The scarcity, scarcity and volatility that currently characterize the supply of electricity and gas in Europe as a result of Russia's maneuvers in response to Western sanctions, aggravated by circumstantial factors such as the drought, have led the European Union to plan a historic intervention in the markets with the aim of lowering prices. The European Ministers of Energy will participate this Friday in Brussels in an extraordinary council convened by the Czech Presidency of the Council, which has proposed to bring out all the artillery to deal with a rise in prices that is beginning to suffocate households and produce stoppages in industry .
“It is critical to analyze the events in the markets and identify possible measures to respond to the high prices of electricity derived from the high prices of gas”, affirms the document sent to the capitals last Friday, the same day that Gazprom announced a new closure of the NordStream 1 gas pipeline for alleged technical reasons, a decision that provoked a strong reaction from Brussels, which accused the company of hiding behind "false pretexts" and denounced "a display of Russian cynicism, which prefers to burn the gas than fulfill its contracts ”.
Friday's meeting will focus on the adoption of the emergency measures announced a week ago by Ursula von der Leyen, president of the European Commission, whose technicians have spent weeks analyzing the advantages and disadvantages of unprecedented measures to try to control the prices of Energy. Among the initiatives proposed by the Czech presidency of the EU to decouple the price formation of both goods, the application of a cap on the price of gas used to produce electricity stands out, as the G7 has agreed to do with Russian oil. Failing that, it is proposed to apply this limit at least to the gas that comes from “certain jurisdictions”, in reference to the one that is bought from Moscow, on which Germany and other Central European countries depend especially.
The other problem identified by the European Union is the lack of liquidity in the market. “Electricity generating capacity in the EU has been [this summer] significantly lower than usual due to falling nuclear output in some countries, reduced hydropower, low levels of the Rhine and other rivers. , which has affected the transport of coal, as well as the unfavorable conditions of the wind sector”, states the aforementioned document, which emphasizes that the lower production of electricity through these routes is increasing the demand for gas, aggravating the price problem.
Among the options that will be presented to the ministers are the intervention of the European Central Bank to reinforce the lines of credit for some operators who are experiencing situations of strong pressure, modify the rules of energy commercialization, for example by lowering the regulatory obligations on collaterals, the temporary suspension of operations in the electricity derivatives markets or, failing that, of certain bands in the futures markets. The other measure that has been discussed the most in recent days in Brussels is a variant of the Iberian exception approved last spring for Spain and Portugal. Instead of acting on the price of gas, it is proposed to act on the revocable ones by adopting a cap on the profits that electricity companies can obtain for this type of energy (currently, they are the so-called intra-marginal operators of the market, cheaper than gas), so that the price difference is directed to a fund that allows governments to adopt price relief measures for consumers.
Although all possibilities are open, the Czech presidency warns that the measures adopted should not lead to an increase in consumption or compromise the objectives of reducing gas demand. Thus, although the document sent by the Czech Presidency of the Council to the 27 member states for them to state their preferences also evokes measures such as the revision of the CO2 emission rights system with a view to relaxing the limits and giving options to the Governments, but The measure on which the entire plan rests is the reduction of global electricity consumption. In the same way that the EU adopted, in July, a coordinated plan to reduce gas consumption, through voluntary measures that could become binding in the event of a shortage, Brussels and Prague are proposing a similar initiative to reduce electricity demand.
In parallel, the debates continue on a total reform of the design of the electricity market "with which we are better prepared to face similar market conditions in the coming years". One of the internal documents prepared by the Commission's technicians indicates in effect that the tensions, although they should loosen, will not be resolved before the year 2024 or 2025. Until recently, the taboo subject of decoupling the price of gas from electricity has jumped up in the air as a result of rising prices and tensions in supply. Although the measures that the European Commission has opened to study (“late” in the opinion of many, including Charles Michel, the president of the European Council) are unprecedented, the left-wing groups in the European Parliament demand more forceful interventions
"It seems that finally it was possible to change the model and that a planned strategy can even be proposed to reduce the demand for gas," MEP Sira Rego (Podemos) ironically joked last week during a debate with the Commission, who recalled that his group has been demanding a reform of the marginalized electricity market for some time “especially due to the disastrous effects of climate change and the strong dependence on imports”. Now, "in addition, we must have a long-range plan that is only fair and sustainable, which is only possible through a planned strategy based on the general interest," said the failed candidate of the European United Left for the presidency of the European Parliament.
