Home Latest News European Union considers measures to control soaring energy prices

European Union considers measures to control soaring energy prices

0
4

BRUSSELS — Confronted with an “astronomic” rise in power costs, European Union ministers will meet on Friday to debate emergency measures to get their nations by the chilly months forward with out further social and financial upheavals.

The European Fee has requested international locations to think about 5 fast strikes together with a plan to redistribute some power producers’ windfall income to companies and households, a value cap on Russian pipeline gasoline and necessary targets for decreasing electrical energy use throughout peak hours, amongst different doable steps.

The potential plan underscores the widespread sense of alarm throughout Europe because the fallout from the battle continues to weigh on European economies. It comes simply days after power large Gazprom suspended the stream of gasoline by a key pipeline — a transfer initially blamed on technical points till the Kremlin stepped in to say it was in truth about Western sanctions.

Putin, in defiant speech, threatens Western gas and grain supplies

“We face a unprecedented state of affairs, as a result of Russia is an unreliable provider and is manipulating our power markets,” European Fee President Ursula von der Leyen stated Wednesday, outlining the fee’s plan. “Our unity and our solidarity will guarantee that we’ll prevail.”

However for all of the discuss of solidarity, the E.U. stays divided on the main points, with some international locations expressing skepticism about windfall taxes and others anxious concerning the concept of a gasoline value cap. Some want to tweak the bloc’s energy market, whereas others need an overhaul, together with the whole decoupling of gasoline and power costs. “The satan is within the particulars,” stated a senior E.U. diplomat, talking on the situation of anonymity to debate behind-the-scenes talks.

As Europe seeks widespread floor within the days and weeks forward, Russian President Vladimir Putin shall be trying to exploit the variations in place, enjoying international locations with totally different ranges of dependence on Russian power off in opposition to one another to weaken the West’s response, stated Simone Tagliapietra, an power skilled at Bruegel, a Brussels-based assume tank. “For Russia, that is about divide and rule,” he stated.

Within the greater than six months since Russia launched its full-scale invasion, the E.U. has been attempting to weaken Russia’s power leverage — with combined outcomes.

Russian pipeline gasoline now makes up 9 % of E.U. gasoline imports, von der Leyen stated Wednesday, not the 40 % it was at the start of the battle. The E.U. final week reached its goal to get gasoline shops to 80 % nicely earlier than the climate turns in November. As Europe’s reliance on Russian fossil fuels is waning, E.U. officers say, Putin is dropping his grip.

For now, power markets stay in disaster and E.U. international locations are spending billions to subsidize electrical energy payments. Germany on Sunday introduced plans for a virtually $65 billion aid package deal, with Chancellor Olaf Scholz vowing to clamp down on power suppliers who’re making “extreme income.” Revenue from windfall taxes on such producers shall be used to cut back client costs for gasoline, oil and coal.

Russia’s Gazprom says it won’t reopen Nord Stream gas pipeline to Europe as planned

The fee, the E.U.’s government physique, want to see related strikes on the E.U. stage, in line with a paper they unveiled forward of the summit. Von der Leyen on Wednesday outlined plans for what she known as a cap on income of corporations producing electrical energy at comparatively low prices however promoting it for top costs allowed underneath European market guidelines.

Wholesale electrical energy value have been hovering as a result of they’re at the moment tied to the price of pure gasoline, which has been pushed up exponentially by the Russian invasion of Ukraine. The present system inflates the price of a number of different varieties of power, corresponding to solar energy or electrical energy generated from waste-to-gas vegetation.

The fee goals to stage out the prices and convey some consistency to electrical energy costs all through Europe. It will create a de facto windfall tax on energy producers which were reaping document income due to the excessive value of pure gasoline, utilizing the income to decrease client power payments.

The plan is daring however it additionally carries important danger. The underlying downside in Europe is demand for power is way outstripping provide. Addressing that downside with out considerably decreasing demand or bringing extra power into Europe threatens to create market distortions that finally may exacerbate the shortages. The windfall tax, for instance, may discourage corporations from making new investments in desperately wanted power infrastructure. Worth caps that decrease the price of power might encourage customers to make use of extra of it, aggravating the availability downside.

The plan addresses these points by additionally together with a provision that units necessary discount targets for power use throughout peak instances. However implementing such reductions is a heavy carry, which might require international locations to pay subsidies to compensate for the losses incurred as corporations are pressured to chop again their manufacturing. The plan is obscure on precisely how these reductions could be enforced, leaving it to particular person international locations to “determine the most effective means to lower whole consumption.”

One other provision within the plan would try to cap the value of pure gasoline flowing to Europe from Russia. That will enable international locations to maintain shopping for Russian gasoline so long as the value doesn’t exceed a sure threshold. The thought could be to set the value ceiling above manufacturing prices however beneath present costs, encouraging Russia to maintain gasoline flowing, however limiting income.

“We should lower Russia’s income which Putin makes use of to finance this atrocious battle in Ukraine,” von der Leyen stated Wednesday.

However some international locations and analysts are skeptical about how efficient this could be, contemplating Russia already has the higher hand on gasoline provides and has been utilizing it as an financial weapon in opposition to Europe. Russia may use the measure to justify additional disruptions or to chop off the stream of gasoline to Europe.

Putin, for his half, has made it abundantly clear that any new measures is not going to go unanswered. In a speech Wednesday, he inveighed in opposition to the Group of Seven most industrialized nations’ value cap on Russian oil and warned of further cutoffs to come back.

“We is not going to provide gasoline, oil, coal, heating oil,” he stated, “We is not going to provide something.”

Halper reported from Washington. Kate Brady in Berlin contributed to this report.



Source link