The 27 Member States of the European Union (EU) agreed on Friday on urgent solutions to soaring energy prices. “Four main areas in which the 27 expect legislative proposals from the Commission in the coming days, with the hope of concluding before the end of the month“, summarized the Czech Minister Jozef Sikela in the afternoon.
One element is brandished as a victory by Belgian Minister Tinne Van der Straeten: the 27 are asking the Commission to cap gas prices. The measure was supported by Belgium and Italy. “Today, there is an agreement between ministers to lower the bill via this cap on gas. The European Commission will come up with a proposal that can work in the (coming) weeks. This will give oxygen to our households and our industries“, confided to our microphone Tinne Van der Straeten (Groen, Flemish ecologists).
As Russian gas now represents only 9% of European imports (compared to 40% before the war), several States including Italy advocated a complete cap on the prices of gas purchased by the EU, including liquefied natural gas (LNG ). “Fifteen countries came out clearly in favor (…), a solid majority“, welcomed the Italian Minister Roberto Cingolani.
We are going to remove this huge increase which is no longer related to the real cost of gas
The measure targets all types of gas, not just Russian gas. “The markets have gone crazy, we must intervene to calm the markets“, reacted the Belgian minister. “We are going to remove this huge increase which is no longer related to the real cost of gas to calm the markets“.
The goal: to apply the measure in the coming weeks
According to our Minister of Energy, the objective is to achieve a concrete measure in the coming weeks. Now that the 27 member countries have agreed, it is up to the Commission to prepare an applicable measure. “It was very clear and shared by almost all the energy ministers that it is necessary to intervene at the level of the bill before the winter begins. It means that there are only a few weeks left for us to lower the bill. We are at a very very accelerated pace. This is rightly so because high bills are in the mailboxes almost every day. We are working to lower these bills“, she told us. “We’ll meet again between energy ministers before the end of September to listen to the Commission’s proposal. If there is agreement, it can be implemented in about ten days“.
Do not endanger the supply
“Nothing is excluded (…) but we must be careful not to undermine the security of our supplies” during the winter, reacted Kadri Simson, European Commissioner for Energy, recalling that the EU must remain sufficiently attractive in a highly contested world market, where supply is tight and where LNG ships can easily find new other destinations.
“Under the term ‘gas price cap’, you can put a lot of things“, insisted French Minister Agnès Pannier-Runacher, “whether it is LNG, gas transported by pipeline from Norway and Algeria“, or even the cap imposed by Spain on the price of gas paid by thermal power stations.”There are many very different proposals, it is far too early to say that we will do this or that“, abounded Friday in Berlin the German chancellor Olaf Scholz.
Redistribute “superprofits”
Another central subject of the debates: the dysfunctions of the European electricity market, where the wholesale price is indexed to the cost price of the last power station mobilized to meet demand – often a gas-fired power station.
The Commission proposes to cap the revenues of nuclear and renewable energy operators (wind, solar, biomass, hydroelectric) who sell their electricity at a price well above their production costs. States could levy the difference between this ceiling and the market price to redistribute these “superprofits” to vulnerable households and businesses.
Despite very different energy mixes from one country to another, the measure has generated a broad consensus. Berlin and Paris, under political pressure to tax “superprofits”, demanded such a “contribution mechanism“.
At the same time, the Commission wants to demand “a temporary solidarity contribution“to producers and distributors of gas, coal and oil, favored by soaring prices.
Coordinate to reduce demand and improve liquidity
Ministers finally asked the Commission to present measures “to coordinate reductions in electricity demand” across the EU and for “help solve cash flow problems” on the energy markets, according to the explanations of the Czech minister.