Companies that produce low-carbon energy are currently making windfall profits that don’t even begin to reflect their production costs, Commission President Ursula von der Leyen said in Brussels on Wednesday. “We want to divert these windfall gains to help particularly affected households and businesses adapt.”
The same applies to “windfall profits” from companies that do their business with fossil fuels, said von der Leyen. The EU states will now discuss this. “The goal is to influence the price of electricity, knowing that it is also influenced by global circumstances,” von der Leyen said.
Price cap, save electricity
Specifically, the EU Commission is planning a price cap of EUR 200 per megawatt hour for electricity that is not produced with gas. This emerges from a template from the authority that the Reuters news agency was able to see. In addition, the Commission wants the member states to reduce their electricity consumption by ten percent per month, measured against the average consumption of the past five years. These proposals are to be discussed on Friday.
Demand: Invest additional profits in relief, renewable energy and infrastructure expansion
The First Vice President of the European Parliament, Othmar Karas (ÖVP), sees the measures presented as absolutely the right step. “Energy providers and finance ministers are currently making exceptionally high profits. This additional profit must be invested in relief, in renewable energy and in infrastructure expansion,” Karas wrote on Twitter on Wednesday. Now there must be speed in the implementation. The energy market needs to be rethought. A European model is needed to skim off the excess profits.
Green MEP Thomas Waitz sees a price cap and a solidarity contribution from fossil energy companies as good steps to counteract the crisis. However, he is not completely convinced of the EU proposal: “I miss the push for a joint EU gas purchase and concrete proposals for the redistribution of corporate profits in society in order to secure social peace in Europe and not continue to be a plaything of Putin’s threatening gestures.” , Waitz said in a statement.
At present, the price of electricity in Europe is mainly determined by expensive gas-fired power plants, which are switched on to produce electricity due to the high demand. Since the price of gas has risen sharply against the background of the war in Ukraine, electricity has also become more expensive. Other energy companies that produce electricity more cheaply – for example from wind, solar or nuclear power – make big profits because they can also sell their electricity at the higher price. Some of these “chance profits” are to be skimmed off and used to relieve consumers.
But oil and gas companies also made big profits, von der Leyen said. “We will therefore propose a solidarity contribution for such companies. Because all energy sources must contribute to overcoming this crisis.” Member States should use these revenues to support particularly affected households and continue to invest in clean, domestic energy sources.
As a further measure against the high electricity prices, von der Leyen suggested reducing electricity consumption during times of high demand. “We will propose a binding target for reducing peak-time electricity consumption.” During these times, electricity is particularly expensive because the expensive gas is used for production on the market during peak demand.
At the same time, one must support the energy supply companies, which are currently struggling with the enormous volatility of the markets, said von der Leyen. “We will update our state aid frameworks so that state guarantees can be provided swiftly in an emergency.”
As a last measure, von der Leyen named a price cap for imports of Russian gas. “The goal here is very clear. We must reduce Russia’s revenues, which Putin is using to finance his cruel war against Ukraine,” said the politician.
Since Russia halted supplies via Nord Stream 1, very little Russian gas has flowed to Europe via Ukraine and Turkey. Von der Leyen said Russian gas now accounts for just 9 percent of EU gas imports, down from 40 percent at the start of the war.
The Russian President had previously threatened to stop supplying gas to Europe in the event of a gas price cap. “If any political decisions are made that go against the treaties, we will simply not fulfill them.” If it goes against Russian interests, Russia will not supply gas, oil or coal, Putin said in a speech in Vladivostok.
“We should not be impressed by this announcement. They will come sooner or later anyway,” said von der Leyen. That is why Europe is working so hard to become independent of Russian gas. Since Russia halted supplies via Nord Stream 1, very little Russian gas has flowed to Europe via Ukraine and Turkey. Von der Leyen said Russian gas now accounts for just 9 percent of EU gas imports, down from 40 percent at the start of the war.
Czech Industry and Trade Minister Jozef Sikela rejects a price cap on gas imports from Russia. “In my opinion, this is not a constructive proposal,” said the conservative politician on Wednesday, according to the CTK agency in Prague. “This is more of a variant of the sanctions against Russia than a current solution to the energy crisis in Europe,” said the 55-year-old.
The energy ministers of the EU countries are meeting in Brussels on Friday for a special meeting. According to von der Leyen, the EU Commission could then present a corresponding legal proposal next Tuesday. The Czech Republic will hold the rotating EU Council Presidency until the end of the year. The presidency country usually plays the role of mediator in the event of differences of opinion. The government in Prague sees a decoupling of gas and electricity prices or a price cap for certain types of electricity generation with the exception of gas-fired power plants as possible solutions.
Source: Nachrichten
