EU Energy Ministers to Discuss Measures to Curb Rising Energy Costs

  European Union energy ministers will meet on Monday to consider options for reducing energy costs, while officials draft emergency plans to soften the impact of surging oil and gas prices triggered by the Iran war.

The European Commission is preparing emergency measures to protect consumers from rising energy bills. According to EU officials familiar with the discussions, the plans include examining state support for industries, national tax cuts, and using the upcoming revision of the EU carbon market to ease the supply of CO2 permits.

Commission President Ursula von der Leyen said Brussels is also considering imposing a cap on gas prices.

Ministers will hold closed-door talks on Monday to discuss possible measures to help reduce price increases triggered by the closure of the Strait of Hormuz, which has disrupted LNG trade and caused unprecedented oil supply disruptions.

Europe’s heavy reliance on imported oil and gas means the region is highly vulnerable to global price fluctuations, and no quick solution is expected.

“There are structural reasons why energy prices in Europe are high,” said Joanna Pandera, president of the Polish think tank Forum Energii. She added that differences in energy mixes and taxation among countries mean prices vary widely across the European Union. “It is very difficult to find a one-size-fits-all solution.”

Europe’s benchmark gas prices have risen more than 50% since the Iran war began.

Some governments, including Italy, want sweeping EU intervention—such as suspending the bloc’s carbon market—to curb the influence of CO2-emitting gas power plants on electricity prices.

Other governments expect Brussels to focus on national tax cuts or domestic subsidies “to return responsibility for key measures to member states,” said an EU diplomat.

However, relying on national subsidies risks widening the gap between richer and poorer EU members.

“Not everyone can afford state aid, that’s the problem. It works for those who have plenty of money,” said a senior EU diplomat.

Of the more than €500 billion ($571 billion) spent by EU governments on support measures during the 2022 energy crisis, €158 billion came from Europe’s largest economy, Germany, according to the think tank Bruegel.

Von der Leyen will send a shortlist of emergency options to EU leaders this week ahead of their summit on Thursday.

In the long term, Brussels says increased domestic production of clean energy from renewable and nuclear sources will end Europe’s dependence on volatile fossil fuel imports.
(Source: Reuters)