EU announces upcoming gas market reform in response to soaring prices – EURACTIV.com
The European Commission will use a long-planned reform of EU gas market rules, expected in December, to address the current shortage of supply in the market. This is according to the EU energy chief who added that there are sufficient reserves to last the winter.
“By the end of the year, I will propose a reform of the gas market and will examine in this context the questions of storage and security of supply”, said Kadri Simson, European Commissioner for Energy.
She made the remarks on Wednesday October 6 during a debate in the European Parliament on the current energy price crisis.
Soaring gas prices have hit Europe’s poorest citizens and impacted business investment decisions, threatening to slow economic recovery.
One of the ideas proposed by Spain is for the EU to jointly buy gas to take advantage of the power of its single market of 450 million consumers. A strategic EU gas reserve could then be created.
Reacting to the proposals, Simson said joint sourcing and storage of emergency reserves were ideas to be explored.
The upcoming revision of European gas market rules is also an opportunity to crack down on speculators, according to Claude Turmes, Luxembourg’s energy minister.
“The EU should take advantage of the revision of the gas directive at the end of the year to examine more precisely the behavior of certain traders in the market,” Turmes told journalists in Brussels on Friday 1 October.
“There are indications that there are extremely speculative traders in the market. And there is probably a need in this gas directive to propose more detailed regulations on traders, ”he said.
Turmes proposes to impose a minimum of hedging on all market players to avoid excessive speculation in the gas markets.
“It is very important to understand that most gas companies in Europe have hedging strategies. We know they have bought gasoline in the last year and a half at much lower prices. They have hedged their risks and the price increase during the winter should be contained, ”he said.
Enough storage for the winter
Speaking in the European Parliament, Simson also sought to reassure markets, saying EU countries have enough gas in stock to get through the winter.
“Underground gas storage is over 75% across Europe. This level is lower than the ten-year average but sufficient to cover the needs of the winter season, ”Simson told European lawmakers in Strasbourg.
The price spike has come as the EU prepares for a major upgrade in climate policies, stoking concerns among poorer states in the central and eastern EU that measures to increase the cost of polluting fuels could push more households into fuel poverty.
Repeating previous statements from the European Commission, Simson insisted that the long-term response at the EU level is to increase production from renewable sources and increase energy efficiency.
“Wind and solar have continued to produce the cheapest electricity in Europe in recent months” and “are not exposed to price volatility,” she noted.
In the short term, she said EU governments can provide targeted consumer support through direct payments to those most at risk of energy poverty, reduce energy taxes and shift burdens to general taxation.
To help citizens, governments could also use some of the money from the sale of carbon permits under the emissions trading system, Simson added, saying the higher costs of carbon provided EU governments with an additional € 10.8 billion. Competition authorities at European and national level are also seeking to curb speculation in the energy markets.
The Commission will present a list of measures in line with EU law next week.
As part of these plans, the Commission will also examine the overall price composition of the electricity market, said Ursula von der Leyen, President of the European Commission.
“If the electricity prices are high, it is because of the high gas prices, and we have to consider the possibility of decoupling within the market because we have much cheaper energy like renewables,” said von der Leyen during a visit to Estonia on Tuesday. (October 5).
This is in line with demands from France, which called for decoupling the price of electricity from gas markets to link it to the average cost of producing electricity in each EU country.
Although gas accounts for only a fifth of electricity production in Europe, gas-fired power plants have become price determinants in the electricity market because they can be started in the short term to meet peak demand. demand.
Brussels is determined to ensure that soaring prices don’t derail its emissions reduction plan and has offered a multibillion-euro fund to help poorer households invest in green options.
“Let’s keep an eye on the ball. The problem here is the climate crisis, ”said EU climate policy chief Frans Timmermans. “The faster we move towards renewable energy, the faster we can protect our citizens against high prices. “
[Edited by Alice Taylor]