Europe’s vitality disaster: Ursula von der Leyen unveils 5 proposals to curb hovering costs

Ursula von der Leyen has unveiled a sequence of long-awaited proposals to sort out the EU’s worsening vitality disaster and curb the hovering payments which might be placing European households and firms beneath monetary stress.

The European Fee president proposed an EU-wide plan to scale back electrical energy consumption, a worth cap on the surplus revenues made by renewables and nuclear vitality, a solidarity mechanism to seize the “huge” and “sudden” income reaped by fossil gasoline corporations, and a state help programme to inject additional liquidity into struggling utility companies.

“The manipulation of the fuel markets has a spill-over impact on the electrical energy market,” von der Leyen mentioned on Wednesday afternoon.

“We’re confronted with astronomic electrical energy costs for households and firms and with huge market volatility.”

Von der Leyen additionally put ahead a worth cap on imports of Russian pipeline fuel, which, if launched, might push the Kremlin to retaliate and completely droop fuel flows.

“We should minimize Russia’s revenues which Putin makes use of to finance this atrocious struggle in opposition to Ukraine,” she mentioned.

Over the previous few months, Gazprom has decreased the fuel stream by its pipelines, shutting down Nord Stream 1 for an indefinite period of time.

Consequently, von der Leyen defined, the share of Russian pipeline fuel within the EU’s complete imports has plunged from 40% earlier than the struggle to 9% right now. 

Norway, she mentioned, has changed Russia because the bloc’s main fuel provider.

The president added her providers have been additionally analyzing the opportunity of a worth cap on all imported fuel, which would come with liquefied pure fuel (LNG), a commodity that has turn into key to diversifying away from Russia.

Nonetheless, this far-reaching cap wouldn’t be tabled in the meanwhile.

“LNG is scarce and may be rerouted to totally different areas,” von der Leyen mentioned. “We [want to] keep aggressive for LNG suppliers however be sure that the costs we pay will not be terribly excessive however in a good vary.”

‘We have to flatten the peaks’

The measures introduced by the Fee chief are all of remarkable nature and mirror the balancing act between intervening within the free market and guaranteeing the safety of vitality provides.

The primary proposal, electrical energy financial savings, would set up a “necessary goal” for limiting energy use throughout peak hours when the function of fuel turns into outsized and the payments swell.

“This requires good discount in demand. We want a technique to flatten the peaks which drives the worth of electrical energy,” von der Leyen mentioned.

The EU has already put in place a voluntary plan to chop fuel consumption by 15% earlier than subsequent spring.

The second proposal is supposed to restrict the surplus revenues made by so-called inframarginal mills, that’s, those that do not use fuel to provide electrical energy, equivalent to renewables, nuclear and coal, and have considerably decrease manufacturing prices.

For the reason that ultimate worth of electrical energy is at all times set by the costliest gasoline to satisfy calls for – on this case, fuel – these inframarginal mills are seeing “revenues they by no means dreamt and that they can’t reinvest as quick,” von der Leyen mentioned.

The distinction between the ultimate electrical energy worth and the yet-undefined EU cap would create additional funds for governments, which might then be used to assist shoppers in want.

“It’s now time for shoppers to profit from the low prices of low-carbon vitality sources,” von der Leyen mentioned.

An identical mechanism may very well be utilized to fossil gasoline corporations that commerce oil and fuel, however this could goal their declared income, slightly than the market dynamics.

All of the concepts can be additional mentioned by EU vitality ministers on Friday throughout an emergency assembly, the place politicians are anticipated to present the Fee a clearer political mandate to maneuver forward.

As soon as agreed, the measures may very well be quickly launched beneath an emergency process.

Fee officers had beforehand rejected different drastic proposals, equivalent to subsidies for carbon emissions permits or an outright suspension of the wholesale market.

The chief additionally dismissed the opportunity of making use of the Iberian mannequin – a subsidised cap on fuel costs – to all the EU market, fearing it could encourage greater consumption of fuel and make nations extra weak to Russia’s provide manipulation.

Von der Leyen’s govt has been the goal of criticism in current days, with each European Council President Charles Michel and Belgian Prime Minister Alexander De Croo decrying the late collective response to the vitality disaster.

Market intervention “ought to have been completed earlier, and it is a disgrace that it took so lengthy,” De Croo mentioned.

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