Five countries of the European Union, including the Czech Republic, turned to other countries and the European Commission with a call for a joint solution to the current rapid rise in energy prices. Their proposal asks for better coordination of purchasing and building strategic gas reserves, reforming the electricity market, or reducing the dependence on energy imports.
The group also wants to prevent unpredictable increases in the prices of emission allowances. European Commission Vice-President Frans Timmermans, however, denied that fluctuations in the allowance market are behind the rapid growth of energy prices.
Call for a coordinated approach
In recent weeks, EU countries have been addressing the question of how to mitigate the effects of rising energy prices they are facing as a result of the economic recovery and insufficient gas supplies. Spanish Prime Minister Pedro Sánchez and Czech Prime Minister Andrej Babiš talked about the need for a coordinated approach at an informal EU summit in Slovenia.
According to sources from the meeting, Sánchez referred to a joint call, which, in addition to the economic ministers of his country and the Czech Republic, was signed by their colleagues from France, Greece, and Romania.
“Firstly, a common approach is needed at the European level. We need a European methodological tool to coordinate national measures so that we can respond immediately to dramatic price increases,” the ministers said.
According to them, the EU should find out why the current gas supply contracts are insufficient and create common guidelines for the purchase of gas reserves. EU countries should also better coordinate gas purchases to secure a better bargaining position, states suggest.
They also call for a reform of the electricity market to ensure that the price for consumers is more in line with the cost of generating it in each country. At present, the price of electricity on the EU market is tied to the price of gas, which France, in particular, wants to change. However, other states, led by Germany, are rather skeptical about reform.
Dependence reduction on gas-exporting countries needed
The proposal of five countries, in an indirect allusion to Russia in particular, emphasizes the need to reduce dependence on gas-exporting countries and to support the transition to solar or biomass energy production. At the same time, the letter emphasizes that the EU should ensure greater predictability of the market for emission allowances, high prices of which were criticized by Babiš at the summit.
The European Commission is preparing to publish proposals for a common approach next week, and the heads of state of the EU will discuss them at a regular summit in two weeks in Brussels.
The building of strategic stocks or the possible separation of electricity and gas prices this week, were mentioned by Commission President Ursula von der Leyen as possible steps to the reform of the allowance market. However, the second-highest-ranking member of the EU executive, Timmermans, was evasive about the issue. According to him, trading in allowances is not a major cause of the sharp rise in energy prices.
“The problem is elsewhere. It lies in market conditions, where currently the highest demand in 25 years has caused price increases,” Timmermans said before a meeting of environment ministers. According to him, emission allowances affected the growth of energy prices “minimally, at most from one-fifth”.
