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Vulcan Insight | EU looks to tackle rising energy costs

As energy prices soured across the European Union to new record levels in recent months, the European Commission and EU Member States move to tackle the rising costs at the highest political level. Among some critical voices over a correlation between the Commission’s climate ambitions and the rising prices, EU Energy Commissioner Kadri Simson will present a “toolbox” of measures to respond next week.

After both electricity and gas prices reached multi-year records in the past weeks, the debate over prices and their potential social and economic consequences, reached the EU’s highest echelons this week.

From EU Finance and Environment Ministers, to the European Parliament and Heads of State or Government at their EU-Western Balkans Summit, Ministers and MEPs warned of the risks to their economies and social cohesion from the rising costs faced by consumers and businesses. The topic is set to also be a key discussion point for EU leaders at their next regular European Council Summit in Brussels on 21-22 October.

Faced with calls for a Europe-wide approach to the temporary crisis, EU Energy Commissioner Kadri Simson promised to present a “toolbox” of options of measures countries can take to respond in the coming week. The toolbox will also be complemented with a study whether new legislative proposals on reforming the gas market will be needed. The Commission is due to present a legislative package on revising the EU gas market rules on 14 December.

The toolbox also comes as European Commission President Ursula von der Leyen as well as a number of EU countries called for the creation of an EU-wide gas reserve to hedge against steep gas price fluctuations.

Meanwhile, the Commission’s Climate Commissioner, Frans Timmermans, and almost all Ministers rejected accusations brought forward by Hungary, Poland and Romania, that the price increases are due to the EU’s climate ambitions and energy transition. The accusations came despite statistics showing that only about 20% of the price increases are related to the EU’s Emissions Trading Scheme, with rest a result of a combination of high market demand and low gas supply, especially from Russia.

Speaking after meeting with Environment Ministers, he stressed that “the best answer to this problem today is to reduce our reliance on fossil fuels,” before adding that “the quicker we move towards renewable energy, the quicker we can protect our citizens against high prices.” The sentiment was shared by Greek Minister for Environment and Energy Kostas Skrekas, who said that “the European green energy transition strategy is not the cause of this crisis, but the populist voices say exactly this: They want us to blame the Green Deal. We cannot stay put and do nothing against this problem.” Meanwhile, Austria’s and Germany’s Environment Ministers reiterated that the best way of tackling high energy prices is to substantially expand renewable energy.

Compliments of Vulcan Consulting – a member of the EACCNY.