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The Twenty-seven urge Brussels to seek more alternatives to limit gas prices


EU ministers approve reducing electricity demand, taxing renewable and nuclear energy and imposing a "solidarity contribution" on fossil fuels, but remain divided on how to intervene to lower prices

The battle to contain skyrocketing energy prices in Europe is going to be waged in the coming days in the field of intervention in the price of natural gas that reaches the community bloc.

The Twenty-seven have given their final approval this Friday to the most urgent measures they had on the table: a reduction in electricity demand, taxing the extraordinary benefits of inframarginal energies (renewable or nuclear) and imposing a "solidarity contribution" to the fossils.

But a majority of Member States, like Spain, want to go much further and demand significant interventions to limit the price of gas, not just the Russian one, as proposed by the European Commission.

Their demands are met with resistance from countries that fear this could affect supply.

They are less, but powerful, like Germany or the Netherlands.

The third vice-president, Teresa Ribera, who had arrived in Brussels "disappointed" by the poverty of some proposals put forward by the Commission that "fall short of what Europe needs", showed herself at the end of the meeting in the Belgian capital quite more satisfied by the growing consensus that they said they found around the need to take more measures, although there are still many differences about how far they should go.

"There is almost unanimous majority support, with little formal dissent, for the need to take measures urgently and that they must go beyond the preliminary analysis" of the Commission, said Ribera, who warned at a press conference of the risk of not acting : "If we don't put a cap on gas, we could have a major impact on EU GDP, on industrial production and on consumers."

“We have to act now, the expectations of the citizens are extremely high and we cannot let them down”, agreed the Czech Minister of Industry, Jozef Síkela, whose country presides over the EU this semester.

The also deputy minister said he is willing to hold the extraordinary meetings that are necessary to conclude the negotiations.

The proposal to cap the price of natural gas in general, not just Russia, which was supported by 15 countries this week in a letter sent to Energy Commissioner Kadri Simson, has been met with strong resistance from both Brussels and a Germany, which until now had been the biggest beneficiary of much cheaper Russian gas, and the Netherlands.


Although Ribera assures that after Friday's meeting both are "open to evaluating other options that allow us to have a direct impact on the price of gas", both Berlin and The Hague have made it clear that they continue to be very concerned about security of supply and they demand guarantees that a price intervention will not endanger them.

"We are not dogmatic," sources familiar with the Dutch and German suspicions assured in the corridors of the Council of the EU this Friday.

But both countries, as well as the European Commission, want assurances – “preconditions”, Commissioner Simson called them – that a general cap on gas prices would not lead to an increase in gas consumption (as they say happens with the so-called “Iberian exception”,

The reticent countries also point out that the 15 countries that have increased the pressure are not a unified block and that they support at least four different formulas on how to limit gas prices.

Those interested, who make up 64.3% of the population and therefore are close to qualified majority, reply that it is above all about showing a "political will" on the need to act now.

"I agree that we need to do more, especially on gas prices, before winter," said Commissioner Simson.

“In the current situation, an EU-wide market intervention is necessary to reduce the costs of gas purchase by consumers and reduce the cost of gas-fired power generation.”

The European Executive, which has had to recognize that its proposal to limit only the price of Russian gas does not have sufficient support, has said it is "open" to studying a proposal similar to the Iberian exception at European level, an initiative for which France has put a lot of pressure on lately.

It also proposes a joint gas purchase platform, something that both Paris and Berlin also support.

According to Ribera, among the Twenty-seven there is also "significant support" for another of Spain's bets: to create a reference index for the European gas market different from the Dutch TTF, which for the moment continues to set prices but which, as highlighted by the Spanish Minister of Ecological Transition, "does not respond to reality today and is distorting the functioning of the gas markets".

In any case, Ribera summed up, the momentum cannot be lost.

"We have to continue working, we have to do it urgently, what we have found on the table today is not enough (...) we would like the Commission to make us a much more complete proposal".

The Commissioner for Energy, whose face showed the impact of the rapa dust that she received in the session held behind closed doors, assured at the end of the meetings that Brussels has understood the message and new alternatives will be presented as soon as possible.

However, he did not want the tension of the meeting on gas price caps - one of the three sessions of the day, in which the ministers were also informed of the situation after the four leaks detected in the NordStream 1 and 2— obscured a fact that all the ministers have also celebrated: the political agreement reached on the urgent measures to be adopted.

Urgent measures: reduction of electricity consumption and taxes on extraordinary profits

The agreement establishes a commitment of the Twenty-seven to reduce 10% of the general consumption of electricity and a mandatory 5% in peak hours.

For this binding measure, the countries have achieved, after intense negotiations, a broader margin of maneuver than initially proposed by the Commission: they must identify 10% of their peak hours between December 1, 2022 and March 31, 2023, during which they will reduce demand by that 5%, but they will have "freedom to choose the appropriate measures to reduce consumption" both in that objective and in the 10%, according to the final agreement.

The countries have also agreed to set a cap price for the inframarginal between December 1 and June 30 next of 180 euros MWh, although countries with measures already in place, such as Spain, will be allowed to maintain their own caps.

Finally, the agreement also implies the imposition of a temporary and mandatory "solidarity contribution" to the profits of fossil energy producers and refineries.

This “contribution” will entail a tax of 33% of any profit greater than 20% of what they have obtained more than the average of the last four years in fiscal year 2022 and/or 2023.

Although all the details will not be known until the measures are registered in the official gazette of the EU, the final document, which according to various sources has not been retouched and to which EL PAÍS had access, includes a new article that aims to close the door to the energy companies so that they avoid paying the temporary rate on the extraordinary benefits that the high prices of raw materials bring them with tax credits.

This is of great importance for Spain, one of the few EU countries that has this type of instrument that allows, especially companies, to reduce their tax bill.

Energy companies accumulate in Spain more than 14,600 million in tax credits, a tax measure that allows companies to deduct accounting losses that could not be deducted when they occurred.

When the Government designed the new temporary tax for energy and banking that is still in the parliamentary process, it taxed income and not profits to make it difficult to avoid the new rate, for which it hopes to collect some 7,000 million.

But the proposal for the emergency intervention that the European Commission put on the table in mid-September foresees taxing profits and not income.

The Executive was quick to point out that when this plan was final and approved by the Council of the EU, it would adapt the design of its tax to the community regulation.

Source: elparis

All business articles on 2022-09-30

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