The EU’s ambitious energy policy coordination plans are gradually being scaled back, leaving Ireland pretty much alone with the budget in five days.
Just last week, European Commission President Ursula von der Leyen unveiled, amid much fanfare, measures to lower electricity prices, including windfall taxes from energy companies to subsidize lower household bills and proposals to reduce electricity use during peak periods.
The happiest assessment is that the ideas received a mixed reception from the government and the Policy Making Commission returned to the editorial offices.
Some details emerging from these revised plans are now closer to some national measures, notably those already being implemented in Greece, Italy and Spain.
The mandatory reduction in electricity consumption demanded by Brussels has reverted to voluntary efforts. Oversight is also likely to be scaled back, with the requirement for national reports on reductions in use now at least being scaled back to a longer timeframe.
So a 10 percent electricity savings target will clearly be voluntary. Brussels officials are now speculating whether a mandatory 5 percent reduction in peak consumption can still be considered mandatory once EU governments finally agree to the plans.
In many respects, the EU Commission has a borderline impossible task ahead of it.
Many member states have already taken a variety of measures to contain the exploding energy prices for households and companies and/or to cushion the energy losses for them through various grants and subsidies.
Brussels-based think-tank Bruegel yesterday published an overview of member states’ energy policies – and it’s packed with staggering details.
The efforts of many member states so far make the Irish government’s efforts seem limited enough, raising the bar again for Paschal Donohoe in Tuesday’s budget.
Ten of the 27 EU capitals have either planned or introduced rules for unexpected taxes, increasing pressure on the Commission to be as flexible as possible with its plans so it doesn’t mess up the national work already being done. Fortunately, Norway, which is not a member of the EU but is closely linked to it, owns state-owned gas and oil and has already provided generous support to households and businesses.
Dedicated non-EU Britain and its new Prime Minister are planning another major package of measures. That financial times yesterday estimated that the total volume of UK energy aid packages could exceed 180 billion euros, or 6.5 percent of the national economy.
Even the otherwise cautious Netherlands announced an energy aid package worth 18 billion euros on Tuesday. When this is added to previous measures, the total is estimated at almost 3 per cent of Dutch GDP or economic output.
Some in the EU Commission and other institutions such as the European Central Bank (ECB) in Frankfurt fear the longer-term impact of such measures on national and European public finances as a whole.
Nobody advocates not taking strict measures. The real concern is that what is being done will not be one-offs, but structural economic measures that have a habit of being permanent.
Bruegel’s global figure for EU governments’ energy aid measures is €500 billion.
“This is clearly unsustainable from a public finance perspective,” Bruegel’s Simone Tagliapietra said of the European Energy Crisis Law.
“Governments with more fiscal space will inevitably weather the energy crisis better, beating their neighbors for limited energy resources during the winter months,” she added.
And all that before Vladimir Putin upped the ante yesterday.
https://www.independent.ie/opinion/analysis/alarm-bells-ring-over-eu-states-500bn-spending-on-energy-subsidies-to-citizens-42008119.html Alarm bells are ringing because EU countries are spending €500 billion on energy subsidies to citizens