Limit the income of energy and electricity companies; limit the price of gas imported into the EU; reduce demand and solve the liquidity problems of the marketers. These are the agreements reached by the 27 EU Energy Ministers. From here, the European Commission is summoned to bring a detailed proposal next Tuesday, after the meeting of the college of commissioners.
Czech Energy Minister Josef Sikela, the country that holds the rotating presidency of the EU Council, explained: “I am pleased to announce that the ministers have agreed to find an urgent and firm solution to alleviate high energy prices. The debate has not been easy, but we have given a clear message about what to do. Now we know the path we want to take: the level of energy and electricity prices at present generates inflation and harms the European economy, weakening competitiveness and generating social tension. There are four areas in which the Member States expect the European Commission to present legislative measures in the coming days. The four areas are: limit the income of electricity producers with low production costs, with solidarity investment from fossil fuel companies; we expect the Commission to introduce an urgent intervention to limit the price of gas; also measures for a coordinated reduction in electricity demand. The ministers have also called for measures to help solve the liquidity problem [ayudas de Estado]”.
The agreed measures are in line with the non-paper, the draft put forward by the European Commission last Wednesday. Now we need to go into the details.
The European Commissioner for Energy, Kadri Simson, declared after the meeting: “The ministers are ready to support a rapid and coordinated response to fight the rise in energy prices. Climate change has increased the mismatch between supply and demand, which is why there are high prices and companies and citizens need protection. For this reason, we have worked to design a series of measures that will help consumers pay their bills: we have to reduce electricity consumption intelligently, especially during peak hours, we want a mandatory target for the Member States. We also need instruments that ensure a fair distribution of the income of the energy players, and that are dedicated to supporting measures to lower the bills of households, companies and industry”.
Simson has announced: “We will cap renewables, low-carbon sources, but it doesn't make sense to cap low-carbon sources and increase fossil fuels. We also propose a solidarity tax on these companies, to help consumers. The situation is problematic, the futures problem needs to be stabilized and we are going to work with the banking regulators to have a temporary aid bank to deal with the liquidity problem. The Commission is also open to making a complementary index of liquefied natural gas. We have a market that does not reflect reality, and gas prices must be lowered at their source. We are thinking of putting a cap on the price of Russian gas and that Russia will stop having income despite reducing supplies.
“The cap on the price of gas”, Sikela has said, “is the most complex thing we have to decide on. Most of the countries say that it is necessary to set a cap, but we need a little more time to see where that cap is set and where it is applied”.
Simson explained that "all the measures are on the table", but he wanted to cool down the cap on liquefied natural gas: "It could affect supply at a time when we want to replace Russian gas". Simson has also cleared the debate on emission rights (ETS): “This is not the format of ministers, it must be dealt with in the environment council. We can say that adjustments are needed. The proposed measures that have been made suppose an emergency and short-term intervention for the current problems, but an adjustment of the market design is necessary in the medium term, to have a different system with a greater part of renewables, the centralized approach, and a legislative proposal is going to be presented and we hope that the work will be available at the beginning of next year”.