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29th Sep 2023

Nine countries oppose EU gas market reform

  • A wholesale reform of the electricity market will not solve high prices, the group of nine member states believe (Photo: European Parliament)
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Germany, the Netherlands and Denmark and six other countries have signed a letter saying they cannot back any reform conflicting with the gas and energy markets - including a reform of the EU electricity markets.

Spain and France have called for a fundamental rewrite of gas-buying rules ahead of the Emergency Council of environmental ministers on Tuesday (26 October).

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But hopes for a new agreement seem squashed even before the meeting could start.

Denmark, Germany, Austria, the Netherlands, Luxembourg, Ireland, Finland, Estonia and Latvia signed the letter stating that higher prices are caused by global economic recovery and are not caused by the EU gas market design.

A wholesale reform of the electricity market "will not be a remedy to mitigate the current rising energy prices linked to fossil-fuels markets," they wrote.

Instead, the EU should focus its energy on promoting energy efficiency, investment in green energy and a 15 percent interconnection of the EU electricity market by 2030, which could save up to €40bn in the long run. They referred to national measures to protect households against higher bills as a short-term solution.

Most countries are already using subsidies and tax cuts to lower bills, but some EU countries want more fundamental reform to protect citizens in the future as well.

The wholesale electricity price is currently often set by gas prices, but this is unfair according to France and Spain.

"We get our electricity from nuclear power plants and hydraulic energy. So this increase in gas prices even though we have our independence in terms of electricity production is totally absurd"", " said the French finance minister Bruno Le Maire said in advance of Tuesday's ministerial meeting.

Cheaper renewable energy is also set by gas prices, hampering the green transition.

Spain has led calls to decouple the price of power from the cost of gas, and joint gas-buying to increase EU countries' bargaining power in global markets.

"We want to impress on the council a sense of urgency," Spanish prime minister Pedro Sánchez told press last Friday, warning that "the issue of energy prices can undermine the competitiveness of the EU."

But the group of nine countries protected the current market design. "The internal market for gas and energy has been jointly build over the past decades. Competitive markets contribute to the security of supply and are thus a key element to facilitate the transition," they wrote.

European Central Bank president Christine Lagarde recently told MEPs that "fiscal authorities" (ie governments) have a responsibility to "harness market power" - implicitly referencing the Spanish plan for joint gas purchases, EUobserver recently reported.

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