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26th Sep 2022

Opinion

Dial down the gas market — not people's right to energy

  • Calls from EU foreign affairs chief Josep Borrell and others for people to 'turn off the heating an hour earlier' not only sound jarring and out of context — but are simply cruel (Photo: jiva)
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The world didn't need yet another war for the European Commission to realise that the invisible hand of the market cannot solve everything.

After Putin's criminal invasion of Ukraine, the commission seems to have come to terms with Europe's problematic dependence on Russian gas.

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  • Diversifying gas purchases will only keep us locked in to dirty fossil fuels, and shifting EU payouts from Putin to the bin Salman family is hardly heartening (Photo: kremlin.ru)

According to official data, the EU imports 90 percent of its gas consumption, with Russia supplying around 45 percent.

With their latest set of proposals, "RePower Europe", Ursula von der Leyen's team break some taboos that have guided their stubborn defence of big energy companies but fail to address the root causes of the problem: the market architecture.

This market is designed to defend the profits of energy giants — blackmailing the EU through its dependency on gas.

With its new proposals for the energy sector, the commission has finally begun to listen to the voices of workers, households, and civil society that have been fighting for energy democracy for years.

These are the same demands that The Left has been putting forward in the European Parliament and which it has continued to defend with its "Power to the People" campaign, such as easing rules on state aid; the opportunity for member states to intervene and set price ceilings; and a tax on windfall profits, which — according to the International Energy Agency — could make up to €200bn available this year.

However, if the commission really cares about social and climate justice, and wants to achieve "energy independence," it must continue to listen: this plan concedes too little, far too late.

By buying more liquefied natural gas (LNG), the commission is deviating far from the climate targets to which it pays lip service, making, once again, the most vulnerable households pay for the price of yet another crisis.

Diversifying gas purchases will only keep us locked in to dirty fossil fuels, and shifting EU payouts from Putin to the bin Salman family is hardly heartening.

To achieve energy independence and sovereignty there is only one solution: a fair energy system based on renewables and under public control. However, this requires the political will to admit that people's interests come before big business profits.

€4bn in profits in six months

While families continue to pay astronomical bills and face a generalised increase in prices (estimates indicate that over 30 percent of current inflation is due to energy price increases), energy companies have hit the jackpot, making profits of at least €4bn during the first six months of 2021.

This is not the result of a macabre twist of fate, but the consequence of the deliberate liberalisation measures of recent decades. Energy is treated as a commodity, not a right, and its price is set on the Amsterdam stock exchange.

Europe's electricity pricing system works on a common "pay as you clear," or "marginal" model, where all electricity producers — from fossil fuels to wind and solar — bid into the market and offer energy according to their production costs. The bidding starts from the cheapest resources — the renewables — and finishes with the most expensive — usually gas.

Since most countries still rely on fossil fuels to meet all their power demands, the final price of electricity is often set by the price of coal or gas.

If gas becomes more expensive, electricity bills inevitably go up, even if clean, cheaper sources also contribute to the total energy supply. In any other market this would be considered fraud: imagine paying the price of champagne for a loaf of bread.

The commission defines this system as a model providing "efficiency, transparency and incentives to keep costs as low as possible," yet it is now ready to suspend some of its features — only temporarily, lest we "distort the market."

Our priority is people's dignity, not the market, which, even by its own standards, is not delivering what it promised: lower energy prices.

Several studies contradict the commission's pro-market vision, but, in addition to the data, people's daily experiences are undermining the certainties of European elites.

The evidence against the pro-market vision comes from the struggles of the people living far away from the warm buildings of power forced to choose whether to heat their homes or eat.

In this context, calls from Borrell and other leaders for people to "sacrifice" and "turn off the heating an hour earlier," not only sound jarring and out of context, but are simply cruel.

Borrell may think he is addressing an undisciplined group of people that squanders resources, but he has no idea of the sacrifices and living conditions of the majority of workers and families in Europe, who simply do not have the resources to waste. Energy poverty is not a personal burden, it is a political failure.

We, therefore, call on our colleagues to take responsibility for overcoming this failure, to join our voice and that of the millions of people across Europe: let's work together to change the rules of the market to ensure an energy model that serves people and our planet.

After all, climate change is not up for discussion, our market fixation should be.

Author bio

The three authors are all Left MEPs on the European Parliament Industry Committee: Cornelia Ernst (Die Linke), Marisa Matias MEP (Bloc de Esquerda) and Sira Rego (Izquierda Unida).

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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