The EU has been slowly negotiating deregulation of its energy markets for nearly ten years. Early in 2002 energy ministers agreed on 2004 as a date to open the market for industrial and commercial consumers, but at that time France and Germany had led opposition to other parts of the plan, delaying its passage. France objected to full liberalisation at the domestic level. Germany objected to proposals to force utilities to sell off electricity and gas transmission businesses if they had supply or generation.

By the end of 2002 a new right of centre government in France had accepted competition for domestic consumers – albeit delayed for three years, until July 2007. The sell-off requirement had been modified to allow utilities to create separate legal entities for different parts of their business. Groups in favour said this was the minimum requirement necessary to ensure grid operators did not discriminate against rival firms seeking access to an incumbent’s customers.

The European Parliament will now hold its second reading of these proposals. Member States will then need to consider how to implement the measures.

Meanwhile, the European Parliament also passed its greenhouse gas trading scheme at the end of 2002. That scheme would set a cap on carbon dioxide emissions from many industries across the EU by 2005 and allow companies that have reduced emissions to trade excess credits.

Up to 2002, several European countries had set up their own trading schemes, including Germany and the UK. But these piecemeal schemes were not compatible with each other or the proposed EU scheme, and this made it more difficult to get agreement on the EU plan. It went ahead after it was agreed that countries could opt out of the scheme until 2007 and that groups of companies could form ‘collective pools’ so each did not have to incur the costs of trading emissions individually.