It is difficult to predict how the debate on high energy prices will develop at the meeting of EU heads of state and government later this week.
So far, the draft conclusions only say: "The European Council has dealt with the recent rise in energy prices."
Business correspondent in Brussels.
Follow I follow
It could be a big one.
At least this is indicated by a wire report from the German embassy, in which it informs the federal government about the discussion of the EU states about the toolbox on the energy crisis just presented by the European Commission.
The FAZ has the paper marked “only for official use”.
As the report shows, the “Toolbox” met with broad support.
"There was a general consensus on the measures for vulnerable households and affected companies as well as for increasing energy efficiency and the further expansion of renewable energies and electricity storage", it says.
Beyond all agreement on short-term aid and a general commitment to the Green Deal, however, there is great displeasure. Spain, which has been particularly hard hit, is “pissed off” that the Commission has “drained” all more far-reaching proposals, as it is called in diplomatic circles. France, Greece, Romania, the Czech Republic and Hungary are also angry. The Commission has promised to “examine” the proposals of various states. However, this is probably not completely wrongly understood as a factual rejection in the capitals concerned.
The main issue here is the demand made by France and Spain to decouple electricity from gas prices. So far, the price in the EU depends on how much the most expensive energy source used to generate electricity costs. At present, "only 6 percent of EU gas consumption goes into electricity production, and yet the high gas price dictates electricity prices," criticized Hungary according to the wire report. France and Greece had argued that the price should better reflect the average national production prices. Spain could then expect lower prices because of its renewable energy sources; France would benefit from this because it gets 70 percent of its electricity from cheaper nuclear power.
Orientation towards average production prices would, however, fundamentally change the "design" of the EU electricity market introduced in 2015. The so-called marginal price system means that the price is low as long as the demand can be met from cheap wind, water, solar or nuclear power plants. Not that long ago, this actually led to negative prices again and again because there was so much electricity on the market. At the same time, however, it allows the price to rise so sharply in the event of a power shortage that the necessary use of coal and gas-fired power plants pays off. This high price, in turn, makes it attractive for providers of wind or solar power to continue investing in the expansion. The Commission is correspondingly critical if countries like Spain now want to skim off the profits,that the operators of wind and solar power plants are currently doing.
Dispute looms over nuclear power and the role of Russia
The assertion made by Hungary during the debate between the states that the market is failing because the gas dictates the price of electricity is expressly not shared by the Commission.
It is clear that the energy market rules are not to blame.
Without competitive energy markets, the prices would be even higher, she emphasizes.
According to the wire report, the northern European states, the Netherlands, the Baltic states and Austria see it similarly, in addition to Germany ("A market failure and an acute threat to the supply situation cannot be identified. Therefore, market interventions did not seem appropriate").
They also share the Commission's analysis that the current price increase is mainly due to the “very positive global economic recovery” (Germany). Denmark emphasizes that the EU should not solve a temporary problem with long-term structural measures. Because of the low influence of Europeans on global energy prices, the Netherlands had spoken out in favor of the most efficient markets possible: “When you are small, you have to be smart” (“If you are not big, you have to be smart”).
On the other hand, Spain, France and the other proponents of a new market design meet with understanding in the environment of Council President Charles Michel. The argument that the existing market design comes from a time when fossil fuels played an even more important role is not wrong, they say. Dispute threatens at the summit over the role of Russia and nuclear power. France and other states have asked the EU Commission to finally classify nuclear power as a “green technology” in view of the high prices in order to promote expansion. Germany, supported by Austria, stressed that nuclear energy was not a solution, not even for the current situation.
The debate about the costs of climate change and the expansion of emissions trading to include buildings and transport also continues.
Above all, the Eastern Europeans, but also France, Spain and Italy had addressed this, it says in the wire report.
Poland had warned that some of the Commission's proposals in the Fit for 55 climate package were "likely to increase energy poverty".
The only thing that is clear is that the European Commission's plan to reassure the Member States by presenting the toolbox has failed.
The debate on the EU's correct answer to the energy price crisis will continue on and probably after the EU summit.
As a precaution, the Slovenian EU Council Presidency has already invited to a special meeting of energy ministers for October 26th.Keywords: spain, eu brussels, energy crisis, power, wire report, energy price debate, debate, energy prices, grip, electricity market, state, france, threat, role, dispute