factor (LRF).
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Response to Updating the EU Emissions Trading System

8 Nov 2021

The European Federation of Energy Traders (EFET) welcomes the opportunity to provide our comments to the Commission consultation on updating the EU emissions trading system (ETS ). Our main messages are: 1. Reinforcing the role of the EU ETS as a key driver of a cost-effective decarbonisation of the EU economy. 2. Creating a pathway for a gradual expansion of the EU ETS. 3. Ensuring MSR review forms part of a comprehensive EU ETS revision. 4. Ensuring coherence between the EU ETS and the overlapping instruments and policies introduced both at EU and at national level. 5. Putting in place a CBAM linked to the EU ETS. A credible, reinforced and expanded EU ETS is instrumental in achieving the European 2030 climate targets and the 2050 climate neutrality objective in a cost-effective way. With the expansion of the EU ETS and the establishment of a second ETS for transport and buildings, an EU wide carbon price can become the long-term driver for decarbonisation across the European economy, encouraging uptake of least cost emission reduction technologies and solutions and facilitating energy system integration. All in all, the proposal of the EU Commission to expand and reinforce the EU ETS in line with Europe’s revised climate targets by lowering the EU ETS cap and increasing the linear reduction factor (LRF) receives full support from EFET. We also support the introduction of a separate Emissions Trading System for buildings and transport and the prospect of merging both systems into one in the future. In light of continuous global warming, the EU needs to act quickly and decisively. Therefore, we urge the EU to implement a meaningful carbon price across all sectors as soon as possible and to make sure that eventually all carbon emissions from industry, SMEs, transportation and households that do not fall under the EU ETS are covered by the new ETS to prevent distortions of competition. We would like to emphasise the need to implement the ETS reform as soon as possible, in order to spread in time the impact of the tightened scheme on industry and consumers. The later the ETS reform is adopted, the starker the immediate impact on them will be. We recognise that negotiations on the ETS for transport and buildings are divisive amongst Member States, but would nonetheless urge you to proceed as soon as possible with the ETS reform to reflect the EU’s strengthened climate targets.
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Response to Restoring sustainable carbon cycles

7 Oct 2021

The European Federation of Energy Traders (EFET) welcomes the opportunity to provide our comments to the Commission consultation on restoring sustainable carbon cycles. Carbon removals from forests, agricultural practices or engineered solutions will play an important role in achieving climate neutrality by 2050. Up to now, policymakers in Europe have paid too little attention to this topic Therefore, carbon utilisation and the development of a regulatory framework for the certification of carbon removal technologies will be crucial and should be developed and implemented in the short-term. There are novel technologies available, which can either enable carbon sinks, or reduce CO2 emissions from standard industrial installations or by integrating agricultural emissions. A technology-neutral approach should be followed, based on the amount of carbon captured, mitigated or used. This will require a corresponding certification methodology that allows the tracking and monetisation of environmental benefits. Such a certification system needs to be flexible enough to cater for various carbon value chain processes. This should include the full breadth of both technology-based and nature-based solutions available. Our recommendations are as follows: 1) The EU ETS is Europe’s central instrument to reach climate goals. The respective price for EUAs has become a benchmark for carbon abatement across Europe. For this reason, EFET see a benefit to the integration of Carbon Dioxide Removal technologies (CDR) into the EU ETS, as far as practicable, through transparent and verifiable “CDR certificates” or “negative EUAs”. 2) We see a need to take a broad approach. Therefore, both technical (BECCS, DACCS) and natural solutions are needed. 3) We see a need to define a framework for credible removals. 4) The European Union should use all CDR options available to reach the EU objective of climate neutrality. 5) CDR should be implemented as soon as possible – an optimal solution would be if they could still be integrated into the Fit-for-55-package. 6) The EU should build on established standards for a regulation and governance structure. 7) The EU should develop its frontrunner position and ensure global compatibility.
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Response to EU Standard for Green Bond

27 Sept 2021

On behalf of the European Federation of Energy Traders (EFET), we are providing this feedback to the Commission’s draft proposal for a Regulation on European green bonds. The European Federation of Energy Traders promotes and facilitates European energy trading in open, transparent and liquid wholesale markets, unhindered by national borders or other undue obstacles. We build trust in power and gas markets across Europe, so that they may underpin a sustainable and secure energy supply and enable the transition to a carbon neutral economy. EFET currently represents more than 100 energy trading companies, active in over 27 European countries. We are concerned about Art. 7(1) subparagraph 2 and Art. 7(2) subparagraph 3, as they could imply that grandfathering of an EU Green Bond (EU GB) would be eroded indirectly. The requirement to reallocate bond proceeds following new technical screening criteria (TSC) within five years will have a negative impact on issuers, the price of European green bonds, as well as investors. In other words: projects that were suitable for allocation before the amendment would have to be refinanced, the issuer would have to find new ”green” uses of proceeds or, in the worst case, bond proceeds would have to be repaid. Predictability is crucial when investments like these are made. Any risk of “disqualification” is disruptive and will cause additional volatility around some bonds. This would cause serious difficulties for long-term financing. In order to provide legal certainty to issuers and investors and prevent any negative impact on the price of EUGBs already issued, it should be made clear that issuers may allocate bond proceeds under the delegated act applicable at the point in time the bond is issued, and they do not need to be replaced until their maturity. Potentially, the complexity described above might even cause reluctance to issue EU GBs with a term exceeding five years. As a result, the EU GBs could be perceived as less flexible and less attractive. Hence, a grandfathering clause must apply.
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Response to Gas SoS – risk groups amendment

17 Aug 2021

EFET welcomes the opportunity to comment on the amendments to Regulation (EU) 2017/1938 (further referred to as “SofS Regulation”) implemented in view of the expansion of the gas grid and necessary changes to the risk groups composition. Indeed, regional cooperation in the spirit of solidarity ensured under the SofS Regulation is a major success of the European Union and an indispensable element of the internal gas market. We note that the works of the Gas Coordination Group have substantially contributed to that success through advising on the adequacy of measures necessary for efficient cooperation. We therefore fully endorse and stand ready to further support the works on the measures ensuring coordinated response to emergency situations that may threaten the stability of gas supplies. We recognize the need to adjust the risk groups composition laid down in Annex I to provide legal certainty and to adequately reflect the risks associated with disruptions on each supply route. We take this opportunity to signal that since the groups bring together the Member States most affected by a given emergency to prepare common risk assessments, provisions enabling formal cooperation with the affected third countries should also be considered. While this cannot encompass full solidarity as between the Member States, legally sanctioned cooperation could improve the efficiency of the mitigating actions in many ways. Such arrangements would bring benefits to all the risk group members, allowing for a comprehensive overview of all the potential risks and opportunities brought about by the gas infrastructure they share. We support the revision of Union-wide simulations that is to enable factoring in the new supply routes that are expected to commence operation in 2023. We also welcome the related amendments to the risk groups composition in order to properly reflect all the risks brought about by supply route disruptions. These amendments have been discussed in detail at the meeting of the Gas Coordination Group, giving us confidence that the revised setup properly reflects the changes to the physical gas network structure. Broadened composition of the risk groups should contribute to reinforcing the security of gas supply through allowing a more accurate risk assessment and expanding the scope for coordinated mitigatory actions. On a related topic, EFET believes that future considerations on security of gas supply should also address the potential risks associated with gas oversupply. EU rules ensure that the flexibility of the market mechanisms can be utilized at times of surplus deliveries just as is during shortages, through allowing for the commodity prices to go negative. Such common approach across the EU should encourage market participants to bring the gas system back to balance rather than a forced curtailment which may result in unnecessary contractual dispute. Finally, we look forward to continued cooperation on how decarbonisation of the gas sector will impact security of supply, and how security of energy supply can be delivered in an integrated system.
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Response to Revision of Non-Financial Reporting Directive

9 Jul 2021

EFET acknowledges the necessity for strengthening the Non-financial Reporting Directive reporting requirements on sustainability and increasing corporate reporting transparency in order to underpin the transition towards a sustainable paradigm. EFET supports the proposal‘s principle of double materiality, which reduces uncertainty regarding companies’ reporting information on how sustainability matters affect them, and on the impact companies have on the society and the environment. However, companies are faced with challenges in adjusting their present reporting to new requirements which must be implemented within a relatively short timeframe. Hence, EFET underlines the need for a gradual introduction of both reporting requirements and reporting complexity. We suggest starting with reporting on “sector agnostic” data (core data), followed by reporting of sector or entity “specific data”. In this context, the requirement to publish all non-financial information in the management report may lead to a disproportionate burden, as the required necessary standards, internal controls, data quality etc. has to reach a more mature level. To recall, in a similar situation, it took years before financial data was developed and properly reported. Additionally, EFET is concerned that a too rigid setup for disclosing data may be detrimental to the purpose. More flexible choice of publication could allow companies to reflect better their path towards a sustainable agenda. Reporting requirements must NOT result in a disproportionate burden for companies, all without really creating added value for the data users. In terms of standardisation EFET encourages adopting well-known and global standard frameworks, like GRI, as it reduces the workload and underpins comparability between data, an essential tool for a level playing field. EFET supports CSRD reinforcing assurance around ESG data. Regarding the level of ESG data assurance, reasonable assurance may be the right direction, but it cannot be mandatory before certain prerequisites are met. It has taken vast resources and many years to develop the needed setup for financial data and, similarly, the setup around ESG reporting will expectedly also require some time to be developed. The starting point should be limited assurance and then gradually introduce reasonable assurance for “sector agnostic” (generic) data, followed by entity “specific data”, after a review, if data quality has already reached adequate quality standards. In the longer run, EFET supports the rationale for introducing one platform for all data reporting, such as it is intended via the establishment of an European Single Access Point (ESAP). However, currently, we harbour concerns related to ESAP. Despite good intensions, it may lead to even more complexity and increased efforts for data providers, compared to ESG information already published within the non-financial report. As for data already sent to authorities, double reporting for companies should be strongly avoided, by requiring these authorities to forward relevant data to ESAP. Furthermore, regarding data impact on companies’ shareholder value, it is also key that the setup does not negatively impact market integrity if something is published at ESAP before the at appointed platforms for such information. Consequently, EFET suggests gaining experience from reporting according to the CSRD BEFORE introducing ESAP as unique platform for ESG data. Finally, a consistent regulatory framework needs to be ensured. Full alignment of CSRD (NFRD) sustainability reporting requirements with relevant EU legislation is a prerequisite for achieving this objective, in particular in relation to the Sustainable Finance Disclosure Regulation and the Taxonomy Regulation.
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Response to Delegated Act on the Ancillary Activity Exemption

23 Jun 2021

EFET is submitting this feedback on behalf of JEAG (Joint Energy Associations Group). We very much support the Delegated Act for the Ancillary Activity Exemption as drafted by the European Commission (EC DA), it removes unnecessary red tape and minimises administrative burdens on the real economy. We support the main changes triggered by the amended AAE which are the following: - Deletion of Market Size Test: The test was deleted as it was overly complex and presented a significant burden during the crisis. It was a red-tape requirement as it did not alter the status quo in terms of non-financial counterparties (NFCs) that are eligible for the exemption. - New De-minimis Test: It offers a simplified test to NFCs and minimise the administrative burdens. - Level of thresholds: The amended AAE does not change the current methodology of the Trading Test and Capital Employed Test, as they have worked well in practice.These two current tests were only changed regarding the level of the corresponding test thresholds as defined in MiFID II quick fix. - Deletion of yearly notification requirement: Instead of annually notifying their relevant NCA that they make use of that exemption, NFCs should report only upon a request from the NCAs, assessing their activity to be ancillary to their main business. This change saves NFCs and NCAs resources. We support these changes as they help NFCs to competitively access wholesale commodity markets in order to manage their commercial risks, whilst remaining out of scope of burdensome MIFID II license requirements. Furthermore, these amendments simplify the AAE substantially which lowers the compliance burden for the real economy and helps drive the energy transition. In this context, we fully support the draft EC DA as it incorporates the above-mentioned changes into the current RTS 20 and retains all other elements of the RTS 20 unamended. This guarantees an efficient transition to the new AAE regime and avoids additional unnecessary implementation efforts by NFCs and financial regulators. This approach doesn’t change the AAE nature or scope. In detail, we support because: - It deletes the Market Size Test of current RTS 20. - It introduces the new De-minimis Threshold Test as described in Art. 2(4), sub-para. 2(a) MiFID quick-fix. This new test is embedded in the established calculation methodologies and principles of RTS 20. Overall, this test substantially minimises the burdens without changing the nature or scope of the AAE. - It keeps the current provisions in RTS 20 regarding the calculation methodology and principles of the Trading and Capital Employed Test. These are already implemented by NFCs, accordingly supervised by financial regulators, and have not raised any concerns. The only required change to these 2 tests is the level of the corresponding test threshold as set out in Art. 2(4), sub-para. 2, lit. (b) and (c) MiFID quick-fix. - It implements the amended levels of the thresholds for the Trading and Capital Employed Test as required by the amended wording of AAE Art. 2 (4), para. 2, lit. b) and c) MiFID II. Therefore, under the Trading Test the non-privileged trading activities shall not exceed the total size of the other trading activities at group level. Alternatively, the capital employed by the group shall be predominantly allocated to the main business of the group. - It allows NFCs to decide which of the three alternative tests to perform to determine whether their trading activity is ancillary to the main business of the group. If a person’s trading activity is ancillary under any of those tests, it is considered to be ancillary to main business under Art. 2(1)(j) MiFID II. - It deletes the reference to the former yearly notification requirement in RTS 20. - DA will apply in 2021 to guarantee an efficient transition to the new AAE regime. This creates legal clarity for NFCs and ensures that they don’t have to calculate in Q1 2022 under RTS 20 if they are eligible to use AAE.
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Response to Commission Delegated Regulation on taxonomy-alignment of undertakings reporting non-financial information

2 Jun 2021

EFET welcomes the opportunity to provide feedback on the proposed EU Taxonomy Article 8 Delegated Act. Nevertheless, in order to have a functional setup EFET sees the need for several issues to clarified: Assessment of energy trading: The Taxonomy Regulation needs to clarify how to report the sale of energy products, e.g. electricity generated from taxonomy-aligned assets, including the potential subsequent sale which is not directly linked to the taxonomy-aligned activity. Guarantees of an origin of energy or certificates relating to taxonomy-aligned sustainable energy products can credibly evidence attributes such as a renewable source or the carbon intensity of generated electricity and of various gases on a consistent basis across the EU. Reporting entities should be free to "improve" the portfolio of energy they supply or consume by making decisions accordingly to acquire appropriate guarantees of origin or sustainability certificates. Issues related to reporting: • Reporting should focus on forward-looking metrics of capital expenditure to incentivize investment. Hence, CapEx is the key metric to measure the progress on a sustainable path generally and specifically to secure the successful transition of the energy sector. • Providing the key performance indicators covering the previous five reporting periods should not be required retroactively. In Article 9(3) of the draft delegated act, it should be clarified that the provision only applies forward-looking, from the reporting period 1 January 2023 and onwards. • KPIs should focus on one climate objective. Hence, it should be made clear that a reporting entity does not have to assess against all objectives, i.e. it can just select one (most relevant for a company) and then for the remaining objectives add ‘not assessed’. • Insignificant activities can be left out of assessment to avoid ‘red tape’. Companies have sometimes a minor activity, contributing negligibly to the company turnover, etc. Thus, it should be made clear that if an activity is insignificant, it can be left out of assessments. Besides avoiding unproportionate costs for European companies it also limits ‘red tape’ information for the users of the data disclosed. • Reporting requirements should allow for some flexibility in format and in terms of use of proxies. Reporting requirements should allow for some flexibility in format to reflect the specificities of different companies and their activities, and to ensure tractability regarding global methodology/standards. There is also a need for allowing proxies to be used in certain practical situations (i.e., revenue from CHP plants cannot be split according to fuel type/technology without using a proxy). • Ensuring coherence with the European reporting framework particularly for regulations such as CSRD and SFRD, but also more broadly. Issues related to scope: A principle of ‘equivalent rules’ is important when it comes to non-EU activities. An EU company should be able to have non-EU activities considered as sustainable as EU ones – e.g. an US wind park – if these activities apply to equivalent sustainability criteria. This means that the non-EU rules must be part of a regulatory regime being more or less at the same level; however, the rules do not have to be identical. The definition of CapEx in Annex I 1.1.2. should clarify the inclusion of joint ventures and associated companies for the calculation of the CapEx KPI. Furthermore, it is unclear if the definition for OpEx in Annex I 1.1.3.1 includes indirect costs from inter alia administration (e.g., financial functions, strategy) and commercial activities. In conclusion, more guidance is needed, as well as a proportionate approach making room for flexibility to the highest extent possible for the purpose. In this context, EFET would be happy to contribute with practical insights.
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Response to An act specifying when commercial terms of central clearing are fair, reasonable, non-discriminatory and transparent

2 Apr 2021

The European Federation of Energy Traders (EFET) supports the development of FRANDT principles and considers the Delegated Act a needed and welcomed step forward for a better trading regime. We would welcome an extension of the FRANDT principles to cover all derivatives available for clearing at EU CCPs (central clearing counterparties) to enable real economy and in particular commodity firms (most of which are non-financial counterparties - NFC-) to take advantage of transparent and non-discriminatory clearing terms which would encourage voluntary clearing of derivative transactions, hence promoting EMIR’s goal of reducing systemic risk. We strongly believe that there would be a benefit in applying FRANDT terms in a wider scope. While from a regulatory perspective the FRANDT principles are not specifically limited to OTC (over-the-counter) derivative arrangements and to counterparties subject to the clearing obligation under EMIR, a harmonization of clearing terms (for mandatory or voluntary clearing of OTC and Exchange Traded Derivatives - ETDs) will ensure a level playing field between clearing clients and between Clearing Service Providers. This will lead to a further reduction of systemic risks by removing barriers to OTC derivatives clearing and make the clearing services and processes more efficient for all involved parties through the application of the same approach to all derivatives (OTC and ETDs) and all clients. Therefore, we consider that FRANDT principles should apply to any mandatory and voluntarily cleared derivatives (independently of whether a regulatory framework caters for compulsory clearing) and to clearing relationships of clearing service providers (clearing members) with any counterparty/client. Furthermore, ESMA’s current proposal entails that no commodity derivative clearing would be subject to FRANDT principles. As such, while transactions between the most sophisticated counterparties will be under FRANDT, those entities that may require additional “client protection”, the NFC-, are deliberately and clearly left out of scope. If the proposed rules would be applied on a voluntary basis to ETDs entered into by NFC-: we note that in the proposed Delegated Act the topics around the structure of contracts and notice periods have not been considered as priorities. This outcome is particularly disadvantaging NFCs- regarding transparent and comprehensive clearing arrangements that should allow a fair negotiation and allocation of risks management between the Clearing Service Provider and the respective clients. The lack of an EU-wide harmonisation of the main parts of the Clearing Service Agreements is from our point of view not according to FRANDT principles and works against the major concerns of the clients regarding negotiation of Clearing Service Agreements and the required efforts to switch from one Clearing Service Provider to another. We do hope that this topic will be at least monitored by the Commission and re-opened when future consultations will take place. Under Article 38 (6) of EMIR Refit, clearing members are provided by CCPs with a tool enabling the simulated calculation of initial margin. It should hence become mandatory for these clearing members in return to make initial margin calculation transparent for their clients. The transparency on the applicable margin model should include such simulation tool. Finally, we would welcome if CCPs could agree on a common and generic solution towards the calculation of initial margins, which would enhance transparency between CCPs and their clearing members. This can be added at point 3.1 of the Annex of the Delegated Act.
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Response to Climate change mitigation and adaptation taxonomy

18 Dec 2020

EFET supports Sustainable Finance as a framework underpinning the green transition of the EU, and have the following comments to the draft Delegated Act (DA). General comments a) EFET finds it positive that DA generally makes reference to existing legislation instead of making own criteria. However, we shall urge for reference to existing legislation to be even further the common principle b) The DA sets a comprehensive framework for activities based on their respective contributions to climate change mitigation. This should include a proper framework for both transitional and enabling activities based on their respective contributions to climate change mitigation. c) Important to respect the technological neutrality of the screening criteria by identifying the potential contributions of relevant economic activity to the given environmental objective d) The draft DA has an averse DNSH test-level for Climate adaptation requirements on Climate mitigation activities. It is worrying to experience that the risk assessment criteria and compliance needs when it comes to climate risk adaptation are very wide-ranging, cf. Annex E. Investors only need this information on a general level, and validation of a negative impact from climate risks, should be made on a proportionate level, incl. a phase-in approach also for existing (already running) activities when the DA comes into effect as well as for new activities established after this DA comes into effect. The length of the phase-in should be proportionate to the type of activity e) It should be clearly stated as an initial statement that the DA as a rule allow for third-country activities to count if an environmental impact assessment has been completed in accordance with equivalent national provisions or international standards f) To have a functional framework the criteria must be hold up against ‘reality’. We acknowledge that the DA makes use of a reference to “where feasible” or “where applicable”. This comply-or-explain flexibility is very positive for the compliance of the rules Specific comments g) We agree with removing the reference to 100 gCO2e/kWh for wind and solar. We suggest this principle to be used even wider for technologies far from breaching the threshold h) The DA proposes special Taxonomy criteria for hydropower, especially those for “sustainable use and protection of water and marine resources”. This is problematic and, instead, EFET strongly recommends a reference shall be made only to the EU acquis also for hydropower. i) Having in mind the demanding criteria for sustainable bioenergy, EFET does not see classification of bioenergy as ‘transitional’ as justified. Bioenergy is generally using forest residues and waste materials and thereby fits well into the thinking of recycling and use of all bits of a source in order to be climate-friendly j) All energy storage technologies should be categorised as economic activities substantially contributing to climate change mitigation and not as enabling activities. i.e. a technology-neutral approach should prevail k) The delay in the assessment of nuclear power implies uncertainty not only for the nuclear sector but also for the power sector in general. Hence, EFET shall call for the European Commission to accelerate the assessment process of nuclear in order to shorten the period of uncertainty l) Manufacture of renewable hydrogen will most likely be a key element in the green transition. EFET shall therefore call for the criteria to allow at least for electricity already qualified as Taxonomy aligned as renewable to produce renewable hydrogen. In this regard, EFET calls for the criteria to allow producers of renewable and low carbon hydrogen to meet obligations on use of renewable energy as a source fuel by means of tradable certificates m) Generation of electricity from gaseous and liquid fuels should be recognized as “green”, should these activities meet the defined threshold provided also DNSH criteria are met
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Response to Commission Delegated Regulation on taxonomy-alignment of undertakings reporting non-financial information

8 Sept 2020

EFET generally supports harmonisation of the rules at Union level on what is an environmentally sustainable economic activity. Thus, EFET supports this Level 2 regulation, i.e., the Delegated Act under Art. 8 (“DA”), as varying requirements in different countries could lead to e.g. an unlevel playing field. Therefore, the reporting requirements, as set out in the Taxonomy Regulation, should be harmonized at European level, also to avoid inconsistent data sent to the market. At the same time, coherence should be secured between the Delegated Regulation and the EU acquis. This is valid for both sector specific rules, such as RED II, and the generic rules, such as the ongoing revision of NFRD. EFET urges for a close involvement of the real economy, and particularly of the key energy sector, in the drafting of the DA. It is important that the DA takes the specifics of the energy industry into account. We harbour concerns that the DA will not be flexible enough to adjust to what we foresee to be a rapidly changing reality. Therefore, a review of the DA after 1 year of application is recommended. The Delegated Act (DA) is necessary to consider any lessons are learnt from the application of the EU Taxonomy. EFET agrees taking into consideration the company size w.r.t. the scope of the DA. While we consider that SMEs will play a role as well in the green transformation, proportionate standards for SMEs should be considered. There is a growing demand for data and information from investors and other stakeholders. However, when assessing whether non-financial reporting practices meet certain objectives, it should be done based on justified needs of stakeholders rather than expectations that create additional reporting burdens without real added value. For instance, reporting companies should retain flexibility in their choice of publication. A requirement to publish non-financial information in the management report could lead to time pressure and thus to imperfect reporting of the non-financial data. In any case, the taxonomy-related disclosures should be implemented according to existing accounting standards, in order to keep the additional burden for companies to a minimum. This could be done via a close cooperation with the accounting standard setting bodies. Otherwise, the implementation in the companies will be much more complicated and unnecessary expensive. A parent company, independent of the location of its seat, should be allowed to produce the group report according to the EU rules, as group subsidiaries may fall into the NFRD scope by easily fulfilling two of three criteria (net turnover, balance sheet total). Subsidiaries are not financing themselves as this usually happens through a central group function for the whole corporate group and investors are more interested on the whole group’s impact rather than on single entities. While three metrics need to be reported according to the Taxonomy Regulation, it is essential that the DA considers future-oriented metrics, which should be the key factor for investors when taking their investment decisions in a sustainable way, as intended by the EU’s Sustainable Finance Agenda. The approach to screening and reporting sustainable activity should focus on companies’ willingness to transform and their speed of change. The Taxonomy can deliver the greatest impact by focusing on companies’ needs to finance future investments in sustainable activities rather than to run their businesses day-to-day. Therefore, CapEX is the right metric to measure the progress on a sustainable path generally and specifically to secure the successful transition of the energy sector. To conclude, non-financial reporting requirements should be clear, harmonized, proportional to the size of the company, coherent with the EU acquis, focus on CapEx, allow parent company reporting, provide relevant non-financial information and involve the real economy in the legislation drafting.
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Response to A EU hydrogen strategy

8 Jun 2020

EFET comments on the Roadmap for an EU Hydrogen Strategy [full response in the atachment] It is increasingly accepted that decarbonisation by 2050 will be impossible without molecules. Not all industrial use of energy can be electrified, there are not yet efficient mechanisms for storage of electricity over weeks, months and seasons in the volumes that will be necessary, and the intermittency of electricity supply at higher levels of penetration of renewable generation are all challenges that the gas system is well-placed to help address. However, gas must decarbonise in order to contribute. Additionally, the gas system provides a cost-efficient means of transporting large amounts of energy using already-invested assets, as an alternative to expansion of the electricity transmission grid or increased localised production at the levels that would be needed. Replacement of natural gas with hydrogen allows the gas system to play an ongoing role in a decarbonised framework using existing assets in many cases. Ultimately, there will be dedicated hydrogen grids, but in the interim, opportunities may exist for blends or co-transportation, subject to design of new operational frameworks and the ability to overcome current technical constraints such as burners being able to accommodate a variable mix. EU support to kick-start the hydrogen market, and in particular to ensure that hydrogen is not disadvantaged against other technologies through the design of support schemes and allocation of transport infrastructure costs, will help to achieve a more efficient decarbonisation strategy. In order to achieve a cost-effective decarbonisation of the EU economy, EFET believes that it should be underpinned by the five following policy priorities: 1. Setting an ambitious, economy-wide climate neutrality objective at Union level 2. Strengthening the EU ETS in the short term, as it currently applies to power generation and heavy industries, then reforming and expanding it to become a long-term driver for decarbonisation across the EU economy 3. Utilising market-based mechanisms and adapting market instruments whenever financial support for new, low carbon energy sources is considered, while respecting sectoral unbundling rules 4. Ensuring pan-European coordination and cross-border implementation of any financial support schemes for renewable, decarbonised and low-carbon gases, especially in case national end-use prohibitions of hydrocarbons should be foreseen 5. Insisting on technological neutrality of measures, to include a level playing field between power and gas systems, so that users face a cost-reflective allocation of costs across both types of grid, without cross-subsidisation. Success in the energy transition will depend on factors unknown, such as which technologies – existing and as yet undiscovered – will prove to be capable of being rolled out at scale, with sufficiently declining costs. A framework that allows technologies to compete across power and gas markets and does not try to pick early winners – allowing the most promising to have scope for development – will retain the broadest options to achieve the Climate Target Plan. Our full response to the consultation is attached.
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Response to Key elements of the methodology reflecting environmental, social or governance (‘ESG’) factors

6 May 2020

The European Federation of Energy Traders (EFET) welcomes the opportunity to provide feedback on the Delegated Regulation on the minimum content of the explanation on how ESG factors are reflected in the benchmark methodology. Commenting on benchmark commodities under the scope of this Delegate Regulation (indexes whose constituents are exchange traded contracts) and on the template in general, we see the proposal as a good outcome, including the vital elements necessary for creating standard templates and allowing some degree of flexibility from benchmark administrators. An EU based benchmark framework may reduce the administrative cost for providing data to different sustainability benchmarks, as many companies are currently approached by several green benchmarks with different data and standards. The various standards make increasingly challenging for a company to manage the data provision. We are glad to see that benchmark administrators can be rather flexible in the list of ESG factors considered (“Benchmark administrators are currently not required to disclose a list of ESG factors”). Those factors should be made mandatory regarding only generic data, in accordance with the taxonomy criteria. We do not recommend specifying a broad spectrum of mandatory ESG data for all types of businesses. Except the obvious generic data, mandatory data will hinder the future development of benchmarks and will not give real signal to investors. We agree with the Commission’s statement that “ESG factors should take into account the different types of benchmark that exist in the market.” However, there should be a close relationship of what to report according to the NFRD and data provided to ESG benchmarks. Key data must be the NFRD data and generic data should be according to the taxonomy criteria. On commodity benchmarks at large, however, we fail to see how they are part of this delegated act: art. 1(3)(f) of this Delegated Regulation specifies “commodity benchmarks”. To our reading, commodity benchmarks are exempted from the entire Title II of the Benchmark Regulation (BMR), with some exemptions: article 10. Outsourcing and “unless […] is a regulated-data benchmark or is based on submissions by contributors the majority of which are supervised entities”. As this Delegated Regulation is based on the empowerment set out in Article 13(2a) BMR, which is under Title II, commodity benchmarks are exempted from transparency of methodology. Only a commodity benchmark that is a “regulated-data benchmark or is based on submissions by contributors the majority of which are supervised entities” is under this Delegated Regulation. If that is the case, we request clarifying article 1(3)(f) of this Delegated Regulation, by specifying the commodity benchmarks where it applies (only if a commodity benchmark is a “regulated-data benchmark or is based on submissions by contributors the majority of which are supervised entities”) or remove the benchmark altogether. Furthermore, the TEG Report recognizes this limit (“transparency of the methodology - does not apply to certain commodity benchmarks”-3.3.2.4 Commodity benchmarks), consequently creating a special template. On the TEG Report, commodity benchmarks are understood as baskets of contracts (futures, options, forward, etc.)) which could be interpreted as including emission allowances, against the definition of “commodity” in Commission Regulation No 1287/2006. Introducing a reference to Commission Regulation No 1287/2006 for commodity definitions would alleviate our worries. To conclude, we request specifying the commodity benchmarks to which this Delegated Regulation applies. The reuse of generic data disclosed according to other EU legislation – in particular NFRD – should be allowed and encouraged, as it would significantly reduce the regulatory burden and help create EU-wide standards.
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Response to Climate change mitigation and adaptation taxonomy

19 Apr 2020

EFET supports the Sustainable Finance Action Plan. The green transition requires considerable funds and it is important to incentivize private funds towards sustainable activities. To make this happen, it is key to have a classification system and – via an associated transparency framework – insight into sustainable activities. EFET supports this work of creating a robust, effective and reality-proofed regulatory framework. The guiding principle must provide a classification system that ensures the right activities are recognised as sustainable and gives the right signals to investors. The system must be established in a common and unambiguous language, building on the existing EU ‘acquis’ and standards, e.g. RED II. Despite good intentions, even minor differences will add to the complexity, e.g. increase risk of poor data quality. EFET therefore strongly underlines the need for a structure based on existing standards rather than establishing new ones. EFET highlights the compliance risk that non-financial firms may not be able to implement the reporting under Art. 4delta of the EU Taxonomy Regulation by 31 Dec 2021, because of the late adoption of the underlying Delegated Acts (Art. 4delta (4) and 6 (4)) may not leave sufficient time for it. EFET therefore proposes not to make 2021 mandatory as the first reporting year for annual figures. Further, as for non-annual figures, a later implementation date needs to be considered. EFET agrees that the framework shall be ambitious. However, setting criteria which are not reality-proofed will be detrimental to the desired goals. On the contrary, it may hamper the transition towards a sustainable future. Hence, there is a vital need to have sufficient experts from real economy industries participating in the review process. Europe is in competition with the rest of the world. Therefore, avoiding disproportionate bureaucracy is essential for underpinning European competitiveness. A proportionate framework will also help setting global standards. EFET welcomes less comprehensive screening criteria and reporting for acknowledged sustainable technologies. The TEG Report has already introduced this principle and EFET advocates that similar proportionate considerations for acknowledged technologies should be applied even more widely, e.g. less stringent obligations demonstrating the mitigating nature of a project after the first year of operation. An overwhelming level of reporting will offer no benefits. It is crucial to identify what is having a substantial influence for investors. Adding data with only a minor impact on the ESG footprint or with minor importance will muddle the picture to the detriment of the set goals and add unnecessary complexity and costs on the European ‘real economy’. Experience from work on the Global Reporting Initiative shows that it makes a difference whether the scope of the reported data ends up being too wide-ranging despite the good intentions. Thus, data must provide a substantial contribution to the ESG objectives, keeping in mind the administrative burden w.r.t. corporate data-finding and disclosure. EFET calls for a framework which incentivises investment in sustainable activities and leaves it to the market to allocate funds towards a carbon neutral society. Using market-based instruments generally requires a simpler regulatory setup and less regulatory review and supervision. All elements that keep low the transactions costs related to investments should be supported. Finally, EFET emphasises the need for regulatory stability and a forward-looking methodology. Processes must ensure that elements are duly impact assessed. Regulatory stability and predictability also helps ensure that already made investments, assessed as sustainable, will not at a later stage be deemed non-sustainable if a criteria review takes place.
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Response to 2030 Climate Target Plan

15 Apr 2020

The European Federation of Energy Traders welcomes the opportunity to provide feedback on the Commission’s inception impact assessment for the 2030 Climate Target Plan. Please find our feedback in the PDF document attached.
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Response to Review of the regulatory framework for investment firms and market operators (MiFID 2.1)

15 Mar 2020

The European Federation of Energy Traders (EFET) welcomes the opportunity to provide feedback on the roadmap to the review of the regulatory framework for investment firms and market operators (Review of the MiFID II/MiFIR framework). We appreciate the European Commission (EC) review of the overall experience with the implementation of the MiFID II/MiFIR framework on commodity markets and its policy objective to foster better and more liquid markets for commodity derivatives in the EU. We welcome the attention to position limits and pre-trade transparency requirements and believe that the changes EC is consulting upon would generally bring about improvements to the current framework. In particular, the refocusing in scope of the position limit regime to a set of critical contracts would promote liquidity and substantially reduce the compliance burden on market participants, trading venues and regulators without reducing the integrity and effectiveness of the legislation. Such changes would be consistent with the focus on competitiveness stressed in the political guidelines of the von der Leyen Commission. We do not fully agree with statements signalling a bias in favour of commodity derivatives denominated in euros and derivatives traded on an exchange and/or cleared through a CCP. Commodity trading firms should be left free to negotiate the contracts that are most suitable to their needs both in terms of currency and venue of execution. First, many commodity markets (e.g. oil, coal, metals) are global in nature and their physical and derivative trading tends to take place in a specific dominant currency for practical and historical reasons. By artificially discouraging the use of currencies other than the euros for the settlement of derivatives transactions in EU, liquidity is very likely to move outside of the Union. Second, exchanges and CCPs are suitable for simple and standardised transactions but commodity traders often need to conclude more complex bespoke deals that can only take the form of OTC contracts, either bilaterally or through brokers. Moreover, many market participants enter into derivatives contracts to buy or sell the underlying commodity and their needs are better served by physical OTC markets than centrally cleared ones. As such, electronic trading on exchanges and OTC trading should not be considered mutually exclusive alternatives, as both are necessary to foster a sound derivatives market. The extensive EU legislation covering OTC trading in energy commodity markets, which includes MiFiD II, EMIR, MAR and REMIT, has created a strong framework that allows regulators to effectively supervise the realm of OTC energy trading. Liquid and robust OTC markets should therefore be maintained and encouraged. Finally, we take this opportunity to reiterate the importance of a well-calibrated Ancillary Activity Exemption (AEE) test for the European commodity trading industry. We believe the test has worked well since its introduction and do not agree with calls for a revision of its scope. In particular, we believe it is important that physically settled gas and power contracts continue to remain outside of the scope of the MiFID II definition of financial instruments (see the JEAG Response to ESMA Consultation Paper MiFID II review report on position limits and position management, 19 December 2019). However, the withdrawal of the UK from the EU and the consequent removal of volumes traded on UK exchanges from the market size calculations, will render the test unworkable in its current form. EFET believes this issue may have serious consequences for the European commodity industry and may put EU trading firms and trading venues at a competitive disadvantage compared to their counterparties based in the UK and other third countries. We therefore urge the Commission to take actions aimed at mitigating its impact.
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Response to EMIR Amendment

18 Jul 2017

EFET is the European Federation of Energy Traders and the voice of over 100 real economy firms spread all over the European Union. EFET welcomes the EU Commission’s proposal for an EMIR Review in as far as it leads to a simplification and improvement of the EMIR framework. Our detailed opinion is attached in Appendix. We fully support the retention of the so called “Hedging Exemption,” which is one of the cornerstones of the regulation. This mechanism, duplicated in the MiFID framework, has proven to be effective in capturing systemically important non-financial counterparties, while enabling efficient risk management (see Section A.1 Appendix). Similarly, we deem it beneficial and fully in line with the objectives of the EMIR Review to enable a suspension of the clearing obligation (Section A.2.4 Appendix) and to remove the front loading (clearing) requirement (Section A.2.5 Appendix). While supporting the amendments to the clearing obligation, EFET would like to suggest some minor adjustments to the current proposals, to ensure a double objective: (i) clarity of the regulatory framework: we would recommend to specify with further details the methodology for the calculation of the clearing threshold (see Section A.2.2 Appendix) and to complement the restriction of the clearing obligation to a relevant class of OTC derivatives by an according restriction of the risk management (margining) obligation (see Section A.2.3 Appendix). (ii) consistency of the interplay between different financial regulations: to ensure that small FCs exempted from the clearing obligation under the new EMIR will not be incidentally caught by the obligation under MiFIR (see Section A.2.1 Appendix). On the other hand, EFET would recommend further attention being given to the introduction of single-sided reporting (SSR) and to the exemption of intragroup transactions from the reporting obligation. While SSR may indeed simplify the reporting processes and deserves to be extended, it will also involve high costs for firms and the necessity to maintain dual reporting systems in certain cases. In order to mitigate those adverse effects it is important that firms retain the choice of the reporting mechanisms they will use (single-sided, double-sided or double-sided with delegation) (see Section A.3.1 Appendix). Concerning intragroup transactions their exemption from the reporting obligation will only be effective with the introduction of an appropriate definition of “group” which EFET suggests to define along the lines of the MiFID framework (see Section A.3.2 Appendix). Finally, EFET would like to promote four additional amendments: - Postponement of the entry into force of the new reporting standards under the current EMIR (to apply as of 01.11.2017, Com. Del. Reg. No 2017/104) (see Section B.1 Appendix); - Restriction of the Clearing Threshold calculation to non-financial counterparties (EU firms) and to the non-financial entities (third country firms) who enter into OTC derivative transactions with a EU counterparty. Such an amendment would enable a proper calibration of the EMIR obligation while still capturing systemic risk in the EU (see Section B.2 Appendix); - Alignment of the intragroup exemption to also apply to risk mitigation requirements (See Section B.3 Appendix); - Reintroduction of bank guarantees as collateral at CCPs (see Section B.4 Appendix).
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Response to Network Code on the Allocation Mechanisms of incremental capacity in Gas Transmission Systems

28 Jul 2016

EFET welcomes the initiative of the European Commission to invite comments under the Better Regulation agenda on the latest draft of the Capacity Allocation Mechanisms Network Code (CAM NC). We would recommend the following amendments (sections A, B and C): A. Article 32(1)–Allocation of interruptible services. ‘1.Transmission system operators may only offer standard capacity products for interruptible capacity of a duration longer than one day if the respective standard capacity product for firm capacity was sold at an auction premium, sold out, or was not available.’ The new wording (inclusion of the word “only” compared to the current CAM code) will considerably restrict the ability of TSOs to offer interruptible capacity, which will restrict the ability of network users to flow gas between different markets. For example, the use of interruptible capacity enables network users to match interruptible capacity one side of the IP with firm capacity they already have on the other side of the IP, where it is not possible to buy firm capacity to complete the bundle. Whilst this is not ideal because of the mix of interruptible and firm capacity, it is better than only having capacity on one side of the IP and therefore not being able to flow gas at all, or being required to pay for capacity twice when required to buy bundled capacity on a route where they already hold unbundled capacity on one of the legs. Network users are able to judge for themselves, based on their expectations of interruption, of the risk of mixing firm and interruptible capacity in this way. Sale of interruptible capacity does not prejudice the sale of firm capacity because there is always the risk of interruption, up to and including the Gas Day itself. Furthermore firm itself can be booked on a Within Day basis and interruptible capacity is priced based on the probability of interruption; this means that it is unlikely that interruptible will be booked as a “cheap” alternative to firm. Proposal: Maintain the wording of the current CAM network code and delete the addition of the word ‘only’ and keep the ability for TSOs to offer interruptible capacity for longer durations. The text should read:‘1.Transmission system operators shall offer a daily capacity product for interruptible capacity in both directions at interconnection points where firm capacity has been offered but was sold out day-ahead. At unidirectional interconnection points where technical capacity is offered only in one direction, transmission system operators shall offer a daily product for interruptible capacity in the other direction. Transmission system operators may offer interruptible capacity products of longer duration as well.’; B. Article 30(5)-Principles for alternative allocation mechanisms. With respect to the proposal for 20% of the technical capacity to be set aside (Art. 30(5), in our view only a minor share of the incremental capacity should be set aside. The more technical capacity is set aside, the less technical capacity could be booked by network users and could contribute to the PVUC (present value of user commitments = tariff multiplied by booked capacity). We would support the following revision: ‘If either booking duration or bids for higher amounts of capacity are prioritised, national regulatory authorities shall may decide to set aside an amount equal up to 20% of the technical capacity at each interconnection point when applying Article 8(8)’.; C. Article 3-Definitions. In relation to the definition of ‘alternative allocation mechanism’ under Art. 3(3), we recommend re-inserting the underlined section: ‘‘alternative allocation mechanism’ means an allocation mechanism for offer level or incremental capacity designed on a case-by-case basis by transmission system operators and approved by national regulatory authorities to accommodate conditional demand requests.’ The section was present in earlier drafts and we consider it important to retain it.
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Response to Network Code on the Transparency of Transmission Tariff Structures for Gas

28 Jul 2016

We note that the version of the Code published for consultation here is not the same as the latest version circulated in the industry. Nevertheless, our comments are relevant to both. Key issues • The main EFET priority is for increased transparency, consultation and justification around tariff setting. It is essential to maintain publication of RAB, WACC, Opex and other data essential for calculating allowed revenue and the robust provision surrounding consultation and justification that are included in the current draft. Without this, the NC provides no discernible benefit for shippers and would be of questionable benefit to NRAs. (Article 30(1)) • A full tariff model is preferred to a simplified one, but the removal of sensitivity analysis as an alternative to publication of a model is welcome and should not be reinstated (Article 30(2)). • An asset based cost-split is acceptable provided the cost allocation test continues to be applied to the entire RAB (Article 5.7) • We would welcome an acknowledgement that a number of wider issues remain outside the NC (see below) and that the Commission is committed to providing a platform for their discussion. Further desirable elements • Path-based firm is an improvement over conditionally firm capacity, as it clarifies that temperature- or demand-dependant capacity cannot be classified as firm. However, it legitimises reintroduction of point-to-point capacity that previous legislation sought to remove. • Path-based (i.e. point-to-point capacity, potentially with interruptible rights to deliver to a virtual trading point) should nevertheless be treated as interruptible, with a separate discount factor (a ‘B’ factor to distinguish from the ‘A’ factor used in traditional interruptible products) applied in the reserve price calculation (Article 16(1)). • Interruptible capacity: EFET strongly prefers ex ante to ex post discounts. If ex post compensation is to be instituted then it should properly compensate for interruption of the capacity i.e. reflect the price spread when this is greater than a fixed level of compensation, such as the suggested value of three times the reserve price. (Article 16(4)) • Publication of over- or under-recovery should be updated quarterly during the year, such that any significant adjustment affecting the following year’s tariffs can be anticipated. (Article 19.1) • For completeness the NC should mandate publication in English of all decisions and consultations (e.g. Articles 27(4) and 28(1)) Wider issues that fall outside the NC EFET continues to have reservations about the NC constraining possible solutions to wider issues that fall outside the NC. For example, multipliers and seasonal factors (Article 13) and Capacity/Commodity, Entry/Exit and Cross-border/Domestic splits (Article 30(1)(b)(v)) may require high degrees of flexibility to be able to address wider issues arising from: • commoditisation of capacity bookings; • long term stranding of assets through new transportation routes and changing patterns of supply and demand; • short term stranding of capacity contracts through price convergence at neighbouring hubs; and • future investments made for security of supply reasons that are not underwritten by the market.
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Meeting with Lee Foulger (Cabinet of Vice-President Valdis Dombrovskis) and Bundesverband der Deutschen Industrie e.V. and

12 Nov 2015 · Joint mtg energy assoc/Markets in Financial Instruments Directive II

Meeting with Joachim Balke (Cabinet of Vice-President Miguel Arias Cañete)

20 Mar 2015 · Meeting with EFET (Aygul Avtakhova + Jerome Le Page)