EU countries struggle to unify their response to soaring energy prices

High voltage power lines and electricity pylons pictured near Berlin, November 7, 2006. REUTERS / Pawel Kopczynski / File Photo

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BRUSSELS, December 2 (Reuters) – France, Spain and several others have stepped up calls to reform EU energy market rules to cope with high prices, but have faced the challenge of ‘a group of rival states, including Germany, at the energy ministers meeting on Thursday.

Energy prices in Europe hit record highs this fall amid tight supply and strong demand for gas from global economies recovering from the COVID-19 pandemic. Prices retreated from October highs but remain elevated. Read more

Most EU countries have already used temporary measures to protect consumers against higher bills, including cuts in energy taxes and subsidies for households. Together, the EU estimates that these measures total more than 3.4 billion euros.

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But EU states are divided over their longer-term response. Read more

Germany, Denmark, the Netherlands and six other states said ahead of Thursday’s meeting that they oppose reforms in the EU’s energy market. Price caps or switching to a different system for setting national electricity prices could discourage electricity trade between countries and undermine incentives to build more renewable energy at low cost, they said. Read more

Spain, France, Italy, Greece and Romania responded by calling for changes in EU rules to protect consumers from price fluctuations. They also want EU member states to jointly buy gas to build up strategic reserves and an investigation to identify reforms to the bloc’s electricity market.

The European Commission has announced that it will propose a framework to allow the joint purchase of strategic gas stocks, as part of a proposal to upgrade European legislation on the gas market, expected on 14 December.

Energy Commissioner Kadri Simson said improvements were also needed in power interconnections and the flexibility of European power grids. “Work on all of these issues is ongoing,” she said.

A report released last month by EU energy regulators did not identify any major issues with the design of the block’s electricity market. An investigation by the EU’s securities regulator found that there was no evidence of market abuse in the EU carbon market. Read more

The results were criticized Thursday by some countries wanting to curb financial speculation in the carbon market, which they say has helped push CO2 permit prices to record highs.

“We can no longer pretend that the ETS (Emissions Trading System) is a perfectly functional system (…) it requires in-depth reform,” said Polish climate minister Anna Moskwa.

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Reporting by Kate Abnett, additional reporting from Isla Binnie; edited by David Evans and Emelia Sithole-Matarise

Our Standards: Thomson Reuters Trust Principles.

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