William Malcolm

EU Countries Split Over Joint Response To Energy Price Spike

The European Commission will examine the benefits and risks of joint gas purchases, which are supported by some European Union countries in response to the current rapid rise in energy prices. This was said today by EU Commissioner Kadri Simson after talks with EU energy ministers. At the same time, despite calls for swift action, government representatives did not agree on clear support for any longer-term measures. While some countries, such as France and Spain, have called for market reform and a change in electricity pricing, other countries, led by Germany, have opposed it. The Czech Minister of Industry, Karel Havlíček, advocated in particular the regulation of the market for emission allowances, which, according to him, is supported by half of the states.

Most EU ministers spoke about short-term interventions such as tax breaks or financial support for citizens and businesses to reduce the immediate impact of unprecedented energy prices. On the issue of a longer-term plan, however, the countries are divided, which was reflected last Thursday at the summit of EU leaders, who agreed on general wording rather than on a concrete way to ensure affordable electricity and gas. Today’s ministerial meeting turned out to be similar, although many of its participants, including Havlíček, spoke about the need for swift action.

“We did not agree on a unified position as to whether the EU should take joint action, which would be applied in all member states,” Slovenian Minister Jernej Vrtovec, whose country is chairing a ministerial meeting this semester, told reporters.

According to Simson, at the request of some states, Brussels will begin to find out how much benefit joint gas purchases could be. The EU could buy gas at a time of low prices and store it for later use.

“We need to consider a number of aspects: who will pay for the purchase and storage of gas, how the gas will be transported from different regions,” she said after the meeting. Some countries believe that the joint procurement plan, the details of which the Commission could come up with by the end of the year, could strengthen the EU’s negotiating position. Some states, led by Poland, criticize Russia’s approach, which they say as a key supplier does not currently provide the Union with as much gas as it could.

According to Havlíček, a number of countries also demanded regulation of the market for emission allowances, which the Czech Republic has been promoting for a long time. At the summit, Prime Minister Andrej Babiš demanded that the EU prevent possible speculation on the prices of allowances, and that EU leaders finally ordered the commission to check the functioning of the market.

“Certainly half of the countries were in favor of intervening in the market for emission allowances. There were also countries that strictly reject it, so I would not say that there is a clear result in this,” Havlíček told reporters after the ministerial meeting. Based on this analysis, the EU will be able to resort to possible regulation that could reduce the prices of allowances, which he says are unbearable for many companies. According to the commission, the European Energy Inspectorate should have the analysis ready in mid-November.

Ministers also talked about immediate measures, on which countries mostly agree. Havlíček mentioned the Czech plan for the temporary introduction of zero value added tax (VAT) on energy, which was approved by the government for November and December. However, current EU rules do not allow this, and according to Havlíček, Prague hopes that due to the difficult situation, the commission will have an understanding for this step and will not file a lawsuit against the Czech Republic. “At the moment, we do not want to take off our trousers in front of the ford and we want to negotiate the maximum possible advantage, ie up to zero,” the Czech minister said. However, if the commission did not accept the zero tax and initiated proceedings with the Czech Republic, according to Havlíček, the government is ready to adjust the proposal for reduced VAT to, for example, five percent.