Energy price spike concerns EU countries

Energy price spike concerns EU countries

Some European Union countries, including France and Spain, moved up calls to reform the bloc’s energy market rules to cope with soaring prices, a stance challenged by a competitive group of states including Germany, as EU energy ministers converged on Thursday.

Tight gas supplies collided with high demand in economies improving from the coronavirus epidemic. Hence, european energy prices rose to record highs in autumn. While gas prices have withdrawn from the record highs witnessed in October, they remain relatively high.

Leaders and ministers held multiple emergency meetings to discuss the issue in recent months. However, EU member states have fought to find a typical response to the high prices.

On Wednesday, Germany, Denmark, the Netherlands, and six countries issued a joint statement rejecting EU energy market reforms.

Price caps or changing to a different system of establishing national power prices could dampen electricity trade between countries and undermine incentives to add low-cost renewable energy to the system, the countries stated.

Guarding consumers against higher bills

The second club of countries, Spain, France, Italy, Greece, and Romania, fired back with a joint statement asking for EU rules to shield consumers from swings in energy prices, for instance, by demanding power providers to submit at least one contract based on power supplies bought a year or more in advance.

They also asked for joint gas buying among EU countries to form strategic reserves and review its electricity market reforms.

An initial report by EU energy regulators, issued last month, did not identify significant current power market design issues. A separate inquiry by the bloc’s securities watchdog said no evidence surging prices in the EU carbon market had been created by market abuse.

Many EU countries have previously used temporary national measures to shield consumers from higher bills. This includes energy tax cuts and household subsidies. The Commission has stated it will study the benefits of longer-term options such as joint gas buying.

Ministers will also on Thursday evaluate progress in negotiations to set more challenging EU targets to increase energy efficiency and expand renewable energy this decade.