The underwhelming performance of the EU in facing the energy crisis
by Antonis D. Papagiannidis
The underwhelming performance of the EU in this most crucial juncture of the energy crisis – that is when the energy prices take-off turns into a real prospect of supply shortages in the near future – spearheaded as it is by the baffling mixture of sluggishness and busybodyism on part of the Brussels Commission, is fast becoming a matter of major concern. For all.
Last Friday’s meeting of the of EU “27” Energy Ministers coming days ahead of the planned presentation of the Commission’s own proposals (expected on September 14th) and their turning the normal EU procedure on its head – the Commission mulls over problems, assisted by national experts; it lays out structured proposals; the Council debates/the Parliament joins in; a decision is ultimately taken – gave rise to anxious calls to go faster. Czech Energy Minister Josef Sikela, who took upon him to convene the September 9 informal meeting, acknowledged “there is no time to wait, we have to be swift and united” (The news of discord within the ministerial meeting had just indicated how difficult “swift and united” can be). His all-important German counterpart, Economy and Energy Minister Robert Habeck struck a note of warning: “were it for progress [in EU negotiations] to take too long”, unilateral measures should be expected such as imposing substantial solidarity taxes on business windfall profits throughout the energy sector to alleviate the pain already felt by consumers. Irish Minister Eamon Ryan, asking for action “within weeks, not months” was straightforward enough to lift the veil of political decorum: “in the very next months; when we will really see high prices having effect, that’s when we need to get some of that money”.
In plain English – or Greek, or whatever means of expression barring Brussels-speak – discussing price caps on natural gas or electricity bills, uncoupling end-energy-product prices from costs of dissimilar sources and /or providing for EU-wide storage sharing would come to nil, if provision is not made for some sort of financial support for those at risk. (For fear of sounding populist – the sin of predilection in our time! – may we say that “at risk” may well mean poorer households, but it also refers to energy companies which are verging to insolvency and will soon have to be rescued – at public expense, of course).
In a quaint way. Greek Energy Minister Costas Skrekas used the post-meeting rostrum (with Greek media amplifying the message) to remind all and sundry that two of the approaches discussed originated with Greek P.M. Mitsotakis: windfall-profit taxation and price cap on (all) natural gas supplies.
A troubling self-invited participant to the EU “27” ministerial meeting was instrumental in bringing discord – that was already brewing – to the surface. The participant in question was none less than Vladimir Putin (or, if one would rather have it less dramatically, Gazprom), who put squarely on the table the notion of a full halt in Russian natural gas supply. This move came as a tit-for-tat for the proposal aired for the EU to impose a price cap exclusively on Russian natural gas; the proposal originated with the Baltics but got the (equally politically-worded) embrace of European Commission President Ursula von der Leyen, along with support from France, the Netherlands and Spain. The nay-sayers included Hungary (which was expected given Budapest close ties to Moscow) along with Slovakia, Austria, Italy and – lo and behold! – Greece.
The proposal to impose an overall price cap on natural gas, not singling out Russia, was supported by more than half the EU “27” at ministerial level – but even those going along this proposal asserted it with reservations over how steady fuel supply would be ensured. (Two or three countries – un-named – warned that such a solution might result in demand growth for natural gas …).
Almost the same set-up of countries was positive over bringing into play a mechanism of windfall-profits clawback (either by provisory increase in taxation or through a special levy); Energy Commissioner Cadri Simson pointed to the experience of the Greek system – which has the advantage of being already in operation, and thus real-time observed.
All of which ended by sending the European Commission back to the drawing-board, with the hope it might bring back less of political-minded statements (Cadri Simson followed close on the steps of UvdL saying “Russia weaponized its gas supplies […] to break our economies and divide – politically – the EU; we have to make sure their efforts will fail”) and more of proposals promising to be operational. Next stop: the formal UvdL address to the European Parliament (“State of the Union Address”, more than ever an imitation of the US Presidential practice) which is to include “firm options for the reform of the EU’s energy market”.
For those interested in past practice, last year’s UvdL speech was styled ‘Strengthening the Soul of our Union” …
[A last bit of information, doled out to keep public opinion somehow calm. Natural gas storage, EU-wide, is reported at 82% of capacity, while the goal for end-October is put at 80%. Also, while at the beginning of the Russian invasion of Ukraine Europe imported 40% of its natural gas from Moscow, now it has gone to less than 10%. “So … where’s the rush” one would be expected to say].