European energy ministers reached a deal on Friday to return some of energy producers’ “superprofits” to homes and businesses amid exploding bills, but many believe it needs to go even further.
Officials validated the emergency and temporary measures presented in mid-September by the European Commission, also aimed at imposing a reduction in electricity consumption at peak times.
But they are still divided on how to lower wholesale gas prices, the idea of a ceiling against German reluctance in particular.
They instructed the Commission to come up with solutions for them as soon as possible, ahead of a 27 leaders summit on 7 October in Prague and a new meeting of energy ministers on 11 and 12 October.
“We have to continue the work. We are in an energy war with Russia, which also heavily affects our industry,” said Czech Energy Minister Jozef Sikela, whose country holds the presidency of the EU Council. He insisted on the “urgency” of the new measures, during a press conference after the ministers’ meeting in Brussels.
Recent leaks in the Nord Stream 1 and 2 pipelines in the Baltic Sea, denounced as acts of “sabotage”, have further heightened tensions in the European bloc, already shaken by soaring prices linked to Russia’s war in Ukraine.
The emergency measures endorsed on Friday, which will apply from December 1, set a mandatory target for states to reduce their electricity consumption “by 5%” during peak hours through March 31, 2023. at 10%, an indicative target.
Another measure: the ceiling on the income of electricity producers from nuclear and renewable sources (wind, solar, hydroelectric) who make exceptional profits by selling their production at a price much higher than their production costs.
This limit is set at 180 euros per megawatt hour and the difference between this level and the wholesale market price must be recovered by the States to be redistributed to families and companies, until June 30, 2023. applies to producers and distributors of gas, coal and oil.
Commission President Ursula von der Leyen had estimated at around €140 billion the revenue that could be donated in this way.
But most member states – fifteen including France, Belgium, Italy, Spain and Poland – believe the “most serious problem” still needs to be resolved: they are calling for a ceiling on wholesale gas prices in the European market. These countries want the measure to apply to all gas imports, not just those from Russia.
The community executive, like Germany, is reluctant to put such a measure into practice, fearing that a price limitation will threaten the supply of Europeans, by dissuading “trusted partners” from delivering gas to the EU, with profit from other destinations.
Estonian Minister Riina Sikkut also spoke out against this idea, saying that “gas availability and security of supply were more important than price”.
The Commission is in favor of a maximum price for Russian gas – transported by pipeline or liquefied natural gas (LNG), which currently accounts for 9% of European imports. Russia has historically been the EU’s biggest gas supplier, bringing more than 40% of gas to the bloc.
“But some member states see this as a sanction and we don’t have a consensus on that,” said EU Energy Commissioner Kadri Simson.
To lower prices, Brussels is betting on negotiations with other suppliers of gas transported by pipelines, but believes that for LNG, the negotiating capacity is restricted by international competition.
“We all agree that the market is not functioning normally and that intervention is necessary”, acknowledged the commissioner, also mentioning the option of limiting the price of gas used in the production of electricity.
French Energy Minister Agnès Pannier-Runacher stressed that the extension to the EU of the derogation regime granted to Spain and Portugal that allows them to temporarily decouple the price of gas from that of electricity could be “a lever that can be quickly activated”.
Many EU countries have already put in place support schemes at national level to alleviate households and businesses strangled by bills.