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5th Dec 2021

Gas price spike exposes rift at EU summit

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The first topic leaders discussed at the EU summit on Thursday (21 October) were the continent's soaring gas prices, which have lead to a spike in household energy bills - amid widespread disagreement on how to solve the issue.

Most member states have already implemented tax cuts and subsidies to cushion some of the effects. But a group of countries led by Spain have pressed the council to act more decisively.

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"We want to impress on the council a sense of urgency," Spanish prime minister Pedro Sánchez told press, adding that it should speed up measures, warning that "the issue of energy prices can undermine the competitiveness of the EU."

Madrid has spearheaded a proposal for the common purchase of gas, increasing the bargaining power of member states, and a crack down on speculation in the carbon markets that drive prices upwards.

Polish prime minister Mateusz Morawieck also warned gas prices "could significantly lower economic growth in Europe."

But wealthier countries stressed the need to act thoughtfully, and not make rash changes to the way the energy market works, citing market uncertainty. "We need to find a solution without shutting down markets" German chancellor Angela Merkel told press.

Dutch prime minister Mark Rutte also preferred to wait out high prices, believing them to be temporary, and referred to the commission's energy price "toolbox" - a series of measures countries can take to keep energy prices low without breaking EU laws.

Strongly pitted against this was Hungarian leader Victor Orban, who blamed energy policies for current high energy prices. He reserved most of his vitriol for the proposed extension of the EU emission trading scheme (ETS) to include housing and cars, which raises prices for consumers and households.

"This will kill the middle class, which is the backbone of democracy," he told press. "Those who are driving up the price of electricity and gas are putting the European democracy at risk."

Earlier in the week Warsaw distributed a proposal arguing a possible postponement of parts of the EU climate package.

Executive director of the International Energy Agency, Fatih Birol, recently stressed business leaders and lawmakers not to heed this kind of rhetoric: "recent increases in global natural gas prices are the result of multiple factors, and it is inaccurate and misleading to lay the responsibility at the door of the clean-energy transition."

Merkel told press that "the issue of rising energy prices should be decoupled from the fight against climate change" echoing calls from other leaders that want to double down on renewable energy, citing it as the best long-term solution to the crisis.

Three of the smaller EU member states, Denmark, Belgium and Estonia, called on the G20 countries to up their climate game ahead of the United Nations Climate Change Conference (COP26) in Glasgow in November and "follow the EU's lead" on climate change.

"Join us," Belgian prime minister Alexander de Croo said. "In the long term, there is only one solution to high energy prices: renewable energy."

What's 'renewable'?

But deep rifts exist between EU member states on what constitutes renewable energy.

Poland and the Czech Republic want the council to back gas as a transition fuel towards a green economy. And France leads a group of 10 countries pushing to include nuclear energy in the EU's guidelines for green investments - the "EU taxonomy".

This was vehemently opposed by Xavier Bettel, the prime minister of Luxembourg. "Nuclear energy has no future," he said entering the Council building.

EU leaders presented the preliminary outcome of the debates around midnight. The council supports the commission to monitor the function on the gas and carbon markets, yielding to Spanish demands to potentially curb speculation. The row on nuclear energy has been dropped from the final text, and a decision on gas as a transition fuel has been deferred

Environmental ministers will continue the discussions at an emergency meeting in Luxembourg on 26 October.

Opinion

Why did gas prices suddenly spike?

The 29 September historic high of $1,000 per thousand cubic metres for natural gas is not likely to be the final one this year, as European economies are still in desperate need to fill their storage facilities before winter.

Nine countries oppose EU gas market reform

Germany, the Netherlands and Denmark and six other countries have signed a letter saying they cannot back any reform of the EU gas and energy markets.

EU energy ministers clash amid gas price uncertainty

EU energy ministers met on Thursday to debate spiking gas and electricity prices, and clashed over market reform - with some countries, led by Germany, opposing actions put forward by France and others.

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