Ref. Ares(2023)50929 - 04/01/2023
RWE Supply & Trading
European Commission
GmbH
Frans Timmermans
Vice-President of the European Commission,
European Green Deal and European Climate Law
Rue de la Loi / Wetstraat 200
1049 Brussels, Belgium
Email:
@ec.europa.eu
@ec.europa.eu
Essen, 27 June 2022
Review of EMIR clearing threshold for commodities
Dear Executive-Vice President Timmermans,
We are contacting you with regard to the review of the clearing threshold for commodities
(“EMIR CCT”) under the Regulation (EU) No 648/2012 (“EMIR”). The European Securities
and Market Authority (“ESMA”) has a mandate to periodically review the EMIR clearing
thresholds and update them where necessary, to ensure that these thresholds remain
appropriate. We are of the opinion that this review offers an opportunity to implement
changes which would facilitate the energy transition, enhance European competitiveness
and improve the functioning of markets, whilst safeguarding transparent and safe
financial markets.
On 3 June 2022, ESMA published its final report on
EMIR RTS on the commodity derivative
clearing threshold (ESMA70-451-114) following a public consultation. ESMA has proposed
to immediately increase the EMIR CCT from € 3 bn to € 4 bn and suggests further EMIR
reforms. While we believe that the proposal to increase the EMIR CCT should have been
much more ambitious, we welcome this ESMA report in many other aspects. It
acknowledges the energy industry’s concerns and the urgency to increase the EMIR CCT
to remedy the effects of changed conditions of energy markets. Furthermore, we support
ESMA’s recommendation that “only derivatives not cleared at an authorised or
recognised CCP should count towards the [EMIR C]CT”.
...
Seite 2
In this context EFET has commissioned a
study by Frontier Economics and Luther law firm
(“Study”), which we enclose to this letter for reference. The Study aims, on a scientific
basis, to substantiate the energy industry’s request for an EMIR CCT increase to € 12 bn
and also sets out options for further EMIR reforms. We support both the findings and
conclusions of this Study.
The EMIR CCT, which encompasses energy products such as electricity, natural gas and
carbon emission allowances, was initially set at € 3 bn in 2012 and has remained
unchanged ever since (despite changing market conditions). The low level of the
prevailing EMIR CCT creates a stark choice for many European non-financial firms: They
either meet costly and burdensome NFC+-EMIR requirements or restrict their activities to
avoid breaching the EMIR CCT. Such a curtailment of business can have adverse effects
on market liquidity and limit the options for renewable investors, who need to hedge their
investments in order to be able to access external funds.
The Study finds that the current EMIR CCT level is too low for three reasons:
x It does not reflect the changed energy market conditions in 2022 as compared to
2012. It has neither been adapted to the drastic increase in energy prices nor to
the effects of Brexit on the re-classification of derivatives executed on UK markets
as OTC derivatives.
x It is not suited for facilitating the European energy transition and achieving the
climate targets of the European Green Deal. The European Green Deal requires
hundreds of billions of euros’ worth of investments in the energy sector in the
current decade. Private investments in renewable energy will play a key role. As
government support phases out, the availability of market-based opportunities
for reducing risks (such as OTC derivative trading) becomes increasingly important
to make new renewable investments financeable. However, the prevailing EMIR
CCT severely restricts energy companies from offering hedging solutions to
renewable investors. For example, a single financial PPA, an over-the-counter
derivative which is in the scope of EMIR, for a large-scale offshore wind park can
lead to a company exceeding the CCT of € 3 bn.
x It puts EU energy companies at a competitive disadvantage as EMIR provides the
most restrictive regulatory standards for OTC commodity derivative markets
regulation among G20 jurisdictions.
The Study concludes by recommending an immediate and permanent increase of the
EMIR CCT to a minimum of € 12 bn to at least compensate for energy price increases.
Moreover, the Study recommends further EMIR reforms to facilitate the financing of the
fast-growing private renewable investments needed for Europe’s transition into a low-
carbon economy. The Study provides several proposals for relevant changes to the EMIR
framework and particularly supports the change that derivative trades which are centrally
...
Seite 3
cleared by an authorized or recognized central counterparty should be excluded from the
scope of derivatives that contribute to the EMIR CCT.
We would welcome the opportunity to explain to you the above-mentioned proposals to
make EMIR fit for purpose, which have been substantiated in the attached independent
scientific Study. We would be grateful if you could propose to us suitable dates and times
for a meeting in person or a video conference.
Best regards,
Alpiq Services CZ s.r.o.
ČEZ, a. s.
EnBW Energie Baden-Württemberg AG
ENDESA, S.A.
Enel
S.p.A.
Engie
SA
Ørsted A/S
RWE Supply & Trading GmbH
Statkraft Energi AS/Statkraft Markets GmbH
Verbund Energy4Business GmbH
RWE Supply & Trading GmbH
This letter also goes to:
60 Threadneedle Street
Mairead McGuinness, Commissioner for financial services, financial stability and Capital Markets Union
London, EC2R 8HP
Kadri Simson, Commissioner for Energy, developing an integrated, interconnected and properly functioning European
T
energy market
E
@rwe.com