Ursula von der Leyen is an unlikely European wartime leader. The former German defense minister and qualified doctor was unknown three years ago before she took office in the policy-determining EU Commission.
Yesterday, after breaking new ground on plans for the EU-27’s first coordinated energy strategy, she flew to Kyiv dressed in blue and yellow to show solidarity with embattled Ukrainians. This seven-month-old war has impacted the daily lives of everyone from the Arctic Circle to Crete and from Warsaw to Lisbon.
In Ireland, like across the EU, the hope is for a mild winter that will spare us peril. It may actually be the only hope to avoid the cold weather. There’s a strong sense that this horror is just beginning.
In her annual State of the Union address to the European Parliament, President von der Leyen attempted to capture a number of key points about how the EU will deal with the impending energy crisis. You are forgiven for not knowing that since 2010 various Commission Presidents have made this annual statement to stimulate debate and test new projects.
Such set pieces only attract attention in times of crisis. At the heart of what Ms von der Leyen had to say was that Member States must levy taxes on energy company profits to cushion households and businesses against rising energy bills.
This is at the heart of a series of emergency measures designed to help 460 million people in the European Union get through the winter of 2022/2023.
Ms von der Leyen’s plans must be supported by member governments. If that happens, the legislation would mark a radical, albeit temporary, shift in the energy policies of the world’s largest trading bloc.
“Not just a quick solution, but a paradigm shift, a leap into the future,” summarized Ms. von der Leyen.
It is useful to remember that what is happening is not limited to Ireland. Households across the EU are facing high electricity bills, which have increased fivefold over the past year. In the face of energy shortages, all national governments were intensively searching for alternative supply options.
The plans of the EU Commission stipulate that the national governments must limit the income of providers of nuclear energy and renewable energies to 180 euros per megawatt hour.
It predicts this could generate about €117 billion in excess profit a year, which should go towards subsidies for struggling households and businesses facing soaring energy bills.
The next part will never be popular – but it will remain all the more true for it. There is no way out of the crisis, warned the EU Commission President, unless European countries curb energy demand.
The real hope of avoiding a winter of blackouts and rationing is for Europeans to cut their energy use by 5 percent during peak periods.
Crucially, all governments are striving for more energy savings. Ms von der Leyen pointed out that some European companies have already voluntarily shifted their working hours to off-peak times when electricity is cheaper.
At the heart of this energy crisis are two issues. First, mainland Europe had been too dependent on Russian gas for too long, accounting for 40 percent of the bloc’s consumption before war broke out on February 24.
In an effort to punish Europe for supporting Ukraine after the Russian invasion, Moscow abruptly cut off supplies of natural gas to the EU.
The second problem is that EU electricity prices are benchmarked using the price of the most expensive fuel, which is currently natural gas. A by-product of this reality is that renewable energy companies, which use wind or solar to generate electricity much more cheaply, charge the same high prices as companies that generate electricity from natural gas.
Efforts to bring together 27 different national energy policies represent a major challenge and remind us that most EU policies were developed in times of crisis.
Ms von der Leyen said the EU electricity market “is no longer fair to consumers”. Electricity prices need to be decoupled from gas prices, which would mean a major change in EU policy.
She also proposed taxing fossil fuel companies, which should bring in €25 billion every year.
https://www.independent.ie/news/unlikely-wartime-leader-ursula-von-der-leyen-vows-to-fight-putin-in-energy-markets-41990433.html Unlikely war leader Ursula von der Leyen vows to fight Russian President Vladimir Putin in energy markets