A letter with the proposals of the Greek Government for dealing with the international energy crisis, following the proposal of the Prime Minister, Kyriakos Mitsotakis to the European Council on February 24, was sent by the Minister of Environment and Energy, Costas Skrekas, to the Executive Vice-President of France and Margrethe Vestager, to the Commissioner for the Economy, Paolo Gentiloni, to the Energy Commissioner, Kadri Simson, and to the French Minister for Ecological Transition and President of the Council of Energy Ministers, Barbara Pompili.
The Minister of Environment and Energy proposes the creation of a European Solidarity Mechanism for the energy crisis – EU Energy Crisis Solidarity Facility (ECSF). He stressed that the European Union must take collective and decisive action to take emergency measures to address the effects of large increases in energy costs on households and businesses. The purpose of the European Solidarity Mechanism is to support European consumers, especially the most vulnerable, and to reduce the burden on Member States’s economies from the energy crisis, which is being exacerbated by Russia’s invasion of Ukraine.
How the ECSF Mechanism will work
• The European Investment Bank (EIB) will set up a Solidarity Mechanism for the energy crisis, at the request of the European Commission.
• Member States will be able to obtain low-interest loans from the ECSF to finance measures to offset the effects of high energy prices.
• The amount of funding will be determined by the energy consumption or the annual revenue of the greenhouse gas emission auction auctions of each Member State.
• By decision of the European Council, loans will not be calculated in the deficit and public debt of the Member States.
• Loans will be repaid over a period of 12 to 15 years with measures to be decided by each Member State. The measures could include future revenues from pollution rights auctions and the imposition of a levy on energy consumption.
Member States will have two options for utilizing ECSF resources:
Option A
• Subsidize household electricity and gas bills, giving priority to the financially weakest and applying social criteria.
• Subsidize business electricity and gas bills in a single way.
• Provide cheap capital to businesses, especially those most vulnerable to sanctions against Russia and the war in Ukraine.
• Provide low-interest loans to companies to finance high price hedging contracts with energy suppliers.
• Increase grants for energy efficiency, RES and diversification projects.
Option B
Member States will be able to use ECSF resources to subsidize part of the contracts in the wholesale electricity market.
Particularly:
• The wholesale electricity market will continue to apply the existing rules based on the limit price.
• However, Member States will set ceilings for compensation for each energy production technology. Member States will also calculate the fuel cost for each energy production technology. In case the fuel cost is more expensive than the maximum compensation, the producer will receive the difference.
• Electricity suppliers will be monitored by market monitoring mechanisms to ensure that consumers receive the corresponding discount.
• The cost of the state subsidy to electricity producers will be financed by the ECSF.
In his letter, the Greek Minister of Environment and Energy also proposes the following:
• The European Union should review its policy on energy security and diversification of sources and routes.
• Investments in the development of strategic fossil fuel storage infrastructures, which will enhance Europe’s energy security, should be eligible for financing from European resources and EIB lending.
The same should apply to other energy investments that strengthen Europe’s defense capabilities (eg energy efficiency of military infrastructure, vehicles, etc.).
• Available European funding should, as a matter of priority, be allocated to the implementation of energy interconnections with third countries (eg interconnection of Europe with Africa or the Middle East).
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