The European Fee on Tuesday introduced a raft of recent emergency measures — together with looking for a value cap on a key fuel buying and selling hub if costs spike — aimed toward serving to international locations supply and retailer sufficient fuel for subsequent 12 months.
The strikes, which embrace asking EU international locations to raised coordinate joint fuel buying and establishing a brand new buying and selling benchmark for liquefied pure fuel, are aimed toward serving to the bloc get sufficient fuel to stop one other vitality disaster subsequent winter. The proposal largely sticks to measures acceptable to member international locations and dodges areas the place there isn’t any consensus, like detailing a value cap on imported fuel.
“We have been working very laborious within the final month towards the fallout of the vitality markets, and now we have made progress,” Fee President Ursula von der Leyen said as she offered the emergency bundle. “On this foundation, we are able to now take additional steps in direction of an actual vitality union … we wish to be higher ready for the following filling season.”
The EU has already achieved a number of milestones in securing sufficient fuel provides for this winter after Russia’s invasion of Ukraine threw markets into disarray. The bloc’s fuel reserves at the moment are 92 p.c full whereas reliance on Russian fuel has dropped from 40 p.c to under 10 p.c. Surging costs are additionally prompting a steep fall in demand, down an annual 15 p.c in September.
Capitals have additionally secured an extra 24 billion cubic meters of fuel this 12 months, in response to a brand new report by the Bruegel assume tank — whereas international locations together with Germany and Belgium have agreed to increase the lifespan of their nuclear energy vegetation.
Fuel futures fell to a low of €107 per megawatt hour on Tuesday, down from a peak of €350 per MWh in late August.
“You can’t depend on Russia, and now we have to take our selections in an unbiased method,” von der Leyen stated.
EU leaders are set to debate the Fee proposal after they meet in Brussels for a European Council summit on Thursday and Friday; the difficulty can even be debated by vitality ministers subsequent Tuesday.
The Fee can also be looking for permission from international locations to spell out extra contentious measures, together with default guidelines that may power them to share fuel provides in emergency conditions. Presently, international locations are inspired to arrange “solidarity agreements” for this objective, though simply six have thus far been arrange.
“This isn’t sufficient in a disaster of this scope,” von der Leyen stated.
The EU govt additionally needs the facility to set a short lived value cap on the EU’s benchmark fuel buying and selling hub, the Dutch TTF, in emergencies resulting from “episodes of extreme fuel costs.”
Strengthening joint fuel buying, particularly, is a “good initiative,” stated Bruegel senior fellow Simone Tagliapietra, as a result of low Chinese language demand for fuel this 12 months has helped the EU buy extra LNG from world markets — one thing that might change in 2023.
The bloc can even mobilize €40 billon from leftover EU regional funds to assist companies and weak customers dealing with sky-high vitality costs.
It is “extraordinarily necessary so as to have a nucleus for a European fund … as sure international locations can present extra assist than others,” Tagliapietra stated, holding an equal stage enjoying area for poorer international locations that may’t afford to supply multi-billion-euro aid packages for customers like Germany.
Worth cap hole
However some international locations aren’t blissful that the Fee is once more dodging their calls for.
“These proposals proceed to depart a sense that we aren’t performing with the pace and depth that’s required,” stated Spain’s Minister for Ecological Transition Teresa Ribera. “We ask {that a} benchmark for fuel costs be proposed to exchange the Dutch TTF, however that it’s performed now.”
A bunch of 15 EU international locations needs the Fee to suggest a cap on the worth of imported fuel. However the situation has break up capitals, with international locations together with Germany, Denmark and the Netherlands skeptical of setting a value restrict, nervous it might have an effect on the bloc’s safety of provide.
“The EU Fee is true to be cautious … What’s going to we do if LNG tankers are redirected to Asia?” said Claude Turmes, Luxembourg’s vitality minister, in response to the concept.
One other fear is that setting a fuel value cap would power the EU to manually allocate fuel provides if vitality demand in a number of international locations spiked on the similar time.
“How would that work? We’d want somebody within the Berlaymont basement switching the fuel on and off with a joystick to resolve who will get the fuel,” stated one EU diplomat.
Karl Mathiesen contributed reporting.