EU power ministers on Friday (9 September) known as on the European Fee to cap fuel costs amid rising urgency to sort out skyrocketing payments hitting customers and companies.
Fuel costs have hit historic highs in Europe, spilling over onto the electrical energy market and exacerbating the power disaster triggered by Russia’s struggle in Ukraine.
“Along with the Fee, we have to work swiftly and put together a coordinated answer on the EU degree with the intention to mitigate the excessive power costs as quickly as doable,” stated Czech trade and commerce minister Jozef Sikela, who was chairing the Brussels assembly.
EU power ministers invited the European Fee to suggest a value cap for fuel by mid-September however left the main points for Brussels to determine.
An additional ministerial assembly can be convened within the coming weeks to hammer out the ultimate particulars.
At this level, nevertheless, views nonetheless differ on whether or not the worth cap ought to apply to all fuel imports or to Russian fuel solely.
Final week, Fee President Ursula von der Leyen stated she was personally in favour of a value cap on imports of Russian pipeline fuel, though that is prone to escalate tensions with Moscow, which threatened to chop off provides to Europe fully in retaliation.
“I firmly imagine that it’s now time for a value cap on Russian pipeline fuel to Europe,” von der Leyen stated on Friday (2 September).
Germany, for its half, urged {that a} full stoppage in Russian fuel imports wouldn’t do extra hurt to its economic system since Moscow has already halted deliveries by the Nord Stream 1 pipeline final week.
“Germany not will get Russian fuel and we are able to nonetheless retailer it,” stated German economic system and local weather minister Robert Habeck. “Which means the market not expects us to break down if there isn’t a Russian fuel.”
There’s a “prevailing view” {that a} value cap is required, however the European Fee and EU nations want extra time to “effective tune” the way it needs to be carried out, Sikela instructed journalists after the assembly.
There’s a “division of opinion” and it’s as much as the Fee to work it out, stated Dutch minister Hans Vijlbrief.
Division over value cap
A Fee non-paper on methods to sort out the power disaster was constructive a few value cap on Russian fuel imports, saying the EU has already decreased its dependence on Russian provides, making it a “possible possibility”.
However whereas some nations are supportive, others like Austria and Hungary are involved in regards to the penalties of such a measure, which might see Russia reduce all fuel provides to the EU in retaliation.
As well as, the transfer may very well be assimilated to a sanction in opposition to Russia, which might require unanimity from EU nations to win approval.
“If value restrictions have been to be imposed completely on Russian fuel, that will evidently result in a right away cut-off in Russian fuel provides. It doesn’t take a Nobel Prize to recognise that,” stated Hungarian Overseas Minister Peter Szijjarto.
Talking forward of the assembly, an EU diplomat stated the Russia-only possibility didn’t have help from a majority of nations.
“Additional work” is required on doable choices for a value cap on fuel imported “from particular jurisdictions”, in response to a abstract of the assembly by the Czech authorities, which presently holds the rotating EU Council Presidency.
As a substitute, a number of nations together with Italy and Belgium requested the Fee to review a value cap on all EU fuel imports, together with liquified pure fuel (LNG) which is right now coming principally from the US and Qatar.
Nonetheless, EU power chief Kadri Simson stated a blanket value cap on all fuel imports “might current a safety of provide problem” for Europe, which is now more and more depending on LNG for which there’s sturdy competitors on world markets.
Different nations, in the meantime, are open to completely different choices.
For example, French power minister Agnès Pannier-Runacher stated Paris would “help a mechanism to cap Russian pipeline fuel deliveries” if the European Fee decides to place ahead such a proposal.
Concerning recommendations to cap all fuel imports, she stated France has “a fairly open place on this measure supplied that we take a look at exemptions” that enable EU power firms to purchase fuel above the market value with the intention to defend safety of provide.
Assist for emergency measures
In the meantime, Vijlbrief stated there was “broad help” for the EU govt’s suggestion to cap the revenues of so-called inframarginal energy producers – reminiscent of renewables, nuclear and lignite – which have low working prices and have benefitted essentially the most from excessive fuel costs.
The income would then be recycled to help households and customers combating excessive power payments.
Ministers invited the European Fee to desk a proposal by mid-September, alongside comparable measures to skim the unusually excessive revenues made by oil and fuel firms.
In accordance with the Czech abstract doc, ministers additionally need the EU govt to attract up “emergency liquidity devices that will be certain that market members have at their disposal a adequate collateral to satisfy margin calls and that will handle elevated volatility in futures markets.”
Alongside this, ministers invited the Fee to current a proposal to incentivise coordinated electrical energy demand discount throughout the EU.
On the press convention, Sikela stated he anticipated this to be much like the fuel demand discount goal agreed in July, with a voluntary goal at the start and the opportunity of a compulsory one if the state of affairs worsens.
Nonetheless, Simson urged the Fee was able to go additional. “Certainly, member states are normally very reluctant to help binding measures, however that is precisely what the Fee is contemplating, that we are going to suggest binding electrical energy discount targets at peak hours,” she stated.
Whereas the Dutch are in help of such a goal, “some individuals don’t just like the phrase necessary” Vijlbrief commented.
The European Fee is anticipated to suggest the measures on Tuesday (13 September) and Sikela indicated the Czech Republic desires to move them as shortly as doable.
Regardless of the EU does, although, it could not take away the complete blow of the power disaster, Irish power minister Eamon Ryan warned.
“We have now to be sincere with our customers, households and companies, that we are able to’t cushion the complete blow right here. What we have to do is cushion among the blow,” he stated.
“All choices stay on the desk,” stated Simone Tagliapietra from the Bruegel financial think-tank. “It is going to be now as much as the Fee to return with detailed proposals, which the block seeks to undertake by the top of September,” he instructed EURACTIV.
[Edited by Frédéric Simon and Nathalie Weatherald. Additional reporting from Nikolaus J. Kurmayer and Frédéric Simon.]
