Sánchez will press for Spain and Portugal to apply urgent measures, even if there is no consensus among the member states
The European Commission will take several proposals to curb the price of energy to the European summit that is being held this Thursday and Friday in Brussels. On the table is the possibility of establishing a maximum price for electricity, the reduction of taxes on energy and the joint purchase of the states, but not the Spanish proposal to decouple the price of gas from the electricity rate, a measure which also defends Portugal.
The Community Executive pointed out, in a communication published yesterday, that Europe must take “urgent decisions” to alleviate the effects that the Russian invasion is having on the electricity bill. Several states, including France, have already announced measures to mitigate the effect of gas on the costs of companies and homes and Spain has called for “European solutions” to this problem.
Brussels will present various options to community leaders. The proposal contains regulatory measures such as the possibility of setting a maximum price for the sale of energy in Europe, so that it is higher than the production costs, but lower than the market price.
The EU is also considering fiscal measures such as economic aid to electricity generators. The idea is to assign these companies compensatory measures for the high prices of fossil fuels, so that they can cover the difference between the generation costs and the reference prices.
Joint purchases
The same document also proposes the creation of an entity for joint energy purchases at European level, the reduction of energy taxes and the deployment of temporary state aid. Any intervention in the electricity market has, however, negative consequences. The EU anticipates that its actions to alleviate the price escalation will cause a distortion of the market and competition and will entail a large fiscal cost.
To finance part of these measures, the European Commission proposes that the national authorities establish a tax on the extraordinary profits of electricity companies and use this income to grant aid to the most vulnerable consumers.
The energy debate will be one of the most important of the European meeting, with the countries very divided on what measures to take. Spain and Portugal will once again put on the table the idea of decoupling the price of gas – skyrocketing since the Russian invasion – from that of energy. This possibility, however, is far from reaching a consensus and collides with the resounding ‘no’ of states such as Germany and the Netherlands which, due to their great dependence on Russian gas, refuse to take any measure of this type.
The summit comes after an intense continental tour by Spanish President Pedro Sánchez, in which he met with six heads of government to add support to the Spanish proposal. Faced with the possibility that no measures will be adopted after the European meeting, official sources from the Spanish delegation point out that Sánchez will claim that Spain and Portugal can act to curb the price of energy without the need for all partners to do so.
What is clear to all member states is that Europe must reduce its energy dependency on Moscow. Already in Versailles, European leaders agreed to search for different oil and gas suppliers and to increase strategic reserves. Now, Brussels advises that these reserves reach 80% of their capacity by October and that they increase to 90% in the coming years.
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