EU proposes emergency interventions to tackle high energy prices

The European Commission on the 14th proposed an emergency intervention in the European energy market to ease the recent sharp rise in energy prices. Previously, the much-anticipated proposal to set a gas price ceiling was not included because of the controversy.

The main measures proposed by the European Commission include: member states to reduce electricity consumption by at least 5% during peak hours and reduce total electricity demand by at least 10% by March 31, 2023; a revenue cap of 180 euros per megawatt hour for low-cost power generation companies, including renewable energy; and a tax of at least 33% on excess profits generated by the oil, gas, coal and refining sectors. The latter two measures will help the EU raise about 140 billion euros in funding, the European Commission said.

These unprecedented measures are a necessary response to the energy supply shortages and high energy prices affecting Europe, said European Commission Executive Vice President Timmermans at a press conference. Reducing demand for electricity is the basis for the success of these measures. A cap on huge revenues will prompt highly profitable energy companies to help struggling customers. The era of cheap fossil fuels is over and the EU needs to accelerate the shift to indigenous renewable energy sources.

Since the outbreak of the Ukraine crisis, energy supplies in Europe have been strained by the backlash from EU sanctions against Russia, and gas and electricity prices have soared. Coupled with the extreme weather this summer led to a decline in hydroelectric power generation, as well as the maintenance and closure of some old power plants, so that the past few months the EU power generation has been at a low level, further exacerbating the energy supply constraints and high prices, to consumers and industry caused a huge burden, inhibiting the European economic recovery.

Previously, the European Commission proposed to set a cap on Russian gas prices only, and EU member states are widely divided on this. Some member states are concerned that this measure will further affect Russian gas supplies to Europe and believe that it will not help to calm rising gas prices. In addition, the proposal to implement a gas price cap on a wider scale did not receive broad support. Some member states argue that such a move would lead to more gas being sent to other regions, which would exacerbate the European region's energy woes and jeopardize security of supply.

The European Commission proposal needs the support of a majority of EU member states to be approved. EU energy ministers plan to hold another special energy meeting on Sept. 30.