Von der Leyen’s move seems to have not only caught some member states by surprise, but also divided them.
The imposition of a ceiling on the wholesale price of Russian natural gas is included in the Commission’s five-point proposal for dealing with the energy crisis, as President Ursula von der Leyen officially announced yesterday at a press conference.
Von der Leyen’s move seems to have not only taken some member states by surprise, but also divided, especially on the part of the cap on Russian natural gas, as mentioned in a Politico report.
In Athens, government sources cited by the Kathimerini newspaper said that Greece is not satisfied with the Commission’s intention for a ceiling that will only concern Russian natural gas.
The same sources noted that the Greek side believes that the desired solution should also include ceilings on prices that also concern the other major energy markets, such as the US and Asia, as the present system is easily manipulated by the most powerful players and especially from Gazprom, which as a dominant influence affects the market.
Besides, yesterday Russian President Vladimir Putin launched new threats saying that if a ceiling is imposed on Russian energy resources, then the taps will be completely turned off in those countries that adopt the proposal.
Five meters
In statements to the press in Brussels, the President of the Commission developed the European Commission’s plan in brief to tackle high energy prices, which will be presented to EU energy ministers tomorrow, Friday.
Among other things, the Commission will propose to member states a mandatory target to reduce electricity consumption at peak times, ahead of the Energy Ministers’ Council on 9 September.
“We are facing an extraordinary situation because Russia is an unreliable supplier and is manipulating our energy markets. With unity and solidarity we will prevail!” said the President of the Commission, noting that the storage of natural gas, as a whole in the EU, has reached 82%.
“Through diversification we have increased LNG or pipeline natural gas deliveries from the US, Norway, Algeria, Azerbaijan and other countries. For example, Norway now delivers more gas to the EU than Russia. And we are making huge investments in domestic renewable energy through RePowerEU,” he added.
Continuing, Ursula von der Leyen emphasized that the manipulation of natural gas markets has a secondary effect on the electricity market.
“We are facing astronomical electricity prices for households and businesses and huge market volatility,” he said, setting out a series of “immediate measures” proposed by the Commission to protect vulnerable consumers and businesses:
Firstly, the Commission proposes a “smart electricity saving”, i.e. “a mandatory target to reduce the use of electricity during peak hours”. “We will work closely with member states to achieve this,” noted Ursula von der Leyen.
Secondlythe Commission proposes upper limit on the revenues of companies that produce electricity at low cost. Low-carbon energy sources generate windfall revenues that do not reflect their production costs. “We will propose re-channeling these windfalls to support vulnerable people and companies to adapt,” the Commission President stressed.
Thirdlythe same must be true for the fossil fuel company windfalls. Oil and gas companies also make huge profits. The Commission will therefore propose a solidarity contribution for fossil fuel companies. Member States should invest this revenue to support vulnerable households and invest in clean domestic energy sources.
FourthThe committee proposes the facilitation of liquidity by the member states for energy companies. Energy utilities must be supported to cope with market volatility. They are currently being asked to provide unexpectedly large amounts of capital, which threatens their ability to trade and the stability of future markets. In addition, the Commission will extend the legal framework allowing for the rapid granting of state guarantees.
Fifththe Commission proposes cap on the price of Russian natural gas. “The goal here is very clear. We need to cut the Russian revenues that Putin is using to finance this horrible war against Ukraine,” Ursula von der Leyen stressed.
In conclusion, the President of the Commission pointed out that at the beginning of the war, Russian gas imports by pipeline from Russia were 40% of all imported gas and today it has decreased to 9%. “These are difficult times. But I am convinced that Europeans have the economic strength, the political will and the unity to maintain the upper hand,” he added.
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