Energy prices: Commission presents a toolbox of measures to tackle exceptional situation and its impacts*

(Credit: Unsplash)

This article is brought to you in association with the European Commission.


The Commission adopted today a Communication on Energy Prices, to tackle the exceptional rise in global energy prices, which is projected to last through the winter, and help Europe’s people and businesses. The Communication includes a “toolbox” that the EU and its Member States can use to address the immediate impact of current prices increases, and further strengthen resilience against future shocks. Short-term national measures include emergency income support to households, state aid for companies, and targeted tax reductions. The Commission will also support investments in renewable energy and energy efficiency; examine possible measures on energy storage and purchasing of gas reserves; and assess the current electricity market design.

Presenting the toolbox, Energy Commissioner Kadri Simson said: “Rising global energy prices are a serious concern for the EU. As we emerge from the pandemic and begin our economic recovery, it is important to protect vulnerable consumers and support European companies. The Commission is helping Member States to take immediate measures to reduce the impact on households and businesses this winter. At the same time, we identify other medium-term measures to ensure that our energy system is more resilient and more flexible to withstand any future volatility throughout the transition. The current situation is exceptional, and the internal energy market has served us well for the past 20 years. But we need to be sure that it continues to do so in the future, delivering on the European Green Deal, boosting our energy independence and meeting our climate goals.

A toolbox of short- and medium-term measures

The current price spike requires a rapid and coordinated response. The existing legal framework enables the EU and its Member States to take action to address the immediate impacts on consumers and businesses.

Priority should be given to targeted measures that can rapidly mitigate the impact of price rises for vulnerable consumers and small businesses. These measures should be easily adjustable in the Spring, when the situation is expected to stabilise. Our long-term transition and investments in cleaner energy sources should not be disrupted.

Immediate measures to protect consumers and businesses:

  • Provide emergency income support for energy-poor consumers, for example through vouchers or partial bill payments, which can be supported with EU ETS revenues;
  • Authorise temporary deferrals of bill payments;
  • Put in place safeguards to avoid disconnections from the grid;
  • Provide temporary, targeted reductions in taxation rates for vulnerable households;
  • Provide aid to companies or industries, in line with EU state aid rules;
  • Enhance international energy outreach to ensure the transparency, liquidity and flexibility of international markets;
  • Investigate possible anti-competitive behaviour in the energy market and ask the European Securities and Markets Authority (ESMA) to further enhance monitoring of developments in the carbon market;
  • Facilitate a wider access to renewable power purchase agreements and support them via flanking measures.

The clean energy transition is the best insurance against price shocks in the future, and needs to be accelerated. The EU will continue to develop an efficient energy system with high share of renewable energy. While cheaper renewables play an increasing role in supplying the electricity grid and setting the price, other energy sources, including gas, are still required in times of higher demand. Under the current market design gas still sets the overall electricity price when it is deployed as all producers receive the same price for the same product when it enters the grid – electricity. There is general consensus that the current marginal pricing model is the most efficient one, but further analysis is warranted. The crisis has also drawn attention to the importance of storage for the functioning of the EU gas market. The EU currently has storage capacity for more than 20% of its annual gas use, but not all Member States have storage facilities and their use and obligations to maintain them vary.

Medium-term measures for a decarbonised and resilient energy system:

  • Step up investments in renewables, renovations and energy efficiency and speed up renewables auctions and permitting processes;
  • Develop energy storage capacity, to support the evolving renewables share, including batteries and hydrogen;
  • Ask European energy regulators (ACER) to study the benefits and drawbacks of the existing electricity market design and propose recommendations to the Commission where relevant;
  • Consider revising the security of supply regulation to ensure a better use and functioning of gas storage in Europe;
  • Explore the potential benefits of voluntary joint procurement by Member States of gas stocks;
  • Set up new cross-border regional gas risk groups to analyse risks and advise Member States on the design of their national preventive and emergency action plans;
  • Boost the role of consumers in the energy market, by empowering them to choose and change suppliers, generate their own electricity, and join energy communities.

The measures set out in the toolbox will help to provide a timely response to the current energy price spikes, which are the consequence of an exceptional global situation. They will also contribute to an affordable, just and sustainable energy transition for Europe, and greater energy independence. Investments in renewable energy and energy efficiency will not only reduce dependence on imported fossil fuels, but also provide more affordable wholesale energy prices that are more resilient to global supply constraints. The clean energy transition is the best insurance against price shocks like this in the in the future, and needs to be accelerated, also for the sake of the climate.

Background

The EU, like many other regions in the world, is currently experiencing a sharp spike in energy prices. This is principally driven by increased global demand for energy, and in particular gas, as the economic recovery after the height of the COVID-19 pandemic gathers speed. The European carbon price has also risen sharply in 2021, but at a lesser rate than gas prices. The effect of the gas price increase on the electricity price is nine times larger than the impact of the carbon price increase.

The Commission has been consulting widely on the appropriate response to the current situation, and has participated in debates on this issue with Members of the European Parliament and Ministers in the Council of the European Union, while also reaching out to industry and to international energy suppliers. Several Member States have already announced national measures to mitigate price rises, but others are looking to the Commission for guidance on what steps they can take. Some international partners have already indicated plans to increase their energy deliveries to Europe.

The toolbox presented today allows for a coordinated response to protect those most at risk. It is carefully designed to tackle the short-term needs of bringing down energy costs for households and businesses, without harming the EU internal energy market or the green transition in the medium-term.

Next Steps

Commissioner Simson will present the Communication and toolbox to Members of the European Parliament on Thursday 14 October and to Energy Ministers on 26 October. European Leaders are then due to discuss energy prices at the upcoming European Council on 21-22 October. This Communication is the Commission’s contribution to the continued debate among EU policy makers. The Commission will continue its exchanges with national administrations, industry, consumer groups and international partners on this important topic, and stands ready to respond to any additional requests from Member States.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Constitution of the 9th legislature of the European Parliament

To solve big issues like climate change, we need to reframe our problems

Any doubt?

GSMA announces first speakers for Mobile 360 Series-Middle East and North Africa

A Sting Exclusive: “Accelerating Trade Digitalization in Times of the Pandemic”, written by the UN Under-Secretary-General and Head of ESCAP

NATO summit, Brussels, 11-12/07/2018

The United Kingdom’s decision to leave the European Union will impact young people’s future the most

Guterres welcomes conduct of Afghan elections, commends ‘all who braved security concerns to uphold their right to vote’

Can I still send mail in the time of coronavirus?

Stable growth momentum in the OECD area

A brief history of vaccines and how they changed the world

Quality Internships: Towards a Toolkit for Employers

This company is breeding millions of insects in the heart of London

7 surprising and outrageous stats about gender inequality

Welfare of transported animals: MEPs urge EU states to do a better job

Financial support for workers affected by no-deal Brexit

EP leaders call for negotiations on upgraded Transparency Register to continue

Eight years after Fukushima, nuclear power is making a comeback

Black historical figures who shook the world, from a warrior queen to a Mexican president

Parliament approves key directive regulating professional qualifications

Russia won’t let Ukraine drift westwards in one piece

Elections in Europe: No risks for the EU, leaders readying to face Trump-Brexit

More needs to be done to bridge the digital gender divide

Technology and public healthcare: the basis to fight COVID-19

Forest fires: EU continues to mobilise assistance for Greece and other countries in region

Data Protection Regulation one year on: 73% of Europeans have heard of at least one of their rights

Too Young to Feel Hopeless – Mental Health of the Youth and the Effects of COVID-19

EU will have stronger powers in trade disputes

UNICEF calls on supply chain and transport industry to take COVID-19 vaccines to the world

Nairobi summit: Women’s empowerment a ‘game changer’ for sustainable development

Syria: At least seven children killed in yet another airstrike

Budget MEPs approve €104.2 m in EU aid to Greece, Spain, France and Portugal

This woman solved one of the biggest problems facing green energy

Withdrawal Agreement: Commission sends letter of formal notice to the United Kingdom for breach of its obligations under the Protocol on Ireland and Northern Ireland

‘You can and should do more’ to include people with disabilities, wheelchair-bound Syrian advocate tells Security Council in searing speech

3 dynamics shaping the future of security on the Korean peninsula

Wednesday’s Daily Brief: Women boost work profits, saving biodiversity, UK loses Chagos Islands vote, Gaza funding, malaria-free in Argentina, Algeria

Madagascar: UN Secretary-General reaffirms support for electoral process

Chart of the day: This is how many animals we eat each year

New Zealand Prime Minister opens door to 4-day working week

Digital democracy: a Swiss view on digital trust

Libya: Heavy shelling and civilian deaths ‘blatant violation’ of international law – UN envoy

Coronavirus: Commission presents practical guidance to ensure continuous flow of goods across EU via green lanes

Further reforms in Sweden can drive growth, competitiveness and social cohesion

Plastic is a global problem. It’s also a global opportunity

‘Counter and reject’ leaders who seek to ‘exploit differences’ between us, urges Guterres at historic mosque in Cairo

Avocado: the ‘green gold’ causing environment havoc

A third of young people polled by UN, report being a victim of online bullying

As ride-hailing firms drive into the future, who is being left behind?

COVID-19 has been a setback for women. Gender-responsive policies can stem the losses

How India can become a leader in sustainable aviation fuel

‘Stealing’ food from hungry Yemenis ‘must stop immediately’, says UN agency

Why is scientific collaboration key? 4 experts explain

Women in Switzerland have gone on strike – this is why

Climate change hits the poor hardest. Mozambique’s cyclones prove it

COVID-19: Commission creates first ever rescEU stockpile of medical equipment

MEPs strengthen EU financial watchdogs

More than 90% of the world’s children are breathing toxic air

Chart of the day: These countries have seen the biggest falls in extreme poverty

Security: better access to data for border control and migration management

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: