Energy crisis – EU plan. Energy ministers will discuss the EC’s proposals

EU energy ministers will meet on Friday to find solutions from a long list of possible measures to protect citizens from sky-high energy prices as winter approaches, Reuters reported. The agency added that Hungarian Foreign Minister Peter Szijjarto stated that the proposed limit on Russian gas was contrary to the interests of Europe and Hungary.

The basis for the talks is a set of proposals from the President of the European Commission, Ursula von der Leyen – among them, among others a reduction in Russian gas prices, a charge for unexpected expenses on non-gaseous power plants, a reduction in EU-wide electricity demand and emergency lines of credit for energy companies facing increasing security requirements.

Energy crisis – EU plan

EU diplomats said countries appear to support measures to provide liquidity to firms, and some have also supported curbing energy demand.

However, other proposals are more controversial. The price cap for Russian gas has so far not gained the support of most countries, and some question how this would help bring prices down, given the low volumes of gas Russia is now sending to Europe.

– Our intention is, above all, to lower the prices. Restricting only Russian gas will not lower prices, Belgian Energy Minister Tinne Van der Straeten told Reuters.

The Baltic states are among those supporting the idea, arguing that the price cap would still deprive Russia of revenues to finance military operations in Ukraine.

President Vladimir Putin stated on Wednesday that Russia will stop supplying gas to Europeif the EU imposes a price cap. Support for this policy is negligible among the countries of Central and Eastern Europe, which do not want to lose the shrinking supplies they continue to receive.

Deliveries of the Russian gas pipeline via its three main routes to Europe have fallen by almost 90% in the last 12 months. – according to the Refinitiv data. Russia has accused the supply cuts of technical problems caused by Western sanctions related to the invasion of Ukraine, the Reuters Agency reported.

EC proposals

EU countries are not expected to approve any policy on Friday, but rather to signal Brussels which options have enough support to turn into final proposals. EU emergency rules are usually enacted by most countries, although some may require unanimous approval.

There has also been resistance in some EU capitals to the idea of ​​recovering revenues from non-gaseous power plants and using them to reduce consumer bills.

The EU proposal would limit the price to EUR 200 per megawatt hour paid to non-gas generators for their capacity and would apply to wind, nuclear and coal generators – according to the project described by Reuters.

European energy prices are typically set by gas-fired power plants, and the cap would aim to reduce the cost of electricity produced by power plants that are not exposed to spike in European gas prices, which last month reached 12 times their levels in early 2021 year.

– The proposed European price cap for Russian gas is contrary to the interests of Europe and Hungary – Hungarian Minister of Foreign Affairs said on Friday Peter Szijjarto ahead of an extraordinary meeting of EU energy ministers.

Szijjarto said the proposed price cap would immediately cut off Russian gas supplies to Europe.

France, which has the largest nuclear fleet in Europe, questioned whether the same limit should apply to all generators.

“Having a single income ceiling for all energy generation and all EU countries is something we question,” a Reuters source at the French energy ministry said.

It added that Paris backed an EU price cap on Russian pipeline gas, but warned that the reduction in the price of liquefied natural gas could cause the EU to lose to other countries on much-needed supplies.

An EU diplomat from another country was said to have said that a “large group” of countries were looking for some form of energy price reduction to lower their bills, with the price of gas used for energy production and a bloc gas import limit among the ideas contained in the discussion.

– The question is what you turn and how you turn. The devil is in the details, said the diplomat.

Climate Minister Anna Moscow ahead of the summit

– We have prepared concrete and effective proposals for measures to help solve the current price crisis. They must be implemented without delay in order to bring down energy prices at EU level. According to Poland, it is necessary to solve the problem of high gas prices at its root, i.e. to introduce a price cap on gas imported into the EU. In the field of electricity, it is crucial for Poland to emphasize that the effects of our actions must translate into a reduction as soon as possible. electricity prices on the accounts of final recipients. Therefore, we propose to introduce a price cap on short-term markets in order to achieve a reduction in electricity prices on the wholesale market, said the Minister of Climate and Environment Anna Moscow in an interview with PAP.

She also added: – In addition, we propose, among others: introduce a fixed price of ETS allowances, alternatively temporarily suspend the obligation to settle allowances. We will also call for a temporary increase in the allocation of free allowances for certain sectors in order to mitigate the risk of bankruptcy and closure of installations. We are particularly concerned with suppliers of heat and electricity. Additionally, we propose reducing the market stability reserve, which turned out to be ineffective anyway.

In her opinion, “Russian gas blackmail is leading to an unjustified increase in prices on energy markets in Europe, and” the price cap for imported gas will have a positive impact on lowering energy prices in European markets, but it does not fully solve the problem of the EU’s dependence on Russian hydrocarbons. ” that “we should act more decisively to stop financing Putin’s war machine”, and “the introduction of price limits for all gas imported into the EU and on the wholesale electricity market is a solution that, according to Poland, will bring the effect expected by consumers in Poland and the EU.”

– Electricity prices have increased significantly, so we encourage everyone to save. However, we will not introduce an obligation of restrictions. We are open to solidarity and discussion on the proposed solutions, but on a voluntary basis and not on compulsory restrictions. Energy security or shaping the energy mix is ​​a sovereign decision of the Member States. The EC has no mandate to introduce top-down restrictions, Moscow said.

– First of all, a fixed ETS allowance price of € 32 should be introduced for a two-year period, with the possibility of extension. This would be a single price for all participants in the emissions trading scheme. The price of 32 euro is consistent with the impact assessment and EC scenarios contained in the official documents. Such an allowance pricing measure will allow economic operators to relieve the operating cost base and make the necessary investments to enable a safe and smooth energy flow in the coming winter, avoiding bankruptcies and economic turmoil. Businesses and citizens need cheap heat and energy to operate and survive the winter months. A fixed rate in the ETS may support this goal, said the Minister of Climate.

Moreover, she stated: – Poland has voluntarily reduced its gas consumption since the beginning of the year. In line with the provisions of the Regulation on Gas Consumption Restrictions, these savings already made will be counted towards the implementation of the mandatory reductions, if such were to take place after the Member States’ decision in the Council. For now, the target of 15 percent. reduction is voluntary. In the first month of the regulation being in force, i.e. in August, according to the latest data, Poland exceeded this target more than twice. When it comes to reducing the demand for electricity, we are proposing only voluntary measures and we are not supporting mandatory reduction targets.

When asked why we do not want to accept mandatory savings, since we will achieve this effect anyway due to high prices in the market, she replied: – the European Commission it has failed to push through the compulsory reduction in demand under the regulation itself. It is voluntary until an emergency is declared, which would have to be voted by the Member States. We find it outrageous that the Commission has drawn up a plan that imposes specific obligations on the countries of the Community without first knowing the situation in the energy sector and the economy of each of them. Each country has a different energy mix, uses different raw materials and this must be taken into account. There is a unanimity, not a majority, procedure for any decision on the energy mix. That is why we voted against this regulation. Nevertheless, due to the ongoing decline in demand, regardless of the actions of the European Commission, we will not have to introduce any additional restrictions.

Main photo source: Shutterstock

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