Soaring energy prices push the EU political agenda
BRUSSELS, Oct.6 (Reuters) – The European Union said on Wednesday it would review the functioning of its electricity market and consider proposals to overhaul regulations within the bloc, as it seeks to maintain plans to fight climate change on track in a context of record energy costs.
European electricity and gas prices have skyrocketed this year as strained gas supplies collided with strong demand in economies recovering from the COVID-19 pandemic.
Energy prices were high on the EU’s political agenda on Wednesday, with environment ministers and the European Parliament each debating the issue after country leaders discussed possible answers on Tuesday.
The crisis has divided member states over the intervention of Brussels.
“There is no doubt that we need to take political action,” EU Energy Commissioner Kadri Simson told the EU parliament.
The Commission will publish next week a ‘toolbox’ of options on how governments and the EU might respond. It will also launch a study to determine whether the EU’s electricity market is fit for the block’s planned transition to green power, Simson said.
EU countries agreed on Wednesday to wait for the Commission’s toolbox before considering a joint EU response. Some governments have already introduced national subsidies and tax breaks to reduce consumer bills. Read more
Spain has called for an overhaul of European electricity regulations to decouple the price of electricity from the cost of gas, and for the joint purchase of gas to increase the bargaining power of the countries of the EU in world markets.
Spanish Prime Minister Pedro Sanchez said he and other countries had asked Brussels to offer a “bold” response. “We need extraordinary and innovative measures,” he said.
Not all countries agree. EU regulators expect gas market conditions to ease next spring, and some states have warned of hasty action with lasting consequences.
“Trying to influence the free market is something we are very skeptical about,” said German Environment Minister Svenja Schulze.
The Netherlands cautioned against interference in European electricity and CO2 markets, while Belgium said it was “not convinced” that a joint gas purchase would help counter the soaring prices.
“I don’t think we should raise false expectations. We can’t really do more than what we are already doing,” Portuguese Environment Minister Joao Pedro Matos Fernandes said.
The price spike has come as the EU prepares to improve its policies to tackle climate change. This has fueled concerns in countries like Poland and Romania that measures to increase the cost of polluting fuels could increase household bills. Read more
Analysts said gas prices are the main driver of soaring electricity costs in Europe, while the cost of permits in the European carbon market contributed up to a fifth of the increase. Read more
Brussels maintains that its climate plans will lower bills by reducing their exposure to volatile fossil fuel prices and that if countries fail to cut emissions quickly, they could face much higher costs in the form of deadly floods. , heat waves and forest fires.
“Let’s keep an eye on the ball. The problem here is the climate crisis,” said EU climate policy chief Frans Timmermans.
“The faster we move towards renewable energy, the faster we can protect our citizens against high prices.”
Reporting by Kate Abnett, Robin Emmott, Marine Strauss, Philip Blenkinsop; Editing by John Chalmers, Edmund Blair, John Stonestreet and Marguerita Choy
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