European energy ministers will strive on Friday to adopt emergency measures to curb the rise in gas and electricity prices to deal with the risks of social crisis and business bankruptcies in Europe as winter approaches. Recent leaks from the Nord Stream 1 and 2 gas pipelines in the Baltic Sea, denounced by the EU as acts of “sabotage”, have raised new concerns within the bloc, which is already reeling from war-related price increases caused by Russia in Ukraine.
Opposition between several Member States and the Commission
Meeting in Brussels, the ministers of the 27 should validate the proposals presented in mid-September by the European Commission, aimed at recovering part of the “super profits” from energy producers to redistribute them to consumers, and reduce the demand for electricity. But a majority of member states – fifteen, including France, Belgium, Italy and Spain – consider that the “most serious problem” must be addressed: they are asking for a cap on wholesale gas prices in the European market. These countries want the measure to apply to all gas imports, not just those from Russia.
The Community Executive, like Germany, is reluctant to take such a measure for fear that a price limitation would threaten European supplies by dissuading “reliable partners” such as Norway or the United States from delivering the gas for the benefit of Asia.
The Commission proposes setting a maximum price for Russian gas – transported by pipeline or liquefied natural gas (LNG) – which currently represents 9% of European imports. Russia was historically the largest supplier of gas to the EU, bringing more than 40% of the gas to the bloc. Brussels is counting on negotiations with other suppliers of gas transported by pipeline to lower prices, but believes that for LNG, the negotiating capacity is limited by international competition. The Commission is also considering capping the price of gas used for electricity generation.
Around 140 billion euros in revenue
These options will be discussed by ministers, and should lead to a more detailed plan, before a summit of the leaders of the Twenty-Seven on October 7 in Prague. Meanwhile, ministers are expected to agree on Friday on a draft regulation to limit the income of generators of electricity from nuclear and renewable sources (wind, solar, hydro) that make windfall profits by selling their output at a very high price. above its production costs.
The ceiling would be set at 180 euros per megawatt hour and the difference with the wholesale market price would be recovered by the States to redistribute it to homes and businesses. A “temporary solidarity contribution” is also planned for producers and distributors of gas, coal and oil. In total, revenues of around €140 billion could be donated, according to Commission President Ursula von der Leyen.
Reduction of electricity consumption by at least 5% during peaks
The bill also sets a binding goal for states to reduce their electricity use “by at least 5%” during peak usage hours. The Twenty-seven are also called upon to reduce their monthly electricity consumption by 10%, an indicative objective.
Many EU countries have already put in place support schemes at the national level to relieve households and businesses weighed down by bills. France and Spain, in particular, apply ceilings to energy prices. Similarly, Germany, the EU’s largest economy, announced on Thursday that it would release up to an additional €200bn to cap gas and electricity prices.
European employers’ association BusinessEurope warned on Thursday that gas and electricity prices posed an “imminent risk” of “production losses” and “closures of thousands of European companies.” Mitigating the impact of these prices is “a matter of survival,” she said.
Source: BFM TV
