EU energy ministers on Friday will try to find a cohesive response to the energy shock from Russia’s war in Ukraine, which has pushed up electricity and heating prices.
The invasion of Moscow has caused the price of natural gas to hit record highs, plunging the EU economy into deep uncertainty as all eyes are on whether Russian President Vladimir Putin will cut energy flows entirely.
Before the war, 40 percent of the EU’s gas imports came from Russia, with the bulk of supplies going to Germany, the bloc’s economic powerhouse, which is now scrambling to find new ways to heat homes and power factories.
The European Commission, the EU’s executive branch, will ask the ministerial meeting in Brussels to examine a series of highly complex proposals for the discharge.
The main driver will be finding ways to compensate households and businesses that are struggling to pay their bills and stay in business.
The EU executive will propose a mechanism whereby non-gas power companies such as nuclear, solar or renewables share windfall revenues generated by high electricity prices.
The market price of electricity in Europe is closely linked to the price of gas, meaning non-gas utilities are enjoying a revenue bonanza while gas companies are struggling.
Fossil fuel companies would also be penalized for their mega profits from inflated energy prices.
Austria’s Energy Minister Leonore Gewessler said in the run-up to the talks that a possible solidarity levy on “energy companies that make unexpected profits in times of war” must be “discussed without hesitation”.
– Price cap push stalled –
Another proposal that has garnered widespread support is an idea to bail out electricity companies struggling to hedge their spending in the financial markets.
This would be achieved by easing EU rules on state bailouts of companies suddenly facing tighter conditions on cash as fears of a crisis spread.
The Commission will also ask member states to agree on a common path to reducing energy demand, with mandatory reductions in consumption still seen as an option, diplomats said.
“These are proposals on which I feel there is quite a consensus of views between member states,” said a key EU diplomat.
However, an idea to cap Russian gas prices will stall, diplomats have warned, amid widespread fears that Russia’s retaliation would throw Europe’s economy into even more chaos.
EU chief Ursula von der Leyen on Wednesday urged member states to agree on a price cap on Russian gas, a move Putin has warned is an “absolutely stupid decision”.
However, an EU diplomat informed about the status of the negotiations warned that there was no majority for the idea among the member states.
EU energy ministers will discuss the Commission’s ideas and many countries are expected to bring their own proposals to the table.
The Commission, which drafts legislation to be ratified by member states and the European Parliament, would then formalize the proposal next week.
