Ursula von der Leyen: We will propose a ceiling on the price of Russian natural gas – Five meters from the Commission

The European Commission will propose a cap on Russian gas prices, along with measures that would include a mandatory reduction in EU electricity use during peak hours, as well as a cap on the revenue of non-gas power producers, it said today Commission President Ursula von der Leyen.

“We will propose a maximum price for Russian gas … We need to cut off the Russian revenues that Putin is using to finance this horrible war in Ukraine,” von der Leyen told reporters.

Earlier today, the Russian president, Vladimir Putin, stated that the Russia will stop pumping natural gas and oil if a ceiling is imposed on the prices of Russian energy sources.

New aid to Ukraine

In addition, the Commission president proposed today that the EU should pay €5 billion in financial aid to help Ukraine deal with the consequences of the war, the second part of a €9 billion package for 2022 proposed on May 18.

“Today the Commission is proposing an additional €5 billion in macro-economic assistance for Ukraine,” von der Leyen announced via Twitter. This aid, in the form of loans, will have to be approved by the 27 EU member states, which will discuss the issue on Friday, during a meeting of their finance ministers in Prague.

Five meters

In her statements to the press in Brussels, the president of the Commission briefly developed the European Commission’s plan for dealing with high energy prices, which will be presented to the energy ministers of the EU countries next Friday.

Among other things, the Commission will propose to the member states a mandatory target for the reduction of electricity consumption in peak hours, in view of the Council of Ministers of Energy 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.

RES-EMP

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