Gathered in Brussels for an extraordinary meeting on Friday 9 September, the energy ministers of the European Union Member States agreed on guidelines to frame the European Commission’s future proposals to mitigate the impact of soaring energy prices on households and businesses without ruling out any of the options presented by the Commission.
“Today we managed to agree on a common direction for temporary emergency measures and give a clear task to the Commission to come forward with a robust and tangible proposal in a matter of days (editor's note: probably Tuesday, 13 September)”, said Jozef Síkela, the Czech Minister of Industry and Trade, whose country currently holds the rotating Presidency of the EU Council.
Using a famous phrase from the former president of the European Central Bank, Mario Draghi, he went on to say: “We will do whatever it takes to help our citizens and companies who are facing high energy prices”.
However, the summary adopted at the end of the meeting provides little additional detail to the Commission’s non-paper that it had submitted to Member States (see EUROPE 13016/1).
The EU Council thus leaves the door open to the five emergency measures envisaged by the institution.
It invites the Commission, by mid-September, to: (1) propose measures to cap the revenues of infra-marginal electricity producers with low production costs; (2) propose emergency and temporary interventions, including gas price caps; (3) present a proposal to encourage a coordinated reduction in electricity demand across the EU; (4) introduce a solidarity contribution from fossil fuel companies; (5) develop emergency liquidity instruments.
The idea of a gas price limit is gaining ground
On the second point, the Czech Presidency summary mentions the possibility of “a price cap on imported gas from specific jurisdictions”, whereas the Commission was more in favour of an instrument limited to Russian gas imported by pipeline.
Supporting the idea of a general cap, Belgian Energy Minister Tinne Van der Straeten expressed her satisfaction: “The EU Council gave a clear signal to the European Commission (for) a price cap on all EU gas imports, not only on Russian gas”.
However, the Czech summary stresses that “further work is needed on the possible introduction of such a measure”.
And Mr Síkela insisted that: “The gas price cap is the most difficult case from a market perspective”.
He then asked for more time to “fine-tune” the modalities of this instrument while acknowledging that there is a “prevailing view” among Member States in favour of a cap as an emergency measure.
According to the Italian minister, Roberto Cingolani, 15 Member States are calling for a general cap, three defend a cap limited to Russia, five oppose the idea and are neutral and three others are asking for guarantees.
According to our information and the interventions of the different ministers, Belgium, Italy, Poland, Croatia, Luxembourg, Romania, Slovenia, Malta and Lithuania are said to be in the first group. France, Ireland and Estonia are reportedly also open to the idea of a generalised cap.
This requires “looking at how we can create derogations or purchase possibilities above the market price so as not to find ourselves in a situation where we would not be able to purchase a block of liquefied natural gas (LNG) because the price on the Asian market would be unbalanced”, warned Agnès Pannier-Runacher, the French Minister for Energy Transition.
Hungary, on the other hand, which recently concluded an agreement with Russia for new gas deliveries, is strongly opposed to this.
Germany and the Netherlands are said to have some reservations, as does the Commissioner for Energy, Kadri Simson.
“The general price cap, including LNG imports, could present a security of supply challenge because the energy market is a global market”, Ms Simson said, adding that “nothing is off the table at this stage”.
The Commission is concerned that the introduction of a general cap would divert LNG supplies to other regions, jeopardising the EU’s supply security.
Belgium, Italy and Poland, for their part, consider that a cap limited to Russian gas would not allow gas prices to be lowered and would consist ‘only’ of an instrument of sanction against Moscow, as the Commission has acknowledged.
Support for an indicative electricity demand reduction target
Regarding the possibility of legislation on electricity demand reduction, Member States reportedly support the idea of an indicative rather than a binding target.
“I think there was a general consensus that voluntary reduction should be encouraged”, said the Estonian Minister, Riina Sikkut.
Mr Síkela, for his part, expects to adopt a similar approach to the gas demand reduction regulation, namely an indicative target with the possibility of making it binding (see EUROPE 13000/1).
Strengthening market liquidity
There is said to be broad agreement on the idea of designing emergency liquidity instruments to deal with the increased volatility of futures markets.
Ministers invited the Commission to present an extended and enlarged scope of the Temporary Framework for State Aid, at least until 31 December 2023, for “liquidity support measures, measures covering increased energy costs and for aid supporting the accelerated deployment of renewables and the decarbonisation of the industry”.
Another measure on which there is consensus is the immediate suspension of the automatic increase in the maximum equilibrium price threshold on the electricity market. This is a measure that the European Agency for the Cooperation of Energy Regulators (ACER - see EUROPE 13015/16) is already working on.
Member States also call for further work on the common gas purchasing platform to “secure the EU’s energy supply at affordable prices”.
ETS enters the debate
As expected, several countries pointed to the volatility of the EU Emissions Trading System (ETS) and its responsibility for the rise in electricity prices.
After the meeting, Mr Síkela said that auctioning additional allowances from the Market Stability Reserve (MSR) is one of the possible solutions.
While the Commissioner said that the discussion on the ETS was a matter for the ministers of the environment, Poland reiterated its call for the suspension of the system. (Original version in French by Damien Genicot with Camille-Cerise Gessant)