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How countries stand on tackling the energy emergency

How countries stand on tackling the energy emergency

by host

EU energy ministers descend on Brussels on Friday to discuss their options as Europe faces a catastrophic energy crisis.

They’ll be chewing over five proposals put forward on Wednesday by European Commission President Ursula von der Leyen, as well as other ideas suggested by member countries.

The expectation is that ministers will agree on at least a few areas — including limiting the revenues of power companies not generating electricity with expensive natural gas, and financially supporting ailing utilities.

But other ideas, including capping the price of Russian natural gas and imposing mandatory energy savings, are very contentious.

The ministers aren’t likely to formally adopt any of these proposals, EU diplomats told POLITICO; instead, the Commission will formally present its proposal next week — with a final decision likely to be taken by national leaders next month.

The aim of the summit is to advise the Commission on its proposal, calm highly volatile energy markets and signal confidence to Europeans that everything is under control, diplomats said.

Here’s what to expect at the high-stakes meeting, according to nine national and EU diplomats.

1. Capping profits from power producers

The centerpiece of the Commission’s proposal is to limit revenues earned by companies using non-gas technologies like wind and nuclear to generate power — called “inframarginals” in Brussels-speak — but now earning massive and unexpected profits because the price of electricity is being set by very expensive natural gas. That clawed-back cash is supposed to help consumers deal with higher energy bills.

This proposal has won widespread approval among countries, including Germany, Greece, Belgium, France, Slovakia, Poland, Italy and the Netherlands, either showing openness or fully throwing their weight behind the proposals, said both EU and national diplomats.

But there are complications. Countries have wildly differing energy mixes, and those dependent on gas, like Italy, may get much less money since revenues from gas generators would not be included in this scheme.

The Commission has proposed setting a threshold of €200 per megawatt hour for the scheme to kick in, but France argues that different energy producers should be subject to different rates, according to an energy ministry official.

2. Saving power 

Von der Leyen also called for countries to reduce their power demand through mandatory “smart savings” of electricity at peak hours.

Countries including the Netherlands, Greece, Slovakia and Germany are open to such a policy in principle — though some want cuts to be voluntary, not mandatory.

“We do not plan to implement mandatory restrictions,” Polish Environment Minister Anna Moskwa told Poland’s Polsat television, saying the Commission had no right to make such demands. “I understand that the EC president would like us to save energy, and she can appeal, she can encourage, she can show good examples, but she has no authority to force any country to do so.”

3. Gas price cap

Setting a price cap on gas imports is the thorniest issue. 

On Wednesday, von der Leyen suggested limiting the price paid for Russian gas, saying that’s aimed at both protecting vulnerable consumers and squeezing the Kremlin’s revenues.

But some countries, especially in Central Europe, are worried about being totally cut off from what little Russian gas is still flowing into the Continent.

France, Estonia, the Netherlands and at least three other countries are said to be open to limiting the cap to Russian gas. But others — including Poland, Greece, Slovakia, Belgium and Italy — want the Commission to go further and cap the price of all imported gas. Some warn they’ll refuse a price cap that only targets Russia. 

“A cap on Russian gas only is a purely political objective,” Belgium’s Energy Minster Tinne Van der Straeten said. “I don’t see the added value in that. We will not agree to this.”

Belgium and Greece have circulated their own proposals pushing for a cap on all imports.

But Germany is skeptical about the workability of such a scheme, one official said.

“Germany is voicing a lot of concerns,” Van der Straeten said. “We don’t feel strong support from Germany.”

4. Helping utilities

With many utilities facing bankruptcy and looking for bailouts, von der Leyen also said the Commission could “help … facilitate liquidity support” by EU countries for ailing companies. 

That could mean government credit lines for companies needing to trade on exchanges, with EU state aid rules prohibiting such subsidies temporarily waived.

Countries including Germany, Belgium and Poland have expressed openness to this, although others such as Slovakia have reportedly expressed doubts.

5. Squeezing fossil fuel giants

The Commission also called for taxing profits made by fossil fuel companies, with those funds also redistributed to consumers.

“Oil and gas companies have also made massive profits. We will therefore propose a solidarity contribution for fossil fuel companies,” von der Leyen said.

But at least three national diplomats said they had not had enough time to prepare a position on this idea. One senior national diplomat called the wording in the Commission proposal “vague,” and said that further discussion was needed.

America Hernandez, Hans Joachim von der Burchard, Barbara Moens, Camille Gijs, Giorgio Leali and Jacopo Barigazzi contributed reporting.

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