The EU is working hard to cut energy bills

Capping the price of gas or taxing superprofits… The meeting in Brussels, European energy ministers must adopt measures to prevent the rise in gas and electricity prices.

European energy ministers will try on Friday 30 September to adopt emergency measures to prevent the increase in gas and electricity prices to face the risks of social crisis and business bankruptcy in the approach of winter. The recent leaks of the Nord Stream 1 and 2 gas pipelines in the Baltic Sea, have been criticized by the EU as acts of “sabotage”has sparked new concerns within the bloc, already reeling from rising prices linked to Russia’s war in Ukraine.

The meeting in Brussels, the ministers of 27 should validate the proposals presented in mid-September by the European Commission, which aims to recover part of the “superprofits” of energy producers to distribute it is distributed to consumers, and will reduce the demand for electricity. But the majority of Member States – fifteen, including France, Belgium, Italy and Spain – considered the “most serious problem”: they call for a cap on wholesale gas prices on the European market.

These countries want the measure to apply to all gas imports, not just those from Russia. And sure “more and more nervous” the attitude of the Commission, according to a European diplomat. The Community executive, like Germany, is reluctant to take such a step, fearing that limiting prices will threaten European supplies by dissuading them. “reliable partners” like Norway or the United States to supply the EU with gas, for the benefit of Asia.

Set the highest gas prices in Russia

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 has historically been the largest gas supplier to the EU, bringing more than 40% of the bloc’s gas. Brussels is counting on negotiations with other pipeline gas suppliers to lower prices, but believes that for LNG, the ability to negotiate is limited by international competition. The Commission is also considering capping the price of gas used for power generation.

These options will be discussed by the ministers, and should provide a more detailed plan, before a summit of the leaders of the Twenty-Seven on October 7 in Prague. In the meantime, ministers are expected to agree on Friday a draft regulation that will cap the revenues of electricity generators from nuclear and renewables (wind, solar, hydro) that make windfall profits through selling their output at a price above their cost of production.

A “temporary solidarity contribution”

The ceiling will be set at 180 euros per megawatt hour and the difference in the wholesale market price will be recovered by the States to be redistributed to households and businesses. A “temporary solidarity contribution” also intended for producers and distributors of gas, coal and oil. In total, revenues of around 140 billion euros could be donated, according to Commission President Ursula von der Leyen. The bill also sets targets for states to reduce their electricity consumption. “at least 5%” during peak consumption hours. Twenty-Seven is also called to reduce their monthly electricity consumption by 10%, an indicative goal.

Many EU countries have already put in place support schemes at national level to relieve households and businesses that are choking on bills. France and Spain in particular have applied ceilings on energy prices. Similarly, Germany, the EU’s largest economy, announced on Thursday that it would release up to 200 billion more euros to limit gas and electricity prices.

European employers’ association BusinessEurope warned on Thursday that gas and electricity prices would cause a “imminent risk” on “loss of production” and “capture thousands of European companies”. Mitigating the impact of these prices is “a question of survival”he said.

Leave a Reply

Your email address will not be published. Required fields are marked *