Brussels, Belgium – All eyes are on Brussels this week as European Union leaders convene in Belgium’s capital to discover a joint resolution to sort out the power disaster, which has been gnawing on the bloc for greater than a yr.
Power costs – decided by the value of crude oil, pure gasoline and coal – started hovering final yr on account of COVID lockdowns being lifted, adopted by Russia’s invasion of Ukraine this yr.
“Russia’s battle on Ukraine has extreme penalties on world and European power markets,” European Fee President Ursula von der Leyen mentioned at a press convention within the French metropolis of Strasbourg on Tuesday.
Earlier than the battle, 40 % of the gasoline used within the EU was provided by Russia. However in July, on account of Moscow’s aggression in Ukraine, the bloc agreed to chop Russian gasoline utilization by 15 %, in an effort to wean off its dependency.
In retaliation, the Kremlin minimize gasoline provides to the EU with Russian gasoline large Gazprom saying that the Nord Stream 1 (NS1) pipeline, which delivers gasoline to EU nations like Germany, could be shut for upkeep work indefinitely.
Jacob Funk Kirkegaard, a senior fellow on the German Marshall Fund of america in Brussels, instructed Al Jazeera that Russia’s actions might imperil the European power disaster “lots” within the brief time period.
“However within the medium and long run, it is going to enormously speed up the EU’s inexperienced agenda, serving to the bloc transition to utilizing extra photo voltaic, wind and nuclear power, and likewise turn into impartial of Russia, OPEC [a global cartel of petrol-producing nations] or every other fossil gas producers,” he added.
Divisions on worth caps
After European gasoline costs reached a file excessive of greater than 343 euros ($335) per megawatt-hour in late August, protests erupted throughout the EU with individuals calling on the bloc to search out sustainable options.
However in line with Kirkegaard, EU nations will proceed pursuing totally different methods due to their home circumstances.
“There’s a trade-off between social peace, power demand and monetary prices that every authorities must discover in line with their very own circumstances,” he instructed Al Jazeera.
“Given the destructive affect the power worth rise has on residing requirements and buying energy, it’s fairly predictable that protests will happen,” Kirkegaard added.
Some EU nations, like Belgium, Italy, Poland and Greece, are eager to set a restrict on gasoline costs. Others, like Germany and the Netherlands, worry a worth cap would paralyse the gasoline provide market.
European Council President Charles Michel has referred to as on the 27 EU leaders to reach at a united technique on worth caps by specializing in “decreasing demand, guaranteeing safety of provide and containing costs”.
The leaders will meet in Brussels on October 20 and 21 and likewise talk about whether or not the price-cap scheme launched by Iberian nations Spain and Portugal over the summer season, could possibly be launched at a pan-European degree.
European Commissioner for Power Kadri Simson mentioned that the “Iberian mannequin” could possibly be helpful, however instructed reporters in Strasbourg on Tuesday that the European Fee wouldn’t help a worth cap. She mentioned it will result in a rise in gasoline demand, inducing costs to extend as soon as once more.
The EC proposal
In the meantime, to help residents and companies affected by the power excessive costs, the European Fee has proposed to allocate funds price near 40 billion euros ($39bn) from the bloc’s funds.
“We are going to all introduce a brief mechanism to restrict extreme costs this winter, whereas we develop a brand new benchmark in order that liquified pure gasoline (LNG) shall be traded at a fairer worth,” von der Leyen instructed reporters in Strasbourg.
To make sure costs finally stabilise, the fee has additionally referred to as on EU nations to collectively buy no less than 15 % of the gasoline quantity wanted to satisfy their particular person gasoline storage targets.
The facet of setting a worth restrict on gasoline trades on the Title Switch Facility (TTF) – a Dutch gasoline centre which serves as the muse for gasoline buying and selling in Europe, to be able to deliver down gasoline costs, was additionally proposed. However the fee added that this worth restrict wouldn’t distort the demand and provide of gasoline.
These proposals shall be mentioned by EU leaders later this week.
‘Transition to new sources’
In the meantime, environmental companies are frightened that the EU’s options to balm the power disaster within the face of the escalating battle would hurt the setting additional.
“Elevated power targets will assist decrease our dependency on Russian fossil gasoline, improve member states’ power safety – defend houses, communities and companies from skyrocketing power payments in addition to the worsening impacts of the local weather disaster, for protected winters and summers,” they mentioned in a letter directed to the Czech Republic’s Prime Minister Petr Fiala, whose nation presently holds the presidency of the Council of the European Union.
Frans Timmermans, govt vice-president of the European Fee, mentioned that the EU would concentrate on transitioning to renewable sources of power and referred to as on EU nations “to contemplate methods to fund extra funding in Europe’s inexperienced power transition”.
On October 14, Greece toyed with powering electrical energy utilizing solely renewable sources of power like photo voltaic and wind power for 5 hours.
In response to the nation’s Impartial Energy Transmission Operator, at 9am native time (06:00 GMT), a file excessive of three,106 megawatt hours of electrical energy was generated.
Nikos Mantzaris, a senior coverage analyst at Athens-based think-tank the Inexperienced Tank, instructed Al Jazeera that Greece’s instance might function a mannequin for coal-plagued nations equivalent to Poland, Czech Republic and Bulgaria.
“The EU also needs to transfer from subsidising consumption of electrical energy and fossil gasoline in the direction of subsidising power financial savings in addition to initiatives, which can decrease the carbon footprint completely,” he added.
Kirkegaard shared an analogous view and highlighted that the EU might study classes from the previous.
“In 1973, there have been additionally power worth spikes due to an oil shock. The principle lesson from these experiences is that it’s worthwhile to scale back demand and it’s worthwhile to transition to new sources of power,” he mentioned.
