By European energy ministers’ meeting today in Brussels was not able to agree on European measures to limit the energy cost. Many countries have already done this with national measures. European citizens pay 3 or 4 times more gas and electricity and some countries have already taken their own countermeasures: by setting a national price cap paying the difference between purchase and sale to citizens and businesses or by providing subsidizing to the citizens. The measures proposed by the European Commission do not convince many States, as they judge them dangerous for the security of their respective countries.
Brussels, 30 September 2022
Why gas cap is not working?
First of all, because Europe buys the gas it needs, but does not produce it. So pricing it to the seller is just an illusion, as they will not sell it to us, because the world gas market is much larger than the relatively modest consumption of Europe. Then, because, as an ancillary measure, it should oblige EU Member States to stop buying gas at prices higher than those set in Brussels. And here the possible closure of all the taps is at stake. Because if the producing countries create a cartel, they fix the price and our governments will no longer be able to buy it. At this point only military wars can get us the gas by force.
But governments know that without openly declaring a military war, they will not be able to control the revolt of their citizens.
The today agenda
The proposal included:
- measures to reduce electricity demand during peak hours in order to decrease electricity prices for consumers. Result: they “agreed” on a 5% reduction of 10% of the peak demand between December and March 2023. In fact, this reduction is not imposed by Brussels but becomes a necessity because energy resources would still be lacking.
- measures to collect surplus revenues from the production of electricity from non-fossil sources. Result: They agreed to limit to € 180 / MWh and use the margin to reduce the price of household bills. In fact, these are already measures put in place by the Member States…
- solidarity contribution from the fossil fuel sectors’ surplus profits, which will be used to alleviate the impact of high prices on final customers and further protect electricity retail customers. Result: They have decided to impose a 33% tax on extra profits on the producer to reduce utility bills. Many Member States have already decided to apply such a tax at national level, but it seems that this measure is not feasible even for constitutional reasons in many countries.
Ministers then hold an exchange of views on further policy options to mitigate high gas prices, but besides an exchange of views there will be nothing concrete.
Application
The measures, included in a new Council Regulation, are temporary and extraordinary in nature.
They will apply from 1 December 2022 to 31 December 2023. The reduction targets of energy consumption shall apply until 31 March 2023. The mandatory cap on market revenues shall apply until 30 June 2023.
Member states introduced specific exemptions for Cyprus and Malta.
The Regulation will be formally adopted by written procedure in early October. It will then be published in the EU’s Official Journal and enter into force on the next day.
Complete Council Conclusions here
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