EU vows emergency plan to tackle energy costs after Ukraine invasion
Brussels is taking emergency measures to curb a spike in household energy bills following Russia’s invasion of Ukraine.
Ursula von der Leyen, President of the European Commission, promised to present ideas on the possibility of controlling energy prices and methods of mitigating the impact of gas prices on electricity costs, during a summit EU in Versailles, where leaders agreed to drastically reduce dependence on Russian imports. Oil and Gas.
“By the end of this month, the committee will outline options to limit the contagion impact of gas price increases on electricity prices,” she said, adding that the committee was also looking at how to allow aid from the state comes to businesses that are in difficulty.
Member states including France, Italy, Greece, Spain, Belgium and Romania support ways to limit the link between gas and electricity fees due to the recent spike in prices. Other capitals are reluctant to support heavy intervention that could disrupt EU energy markets.
Italy, Spain, Belgium and several other countries also wanted the ability to cap prices, but faced resistance.
EU leaders met at an informal summit in Versailles chaired by Emmanuel Macron, the French president, who holds the EU’s rotating presidency, to discuss the economic and international response for the war in Ukraine.
They agreed to “remove our dependence on imported Russian gas, oil and coal as soon as possible” by increasing LNG imports from other markets, developing the European hydrogen market, improving energy efficiency and accelerate investment in renewable energy.
Von der Leyen said a plan would be presented by mid-May to phase out reliance on Russian energy by 2027, although member states differed on whether this would be possible. are not.
She said it “could” cut imports from Russia by two-thirds by the end of the year, as outlined in this week’s mandate plan. It also includes the possibility of subsidizing consumer bills through a tax on utilities, which is expected to make an additional 200 billion euros in profits this year.
The EU energy pricing system operates on a “pay as you clear” model, where the wholesale cost of electricity reflects the price of the final unit of energy purchased through auctions held in member countries. In general, gas is a necessary fuel to ensure an adequate supply of energy to meet demand and thus drive prices up, even in countries like France, where cheaper nuclear power supplies about 70% of electricity. power.
This week, French Finance Minister Bruno Le Maire said the idea that the price of carbon-free electricity should still depend on fossil fuel prices must change. “The higher the price of gas goes up, the clearer this fact becomes to everyone,” he added.
Mario Draghi, Prime Minister of Italy, said after the summit: “Today there is only one price, so electricity produced at a very low cost – for example from renewable sources – reaches the consumer. used at the same price as electricity produced from gas. . . This is the main reason for the high electricity bills.”
EU leaders also support steps to add gas storage capacity as they keep an eye on the risk of Russian supply disruptions ahead of next winter. The commission will propose that underground gas storage sites be filled to 90% capacity by October each year.
Additional reporting by Andy Bounds in Brussels, Eleni Varvitsioti in Athens and Amy Kazmin in Rome