Saturday

2nd Dec 2023

Energy price spiral could harm EU recovery

  • Underground gas reserves are around 70 percent capacity – seen as "tight", but "adequate to cover the winter-season needs" by energy commissioner Kadri Simson (Photo: European Parliement)
Listen to article

The increase in energy prices, driven by a surge in gas demand and tight supply, and their knock-on effect on consumers and industry bills have put the bloc's economic recovery under pressure.

"This price shock cannot be underestimated," EU energy commissioner Kadri Simson told MEPs during a debate in Strasbourg on Wednesday (6 October).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"It is hurting our citizens, in particular the most vulnerable households, weakening competitiveness and adding to inflationary pressure. If left unchecked, it risks compromising Europe's recovery as it takes hold," she added.

Gas prices are expected to remain high throughout the winter, according to current demand forecasts. Currently, underground gas reserves are around 70-percent capacity - which was seen by the commissioner as "tight", but "adequate to cover the winter-season needs".

The current situation has prompted several EU governments to take action at national level, capping prices and intervening in markets.

However, some member states are calling to coordinate action at EU level.

The EU Commission is expected to put forward common guidelines next week. But Simson said governments can already implement certain measures, such as providing targeted support to consumers, direct payments to those more at risk of energy poverty, or cutting energy taxes.

"The priority should be to mitigate the social impact, ensuring that energy poverty is not aggravated," she said.

Common gas reserve

The surge in energy prices is a major concern for Spain, which has pushed for it to be on the EU agenda of the next summit on 21 to 22 October.

The EU needs "extraordinary, innovative and robust" measures to tackle this "unprecedented crisis," said Spanish prime minister Pedro Sánchez on Wednesday, before meeting EU leaders for the second day of a summit in Slovenia.

Spain is suggesting to build a "strategic gas reserve" for the whole EU. As with EU vaccine strategy, this idea is based on a common procurement scheme that would enable internal redistribution among member states, if necessary.

Additionally, Madrid has called for a reform of the EU's carbon market.

Under the EU's emissions trading scheme (ETS), based on a cap-and-trade system, a price is put on carbon emissions and emission allowances are then auctioned.

However, according to the chief of EU climate policy, Frans Timmermans, the EU's carbon market is not the problem and "playing around with the emissions trading scheme" would have a "very small" impact on current energy prices.

"The quicker we increase our renewable investments, the quicker we can protect our citizens against price increase," he said on Wednesday.

Manipulation of the market?

Earlier this week, France, Spain, the Czech Republic, Greece, and Romania also called for better coordination of natural gas purchases, arguing that the EU should reduce its "dependency on gas-exporting countries as fast as possible".

The small group of countries urged the EU Commission to investigate why current gas contracts have proven insufficient.

EU lawmakers recently raised similar concerns, calling for an investigation into potential market manipulation.

"We need to identify if there was any kind of market manipulation in EU in recent months. We have to make sure that no state or non-state actor, be it Russian Federation, Gazprom, or anyone else manipulates or influences European energy prices," said MEP Mureşan Siegfried, a Romanian from the centre-right European People's Party, on Wednesday.

For her part, MEP Iraxte García, the leader of the socialists in the EU Parliament, said that many energy exporters were making millions in the current crisis, arguing that Europe cannot be "blackmailed by certain countries".

Last week, Russian firm Gazprom cut by 70 percent its gas exports to the EU via Belarus, according to its own data. The Russian state-owned energy giant has warned that prices could increase further in the winter due to gas shortages.

"Are we being played by Gazprom and Russia?," Dutch Green MEP Bas Eickhout asked on Wednesday, adding that if this "geopolitical game" existed, Europe needed to act on it.

Last month, a group of over 40 MEPs accused Gazprom of manipulating prices, while insinuating that Russia was pressuring Europe to get quick approval of its new Nord Stream 2 pipeline to Germany.

Exclusive

MEPs suspect Gazprom manipulating gas price

MEPs from across the political spectrum suspect Russian gas giant Gazprom manipulates market prices. They have written to the EU Commission asking for an investigation. According to the signatories, Gazprom is pressuring Europe to open the Nord Stream 2 pipeline.

Spain wants energy price discussion at next EU summit

Spain wants to discuss the current energy price spike at the next EU summit in October, and called on the European Commission to provide member states with guidance on how to react to current record gas and electricity prices.

EU unveils plan to repay Covid recovery-fund borrowing

The European Commission has presented three new sources of revenues for the EU´s coffers aimed at repaying the emergency coronavirus recovery fund and supporting vulnerable households in the transition towards climate neutrality.

EU probes possible energy-price manipulation

The EU Commission is investigating possible "manipulative abuses" by Europe's gas suppliers, as part of new measures to help businesses and vulnerable consumers cope with rocketing prices.

Opinion

Dubai's COP28 — a view from the ground

Discussion of the biggest existential threat humanity has ever faced is barely mentioned on billboards or signage in Dubai — yet visitors are made aware quite quickly that t world rugby sevens tournament is imminent.

Latest News

  1. Israel's EU ambassador: 'No clean way to do this operation'
  2. Brussels denies having no 'concern' on Spain's amnesty law
  3. Dubai's COP28 — a view from the ground
  4. Germany moves to criminalise NGO search-and-rescue missions
  5. Israel recalls ambassador to Spain in new diplomatic spat
  6. Migrant return bill 'obstructed' as EU states mull new position
  7. Paris and Berlin key to including rape in gender-violence directive
  8. What are the big money debates at COP28 UN climate summit?

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Stakeholders' Highlights

  1. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  2. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us