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    EU governments wary of capping Russian gas but support limiting electricity profits


    September 9, 2022 - CE Noticias Financieras

     

      With the outlook even more complicated than was foreseen before the summer, with Russian gas supplies to Europe completely cut off, electricity bills rising unstoppably across the continent and the risk of recession looming ever closer to the EU economy, the energy ministers of the EU-27 will meet today at 10 a.m. in Brussels for an extraordinary conclave from which a political agreement should emerge on various emergency measures designed to contain the price spiral.

      According to sources in the Czech presidency of the Council, which is hosting the meeting, previous discussions at ambassadorial level suggest agreement on the need to adopt a coordinated electricity-saving plan (whether through voluntary or binding measures remains to be seen) and one of the initiatives proposed by the European Commission to decouple the price of electricity from the price paid for gas, the capping of energy company windfall profits, which will allow part of the revenue to be diverted to help consumers and businesses without sweetening or doping prices, thus maintaining the pressure to save energy.

      Germany refuses to lower the ambition of the European green pact, Poland wants to stop penalizing CO2 emissions.

      On the other hand, the other major initiative put forward this week by President Ursula von der Leyen, the cap on the price the EU is willing to pay for gas from Russia, seems to be shelved for the time being. Germany, Austria and other Central European countries with a high energy dependence on Russia see more risks than benefits in it, given the possibility that the Kremlin, as it has already warned it will do, will decide not to sell fuel to Europe if it caps its price in advance. The positions on possible changes in the ETS market vary: while Germany demands that the ambition of the European green pact should not be lowered, Poland advocates suspending the penalty on CO2 emissions.

      Spain, which will be represented in this council by the Vice President for Ecological Transition and Democratic Challenge, comes to the meeting in a relatively more comfortable position than other countries since the so-called 'Iberian derogation' that came into force before the summer has allowed consumers to currently pay prices well below the European average and also below the ceiling that the draft regulation prepared by the European Commission, 200 euros per megawatt/hour.

      The Spanish government is inclined to make the goal of reducing electricity consumption voluntary; Brussels proposes that the savings be mandatory and 5% at peak times, but in the draft regulation that could be approved next week already provides that countries where electricity is paid below 200 euros per megawatt hour would not be required to adopt it.

      "We must show unity to the world", diplomatic sources claim.

      The ministers are not expected to go into technical details or figures today, this is an indicative discussion and only to give a signal of what urgent measures they want to adopt now. The EU executive will adopt the legislative proposals next Tuesday. Due to the different regulatory realities and energy mix of each country, ad hoc solutions by region are not ruled out, as has been done with the Iberian Peninsula, an island in energy terms. Negotiations between capitals will then begin, a process which, according to the Czech presidency of the Council, should not take too long.

      "It is extremely important that we show unity among countries and institutions to send a signal to the outside world and the markets that we are ready, that we have a plan and clear ideas on what to do," diplomatic sources claimed yesterday. Prague plans to convene another extraordinary council of European energy ministers at the end of the month to formally adopt the measures.

      Time is pressing. Every day, one more red light is lit, raising fears of a recession in Europe, as the Commissioner for Economic Affairs, Paolo Gentiloni, pointed out this week. In the space of twelve months, the price of gas has risen almost tenfold, leading to an average increase in the price of electricity of 300% so far this year, a trend aggravated by the collapse of hydroelectric generation, shutdowns at nuclear power plants and, in general, energy shortages.

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