In her annual condition of the union speech, European Fee president Ursula von der Leyen established out main vitality current market interventions to take care of high charges

The European Fee has stepped again from previously designs to cap the price tag of Russian gas, proposing in its place to established up a new task pressure with EU member condition reps that will try to negotiate offers with vital suppliers these as Norway.

In her once-a-year state of the union speech just before the European Parliament in Strasbourg on Wednesday (14 September), Commission president Ursula von der Leyen mentioned negotiation would be a additional efficient way to reduce gasoline charges, which are set on the international current market.

EU power ministers, assembly very last week in Brussels, expressed reservations about a gasoline rate cap, indicating it risked undermining the EU’s means to negotiate source deals with different suppliers.

A new job force will be set up to negotiate discounts with Norway and other fuel suppliers so that “we decrease in a acceptable way the price tag for gas,” stated von der Leyen, the previous German defence minister who took the helm of the EU govt in December 2019.

The move was welcomed by Simone Tagliapietra, a senior fellow at the Bruegel economic consider tank in Brussels.

“She is ideal: this is the way to go – possibly with by using EU joint motion to leverage the size of the European gasoline market,” he explained to Euractiv.

In parallel, von der Leyen declared the generation of a new gas market benchmark to replicate the EU’s speedy shift from imported pipeline gasoline to liquified organic gas (LNG), which is traded on the world market place and delivered from faraway sites this sort of as Qatar and the United States.

“We have to diversify away from Russia,” she insisted, noting that pipeline gasoline supplies from Moscow have now fallen to 9% of EU gas intake from all over 40% last calendar year.

In the deal with of soaring fuel charges, EU nations around the world have poured billions into social safety steps in get to shield the most susceptible households.

To support finance this, von der Leyen introduced the development of a windfall tax on the “revenues of organizations that produce energy at a low cost” – usually renewables and nuclear. A draft proposal, seen by Euractiv, puts the restrict at €180/MWh, the exact same stage that has been released in Spain.

A different “solidarity contribution” will be demanded of oil and fuel companies, which have reaped incredible earnings from soaring rates on world-wide vitality marketplaces.

“Our proposal will raise a lot more than €140 billion” for EU member states to cushion the blow of the electricity crisis on European buyers, von der Leyen announced.

European Hydrogen financial institution

At the similar time, the Commission president warned towards repeating the problems of the 1970s oil disaster by investing as well a lot in new fossil fuel infrastructure.

“Only a handful of visionaries realised the difficulty was the fossil fuels on their own – not their price”, she claimed. “We retained driving on the very same road” and “fossil fuels had been massively subsidised,” she warned. “That was improper and we are nevertheless paying the value for that.”

To be certain investments in long term cleanse electrical power infrastructure, von der Leyen introduced the creation of a “European hydrogen bank” that will “guarantee” the order of hydrogen thanks to cash drawn from the EU carbon market place, the Emissions Buying and selling Plan (ETS).

The new bank “will be ready to devote €3 billion to aid make the long run marketplace for hydrogen,” von der Leyen said.

It is envisioned to be modelled on the German H2-Global basis, financed with €900 million, which is envisioned to enter procedure before long. The financial institution delivers a assured selling price for hydrogen for up to 10 many years by covering the big difference between output charges and the product sales cost.

Energy sector reform

Turning to the electric power market, von der Leyen emphasised the have to have to “decouple the dominant influence of gas on the value of energy ” in order to assure customers “reap the benefits of lower-price renewables”.

Charges on the EU electricity sector have soared a lot more than tenfold because Russian fuel provides started lowering past yr.

“My analysis is that the current energy market place design based mostly on the principle of advantage get, is not in shape any more, it is not match for buyers any longer,” von der Leyen reported, confirming programs announced previously this 12 months to fundamentally redesign the EU’s electrical energy current market.

This write-up was produced by Euractiv and republished beneath a material sharing arrangement.

Megan Darby

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