n Dáil yesterday, Tánaiste Leo Varadkar bluntly told Sinn Féin’s Mary Lou McDonald that the government had done everything it could for the time being, spending a total of €1 billion in taxpayers’ money.
He said the government can only ease the burden but hopes the EU’s next move will relax rules to allow at least a temporary reduction in VAT.
The European Commission is trying to get national leaders to endorse an energy cost-cutting plan at their summit tomorrow and Friday, but options are narrow and their impact uncertain.
A cap on gas prices
The Prime Ministers of Italy, Spain, Portugal and Greece will present proposals to limit energy prices. Polish Prime Minister Mateusz Morawiecki said he “fully supported” the plan.
French President Emmanuel Macron, who has 18 days to vote for re-election, has also called for a reform of the EU’s electricity pricing system.
In Spain there are street protests because of spiraling energy prices and Madrid has been calling for EU emergency measures since September last year. Greek Prime Minister Kyriakos Mitsotakis proposed a gas price cap earlier this month. The Belgian Prime Minister Alexander De Croo has also spoken out in favor of a price cap and is committed to other countries.
But the markets can win
Germany and the Netherlands say that if the EU decides to pay less for gas, suppliers may well choose to sell elsewhere.
Brussels diplomats also say that decoupling gas and electricity prices is not realistic, as electricity is often generated from gas. The reality is that gas is the largest input to the generation of such electricity.
Longer term fixes
All EU governments know that the real answer is to find more supplies outside of Russia. Hence attempts to get closer to Iran on nuclear power in order to secure oil and gas from there.
This contrasts with a slowdown in the promised phase-out of nuclear power in some countries and a similar rethinking of gas and even coal.
Efforts are being made to reduce Russia’s energy dependency by two-thirds by the end of the year and to end all imports by 2027. It does exist doubt here.
EU bulk purchasing of energy
The final crisis of bulk vaccine buying could be a blueprint where energy is bought in bulk for equitable distribution.
EU Commissioner Maros Sefcovic said member governments could support such a move and have the economic clout to make it work.
But that’s for next winter at best.
