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EU leaders on Friday spent an inordinate amount of energy bickering over how best to protect voters and businesses from rising energy prices.
In the end, at the end of a two-day summit focused on Russia’s war on Ukraine, leaders agreed on an all-under-the-sun approach that would most directly allow Spain and Portugal to raise gas prices to limit and, accordingly, to their prime ministers, to provide quick relief to budgets in need of money.
In the longer term, the measures backed by leaders aim to end Europe’s dependence on fossil fuels supplied by Russia once and for all – an aspiration that existed before President Vladimir Putin’s invasion of Ukraine, but now an urgent security imperative. Germany, for example, wants to be free of Russian oil and coal by the end of the year.
“We will continue to increase our support for Ukraine,” European Commission President Ursula von der Leyen said at the summit’s closing press conference. “We will tighten our sanctions and rid ourselves of Russian fossil fuels.”
Earlier on Friday, von der Leyen appeared in Brussels with US President Joe Biden to announce a plan for the US to help Europe end its dependence on natural gas from Russia. They set a target of an additional 15 billion cubic meters (bcm) of US liquefied natural gas to EU markets this year and 50 bcm more annually by 2030.
Russia now sends the EU 155 billion cubic meters per year, or about 40 percent of the total gas consumption of EU member countries. The announcement with Biden signaled the seriousness of the EU from a political perspective, but the question immediately arose as to whether the US could ever achieve the ambitious goals outlined by the leaders.
Leaders spent much of the rest of Friday grappling with the particular demands of Spain and Portugal, countries that are literally “off the grid” when it comes to the broader EU energy system.
“The Iberian Peninsula has a very special situation – the energy mix there has a high proportion of renewable energies,” said von der Leyen. “And that with very few connections. And that is why we have agreed on a special treatment that is possible for the Iberian Peninsula, so that the Iberian Peninsula can deal with this very specific situation that they find themselves in.”
The EU’s electricity system pegs the price of electricity to the last fuel used to meet demand, which is usually natural gas, and this has led to high electricity prices as the price of natural gas has risen eightfold over the past year.
The European Council’s decision was not enough to give Spanish Prime Minister Pedro Sánchez and Portuguese Prime Minister António Costa the flexibility they had requested to fully “decouple” or “unbundle” the price of gas from consumers’ electricity bills – or intervene with the widest possible power to enforce price controls.
But the council’s decision to allow “temporary emergency measures” was victory enough for Sánchez and Costa to appear together at a triumphant joint press conference.
“Our discussions and proposals with the energy ministers have resulted in a very beneficial agreement for the Iberian Peninsula,” said Sánchez, adding: “We led the debate and achieved the goal we set in this council.”
Countries that had resisted government intervention in energy markets were awarded concessions that give the European Commission powers to assess proposed contingency measures and require it to ensure such moves do not undermine trading conditions in a way that “demands contrary to common interest”. .”
In a way, the result was classic EU fudge, giving all leaders a chance to claim some sort of victory and sidestepping some of what could be the most difficult policy decisions.
The spike in energy prices, exacerbated by the war in Ukraine, has exposed Brussels’ extremely limited ability to help given the wildly different conditions of energy markets in different EU member states. At the press conference, von der Leyen acknowledged that there is no panacea and that every approach has disadvantages.
“We looked at various options to mitigate the impact of high energy prices on consumers and businesses – measures such as income support or state aid, vouchers, reduced taxes, price caps, price adjustments, contracts for difference, etc.,” she said. “All the options we presented have pros and cons.”
Among the moves agreed by EU leaders was a plan to pool the purchasing power of the 27 countries.
“The energy mix … in our member states is very different,” von der Leyen said. “But we have to work together.”
French President Emmanuel Macron said of the proposal to buy gas jointly that “there is cooperation [on] A long contract is the best tool to bring gas prices down.”
In addition to the short-term measures, said von der Leyen, the Commission is also looking at “the design of our energy market” – i.e. “the question of decoupling the gas price from the overall electricity price”. On this complex issue, she said: “We will present options for this in May.”
Sánchez and Costa did not provide any information about their plans. The two prime ministers said they would be quick to come up with proposals to reduce electricity bills for citizens and businesses, but that it was impossible to predict how much relief consumers could expect.
The protracted debate over ending the EU’s dependence on Russian energy has shown leaders’ insistence on countering Putin’s war in Ukraine. Thursday saw back-to-back war-focused NATO, G7 and European Council summits, and by the end of Friday’s discussions, many leaders were sleeping from exhaustion.
Chancellor Olaf Scholz told reporters that Germany’s independence from Russian energy was “a tall but solvable task.”
He didn’t say how long that would take, but emphasized: “It will go much faster than some fear.” Speaking about Russia, he then added: “It will also go much faster than some people might wish. “
Scholz added: “That everyone now wants to become self-employed [of Russian energy] means, of course, a strategic deterioration of Russia’s situation also in economic terms … it is a dramatic change in Russia’s development and income prospects. The war is already having a dramatic cost for Russia and is a huge mistake.”
During the summit, leaders re-elected Charles Michel as Council President for a second two-and-a-half-year term. And Macron surprisingly announced at his own final press conference that France, Greece and Turkey would embark on an evacuation mission to rescue people from Mariupol, a Ukrainian city on the Azov Sea almost completely destroyed by bombing.
In their summit decisions, leaders also raised concerns that the war in Ukraine could lead to a global food crisis, particularly because of the shortage of wheat, of which Ukraine is the main producer.
The leaders also discussed plans for an April 1 summit with China. However, many of their conclusions were devoted to the war and related security concerns. They called on Putin to end military hostilities immediately and approved a new blueprint for EU security policy, the “Strategic Compass”.
Maïa de La Baume, Lili Bayer, Giorgio Leali, Paola Tamma and Hans van der Burchard contributed reporting.
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https://www.politico.eu/article/eu-chief-channel-energy-cut-russia-gas/?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS_Syndication EU chiefs channel energy to cut off Russian gas - POLITICO