Thursday, October 28

Brussels opens up to centralized gas purchases and strategic reserves due to the electricity price crisis


Immediate public aid to homes and companies affected by the skyrocketing prices of the electricity bill in the short term. And, in the medium term, evaluate the advisability of joint gas purchases and strategic reserves, proposed by the Spanish and French governments. The European Commission has presented this Wednesday the set of recommendations to the States to respond to the energy crisis, and has announced the study of new ones by the end of the year. Of course, it does not seem that he has yet made “bold and forceful” decisions such as those requested by the Prime Minister, Pedro Sánchez. In the end, Brussels seems to trust investment in renewables and its greater weight in consumption energy autonomy and the reduction in prices.

The European Commission resists the urgent measures requested by Spain and France to reform the electricity market

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Next week, Heads of State and Government will address the energy crisis at the European Council on October 21-22. For now, the Vice President of Energy Transition, Teresa Ribera, has stated: “The proposals do not address the exceptional nature of the situation in which we are, with exceptional measures to match the challenge that lies ahead.”

In relation to the urgent measures –among which the requests from Madrid and Paris are not found–, Brussels points out in its call toolbox –Toolbox– the margin of governments to lower taxes and fees as far as possible, as well as state aid, mainly for small and medium-sized companies. The toolbox addresses current impact and focuses on immediately available short-term measures.

And in relation to the latter, with the medium term and with a view to the gas package that will be presented at the end of the year, Brussels announces that it will study measures – some of the proposals by Spain – to improve “preparation for price shocks and supplies “. In this sense, the Community Executive has on the table to accelerate the share of renewables, and in relation to supply, “to examine in depth the reserves, joint purchases and the electricity market.”

Brussels acknowledges that storage has already been weighed in the past, but ended up being discarded: “We will return to it without prejudice with a view to the December gas package. The current framework, which is 2019, is working well, but we will analyze it.”

Sira Rego, IU spokesperson in the European Parliament, said: “These are insufficient measures to really solve the problem. The Commission does not question the real problem that electricity prices are at record levels. This problem is called the marginalist price model. , of which the Energy Commissioner, Kadri Simson, has made an extreme defense “.

“The long-term solution is to rethink our energy mix towards renewables. We must improve interconnections, which, for example in Spain, are below the 10% target, and create a competitive energy market with fewer entry barriers “, said Susana Solís, a Citizen MEP.

France is one of the countries, along with Spain, that is pushing the most to reform the electricity market, particularly with regard to the marginalist system whereby the most expensive energy sets the final price, in this case gas. However, Brussels has doubts about this disengagement, because it defends that these “benefits fallen from the sky” allow renewables to accelerate their development and increase production and their share in the mix energetic. Spain, in any case, is already legislating to pass on part of those benefits fallen from the sky in reductions in the electricity bill.

The European Commission is concerned that the debate on the energy crisis does not lead to the questioning of the energy transition, something that Hungary is already doing, for example. That is why he expresses his concern for “the just transition” and helping vulnerable families. “There are green measures that do not come into operation until 2026, so they cannot be blamed for the price spikes, and energy poverty is a real thing at the moment. In addition, States have 26.3 billion derived from the trade in rights of emission of the European Union (ETS), that will increase with the new European legislations “.

In any case, the European Commission assures that “there are no risks of gas shortages this winter, according to consultations with suppliers. According to market forecasts, prices should return to normal from March.”

One of the issues of concern in the EU is Russia’s dependence on gas. In this sense, the European Commission is talking with Ukraine, a country with good gas storage capacity. And he points out to Gazprom: “It is a company that usually fulfills its contracts, but at this time of crisis it has not increased supplies, perhaps for market reasons, for the increase in prices in Asia, for the needs of Russia … In any case, we believe that Gazprom is a company from which an increase in supplies can be expected at a time like this. ”

Short-term measures

Brussels specifies a number of measures that states can take immediately: provide emergency income for consumers with energy shortages, for example, through vouchers or partial bill payments, which can be financed with ETS revenues; authorize temporary deferrals of bill payments; apply safeguards to avoid network disconnections; provide temporary and targeted reductions in tax rates for vulnerable households; provide support to companies or industries, in accordance with EU rules on state aid; improve the international scope of energy to guarantee the transparency, liquidity and flexibility of international markets; investigate possible anti-competitive behavior in the energy market and request the European Securities and Markets Authority (ESMA) to further improve the monitoring of carbon market developments; facilitate wider access to renewable energy purchase agreements and support them through complementary measures.

“These measures,” says Brussels, “could be partly financed by revenue generated from ETS auctions of rights, levies and taxes on energy prices, as well as environmental taxes. In the current context, ETS revenue higher than expected can be used to finance unforeseen needs for specific social support. Between September 1, 2020 and August 31, 2021, the revenues generated by the auction of ETS emission rights amounted to 26.3 billion euros ” .

Medium-term measures

Among the measures that the European Commission is considering in the medium term are: increasing investments in renewable energies, renovations and energy efficiency and accelerating renewable energy auctions and permitting processes; develop energy storage capacity to strengthen the share of evolving renewable energies, including batteries and hydrogen; ask the European energy regulators (ACER) to study the benefits and drawbacks of the existing electricity market design and propose recommendations to the European Commission where relevant; consider reviewing the regulation of security of supply to ensure better use and operation of gas storage in Europe; explore the potential benefits of voluntary joint procurement by Member States of gas reserves; create new regional cross-border gas groups to analyze risks and advise Member States on the design of their national preventive and emergency action plans; boost the role of consumers in the energy market, empowering them to choose and switch suppliers, generate their own electricity and join energy communities; adopt a rule book for electricity cybersecurity; propose, in December 2021, a Recommendation providing further guidance to Member States on how best to address the social and labor aspects of the green transition.

“The measures are aimed at responding to the current rise in energy prices and will contribute to achieving a socially just and sustainable energy transition”, states the European Commission: “Member States can act and are already taking a number of measures related to taxation, direct income support and other measures aimed at providing short-term relief from the problems that rising prices create for some.At the EU level, a number of measures can be taken in the medium term. Additional measures on storage, market integration and energy communities to ensure more resilient energy markets, better prepared for volatility and the challenges of transition. Advances in energy efficiency and measures to modernize the energy system will reduce energy bills to long term”.




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