The European Commission (EC) on Wednesday adopted a communication on energy prices, addressing the extraordinary rise in global energy prices, which is expected to continue throughout the winter. The EC calls on the Member States of the European Union (EU) to take a number of measures to reduce the impact of rising energy prices on consumers, especially the poor.
As in many regions of the world, so is Europe today energy prices are rising sharply. This is mainly due to growing global demand for energy, especially gas, as the economic recovery from the peak of the Covid-19 pandemic is gaining momentum.
Since January, the wholesale price of gas has risen by 250 percent, causing a sharp rise in costs for consumers and businesses. And rising prices have also raised concerns about possible increases in inflation, which could hamper the global economic recovery.
“Rising global energy prices are a major concern for the EU. Protecting vulnerable consumers and supporting European businesses is important as we recover from the pandemic and begin economic recovery,” said EU Energy Commissioner Kadri Simsone.
A rapid and coordinated response is needed
The notice contains includes a set of measures, which the European Union and its Member States can use to address the immediate effects of real price increases and further strengthen their resilience to new price shocks.
The Commission calls for consideration to be given to emergency support for vulnerable households, state aid to businesses and targeted tax cuts. The Commission also recommends postponing electricity bills if necessary and introducing security measures to prevent these households from being disconnected.
Short-term government measures include emergency income support for households, state support for enterprises and targeted tax cuts.
The Commission will also support investment in renewable energy and energy efficiency, examine measures for the storage and purchase of gas stocks, and assess the current market structure.
The European Commission points out that the current rise in prices calls for a rapid and coordinated response. The current legal framework allows the EU and Member States to take action to prevent immediate effects on consumers and businesses.
“This may seem like a daunting task for countries that are still recovering from a pandemic, but revenues from the emissions trading scheme are rising all the time, and we call on member states to use these additional revenues to reduce the social pressure of rising energy prices,” Simsone said.
Vulnerable consumers must be supported first
Priority should be given to targeted actions that are able to respond quickly reduce the impact of price increases on vulnerable consumers and small businesses. These measures should be easily adjustable in the spring, when the situation is expected to stabilize. There is no need to stop long-term restructuring and investment in cleaner energy.
The European Commission proposes:
- provide emergency income support to energy-poor consumers, for example through vouchers or partial bill payments;
- allow temporary deferral of bill payments;
- introduce safeguards to avoid disconnection;
- provide targeted temporary reductions in tax rates for vulnerable households;
- to provide support to companies or sectors in accordance with EU state aid rules;
- to promote international information activities in the field of energy in order to ensure the transparency, liquidity and flexibility of international markets;
- to investigate anti-competitive behavior in the energy market and to ask the European Securities and Markets Authority (ESMA) to further improve its monitoring of carbon market developments;
- to facilitate wider access to and promotion of renewable energy contracts through support measures.
In the long term, we need to move towards energy independence
The European Commission is also offering support to companies suffering from rising electricity bills. In the medium term, consideration is being given to reviewing the regulation of energy supply, or the possibility of Member States purchasing gas jointly. It also calls for investment in renewable energy and transnational electricity grids.
The EC also promised to consider the possibility of the EU purchasing natural gas for all countries together, just as it now bought Covid-19 vaccines for all together. Such collective procurement – participation in it would be voluntary – would make it possible to build up European strategic reserves. Spain, for example, would be very interested in such joint procurement.
The EU Energy Commissioner Simsone will present the package and measures to MEPs on Thursday and to energy ministers on 18 October. EU leaders will discuss energy prices at the forthcoming European Council on 21 and 22 October.
European commision also offers a range of eventsto increase the EU’s long-term energy independence.
“The current situation is exceptional and the internal energy market has worked well for us over the last 20 years. But we need to be confident that it will continue to do so through the European Green Course, increased energy independence and achieving our climate goals,” says Simsone.
The Commissioner has also denied claims that all energy issues are directly linked to the European Green Course.
“I want to make it clear that we are not experiencing rising energy prices because of our climate policy or because renewable energy is expensive. We are facing it because fossil fuel prices have risen sharply.
Unfortunately, we do not yet have enough of this “green” electricity available to everyone. That’s why we need to speed up the “green” transition, not slow it down. “
The future of nuclear energy is unclear
A quarter (26%) of the electricity consumed in Europe is generated by nuclear power plants, but the EC has promised to answer the question of whether nuclear energy is “green energy” by the end of the year, as there are very different views between Member States.
For example, Germany plans to close all its nuclear power plants by 2022. Germany’s position is also supported by Austria, Denmark, Luxembourg and Spain.
France and nine other countries, including Finland, Poland and several other former Eastern bloc countries (Bulgaria, Croatia, the Czech Republic, Slovakia, Hungary, Slovenia, Romania), are in favor of using nuclear energy in the future. Therefore, the official European position on this issue is not yet clear.
Europe experiencing an unprecedented rise in energy prices, which could jeopardize the economic recovery from the pandemic and adversely affect people’s incomes. The rise in prices will be even faster with the start of the new heating season. The European Union and the Member States are thinking of solutions so that households can afford to pay for heat and electricity.
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