Von der Leyen unveils five proposals to curb rising energy prices

Ursula von der Leyen has unveiled a collection of long-awaited proposals to sort out the EU’s worsening vitality disaster and curb the hovering payments which are placing European households and corporations below monetary stress.

The European Fee president proposed an EU-wide plan to cut back electrical energy consumption, a value cap on the surplus revenues made by renewables and nuclear vitality, a solidarity mechanism to seize the “huge” and “sudden” income reaped by fossil gas corporations, and a state support programme to inject further liquidity into struggling utility companies.

“The manipulation of the gasoline markets has a spill-over impact on the electrical energy market,” von der Leyen mentioned on Wednesday afternoon.

“We’re confronted with astronomic electrical energy costs for households and corporations and with huge market volatility.”

Von der Leyen additionally put ahead a value cap on imports of Russian pipeline gasoline, which, if launched, might push the Kremlin to retaliate and completely droop gasoline flows.

“We should minimize Russia’s revenues which Putin makes use of to finance this atrocious warfare in opposition to Ukraine,” she mentioned.

Over the previous few months, Gazprom has lowered the gasoline circulate by way of its pipelines, shutting down Nord Stream 1 for an indefinite period of time.

Consequently, von der Leyen defined, the share of Russian pipeline gasoline within the EU’s whole imports has plunged from 40% earlier than the warfare to 9% at this time. 

Norway, she mentioned, has changed Russia because the bloc’s main gasoline provider.

The president added her companies had been additionally inspecting the opportunity of a value cap on all imported gasoline, which would come with liquefied pure gasoline (LNG), a commodity that has develop into key to diversifying away from Russia.

Nevertheless, this far-reaching cap wouldn’t be tabled in the meanwhile.

“LNG is scarce and may be rerouted to completely different areas,” von der Leyen mentioned. “We [want to] keep aggressive for LNG suppliers however ensure that the costs we pay usually are not terribly excessive however in a good vary.”

‘We have to flatten the peaks’

The measures offered by the Fee chief are all of outstanding nature and replicate the balancing act between intervening within the free market and guaranteeing the safety of vitality provides.

The primary proposal, electrical energy financial savings, would set up a “necessary goal” for limiting energy use throughout peak hours when the function of gasoline turns into outsized and the payments swell.

“This requires sensible discount in demand. We want a method to flatten the peaks which drives the worth of electrical energy,” von der Leyen mentioned.

The EU has already put in place a voluntary plan to chop gasoline consumption by 15% earlier than subsequent spring.

The second proposal is supposed to restrict the surplus revenues made by so-called inframarginal mills, that’s, those that do not use gasoline to provide electrical energy, corresponding to renewables, nuclear and coal, and have considerably decrease manufacturing prices.

For the reason that ultimate value of electrical energy is at all times set by the most costly gas to satisfy calls for – on this case, gasoline – these inframarginal mills are seeing “revenues they by no means dreamt and that they can not reinvest as quick,” von der Leyen mentioned.

The distinction between the ultimate electrical energy value and the yet-undefined EU cap would create further funds for governments, which might then be used to assist customers in want.

“It’s now time for customers to learn from the low prices of low-carbon vitality sources,” von der Leyen mentioned.

An identical mechanism might be utilized to fossil gas corporations that commerce oil and gasoline, however this may goal their declared income, relatively than the market dynamics.

The 5 concepts will likely be additional mentioned by EU vitality ministers on Friday throughout an emergency assembly, the place politicians are anticipated to provide the Fee a clearer political mandate on the right way to transfer forward.

The cap on Russian gasoline is poised to be essentially the most divisive proposal, given the completely different ranges of dependency amongst member states. Final week, Hungary introduced a brand new contract with Gazprom for an additional 5.8 million cubic metres of every day gasoline.

As soon as agreed, the measures might be quickly launched below an emergency process.

Fee officers had beforehand rejected different drastic proposals, corresponding to subsidies for carbon emissions permits or an outright suspension of the wholesale market.

The chief additionally dismissed the opportunity of making use of the Iberian mannequin – a subsidised cap on gasoline costs – to your complete EU market, fearing it will encourage increased consumption of gasoline and make international locations extra susceptible to Russia’s provide manipulation.

Von der Leyen and her staff have been the goal of criticism in current days, with each European Council President Charles Michel and Belgian Prime Minister Alexander De Croo decrying the late collective response to the vitality disaster.

Market intervention “ought to have been performed earlier, and it is a disgrace that it took so lengthy,” De Croo mentioned.