Winter is just around the corner, and energy prices have been climbing for months. Between January and October, the wholesale price of natural gas rose by around 440 percent. Since gas is also used to generate electricity, the price of electricity rose at the same time. This also had consequences for the energy bills of European households. In Spain, where there were already protests against the high cost of living, the price of electricity rose by a whopping 425 percent.
Some member states have long been calling on Brussels to intervene. On Wednesday, Energy Commissioner Kadri Simson presented a “tool kit” with possible measures that member states could use without violating EU rules or distorting the market. This could happen, for example, if state aid gave energy suppliers an advantage over companies from other EU countries.
Catalog of measures for now and later
The “Toolbox” lists suggestions that the member states could apply in the short term without violating EU rules. The Commission wants to collect and coordinate these measures. The states could turn the tax screw ad hoc: National taxes for companies and also the value added tax could be reduced for a limited time and heavily affected industries could be subsidized. Direct aid for households with lower incomes, such as vouchers, is also possible, as is already being used in some countries.
The role of individuals can be strengthened by encouraging them to choose and switch providers or to join energy communities, Simson said. But she also said that the individual member states do not “have the same energy mix or identical social situations. Therefore, the actions of the Member States must also be specific. “
In addition, medium- and long-term plans are being forged, which the EU will have to come up with first. A joint gas procurement is under discussion, similar to the one already with the Covid vaccines. This strategy could give the EU more bargaining power, especially with Russia.
However, states like France called for further steps: The EU should create joint gas reserves and decouple the price of electricity and gas. In Europe, the most expensive power plants currently determine the electricity price – this is extremely unfavorable for Paris, because electricity is produced more cheaply in its own nuclear power plants than, for example, in expensive gas-fired power plants in Germany. In Berlin people are therefore rather hesitant to shake the laws of the electricity market. It is assumed here that prices will calm down again anyway.
Price rally at the wrong time
In the long term, the EU wants to focus fully on renewable energies. The greener the European energy, the more independent households are from the fluctuating prices of fossil fuels. “The only long-term remedy is the transition to green energies,” especially wind and solar power have proven their worth. This is where the Commission wants to make it easier for “green” energy providers in the future, also as part of its climate neutrality plans.
The energy price boom comes at an inopportune time for the Commission. Your “Green Deal” is likely to fuel the debate as to whether climate protection is too expensive in view of the already high energy costs.
Worry about fertilizer crisis
The concern that energy costs could lead to a significant increase in many foods is also great, as the news portal Politico writes. On Monday and Tuesday, at the meeting of agriculture ministers in Luxembourg, there was agreement that the price of natural gas would drive up the cost of fertilizers. Because gas is an important means of producing some of the most common artificial fertilizers in agriculture.
The rise in energy prices could “of course have an impact on food prices in the future, that is of course the risk,” said Agriculture Commissioner Janusz Wojciechowski. At the meeting, the Polish government distributed a paper expressing fears of “social unrest” across the EU. The Union must therefore consider the social consequences of climate protection measures and increases in gas prices.
According to Energy Commissioner Samson, that will happen too. The fear of unaffordable bills is justified in many households, she said in Brussels on Wednesday. “We are seeing an increase all over the world, mainly because of the high demand in Asia and the hunger for energy caused by the upswing after the pandemic.” The Commission wants not only to make the supply system more resilient, but above all European consumers protection. Talks on this will begin next week at the EU summit in Brussels, at which Alexander Schallenberg (ÖVP) will be present as Federal Chancellor for the first time.