EU energy ministers agreed during 9 September Extraordinary Energy Council meeting on four main areas for temporary emergency measures to alleviate the growing energy crisis in the Europe and have asked the European Commission for a proposal in days, which includePrice cap on gasCapping the revenues of electricity producersMeasures for a coordinated electricity demand reduction across the EUMeasures that would help to solve the issue of decreased liquidityIn opening remarks by European Commission’s Energy Commissioner Ms Kadri Simson said “Before the summer we put in place new tools to improve storage and reduce demand, to ease market pressures and be better prepared for winter. As the Russian manipulation continues with Gazprom's latest moves on Nord Stream 1, I think we can all agree that these were right decisions to make. Our underground gas storage is now almost 83% full and Member States are taking action to cut gas consumption further. We must continue with both.”First, we need to reduce electricity consumption in a smart way. This means focusing on peak hours, which is when gas-fired power plants are brought online to cover high demand, driving up electricity prices. We intend to propose a mandatory target for Member States to reduce consumption at peak hours. They will then have to implement it based on their national circumstances.Second, we need instruments that will ensure a fairer distribution of revenues that are currently enjoyed by some in the energy sector. On the one hand, we propose to cap the revenues for inframarginal technologies. These are technologies that produce electricity cheaper than the price-setting gas power plants, but whose revenues are driven up to unprecedented levels by the price of gas. This measure will generate income that must be used by Member States to fund support measures to energy users and reduce the price paid by households, SMEs and industries for electricity. We will design our EU framework in a way that will allow national schemes to continue if they are consistent with this objective. We will set the cap at a level that preserves incentives for investment in renewables, which is one of the main benefits of the current market design. But it does not make sense to cap the revenues of low-carbon sources while leaving fossil fuels untouched. Fossil fuel companies' income has swelled over the past months and we will therefore propose a solidarity levy on their profits. The revenues from this measure will be targeted to help vulnerable consumers and companies, or have to be invested into renewables.The fourth area for intervention concerns the financial markets for energy products. The uncertainty created by Russia's behavior is causing additional stress for electricity trading. We need to stabilize the futures markets and avoid that companies suffer because of liquidity problems.She added “We will engage with securities and banking regulators to take swift action. We will also look into our Temporary State Aid Crisis Framework to see if we can streamline procedures to address liquidity gaps via state guarantees. As I have told the ministers today, the Commission also stands ready to develop a complementary index for LNG. The current pricing benchmark for gas, known as the TTF, is linked to a relatively small and pipeline-based market, which doesn't reflect the current reality in the EU.”She concluded “Finally, we need to maximize the tools available to us for bringing down gas prices at their source. We are exploring the possibility of imposing a price cap on Russian pipeline gas, a move that could hit Putin's coffers and not allow Russia to maintain revenues despite cutting supply.”
EU energy ministers agreed during 9 September Extraordinary Energy Council meeting on four main areas for temporary emergency measures to alleviate the growing energy crisis in the Europe and have asked the European Commission for a proposal in days, which includePrice cap on gasCapping the revenues of electricity producersMeasures for a coordinated electricity demand reduction across the EUMeasures that would help to solve the issue of decreased liquidityIn opening remarks by European Commission’s Energy Commissioner Ms Kadri Simson said “Before the summer we put in place new tools to improve storage and reduce demand, to ease market pressures and be better prepared for winter. As the Russian manipulation continues with Gazprom's latest moves on Nord Stream 1, I think we can all agree that these were right decisions to make. Our underground gas storage is now almost 83% full and Member States are taking action to cut gas consumption further. We must continue with both.”First, we need to reduce electricity consumption in a smart way. This means focusing on peak hours, which is when gas-fired power plants are brought online to cover high demand, driving up electricity prices. We intend to propose a mandatory target for Member States to reduce consumption at peak hours. They will then have to implement it based on their national circumstances.Second, we need instruments that will ensure a fairer distribution of revenues that are currently enjoyed by some in the energy sector. On the one hand, we propose to cap the revenues for inframarginal technologies. These are technologies that produce electricity cheaper than the price-setting gas power plants, but whose revenues are driven up to unprecedented levels by the price of gas. This measure will generate income that must be used by Member States to fund support measures to energy users and reduce the price paid by households, SMEs and industries for electricity. We will design our EU framework in a way that will allow national schemes to continue if they are consistent with this objective. We will set the cap at a level that preserves incentives for investment in renewables, which is one of the main benefits of the current market design. But it does not make sense to cap the revenues of low-carbon sources while leaving fossil fuels untouched. Fossil fuel companies' income has swelled over the past months and we will therefore propose a solidarity levy on their profits. The revenues from this measure will be targeted to help vulnerable consumers and companies, or have to be invested into renewables.The fourth area for intervention concerns the financial markets for energy products. The uncertainty created by Russia's behavior is causing additional stress for electricity trading. We need to stabilize the futures markets and avoid that companies suffer because of liquidity problems.She added “We will engage with securities and banking regulators to take swift action. We will also look into our Temporary State Aid Crisis Framework to see if we can streamline procedures to address liquidity gaps via state guarantees. As I have told the ministers today, the Commission also stands ready to develop a complementary index for LNG. The current pricing benchmark for gas, known as the TTF, is linked to a relatively small and pipeline-based market, which doesn't reflect the current reality in the EU.”She concluded “Finally, we need to maximize the tools available to us for bringing down gas prices at their source. We are exploring the possibility of imposing a price cap on Russian pipeline gas, a move that could hit Putin's coffers and not allow Russia to maintain revenues despite cutting supply.”
