Europe is determined to cap quickly and possibly as early as next month the high energy prices that are plunging millions of families into poverty and putting many companies at risk of bankruptcy. At the end of this month it will be clear how.
This is expected by the temporary EU president of the Czech Republic after an emergency meeting of the 27 EU member states in Brussels. There is already agreement on many points. “I am confident that we will bring prices down and that we will soon be able to supply our citizens and businesses with enough energy at an affordable price,” said Czech Deputy Prime Minister and Industry Minister Jozef Sikela.
A large majority among the Member States wants to skim off the sky-high accidental profits of electricity companies and impose a ‘solidarity tax’ on gas and oil companies that already make large surpluses. Member States can redistribute the proceeds to hard-hit households and businesses and finance their transition to green energy.
There is also agreement on the committee’s proposal to significantly reduce power consumption during expensive peak hours and on measures to combat speculation and arm energy companies against extreme market volatility. There is only great division about the imposition of a price ceiling for Russian gas, with Europe dictating the price to Moscow and Putin himself having to decide whether he wants to deliver for that much lower price or not.
Some Central European member states that are almost 100 percent dependent on Russian gas are afraid that Putin will turn off the gas tap completely. But according to committee chair Ursula von der Leyen, Europe can handle it. Gas imports from Russia, 40 percent just before the military invasion of Ukraine, have already fallen to 9 percent, and so far Europe has succeeded perfectly in buying all the gas that no longer comes from Russia elsewhere. Norway is already a bigger gas supplier than Russia.
Gas shortage
As opposed to the countries that are against a price cap for Russia, there are others that want an overall price cap. Belgium in particular has been working towards this for months, but the Netherlands, among others, are on its way. “There is a good chance that we will have a gas shortage,” said State Secretary for Mining Hans Vijlbrief, who replaced Climate and Energy Minister Rob Jetten in Brussels. “If you push the price down too far, suppliers will think: then we’ll go somewhere else with our gas.”
The problem is that some countries are now threatening to take a tough stance that they opt for an ‘all or nothing’ approach: if there is no overall price cap, they will not support a cap for just Russian gas. The Netherlands is already arming itself against pressure to pump up a little extra in Groningen. Vijlbrief: ,,If colleagues ask, I will make it clear to them that it is unsafe. That is our very, very last resort in an emergency.”
Price ceiling
Today’s meeting was not intended to take decisions, but to give the European Commission insight into the views of member states before it comes up with concrete legislative proposals next Tuesday. They must make clear how Brussels plans to pass its price cap for Russian gas and how it intends to shape the reduction in electricity consumption during peak hours.
Some countries want Brussels to take the same route as for limiting gas use earlier this summer: first on a voluntary basis, and only if that does not work through coercion. The committee and council chairman of the Czech Republic immediately want coercion ‘because there is no time to lose’.
The member states are unanimously convinced that Putin will continue to do everything in his power to harm European economies, cause social unrest and fuel political contradictions through the gas tap. Energy Commissioner Kadri Simson: ,,We will have a tough winter on that point too.”
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