As gas prices spike, countries across Europe are frantically trying to mitigate the effects. On Wednesday, European Commissioner Kadri Simson (Energy, Estonia) presented a ‘toolbox’ with potential measures that EU countries can take. Five questions about the European ‘gas crisis’.
1Is Brussels helping the Member States of the European Union with this?
Not really: the message is correct that in the short term the ball is only in the Member States of the European Union. For example, Brussels mainly advises compensating the most vulnerable citizens through direct financial support. Governments can tinker with energy tax and VAT, as long as they inform Brussels about this and do not fall below a certain minimum. Finally, it is possible to provide targeted state aid to companies in distress, provided they remain within European rules.
2 Are the countries not doing that yet?
Certainly: the menu presented by the European Commission mainly contains options that are already being put into practice. Twenty EU Member States have already taken measures or have far-reaching plans to do so. For example, Spain decided to significantly reduce the VAT on energy from 5.1 percent to the minimum allowed 0.5 percent and to tax energy companies extra to redistribute money. France has already announced that it will transfer 58 million households 100 euros each. Gas and electricity prices for consumers there have also been frozen since 1 October.
3Can the Commission not do something more?
Can, probably won’t. Under pressure from panicked member states, Brussels announced on Wednesday that it would conduct research into solutions that may have an effect in the longer term. For example, she is looking at whether a joint purchase can reduce the gas price and whether a shared storage can be constructed. With great reluctance she will also investigate whether adjustments are necessary in the design of the energy market. France and Spain in particular insist on reforming it, but there is little enthusiasm for this in Brussels and countries such as Germany and the Netherlands.
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4 How does the European energy market work then?
For several years now, Europe has had an integrated, liberalized energy market, where the law of supply and demand must ensure high security of supply and low prices. It should also give smaller, often green, energy providers easier access. The principle of electricity generated within the EU is that the energy source that is used as the last ‘backstop’ determines the price. The Commission emphasizes that this system is the most efficient way, because it prevents speculation and manipulation and allows renewable energy providers to benefit from high prices. It means that now that the price of gas, which is the backstop par excellence, is high, all electricity is expensive.
5Has the European discussion on gas prices come to an end?
Certainly not. The subject will feature prominently on the agenda next week at a summit of European heads of government and disaffected countries are expected to increase pressure in the run-up to this. The discussion will almost inevitably also concern the emissions trading system (ETS), which sets a market price for CO2 emissions, and its role in European climate plans.
Brussels lays the ball for support in the gas crisis with EU member states
Source link Brussels lays the ball for support in the gas crisis with EU member states