Photo: European Commission
On September 7, European Commission President Ursula von der Leyen presented a proposal with a set of five immediate measures in response to the emergency situation facing the European energy market.
"We are facing an extraordinary situation, not only because Russia is an unreliable supplier, as we have witnessed over the last days, weeks, months, but also because Russia is actively manipulating the gas market", she said. "We are now confronted with astronomic electricity prices for households and companies, and with an enormous market volatility. Therefore, we will put forward a set of five different immediate measures".
First of all, according to her, is smart savings of electricity. "If you look at the costs of electricity, there are peak demands. And this is what is expensive, because, in these peak demands, the expensive gas comes into the market. So what we have to do is to flatten the curve and avoid the peak demands. We will propose a mandatory target for reducing electricity use at peak hours".
Second, a cap on the revenues of companies that are producing electricity with low costs, will be proposed. "The low-carbon energy sources are making in these times – because they have low costs but they have high prices on the market – enormous revenues. Revenues they never calculated with; revenues they never dreamt of; and revenues they cannot reinvest to that extent. These revenues do not reflect their production costs. So, it is now time for the consumers to benefit from the low costs of low-carbon energy sources like, for example, the renewables. We will propose to re-channel these unexpected profits to the Member States so that the Member States can support the vulnerable households and vulnerable companies", said the President of the EC.
"The third measure is that the same goes, of course, for the unexpected profits of fossil fuel companies. Oil and gas companies have also made massive profits. Therefore, we will propose that there is a solidarity contribution for fossil fuel companies. Because all energy sources must help to overcome this crisis. Member States should invest these revenues to, as I said, support vulnerable households and vulnerable companies, but also to invest them in clean home-grown energy sources, as the renewables are, for example", von der Leyen said.
Fourthly, she pointed out that energy utility companies should be supported to be able to cope with the volatility of the markets. "These companies are currently being requested to provide unexpected large amounts of funds now, which threatens their capacity not only to trade, but also the stability of the futures markets. It is a liquidity problem. Therefore, we will help to facilitate the liquidity support by Member States for energy companies. We will update our temporary framework and enable thus state guarantees to be delivered rapidly", she said.
"And fifth, we will propose a price cap on Russian gas. So here, the objective is: We must cut the revenues of Russia, which Putin uses to finance his atrocious war in Ukraine. And now our work of the last months really pays off. Because, at the beginning of the war, if you looked at the imported gas, 40% of it was Russian gas, since a long time. Today, we are down to 9% only", von der Leyen added.
The energy ministers of the European Union countries will discuss the proposals at a meeting today, September 9.
Source: European Commission