Gas reserves, subsidies and tax cuts: the EU’s tools to fight soaring energy prices

Flags of the European Union fly in front of the headquarters of the European Commission in Brussels, Belgium on July 14, 2021. REUTERS / Yves Herman

BRUSSELS, Oct. 13 (Reuters) – The European Commission on Wednesday presented measures the EU could use to tackle soaring energy prices, and said it would explore the joint purchase of gas between countries as a means of cushioning the surge in prices.

Record electricity and gas prices this year have slashed industrial production and raised heating bills for consumers, prompting 20 EU countries to develop emergency measures, including cuts in energy taxes or subsidies for the poorest households.

The EU executive confirmed that domestic responses are allowed under bloc law and referred to coordinated responses that would take longer to initiate and cope with future price shocks.

The Commission will “explore the possible benefits” of member states jointly purchasing strategic gas reserves, he said. Country participation in such a program would be voluntary. Read more

Spain has called on the EU to launch joint gas purchases, although other countries are reluctant to use lasting regulatory changes to deal with a short-term crisis. The Commission said gas prices are expected to stabilize at a lower level by April.

Leaders of EU countries will discuss methods of tackling the issues at a summit on October 21-22. Energy ministers from EU countries will hold an extraordinary meeting to discuss the price hike on October 26.

“The only way to completely decouple gas from electricity is to stop using it to generate electricity,” said EU energy policy chief Kadri Simson. “This is the EU’s long-term goal, to replace fossil fuels with renewable energies.”

Gas-fired power stations produce around a quarter of the EU’s electricity.

Some governments have said the spike in prices justifies changes to EU energy market rules, which they say are unsuitable for the EU’s green transition, and curbs financial speculation on the market. European carbon market.

The Commission said it would launch studies on both issues, but did not commit to taking immediate action.

Brussels is also investigating “all allegations of anti-competitive business conduct” by gas suppliers, following accusations by some EU countries that Russian Gazprom has suspended supply to drive up gas prices. European gas. Read more

The EU is agreeing on a major set of policies to tackle climate change, and the Commission has said that a swift switch to clean energy is the most effective defense against fluctuating fuel prices fossils.

Brussels will issue guidance next year to speed up approval processes for renewable energy projects, and it has urged countries to spend EU COVID-19 recovery funds on clean energy.

Reporting by Kate Abnett; edited by Foo Yun Chee, John Chalmers, Elaine Hardcastle

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