EU nations struggle to find joint approach on energy prices
European Union nations have struggled to find common ground on ways to shield the population from dramatically increasing energy prices that threaten to plunge millions into cold and poverty over the winter as Russia chokes off natural gas supplies.
As tensions with Moscow mount over the war in Ukraine, the energy ministers of the EU’s 27 nations could not paper over differences on whether and how to impose a price cap on Russian natural gas, with ever-recalcitrant Hungary refusing to agree, saying it would go against its supply interests.
Other countries differed on whether a price cap should apply only to Russia or to other producers too.
An immediate solution had not been anticipated at Friday’s meeting, but it indicated how Moscow’s gas restrictions and threat of a full cut-off have dominated the political agenda of a rich bloc of nations struggling to ensure basic services such as heat and light.
“Russia has used its gas supplies as a weapon to foster an energy crisis next winter but also to weaken our economies and divide – politically – the European Union,” EU energy commissioner Kadri Simson said.
“We have to ensure that their efforts will fail.”
Czech industry minister Jozef Sikela, chair of the emergency meeting, exhorted his colleagues: “We cannot be blackmailed.”
He hoped to overcome other differing views on proposals to bring natural gas and electricity prices back to affordability.
The measures range from windfall levies on oil and gas companies whose profits have risen along with skyrocketing prices to boosting cash for companies to keep operating as they struggle with volatile energy markets.
Several ministers said reaching an agreement would not be easy, given each country’s energy mixes, supplies and needs, but they conceded that time is of the essence if the most vulnerable people across Europe are to receive timely assistance.
Russia has cut back supplies of natural gas that power factories, generate electricity and heat homes, driving up energy prices to record highs and fuelling inflation that is poised to tip Europe into recession later this year.
Irish minister Eamon Ryan insisted that action must be taken “within weeks, not months”.
This coming autumn, “when we’re really going to see the high prices having effect, that’s when we need the support, that’s when we need to get some of that money”, he told reporters in Brussels.
The ministers might agree to provide support to struggling companies forced to buy energy supplies at inflated prices and back measures on ways to impose reductions in electricity use similar to those already agreed on gas.
“There is no time to wait, and we have to be swift and united,” Mr Sikela said.
Despite the urgency, with several northern nations feeling the first chill in the morning air announcing the onset of autumn, the ministers will only give guidelines to the EU’s executive branch, the European Commission, which will present a proposal for the member states next week.
At that point, the EU nations will reassess again, and the hope is that a decision can be made early next month.
The commission has already called for a price cap on Russian natural gas and is seeking a “solidarity contribution” from European oil and gas companies that have made extraordinary profits from the rise in energy costs.
German economy and energy minister Robert Habeck also said it is important to find a way to uncouple natural gas prices from the costs of all other forms of energy, particularly relatively cheap renewables, “without destroying the market mechanisms”.
While hoping for quick progress, Germany is keeping open the option of imposing a levy on high energy profits whose proceeds would be passed to consumers “if it takes too long”, he said.
“We can’t take this card off the table because the other, better way – namely bringing down prices – could certainly be complicated,” Mr Habeck said.
“We’re doing something that affects the heart of European energy supply – we’re intervening in the markets.”
The energy crisis is not only threatening households but also industry, with energy-intensive factories being forced to close.
Commission president Ursula von der Leyen said Russia is “blackmailing” the EU with its threat to turn off the gas to the bloc.
Moscow has already cut supplies partially or entirely to 13 EU countries, blaming alleged technical issues and sanctions.
Russian pipeline gas accounted for 40% of all gas Europe imported before President Vladimir Putin ordered the invasion of Ukraine in February, but now it only accounts for 9%.
The commission believes the EU is prepared for the winter, with joint gas storage levels at 82% – well ahead of the 80% target that had been set for the end of October.