Brussels goes to extreme measures – DW – 09/09/2022

In an unprecedented situation in the energy market, the EU will have to take unprecedented measures. This phrase has been repeated in Brussels for several days now. Politicians of all countries agree that now is not the time for discussions – decisions must be made urgently. Problems that would normally take more than one legislative period to overcome, the EU will have to solve within a few days, in extreme cases – weeks: energy prices are astronomical, and winter is just around the corner and social pressure is growing.

Therefore, the Council of Energy Ministers of the EU member states at an emergency meeting on Friday, September 9, supported the urgent plan developed by the European Commission to mitigate the consequences of the energy crisis. It consists of five items.

Brussels is not afraid of cutting off supplies from Russia

The European Commission proposes to introduce gas price ceiling and will develop specific measures in the coming days. It is known that the President of the European Commission Ursula von der Leyen (Ursula von der Leyen) wants to set a price ceiling only for gas from Russia, but many countries believe that it will be possible to achieve price reductions only by introducing such a cap for other suppliers.

For his part, the head of the European Commission argues his decision by the fact that Russia’s gas revenues are used to continue the brutal war unleashed by Vladimir Putin in Ukraine. “Russia has used gas supplies as a weapon to provoke an energy crisis this coming winter, as well as to weaken our economy and politically divide the European Union,” EU Energy Commissioner Kadri Simson said at a press conference. “We must ensure that these efforts fail.” “.

These are the reasons why von der Leyen considers this measure so important, even if it entails a complete cessation of gas supplies from Russia, Simson explained, on the lapel of her jacket were pinned ribbons in the colors of the Ukrainian flag. She assured that the EU has been preparing for several months for the fact that sooner or later Putin will turn off Europe’s tap.

“This is a sore point for Austria and for me personally,” says Austrian energy minister Leonore Gewessler. we cannot support the price ceiling now“.

According to her, Austria is working under huge pressure to completely withdraw from Russian gas “terawatt by terawatt” through diversification, development of renewable energy sources, efficient use and savings, but so far the goal has not been achieved.

Worst case scenario – unemployment and poverty

“We have prepared plans for all scenarios and for the most extreme case of a complete cessation of Russian gas supplies. Such a scenario will mean not only severe state intervention in the market economy, but also unemployment and poverty – that is why we all strive to avoid this,” she stressed. Gewessler before the meeting of energy ministers.

At the same time, a ceiling on gas prices from other countries, such as Italy is seeking, would be a threat to the EU’s energy security, says EU Energy Commissioner Simson. Because, with limited supply on the global gas market, Brussels needs to continue to look for replacements for Russian gas and maintain high levels of LNG shipments.

The European Commissioner assured that intensive work is underway on other ways to reduce gas prices, for example, bilateral negotiations are underway with suppliers such as Egypt, Azerbaijan, Algeria.

“We will be even more active in holding technical meetings with EU members most dependent on Russian gas,” Simson promised. Meanwhile, the Hungarian minister boasted of success in negotiations with Gazprom on additional supplies to his country.

“Smart Economy”

The point of the plan, which does not cause controversy among EU members, is “smart economy”. That is, saving electricity during peak hours, when it is most expensive. A similar measure has already been introduced in the European Union for gas: the countries decided to voluntarily reduce its consumption by 15 percent compared to 2021. Brussels considered this practice effective for stabilizing the situation on the gas market, and now, following gas, they are ready to reduce electricity consumption as well.

“Thanks to previous decisions, Germany has managed to save gas,” says German Vice Chancellor Robert Habeck. The market no longer assumes that we will collapse if we stop receiving Russian gas.” Gas from the Russian Federation comes to Germany exclusively “in homeopathic doses,” Habek joked, and the country surprisingly in such a short time learned to do without it.

The European Commission is in favor of making energy savings mandatory, but many countries believe that this is not necessary. In the same way, most EU members now believe that the matter has not yet come to a forced reduction in gas consumption and this emergency lever does not need to be activated.

Market intervention

Saving gas and electricity is a relatively simple mechanism, but it alone is not enough to overcome the crisis, they say in the EU. As a last resort, Brussels is ready to intervene not only in pricing policy, but also to impose a tax on unexpected profits of energy companies. Since it was received thanks to the crisis, the European Commission and the members of the European Union are confident that it is necessary to develop a mechanism for the fair distribution of these revenues.

One option is a “solidarity contribution” to redistribute the excess profits of oil and gas companies that unexpectedly benefited from the crisis. The European Commission will also propose a scheme whereby companies producing low-cost alternative energy – nuclear, solar and other – will be forced to share windfall profits generated by high electricity prices. These funds can be used to provide subsidies to vulnerable residents of the European Union, as well as small and medium-sized companies.

Another point of the European Commission’s plan, which does not cause controversy among representatives of different EU countries, is covering the liquidity shortage, in particular for energy utilities in the face of volatility in energy markets. This can be done, for example, by easing the rules for issuing state aid to companies that are suddenly faced with impossible conditions for obtaining cash.

Will Europe freeze this winter?

The energy ministers of the 27 EU countries also reported on their readiness for winter. In most states, gas storage facilities are already 80 percent full, while the EU average has exceeded 82 percent. According to the European Commission, the situation is stable, all governments continue to take urgent measures to diversify energy resources and search for alternatives to Russian gas. The general trend – expansion of LNG infrastructure at all levelsand an increase in the share of renewable energy sources. As early as 2022, the energy equivalent of 8 billion cubic meters of gas will be additionally obtained from them, the head of the European Commission promised, calling investments in “green” energy the EU’s energy insurance for the future.

“This summer has shown that we can react quickly when needed,” said Danish Energy Minister Dan Jorgensen. “It’s important that we have a European community that supports each other in dealing with real, complex problems.”

See also:

Putin wants to freeze Europe?

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