Greetings and welcome to EURACTIV’s Green Brief. Below you’ll find the latest roundup of news covering energy & environment from across Europe. You can subscribe to the weekly newsletter here.
As electricity prices surge on the back of dwindling gas supplies from Russia, calls are growing to bring relief to European households and businesses – some of which are being pushed to bankruptcy.
The calls are being heard as EU energy ministers prepare to hold an extraordinary meeting on Friday to discuss the EU’s response to the crisis.
Last week, Russia indefinitely shut down the Nord Stream 1 pipeline to Germany, worsening the EU’s energy supply crisis, in a move denounced as blackmail by the European Commission.
Despite assurances given by authorities across Europe, the fact is that the energy crisis is now rapidly turning into a systemic one, with potential implications for the entire EU economy.
Over the weekend, Finland and Sweden announced plans to offer billions of euros in liquidity guarantees to power companies buckling under the strain of rising gas prices.
“The government’s programme is a last-resort financing option for companies that would otherwise be threatened with insolvency,” Finland’s Prime Minister Sanna Marin told a news conference on Sunday.
Finnish Economy Minister Mika Lintila went further, saying the unfolding liquidity crisis “had the ingredients for a kind of a Lehman Brothers of energy industry”.
Such parallels are likely to send shivers down the spine of policymakers around the EU. When US investment bank Lehman Brothers went bankrupt in 2008, the shockwaves were felt most strongly in Europe where banks – and eventually EU states – had to be bailed out to avert broader economic collapse.
Fortunately, a crisis of this magnitude is not yet happening in Europe. But the clouds are gathering, and the Finnish example shows that the energy price shock has repercussions on the broader economy.
In Germany, local energy utilities have warned of a looming liquidity crunch due to the gas crisis. In October 2021, OTIMA, a midsized utility based near Berlin, was the first German energy and gas supplier to file for bankruptcy following electricity price spikes. In Austria, Wien Energie, a local energy utility which is also the country’s largest energy firm, has asked the government for a €6 billion lifeline. This comes after German utility Uniper was bailed out in late July for a price tag of €15 billion.
And “the worst is yet to come,” a municipal utility source told EURACTIV.
European energy companies are being strained by so-called “margin calls” – or need of capital to secure trades on energy markets – of at least $1.5 trillion, according to news agency Bloomberg, which cites figures from Norway’s Equinor.
The unfolding crisis is putting pressure on governments to intervene on all fronts.
Over the weekend, Berlin unveiled a €65 billion relief package to alleviate the strain of record-breaking energy prices on families and businesses. The German measure will be financed by a temporary tax on “windfall profits” made by electricity companies, which have benefited from higher gas prices.
The windfall tax is now finding broad support across the EU. In addition to Spain and Portugal, which were first to implement it earlier this year, the idea is now formally backed by French President Emmanuel Macron and Commission President Ursula von der Leyen.
A “non-paper”, circulated by the Commission last week, also considers a windfall profit tax on “inframarginal” electricity generators – like renewables, nuclear and lignite – which have low operating costs and have benefitted the most from high gas prices.
Ahead of Friday’s ministerial, the Czech EU Presidency circulated a non-paper of their own outlining the different options currently under consideration.
Listed under point A) are plans to decouple the price of gas and electricity. This could be achieved, for instance, by “temporarily capping the price of gas used for the production of electricity” or imposing a price cap on Russian gas imports only – an option explored in a separate “non-paper” by the European Commission.
Point B) lists measures to increase market liquidity such as “immediate credit line support” for struggling energy firms, “for instance through the role of the European Central Bank” or a “temporary suspension of European power derivatives markets”.
A popular option with environmentalists is nested under point C), which outlines plans for “coordinated demand reduction measures for electricity”.
A succinct point D) refers to the popular idea of “limiting the revenues of inframarginal electricity producers” with a temporary cap on the electricity prices charged by those operators.
This price cap on Russian gas, combined with a windfall profit tax for electricity firms, seems to have the favours of von der Leyen, who will flesh out her plans during her State of the Union address on Wednesday next week (14 September).
Whatever solution is adopted in the end will have to prove its effectiveness quickly. What Europe wants to avoid at all costs is an energy version of the Lehman Brothers collapse.
– Frédéric Simon
More:
- Berlin eyes oil-fired ‘powerships’ to secure electricity for the winter
- Firewood prices, shortages spell cold winter for Europe’s poorest
- European wildfire emissions hit highest level since 2007
- Biden administration denies Cheniere’s request to sidestep LNG pollution rule
- Experts question merits of European renewable energy ‘go-to areas’
- Macron adamant no need for MidCat gas pipeline
- G7 firms failing on Paris climate goals, despite EU lead
- Algeria a ‘reliable’ gas supplier: EU chief Michel
- Russia pockets €158 bn in energy exports after war: report
- Energy crisis looms large over Germany’s local utilities
- Heating with hydrogen could double consumer bills, report warns
- EU Parliament fights over sustainability criteria for insurance sector
- Sweden, Finland step in to avert Lehman-like situation for power companies
- Berlin freezes carbon price in the name of crisis relief
- Russia scraps Nord Stream 1 reopening, stoking European fuel fears
- Collaboration key to disaster prevention, says EU civil protection expert
- Russian oil price cap wins G7 support, but level still to be determined
- Azeri president says investors discussing expansion of TAP gas link
- Russia says it will stop selling oil to countries that set price caps
- Rising energy prices could fuel social unrest across Europe this winter
- UK sewage dumping could be breach of Brexit pact, says EU Commission
- Swiss launch energy conservation campaign, plan rationing moves
- Gazprom prepares to cut off supplies to France’s Engie as payment row escalates
- EU urged to align corporate climate reporting rules with global standards
- EU’s building renovation ‘one-stop-shops’ taking shape
- Slovenian parliament approves cost-of-living aid for vulnerable groups, businesses
- UN team to inspect Ukrainian nuclear plant in bid to avert disaster
- Commission adopts new rules to fastrack approval of biological pesticides
BRATISLAVA. Electricity distribution companies key to renewables development. An important barrier to renewable source development in Slovakia is speculative capacity bookings and non-transparent grid connection processes from the distribution companies, EURACTIV Slovakia reported. Read more.
PRAGUE. Czech EU Presidency bets on decoupling, price caps as solutions to energy crisis. EU energy ministers will meet in Brussels on Friday to discuss possible solutions to the energy price hikes, and the Czech presidency of the EU Council sees decoupling of gas and electricity prices, as well as price caps on electricity generated from all energy sources but natural gas as viable solutions, Czech Industry and Trade Minister Jozef Sikela told journalists on Tuesday. Read more.
MADRID. MidCat gas pipeline row between Spain, France intensifies. The Spanish Minister for Ecological Transition, Teresa Ribera, on Tuesday, called for the solidarity of France with the Iberian country and urged Paris to rethink its recent rejection of the MidCat pipeline. Read more.
PARIS. Right-wing opposition calls for enquiry into France’s energy independence. The creation of a commission of enquiry to identify the political leaders responsible for the “loss of independence” of France on energy issues was announced by the President of the Les Républicains group in the National Assembly, Olivier Marleix, on Tuesday. Read more.
SOFIA. Bulgaria to supply North Macedonia electricity for winter. Bulgaria has promised to provide North Macedonia with additional amounts of electricity for the winter, as announced after the meeting between Bulgarian Prime Minister Galab Donev and his Macedonian counterpart Dimitar Kovachevski in Sofia on Monday. Read more.
WARSAW. Poland seeks partners on nuclear, in talks with US, France. Poland is talking with several potential partners to launch nuclear energy in the country, with the aim to have six reactors operating before 2040, Prime Minister Mateusz Morawiecki said on Monday. Read more.
PARIS. Macron backs European windfall tax. French President Emmanuel Macron said he favoured a “European contribution mechanism” on energy companies that would apply equally throughout the bloc after a video call with German Chancellor Olaf Scholz on Monday. Read more.
BERLIN. Habeck confirms 2022 nuclear exit, two plants to form temporary reserve. The German government will keep to the country’s planned 2022 nuclear exit, shutting down its last three nuclear reactors amid the ongoing European energy crisis. Read more.
TIRANA | WESTERN BALKANS. Calls on EU to help keep Western Balkans warm this winter grow. Albanian Power Corporation (KESH) Director Ergys Verdho has asked for EU assistance in combatting the energy crisis, joining calls from Prime Minister Edi Rama and other regional leaders over fears of high prices and plunging temperatures as winter draws nearer. Read more.
BRATISLAVA. Double energy prices will drive half of Slovak businesses into the red. If energy prices rise by half, the share of loss-making Slovak companies will to rise to 41% from 28%, with a further 6% making no profits if prices double, says a new study by the National Bank of Slovakia (NBS). Read more.
STOCKHOLM. Swedish government counting on Europe to fix energy crisis. Social Democrat party leader and Prime Minister Magdalena Andersson is hoping to find a European solution to what her opponents consider a problem her party helped create as Sweden faces soaring energy prices ahead of the elections. Read more.
HELSINKI. Finland proposes loan, guarantee scheme for electric companies. A loan and guarantee scheme of up to €10 billion for electricity production companies at risk of insolvency was agreed on by the Finnish government on Sunday. Read more.
VIENNA. Vienna to provide €2.5 billion electricity bill relief. An “electricity price brake,” which will allow households to consume 80% of last year’s electricity use at lower prices, was revealed in the details of the Austrian government’s household electricity relief on Sunday. Read more.
BERLIN. Berlin to implement electricity windfall levy, price limit with or without EU. The German government will tax electricity market windfall profits, using the revenue to cap electricity bills as part of a €65 billion relief package agreed upon during the weekend. Read more.
TIRANA. Albanians told to switch off lights ahead of long, dark winter. Following the lead of authorities across Europe, the Albanian Electricity Cooperation (KESH) has called on citizens to save energy as a long, expensive winter looms on the horizon. Read more.
SARAJEVO. Bosnian entity urges citizens, firms to rationalise energy use. The authorities of Bosnia-Herzegovina’s Bosniak-Croat entity called on citizens and businesses on Thursday to use energy rationally and asked state-owned companies to draft savings plans, particularly for cooling and heating of buildings, Croatia’s HRT reported. Read more.
BUCHAREST. Romania extends energy price caps by a year. The Romanian government will keep in place a scheme to cap energy prices until the end of August 2023, ministers announced Thursday. Read more.
BRATISLAVA. Slovakia leaning towards national gas price cap for households. The economy ministry has proposed a cap on the gas prices for households, and its minister, Richard Sulík, hopes to expand the current price cap on electricity prices. Read more.
MADRID. Spain to temporarily lower VAT on gas amid price hikes. In Spain, the VAT on gas will drop from 21% to 5% from October until the end of the year to help mitigate the impact of energy price hikes faced by those most vulnerable, Prime Minister Pedro Sánchez announced on Thursday. Read more.
DUBLIN. Irish to face another dramatic surge in electricity and gas bills. Electricity and gas bills will increase significantly from October for the third time since May because of the sharp increase in wholesale gas prices, announced on Thursday the country’s largest electricity provider, Electric Ireland. Read more.
HELSINKI. Finnish government announces aid package to tackle rising energy prices. The government announced its much-anticipated electricity package that will include measures to tackle the effects of rising energy prices on Thursday. Read more.
VIENNA. Wien Energie crisis causes political tensions. Vienna’s Social Democratic Mayor Michael Ludwig’s failure to reveal the poor financial state of Wien Energie has caused disgruntlement with its liberal coalition partner at the state level and the governing Greens at the federal level. Read more.
BERLIN. German government announces fifth floating LNG terminal. Berlin has arranged for a fifth floating liquified natural gas (LNG) terminal to increase the amount of LNG the country can import, which may be a boon to the country’s landlocked neighbours. Read more.
PARIS. Macron under fire for keeping energy talks at government level. Opposition parties slammed President Emmanuel Macron for planning an emergency gas and electricity meeting for Friday that will be held strictly among ministers as he did for the COVID-19 situation during the pandemic. Read more.
SOFIA. Bulgaria has potential to become European energy hub, says US’s Pompeo. Bulgaria has the chance to realise its potential as an energy centre in Southeast Europe, former US Secretary of State Mike Pompeo said on Wednesday in Sofia. Read more.
BUDAPEST. Hungary to buy more gas from Russian in new deal. Under a new deal between Moscow and Budapest, Russia’s Gazprom will deliver up to 5.8 million cubic metres (mcm) more natural gas per day via Serbia on top of the volumes agreed in the long-term contract, Hungarian Foreign Affairs Minister Péter Szijjártó said. Read more.
MADRID. Electricity prices in Spain hit historic high. The average price of electricity on the Spanish wholesale market hit a historic high of €307.80 per megawatt-hour (MWh) this August, increasing 19.3% compared to July, fresh data from the Iberian Electricity Market Operator (OMIE) revealed. Read more.
BRUSSELS. Belgian PM says EU solution is only way out of energy crisis. Lowering energy prices calls for an EU-wide solution, said Prime Minister Alexander De Croo on Wednesday, promising the Belgian heads of government who gathered to discuss ways to address the energy crisis that he would continue to push the European Commission “as long as it is necessary”. Read more.
VIENNA. Government steps in to shore up Austria’s reeling largest energy supplier. The government and the city of Vienna agreed on Wednesday to an ’emergency’ €2 billion state loan for Austria’s largest energy supplier to hedge against extreme outliers on the electricity exchange. Read more.
Task force evaluates war damage inflicted to Ukraine energy infrastructure. The Energy Charter Secretariat has published a damage assessment report of Ukraine’s energy infrastructure following Russia’s invasion in February. Published on 24 August, the report was drawn up by a Task Force involving representatives of Ukrainian authorities as part of a project to restore Ukrainian energy infrastructure.
As of 22 August, the estimated damages to the Ukrainian energy sector were at least $1.8 billion, the report says. During six months of war, Russia occupied or damaged about 35% of the country’s installed power capacity, including thousands of kilometres of electric, gas and heat networks, while the oil refining industry was torn down.
In Ukraine, nuclear energy covers more than half of the electricity production (55.5% in 2021). The country hosts four nuclear power plants and one of them, Zaporizhshia NPP, is the largest in Europe, accounting for 43% of Ukraine’s total nuclear power installed capacity. However, the nuclear plant has been occupied by Moscow’s military forces since March 2022, and has recently been disconnected from the Ukrainian power system. Additionally, “the plant is being regularly shelled by the Russian army and allegedly used as an ammunition warehouse, posing a significant threat to nuclear safety,” the report reads.
Thermal and renewable plants are also under occupation or suffered consistent damage. When it comes to electricity transmission and distribution systems, overhead lines, substations and thousands of transformers have been damaged or disconnected due to continuous shelling and hostilities. The complete damage assessment report is accessible here. (Valentina Romano | EURACTIV.com)
Thought Leadership interview: FitFor55 and Buildings, with Philippe Delorme and Ciarán Cuffe. In this episode of Thought Leadership, EURACTIV’s Jennifer Baker discussed EU’s Commission package FitFor55 and RePowerEu proposal with Philippe Delorme, CEO Europe Operations of Schneider Electric and MEP Ciarán Cuffe (Ireland, Group of the Greens/European Free Alliance), Rapporteur of the Energy Performance of Buildings Directive (EPBD) in the Industry, Research & Energy Committee. You can watch the video here.
7 SEPTEMBER. Seeing the wood for the trees: possible implications of RED III on renewable energy development & EU energy security. The event will hear views from the forestry, policymaking, academic and analyst communities on the potential impacts RED III could have on the EU biomass- and hence renewable energy markets. Join MEP Simone Schmiedtbauer, the Secretary General of the Confederation of European Forest Owners (CEPF) Fanny-Pomme Langue, Michael Obersteiner, Director of the Environmental Change Institute at the University of Oxford, and more. Programme and registration here. (Organised by World Bioenergy Association and supported by Bioenergy Europe in Media Partnership with EURACTIV).
SEPTEMBER
- 8 SEPTEMBER ReFuelEU Trilogue.
- 9 SEPTEMBER. Extraordinary Energy Council.
- 14 SEPTEMBER. State of the Union address by European Commission president Ursula von der Leyen.
- 16 SEPTEMBER. Climate Ambassadors Meeting.
- 26-30 SEPTEMBER. European Sustainable Energy Week.
OCTOBER
- 11-12 OCTOBER. Informal meeting of energy ministers.
- 12 OCTOBER. Development of post-Euro 6/VI emission standards for cars, vans, lorries and buses.
- 20-21 OCTOBER. European Council.
- 24 OCTOBER. Environment Council.
- 25 OCTOBER. Energy Council.
- 26 OCTOBER. Zero Pollution Package:
- Integrated water management – revised lists of surface and groundwater pollutants
- Revision of EU ambient air quality legislation
- Review of the urban wastewater treatment directive Revision of the classification, labelling and packaging of chemicals regulation
NOVEMBER
- 6-18 NOVEMBER. Sharm el-Sheikh Climate Change Conference (COP27).
- 30 NOVEMBER. Circular Economy Package 2:
- Proposal for a Regulation on substantiating environmental claims using the product/ organisation
- Environmental footprint methods (green claims)
- Policy framework for bio-based, biodegradable and compostable plastics
- Review of the Packaging and packaging waste Directive to reinforce the essential requirements for packaging and establish EU level packaging waste prevention measures and targets
- Measures to reduce the release of microplastics in the environment
- Sustainable consumption of goods – promoting repair and reuse (the right to repair)
- 30 NOVEMBER. Climate Package:
- Carbon removal certification
- Review of the CO2 emission standards for heavy-duty vehicles
DECEMBER
- 5-17 DECEMBER. UN Biodiversity Conference (COP15). Montreal, Canada.
- 15-16 DECEMBER. European Council.
- 19 DECEMBER. Energy Council.
- 20 DECEMBER. Environment Council.
[Edited by Alice Taylor and Frédéric Simon]