Ministers to discuss 5 measures in the face of soaring prices
- The European Commission listed five measures on Wednesday that will be discussed at a meeting of energy ministers.
- A cap on Russian gas prices and an obligation to reduce electricity consumption during peak hours are on the list of measures.
- Energy costs are skyrocketing for households and businesses following Russia’s war on Ukraine.
Capping Russian natural gas prices and finding ways to ease liquidity problems for energy companies are among five measures EU energy ministers will discuss on Friday as they seek to ease the region’s energy crisis. .
The Czech Republic, which currently holds the EU presidency, last month called for the emergency meeting. Russia has squeezed gas flows to Europe in response to Western sanctions imposed on it for its invasion of Ukraine.
“We are facing an extraordinary situation, not only because Russia is an unreliable supplier, as we have seen in recent days, weeks, months, but also because Russia is actively manipulating the gas market,” he said. said European Commission President Ursula von der Leyen. at a press conference ahead of Friday’s meeting in Brussels.
Gas price cap
Proposing a cap on Russian gas prices to drive down costs is on the list of measures to be discussed. The European Commission’s energy agency has already urged EU members to put in place emergency wholesale price caps to help households and businesses pay rising energy bills.
A cap would limit what local buyers can wholesale pay for Russian gas imports. With Russia cutting energy supplies to the region, benchmark Dutch TTF futures during the year jumped around 1,000% from a year ago.
“We need to cut Russia’s revenue, which Putin is using to fund his atrocious war in Ukraine,” von der Leyden said as part of a prepared speech she gave on Wednesday, referring to Russian President Vladimir Putin. He said on Wednesday that Europe’s aim to impose caps on gas prices is “stupid” and that such a move would drive up prices.
Energy ministers will also discuss liquidity issues facing energy service companies navigating volatile markets. “These companies are currently being asked to provide large and unexpected funds, which not only threatens their ability to trade, but also the stability of the futures markets,” von der Leyden said. She said officials will update her temporary framework for state guarantees to be provided “expeditiously.”
An executive at Norwegian energy company Equinor ASA told Bloomberg that Europe’s energy crisis could worsen unless governments provide liquidity to cover margin calls of at least $1.5 trillion.
Ceiling on electricity revenues, “contribution” to windfall profits
Proposing a revenue cap for companies producing low-cost electricity and a “solidarity contribution” for fossil fuel companies because they have made “massive” profits are also on the committee’s list.
Electricity “smart savings” was the first measure on the commission’s list. With natural gas being a key source of electricity generation, electricity prices have skyrocketed. Peaks in electricity demand bring expensive gas to market, von der Leyden said.
“So what we need to do is flatten the curve and avoid peaks in demand. We will come up with a mandatory target for reducing electricity consumption at peak times,” she said.