Euro Watch

Power companies throughout the European Union are benefiting from billions of euros in windfall revenues each year as a result of a loophole in carbon emission regulations, according to a leading economists report today.

The companies are awarded free so-called ‘emissions permits’, allowing them to generate millions of tonnes of carbon dioxide without having to foot the bill. Furthermore, the same companies are continuing to charge the consumer for the cost price of the permits, leading to billions in ‘free money’ every single year.

The loophole comes as part of an EU scheme to tackle climate change and carbon emissions from corporate polluters, which puts a price of 20 euros a tonne on carbon dioxide emissions.

In theory, the practice is designed to levy a financial burden on the heaviest polluters to encourage environmentally friendly, carbon efficient business.

However, power companies are allowed vast quantities of free permits, which remain billable to the end consumer, resulting in the legal multi-billion euro discrepancy.

Chief Economist of the Carbon Trust Michael Grubb has quantified the benefits to power companies at around 20 billion euros a year, reflecting the magnitude of this practice in the European Union.

However, some experts fear that the figure is much worse than that, when cleaner forms of energy production that output less carbon dioxide are taken into account.

Nuclear and wind energy companies still benefit from the ‘emissions premium’ price for their power, despite the fact that they use less emissions every year, accounting for an even steeper discrepancy than that calculated.

With carbon permits accounting for between 6% and 12% of energy prices in the EU, analysts are calling for measures to be introduced to tackle the current loophole allowing profiteering at the expense of the consumer across the European Union.

Tags: European Economy News, European Union News by stewart
No Comments »

The European Union has today announced it will remove its ban on the export of UK produced beef as of the end of this week, after top regional vets inspected the range of the condition.

The EU had until now banned any form of animal exports from the UK after foot and mouth disease was discovered at several UK farms over the last week and a half.

Whilst overall the ban will be lifted, restrictions will still remain in place in the 10km radius surrounding the original outbreak as a precautionary measure for the time being.

The decision was made today by a panel of EU representative vets, after British produce was given the all clear to resume pan-European export.

British beef and animal products, which account for significant trade with the UK through Europe and further afield had been completed halted after the discovery of the condition on two farms in early August.

However, after swift precautionary actions by the UK authorities, the condition has yet to be discovered elsewhere in the UK, prompting today’s decision.

The EU decision will allow meats from the UK to travel within the European Union, although many countries still have international restrictions on UK produce for fear of spreading the disease.

Northern Ireland will also now be able to move its animal products through the UK as normal when the ban is lifted on Saturday.

The last foot and mouth epidemic in the UK of several years ago lead to the widespread culling of livestock throughout the mainland, and cost millions of pounds in damages to businesses and the economy as a whole.

International reaction to the latest outbreak was designed to prevent the condition from infecting more cattle, which appears so far to have achieved its goal.

Tags: European Economy News, European Union News by stewart
No Comments »

The European Union has today announced it is to resume financing Gaza’s sole power plant, after days of black outs in the troubled territory.

The European Union, which supplies fuel for the plant, suspended its investment last week amidst fears that radical Islamic group Hamas could end up profiting from the measure.

The Gaza region has been completely sealed off from Israel after Hamas took control, leading to what many have feared could be a humanitarian crisis.

After Islamic group Hamas seized control of the territory around two months ago, the EU has sought assurances that tax will not be charged on electricity derived from its own funding, for fear that it might be seen to condone or support the radical movement.

The European Union announced that supply to Gaza would resume on Wednesday, after days of black outs and power shortages in the region leading to the closure of businesses and schools for the duration, as power became a premium

However, the move is still only being billed as provisional, pending further audits and investigations of the way electricity revenues are distributed. Should auditors encounter any discrepancies in the way funds are being distributed, analysts have predicted with some certainty that the EU could withdraw altogether from the region.

With Hamas blacklisted by the EU as a terror group, and indication that money raised could support their movement would be sufficient for the EU to withdraw funding altogether on a more permanent basis, which would again leave residents suffering the brunt of days without power.

However, Hamas criticised the EU’s moves as amounting to nothing short of a ‘collective punishment’ for the innocent people of Gaza for political motive.

EU officials will shortly move in to examine the structure of electricity revenue generation in the impoverished, troubled region.

Tags: European Union News by stewart
No Comments »

The European Union has maintained its decision to withdraw funding for the territory’s only power plant, demanding a guarantee that Hamas will refrain from taxing electricity.

The European Union has until now heavily funded power within the region, which was withdrawn four days ago after a disagreement with Hamas as to the way in which the revenues from electricity are divided.

The news comes as yet another blow to the Gaza region, after its economic isolation from Israel since so-called extremists Hamas took control two months ago.

The EU, which funds fuel to drive the plant, has refused to be linked with the Hamas organisation. The Islamic group, which it considers to be on its blacklist of terrorist organisations, must agree not to generate revenue from the power supply funded by the EU, in a bid to ensure the EU does not indirectly fund the organisation.

On the fourth consecutive day without electricity, the European Union are remaining strong on their demands, refusing to commit to returning funding until they receive the reassurance they require.

Meanwhile, business in the impoverished region has been badly hit, with many forced to close in the wake of a lack of power, whilst the lucky few with electric generators are feeling the increased cost on their profit margins.

Despite the deadlock, the EU remains on standby to continue the supply ‘within a matter of hours’, should Hamas agree not to tax electricity.

Aid groups around the world have criticised the situation in Gaza, with many fearing a potential humanitarian crisis could soon be on the cards.

With the hard line approach of both Israel and the EU of recent weeks, it is the people of Gaza that are suffering as a result of the region’s economic and political problems.

Tags: European Union News by stewart
No Comments »

Deutsche Bank AG has today announced it will no longer operate in Iran as of the autumn, given the increased operating costs is has experienced as a result of UN, EU and German government monitoring measures, as well as international pressure on Iran from the US.

The news comes off the back of a report claiming that German businesses are being pressured by the US to leave Iran as a result of its controversial nuclear weapons programme.

Deutsche Bank is one of a handful of German banks that have announced their withdrawal from Iran over the last few weeks, after a visit from US Treasury officials over Iran’s international position.

After heavy UN sanctions, Iran has come under international suspicion for its nuclear development programme, which many fear could be used to developed nuclear weaponry, despite Iran’s claims of building the technology for energy production.

However there is as of yet no restriction on European businesses operating within Iran, despite the recent spate of withdrawals and sanctions.

Commerzbank AG, Germany’s second largest bank, has also pulled the plug on their Iranian operations, with financial restrictions through increased red tape their public reason for quitting.

However, many critics are claiming that it is the increasing pressure from US officials that is making German banks lose interest in Iran.

The United Nations has imposed numerous sanctions on Iran as a result of its nuclear programme, designed to leverage international cooperation from the Middle Eastern nation.

In conjunction with many developed countries, Iran is accused of funding terrorism and plotting to devise a nuclear armory, allegations Iran fiercely denies.

The sanctions don’t strictly require businesses to stop trading within Iran, although critics claim mounting pressures from the US to scale back operations are having the desired effect on German, and other European businesses trading in the region.

Tags: European Union News by stewart
No Comments »

Disagreements between governments and private contractors has stopped plans by Europe to put into place a satellite navigation system meant to rival the US global positioning system now in place. European Union transport commissioner Jacques Barrot has said that he will contact the companies participating in the project, asking them to explain why no progress has been made in more than a year. The urgency in locating and correcting the cause for the delays is due to EU fears that China could launch a competing system before the European Galileo system is up and running.

The original plan was to have 30 satellites in place and active by 2010, but a spokesman for Mr. Barrot said that at this point the system could not be operational until 2011 and that the timetable would likely slip further. Meanwhile China has said that its Beidou system will be operational for it and its neighbors by 2008, with worldwide coverage to come later on.

A consortium of European companies is involved in the project, but there are reports that they are reluctant to share development costs that have doubled from €1 billion to €2 billion since the project began. Among the companies which are signed up to participate in Galileo are EADS (Euronext: EAD; FWB: EAD), Thales (Euronext: HO), Alcatel-Lucent (Euronext: ALU; NYSE: ALU; TYO: 6687), Inmarsat, Finmeccanica (ISE: FNC), AENA, Hispasat, and a group led by Deutsche Telekom (NYSE: DT; LSE: DEU; TYO: 9496). These groups have not even set up a joint office or appointed a chief executive as yet, and there was no comment from any spokesman for the consortium on the latest developments.

Some have alleged that Spain is behind the hold-up in progress as it tries to get more jobs for its participants, but it said that it was only trying to make sure that that the consortium sticks to a 2005 agreement on the division of work among the companies involved.

Tags: European Economy News, European Union News by Brian Turner
No Comments »

The European Union is reportedly getting ready to introduce US-style class actions into their legal system in order to strengthen protections to consumers by allowing what is being called “collective redress” claims against firms that provide faulty or substandard goods and services. Currently, some EU nations have class action provisions in place, but there is no option for such actions on a EU-wide basis.

EU consumer affairs commissioner Meglena Kuneva defends the upcoming proposal as a way to keep businesses an incentive to keep the quality of the goods and services they offer high and to give consumers more confidence in cross-border transactions. She claims that this is especially necessary as e-commerce grows. Ms. Kuneva says that while the new proposal will take its inspiration from the US system, it will not reproduce it exactly.

The US class action system allows individuals to put separate claims against one company into one collective lawsuit, which encourages them to pursue compensation on claims that would be too expensive and time-intensive to be pursued individually. Such suits have been criticized, however, as benefiting the law firms that bring the suits more than that they benefit the wronged consumers. Ms. Kuneva has reportedly looked at possibly having collective claims in the EU handled by national consumers’ bodies, although some officials think that lawyers or other groups might also become involved.

Tags: European Union News by Brian Turner
No Comments »

The European Commission has imposed fines on ThyssenKrupp (FWB: TKA; LSE: THK) and four other lift manufacturers in an antitrust case in an effort to make it more expensive for cartels to violate competition rules. The companies involved did business in Germany, the Netherlands, Belgium, and Luxembourg between 1995 and 2004, coordinating bids so that designated groups would win specific contracts. The European Union’s competition commissioner said that the lift and escalator cartel had “ripped off” taxpayers, the government, and private customers with its practices.

The improper actions by the cartel extended not only to supply of their product initially, but also to later maintenance of the lifts and escalators they installed. In addition to the fines, the Commission also urged customers to renegotiate their contracts with the companies involved and said that there could be grounds for lawsuits for damages caused through the cartel’s misbehavior.

Among the companies found to be involved in the cartel were ThyssenKrupp, which was fined €479.7 million; Otis Elevators, a division of United Technologies (NYSE: UTX), fined €224.9 million; Schindler (SWX: SCHNEU), fined €143.7 million, and Kone (OMXHelsinki: KNE), fined €142.1 million. All the companies that received fines said that they were examining the ruling. United Technologies said that Otis will appeal the judgment.

The Commission pointed out that it was itself a victim of the cartel, which had installed lifts in its headquarters as well as at the European Court of Justice in Luxembourg.

Tags: European Union News by Brian Turner
No Comments »

Environment ministers from European Union member nations have agreed, at least in principle, to cut greenhouse emissions by 20 percent from 1990 levels by 2020 and to work toward a 30 percent cut worldwide if other developed nations are willing to do the same.

The EU must still figure out how and where to make the cuts, setting the stage for compromise with member nations such as new members Poland and Hungary as well as Finland, all of which are said to oppose mandatory targets for the cuts. Ministers from the UK, Spain and Slovenia supported the 30 percent target, while German Environment Minister Sigmar Gabriel said his country was prepared to cut emissions by 40 percent.

Advocates of national limits said that failure of the EU to act would make it more difficult to convince nations such as the US and China to agree to limit their emissions. But some nations have said they doubt that setting national emissions limits will have any effect on current environmental problems. Further, international negotiations toward standards to replace the Kyoto Protocol, which expires in 2012, have not been able to reach agreement.

Tags: European Union News by Brian Turner
No Comments »

The European Commission has called tax breaks given to companies by Switzerland to locate their corporate offices there are “unfair” due to the discrimination they make between foreign and domestic sources of income. By giving companies tax breaks on profits they make from EU customers, the Commission says, Switzerland upsets the “level playing field” that is required for continued trade relations between the EU and Switzerland. Switzerland replied that there was no foundation to the argument, and pointed out that there are no rules to break concerning tax arrangements because no regulations between it and the European Union exist.

Swiss law lets individual cantons give full or partial tax exemptions to companies on profits they generate outside Switzerland. Among the companies that have chosen to locate their European headquarters in Zurich are Kraft, Google, and IBM.

Switzerland is not a member of the EU, but it has assented to most EU trade rules for which the EU has granted access to customers in its member nations. The position of the Commission is that because Switzerland reaps the benefits of privileged access to EU markets, it should face the responsibilities that go along with such access. The Commission has not said what measures it would – or could – take against Switzerland if no agreement is reached on the issue.

Tags: European Union News by Brian Turner
No Comments »

The European Commission is expected to soon reveal a new package of proposals that will change the rules regulating cross-border trades between European Union member states. The new rules are designed to eliminate the remaining restrictions on trade between member states and to enhance competition.

Under the new rules, for example, a company that wants to sell goods to another member state will no longer have to prove that their products meet the purchasing nation’s standards and rules. The responsibility will instead belong to the purchasing nation, which will have to prove scientifically that the potential import must be restricted and that the restriction does not violate any principles of the EU.

The newly proposed rules are likely to produce a number of disputes as they require some nations to abandon safety standards for such products as used vehicles, bicycles, and construction machinery. Some of these safety standards have been long established. One European parliament member said that the new rules will also be controversial because they will raise ideological issues between nations that take a protectionist stand and those that advocate a free market, and because they involve a great deal of money.

The new rules were the idea of industry commissioner Gunter Verheugen to find solutions to trade problems that have led to numerous legal disputes between EU member states.

Tags: European Union News by Brian Turner
No Comments »

Three automobile manufacturers, two in France and one in Italy, have raised objections to the treatment of German carmakers as the European Commission proposed stringent controls on greenhouse gas emissions from vehicles. The new proposals are the strictest in the world and call for rules that require new cars to emit no more than 120g of carbon per kilometre by 2012. The current average emissions from new cars made in Europe is 161 g/km.

The proposal, which was delayed from when it was first expected to be introduced, was diluted after carmakers protested that the original form of the proposal would add thousands of euros to the cost of a new car as well as eliminate jobs. The complaints came from PSA Peugeot Citroen and Renault in France and Fiat of Italy after German chancellor Angela Merkel warned the Commission in a letter last week against proposing targets on emissions that would hurt carmakers, such as German companies DaimlerChrysler and BMW, that make cars that emit higher amounts of carbon than the average. In addition Volkswagen, along with the European divisions of General Motors and Ford Motor, wrote to the European Commission president, calling the Commission proposal “unrealistic” and technically impossible.

The French and Italian carmakers said they were “irritated” because they have worked very hard and spent a great deal of money to produce cars with lower emissions and feel that it would be unfair for them to be penalized in order to “prop up” German companies that produce larger vehicles that emit more carbon. They said that the watered-down proposal makes it look like German is using its presidency of the European Union in order to protect interests in its own country.

Tags: European Union News by Brian Turner
No Comments »

Details of a plan that would make automobile manufacturers cut emissions from their vehicles by 25 percent overall, with an 18 percent cut in carbon dioxide emissions, by 2012 will be introduced in the European Commission on Wednesday after a two-week delay in which one commissioner had argued for all cuts to come from the manufacturers alone. The plan to be introduced calls for some of the cuts to come from the use of biofuels and better tires as well as from changes made to the design of the cars themselves.

Car industry representatives had said that the proposal to make all emissions cuts the responsibility of carmakers would have sent the cost of a new car up by €2,500. Other reports said that the changes would cause the price of a car to go up by around €600. The industry also contends that consumers are not interested in vehicles that have smaller engines and produce fewer emissions, and that cheaper ways of reducing emissions lie in reducing congestion and changing the behavior of drivers.

But transport is the only European sector that has increased its carbon dioxide emissions in the past 15 years, despite improvements in engine efficiency. This is blamed on increases in the size and power of cars. And so the proposal to be introduced Wednesday holds carmakers responsible for reducing emissions down to 130g/km, down from the 2005 emissions level of 162g/km. A further 10g/km reduction in emissions would be achieved by use of biofuels and better tires, plus initiatives to make sure drivers change gears appropriately.

Tags: European Union News by Brian Turner
No Comments »

Details of a plan that would make automobile manufacturers cut emissions from their vehicles by 25 percent overall, with an 18 percent cut in carbon dioxide emissions, by 2012 will be introduced in the European Commission on Wednesday after a two-week delay in which one commissioner had argued for all cuts to come from the manufacturers alone. The plan to be introduced calls for some of the cuts to come from the use of biofuels and better tires as well as from changes made to the design of the cars themselves.

Car industry representatives had said that the proposal to make all emissions cuts the responsibility of carmakers would have sent the cost of a new car up by €2,500. Other reports said that the changes would cause the price of a car to go up by around €600. The industry also contends that consumers are not interested in vehicles that have smaller engines and produce fewer emissions, and that cheaper ways of reducing emissions lie in reducing congestion and changing the behavior of drivers.

But transport is the only European sector that has increased its carbon dioxide emissions in the past 15 years, despite improvements in engine efficiency. This is blamed on increases in the size and power of cars. And so the proposal to be introduced Wednesday holds carmakers responsible for reducing emissions down to 130g/km, down from the 2005 emissions level of 162g/km. A further 10g/km reduction in emissions would be achieved by use of biofuels and better tires, plus initiatives to make sure drivers change gears appropriately.

Tags: European Union News by Brian Turner
No Comments »

Differences in growth in various Eurozone member nation economies has led to differences over whether or not the European Central Bank is supporting growth, or is not supporting all member nations equally. New data indicates that while Germany’s industrial sector is continuing to recover, Italian and French manufacturers are seeing slowdowns. The mixed results have resulted in a region-wide slowdown in growth that dropped the Eurozone purchasing managers’ index to 55.5 in January, down from 56.5 in December.

This continuing difference in performance in different parts of the region raises the question of whether the benefits of belonging to the monetary union were reaching all member nations evenly. The French PMI was at 52.4 in January after being at 54.2 in December, its lowest level in almost a year. Meanwhile, the Italian PMI was down from 55.0 in December to 53.5 in January, its lowest level in a full year.

While the major candidates for president in France’s upcoming election are using the figures to accuse the ECB of not supporting growth, the ECB characterizes the differences in economic growth between Eurozone nations as not that different from the differences between US states and considers regional differences to be unavoidable as it focuses more on the possibility of inflation. With output prices up last much at their fastest pace since they began to be monitored in 2002, it is seen as likely that the ECB be raising interest rates yet again.

Tags: ECB: European Central Bank News, European Economy News, European Union News by Brian Turner
No Comments »

Europeans are apparently reluctant to pay what it costs to buy cars that meet new, more stringent carbon dioxide emissions standards. Carmakers seem equally reluctant to build and market such vehicles.

Even when carmakers produce cars that meet the proposed standard, consumers are slow to pay the higher prices charged for those cars. Two such vehicles, the Volkswagen Lupo and the Corsa Eco, were introduced in 1999 and 2003 respectively. The Corsa, which met the 120 g/km emissions standard currently under consideration by the European Union, was unsuccessful due to perceptions that low-emissions cars do not perform well, while the Lupo was withdrawn in 2005, a year in which VW only made 5,700 of the cars. Surveys conducted last year showed that 38 percent of Europeans would not buy a hybrid car under any circumstances, while those who said they would buy one said that they were not willing to pay much more for hybrids or for cars equipped with other low-emissions technology.

The European Union hopes to reach an emissions standard of 120 g/km by 2012. The European Commission is still debating legislation amid complains from carmakers that the new limit is “unrealistic”, technically not feasible, and will make a large portion of the European automobile manufacturing sector unprofitable. The carmakers say that while they are working toward lowered emissions, a more wide-ranging approach that includes taxation, state promotion of the use of lower-emissions biofuels, and changes in the traffic infrastructure besides just calling for cars that produce lower emissions.

Still, the industry is preparing for a time when lower emissions will be mandated. For example, BMW has said it is preparing a series of mid-sized cars that will be equipped with stop-start technology and has already launched a production-ready vehicle that runs on petrol and liquid hydrogen.

Tags: European Union News by Brian Turner
No Comments »

The euro and sterling both strengthened on Monday on positive data, while the US currency trade took the day off for Presidents Day.

Comments by Jean-Claude Trichet, the president of the European Central Bank to the European Parliament that expectations for interest rate tightening in the eurozone are sensible, that economic growth on the zone was on the upswing, and that risks to inflation “remain on the upside.” Mr. Trichet also warned of risks associated with housing price bubbles. Interest rates are expected to be raised one-quarter point in March, follwed by two further raises during the year to a rate of 3 percent by the end of the year.

The news out of Germany on producer prices also aided the euro higher. Producer prices were up 1.2 percent on a month-to-month basis in January, well above the predicted rise of 0.4 percent. This news was seen as supporting further interest rate rises in the eurozone. Also in Germany, December’s retail sales figures for December were revised upward to a decline of just 0.8 percent, rather than the 1.4 percent decline that had been reported earlier. Additionally, Italy reported that growth in industrial orders was up in December.

All this news combined to send the euro up 0.1 percent to $1.1942 in relation to the US dollar. The shared currency gained 0.2 percent against the Japanese yen, to ¥141.16.

Tags: European Economy News, European Union News by Brian Turner
No Comments »

Document Security Systems, a small US technology firm, is suing the European Central Bank for an alleged unlicensed use of its anti-counterfeiting technology in printing euro notes.

The company claims that the ECB included patented technology among the security features used in euro banknotes. The suit was filed with the European Court of First Instance, based in Luxembourg, and is thought to be both the first case of its kind against the ECB and the first patent law case filed in the court, which handles cases against European Union institutions.

The lawyer representing DSS, Larry Cohen, said that the company is seeking to collect fees that would have been paid had the ECB entered into a reasonable royalty agreement with DSS for the use of its technology. Mr. Cohen said that the damages could run into the millions of dollars.

The An ECB spokesman said that the bank was aware of the lawsuit but had no comment on the issue. The case is not expected to be heard until late next year at the earliest. Meanwhile, DSS is contemplating legal action against other central banks it believes is using its technology illegally. Shares in DSS rose to a one-year high of $9.55 after the lawsuit was announced on August 1, and were trading at around $9 at early afternoon on Wednesday.

Tags: ECB: European Central Bank News, European Union News by Brian Turner
No Comments »

The euro fell to its lowest point in relation to the US dollar in fourteen months as it reached $1.1869 against the greenback.

The European parliament has added to pressure on the European Central Bank to cut interest rates there by turning down a report that praised the ECB’s monetary policy by saying that central bank is too focused on stability while not taking into consideration the importance of economic growth.

The ECB has not raised interest rates in two years.

Tags: ECB: European Central Bank News, European Economy News, European Stocks & Shares News, European Union News by Brian Turner
No Comments »

The European Parliament has entered a dispute over the 2007-2013 EU budget by supporting a proposal to spend 1.07% of member states’ gross national income.

The figure lies between the 1.14% suggested by the European Commission, and the 1% demanded by the six largest net contributors to EU funds.

The issue will be discussed at a European summit in Luxembourg next week.

The UK is being pressurised to give up its rebate, awarded in 1984, but says that it will use its veto to preserve it.

The Luxembourg presidency of the European Union is formulating a compromise proposal and is holding a series of bilateral negotiations with European leaders.

Prime Minister Tony Blair will be the last to meet the Prime Minister of Luxembourg, Jean-Claude Juncker, who proposes holding the British rebate at its current level, and gradually phasing it out.

The European Parliament has said that it will reject any agreement that allocates too little funding for research and development and regional aid. This is thought to be a reference to a compromise proposed by Luxembourg in May, which would have take approximately 50bn euros from the “Lisbon Agenda” programme to make Europe a more competitive economy.

It would also have reduced the regional aid budget by 40bn euros.

Many governments believe that reaching a budget agreement would show that the EU was back on track following the French and Dutch rejection of the European constitution.

Luxembourg negotiators think the UK may compromise on its rebate if French President Jacques Chirac agrees to compromise on agricultural aid.

Tags: European Union News by Brian Turner
No Comments »