Meeting in Brussels for an Extraordinary European Council, the 27 Heads of State or Government of the European Union countries agreed to invite the European Commission to explore, with the EU’s international partners, ways to curb rising energy prices, including the possibility of introducing temporary import price ceilings.
While this was the fourth meeting of the EU27 to address soaring energy prices and the functioning of the EU electricity market (see EUROPE 12817/1, 12909/1, 12919/1), the text agreed remains cautious.
“We would like things to happen more quickly, but we are making our way and we hope that little by little we will be able to move forward with the solutions we need at European level”, said Spanish Prime Minister Pedro Sánchez at the end of the summit, mentioning “the need to reform the electricity market”.
On this point, the European Council invites the European Commission “to swiftly pursue work on the optimisation of the functioning of the European electricity market - including the effect of gas prices on it - so that it is better prepared to withstand future excessive price volatility, delivers affordable electricity, and fully fits a decarbonised energy system”.
Compared to the draft conclusions obtained by EUROPE after the summit (see EUROPE 12960/4), the final text adds that this should be done while “preserving the integrity of the Single Market, maintaining incentives for the green transition, preserving the security of supply and avoiding disproportionate budgetary costs”.
On 29 April, at the request of the European Commission, the European Agency for the Cooperation of Energy Regulators (ACER) published an assessment of the functioning of the EU electricity market. The regulators concluded that, while there is room for improvement, the current market design is worth keeping and is not to blame for the energy crisis in Europe (see EUROPE 12942/8).
In order to take into account the low level of interconnectivity of the Iberian Peninsula with the single market for electricity, the European Commission had nevertheless reached an agreement with Madrid and Lisbon on the setting of a ceiling for gas prices (see EUROPE 12939/12).
The objective is to establish a temporary emergency mechanism to mitigate the impact of fossil fuel prices on the wholesale price of electricity in the Iberian market, while preserving the integrity and benefits of the single market, without any restrictions on cross-border flows.
Ahead of the summit, both Pedro Sánchez and his Portuguese counterpart, António Costa, expressed their wish that the European Commission approve this mechanism soon.
The European Commission has informed us that it has recently been formally notified by both countries of the mechanism and that it is committed to finalising its assessment rapidly.
“The Commission’s main objective is to come to legally solid decisions, urgently assessing the compatibility of emergency temporary measures in the electricity market through an accelerated procedure, while also ensuring, as requested by the European Council, that the measures reduce spot electricity market prices for companies and consumers, and do not affect trading conditions to an extent contrary to the common interest”, the institution also said.
REPowerEU
Taking note of the REPowerEU plan to move the Union away from dependence on Russian fossil fuels by 2027 (see EUROPE 12955/4), the EU27 invite the EU Council to quickly examine the European Commission’s proposals included in this plan, “including their financing”.
The conclusions call for: - further diversification of sources and routes of energy supply at affordable prices; - acceleration of the deployment of renewable energy; - improvement in energy efficiency and the promotion of energy saving.
The leaders also call for the completion and improvement of the interconnection of the European gas and electricity networks by investing in “LNG (liquefied natural gas) and future proof electricity and hydrogen-ready gas interconnections”, “by taking advantage of the Iberian Peninsula’s potential to contribute to the security of supply of the European Union”.
Turning to the financing aspect of REPowerEU, Italian Prime Minister Mario Draghi said that the next European Council (23 and 24 June) should consider how to use the funds dedicated to the plan’s objectives.
See the European Council’s conclusions: https://aeur.eu/f/1vu (Original version in French by Damien Genicot with the editorial staff)