The European Fee confirmed on Wednesday (13 October) that it was investigating possible “manipulative practices or abuses” by corporations producing and supplying pure fuel to Europe and whether or not sure commerce patterns have influenced the carbon worth improve.
The announcement was a part of a ‘toolbox’ of measures at each nationwide and European stage to mitigate the impacts of skyrocketing power costs on companies and susceptible households.
“Rising global energy prices are a serious concern for the EU. As we emerge from the pandemic and begin our economic recovery, it is important to protect vulnerable consumers and support European companies,” stated EU power commissioner Kadri Simson.
The EU’s power market is at the moment in turmoil because of a surge in fuel and electrical energy costs, primarily pushed by a rise within the world demand of fuel and partly by an increase in carbon costs below the EU’s emissions buying and selling scheme (ETS).
Beneath the ETS, based mostly on a cap-and-trade system, a worth is placed on carbon emissions and emission-allowances are then auctioned. This 12 months, the carbon costs doubled from round €30 to €60 per tonne of CO2.
However in accordance with the EU fee, the impact of the fuel worth improve on the electrical energy worth was 9 occasions greater than the impact of the carbon-price improve.
The state of affairs has prompted most member states to take motion at nationwide stage, capping costs, imposing non permanent tax breaks, and intervening in markets.
However the fee has referred to as on EU governments to additionally use the additional revenues from the inner carbon market to help their most susceptible shoppers, for instance, by way of issuing vouchers or by paying components of their power invoice.
From September 2020 to August 2021, revenues generated from the auctioning from ETS allowances quantity to €26.3bn.
Moreover, member states might defer energy-poor shoppers’ funds quickly or put ahead measures that prevented operators from disconnecting folks’s fuel or electrical energy provide even when they may not pay their payments, the EU govt stated.
A labour organisation final month discovered that just about 3 million employees within the EU can not afford heating their houses.
However general, some 34 million Europeans are struggling to pay their heating payments.
Different measures put ahead on Wednesday to scale back the social impression of the worth surge included decreasing taxes for essentially the most susceptible, establishing focused assist to affected trade gamers, or offering extra flexibility to smaller corporations to entry renewable sources.
Spain, which has seen electrical energy costs triple this 12 months, lately decreased a particular electrical energy tax from 5.1 p.c to 0.5 p.c till the tip of the 12 months and the general tax on family power from 21 p.c to 10 p.c.
Frequent fuel buy?
Beneath its new communication, the EU Fee insisted that the present surge of costs was not a results of the Inexperienced Deal, however was as a result of Europe’s dependency on fossil fuels – mentioning that the decarbonisation of Europe’s power system would scale back future publicity and danger of worth volatility.
“Fossil fuel prices are spiking. We need to speed up the green transition, not slow it down,” Simson stated.
Pure fuel represents round 1 / 4 of the EU’s power consumption, however 90 p.c is imported from third international locations, specifically Russia and Norway.
Because the EU govt acknowledged that fuel had a task to play within the inexperienced transition, strategic fuel reserves have gained relevance, particularly since storage just isn’t out there in all EU states.
Brussels additionally confirmed on Wednesday that it could discover the potential for voluntary joint procurement of fuel, prompting a extra built-in strategy to storage that would assist mitigate volatility in costs.
The present storage capability covers solely 20 p.c of the EU’s annual fuel consumption, nonetheless.
Decoupling fuel and electrical energy costs
Beneath the present market guidelines, fuel units the general electrical energy worth, however some member states, equivalent to France, have referred to as for decoupling of electrical energy from fuel costs.
The EU fee stated that it’ll assess this proposal, whereas arguing that this pricing mannequin was at the moment seen as essentially the most environment friendly one.
“Intervening in the existing European electricity market design as a way to cope with the current price crisis is likely to be inappropriate, as it would require altering a very sophisticated set of rules which took more than a decade to be agreed upon,” Nicolò Rossetto, a analysis fellow on the Florence College of Regulation in Italy, informed EUobserver.
Gasoline costs are projected to stay excessive throughout the winter and to start to fall from April subsequent 12 months.
The toolbox of measures might be mentioned on the subsequent EU summit on 21 to 22 October.