EU with «Toolbox» against high energy prices

Brussels (dpa) – Lower taxes, pay poor households money, invest in renewable energies: According to the European Commission, EU countries can use these and other funds against the rapidly rising energy prices.

Energy Commissioner Kadri Simson presented a so-called “toolbox” on Wednesday with tools that states can use without violating European competition rules. These include emergency measures, but also proposals for medium-term reforms. Specifically, the following measures are at stake:

Targeted support for households and companies

EU countries can provide households that cannot cope with higher electricity and heating costs alone through direct Support payments. This could, for example, be financed by the money from emissions trading, the Commission wrote in its communication. Small businesses could get subsidies. The Institut der Deutschen Wirtschaft (IW) welcomed this proposal, as it would not distort market prices, but those affected would receive support. France has already taken such measures and wants to pay poorer households 100 euros each.

Tax breaks could also help consumers, according to the Commission. As a rule, electricity bills are made up not only of the wholesale price for electricity, but also of taxes, surcharges and network charges that could be waived. The IW calls this measure “probably the most effective arrow in the EU quiver”. In Italy, the state already pays certain network charges. Germany has decided to lower the EEG surcharge to promote green electricity. An additional reduction in the electricity tax to the European minimum would make electricity a third cheaper, according to the IW – this would save a family of four around 430 euros a year.

The Commission emphasized that the funds should only be used temporarily. The Brussels authority considers the current rise in energy prices to be temporary, as it is mainly driven by high demand during the recovery from the pandemic. The situation will stabilize in spring at the latest.

More cooperation on the gas market

As a medium-term relief, the EU Commission wants to examine joint storage of strategic gas reserves. “Today gas storage facilities are not available everywhere in the EU and a more integrated European approach could potentially optimize costs and protect against price fluctuations,” said Simson. The Commission is also considering organizing joint gas purchases in order to improve the negotiating position of states. Spain, France, Greece, the Czech Republic and Romania called for this in a paper last week. However, it is still unclear what exactly such a program might look like. Voluntary joint purchases could become part of a legislative proposal for a reform of the energy and gas market in December, said Simson.

The background is that the gas reserves of the EU countries are unusually low after the harsh winter of last year. In addition, the EU is heavily dependent on gas imports from abroad: According to the Commission, around 90 percent of natural gas in the EU is imported. In this context, according to Simson, the Commission is also investigating possible manipulation and speculation on the gas market, including allegations against the Russian supplier Gazprom.

Possible reform of the European electricity market

The The Commission wants to take a closer look at the structure of the European electricity market. Simson said she had commissioned a study from the EU energy agency ACER, which should deliver the first results in mid-November. The results could also feed into the legislative proposal in December.

France had asked for the system for determining the European electricity price for wholesalers to be changed. On the EU market, the most expensive energy source used always determines the uniform electricity price. First of all, the demand is covered by cheap, renewable energy. If demand increases, expensive gas-fired power plants, for example, are also switched on – then prices climb high for everyone. France finds the system unfair, as the country produces a lot of cheap nuclear power, but still has to orientate itself to the, if in doubt, more expensive European prices. Simson, however, said that the current structure of the market has proven itself and encourages new investments in renewable energies.

Faster implementation of the energy transition

The Commission urges Member States to implement the energy transition accelerate to reduce dependence on fossil fuels in the energy market. “Ultimately, the solution is the same, whether in terms of prices, securing energy supplies or the climate: promoting local, affordable, renewable energies,” said Simson. Some countries, such as Poland, blamed the EU’s environmental measures for the price increase, especially the rising price of carbon dioxide (CO2) in emissions trading. Spain had also warned against speculation on the emissions market. In the EU emissions trading system, for example, electricity providers have to purchase certificates for the emission of greenhouse gases such as CO2, which are traded on the market.

Simson emphasized that the CO2 price has only a small influence on the electricity price. The high gas price has a nine times higher effect on the price of electricity. The Commission will, however, investigate any anti-competitive behavior in the CO2 market, said Simson.

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