Energy: Twenty-Seven deal to deal with “super-profits”

published on Friday, September 30, 2022 at 4:19 p.m.

European energy ministers reached an agreement on Friday to return part of the “super profits” of energy producers to homes and companies in the face of the explosion of bills, but many believe that it is necessary to go further because winter is approaching.

The officials validated the emergency and temporary measures presented in mid-September by the European Commission, also aimed at imposing a reduction in electricity consumption during peak hours.

But they are still divided on how to reduce wholesale gas prices, with the idea of ​​a cap facing German reluctance in particular.

They instructed the Commission to present them with solutions as soon as possible, before a summit of the leaders of the 27 on October 7 in Prague and a new meeting of energy ministers on October 11 and 12.

“We have to continue the work. We are in an energy war with Russia, which also strongly affects our industry,” said Czech Energy Minister Jozef Sikela, whose country holds the presidency of the EU Energy Council. He insisted on the “urgency” of the new measures, during a press conference after the meeting of ministers in Brussels.

The recent leaks in the Nord Stream 1 and 2 gas pipelines in the Baltic Sea, denounced as acts of “sabotage”, have further increased tension in the European bloc, already shaken by price increases linked to the war unleashed by Russia in Ukraine.

The emergency measures endorsed on Friday, which will apply from December 1, set a binding goal for states to reduce their electricity consumption “by 5%” at peak hours until March 31, 2023. The Twenty-seven are also called upon to reduce their electricity consumption. consumption by 10%, an indicative target.

Another measure: the ceiling on the income of electricity producers of nuclear and renewable origin (wind, solar, hydroelectric) who obtain exceptional profits by selling their production at a price much higher than their production costs.

This cap is set at 180 euros per megawatt hour and the difference between this level and the wholesale market price must be recovered by the States to be redistributed to households and businesses, until June 30, 2023. A “contribution temporary solidarity” to producers and distributors of gas, coal and oil.

The president of the Commission, Ursula von der Leyen, had estimated the income that could be donated in this way at around 140,000 million euros.

– ‘Intervention required’ –

But most member states – fifteen, including France, Belgium, Italy, Spain and Poland – believe that the “most serious problem” still needs to be addressed: they are calling for a cap on wholesale gas prices on the European market. These countries want the measure to apply to all gas imports and not just those from Russia.

The community executive, like Germany, is reluctant to implement such a measure, for fear that a price limitation would threaten the supply of Europeans, by dissuading “reliable partners” from delivering gas to the EU, to the benefit of from other destinations.

Estonian Minister Riina Sikkut also spoke out against this idea, saying “gas availability and security of supply were more important than price.”

The Commission is in favor of a maximum price for Russian gas – transported by pipeline or liquefied natural gas (LNG) – which currently represents 9% of European imports. Russia was historically the largest supplier of gas to the EU, bringing more than 40% of the gas to the bloc.

“But some member states see it as a sanction and we don’t have a consensus on it,” EU Energy Commissioner Kadri Simson said.

To lower prices, Brussels is committed to negotiations with other providers of gas transported by gas pipelines, but believes that for LNG, the negotiating capacity is limited by international competition.

“We all agree that the market is not working normally and that an intervention is necessary,” acknowledged the commissioner, also mentioning the option of limiting the price of gas used for electricity production.

The French Minister of Energy, Agnès Pannier-Runacher, stressed that the extension to the EU of the derogatory regime granted to Spain and Portugal that allows them to temporarily decouple the price of gas from that of electricity could be “a lever that can be activated quickly” .

Many EU countries have already put in place support schemes at the national level to relieve households and businesses weighed down by bills.

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