Rising energy costs
The EU is trying to reforms to lower energy prices – and is having a hard time doing so
It is not just drivers at the gas station who are feeling the effects of the rise in energy prices
© Carsten Koall / DPA
At a special meeting, the EU countries wanted to discuss reforms in the fight against rising energy prices. But on the matter of fact they are far apart. A long-term EU solution is not in sight.
The fronts are hardening in the dispute over how to deal with the dramatically increased energy prices in the EU. At a special meeting of the responsible ministers on Tuesday, several southern countries called for comprehensive reforms at the EU level. Germany and other northern states, however, refuse to intervene in the market.
The German State Secretary Andreas Feicht spoke out against hasty measures that could ultimately push prices up further. “It is a particularly important problem for Europe, in the midst of an economic upswing, for which extraordinary solutions have to be found,” said Spanish Energy State Secretary Sara Aagesen Muñoz.
Countries affected differently
The positions of the states are also further apart because they are affected to different degrees by the soaring prices. In Germany, for example, the price of gas has risen much less than in Spain. This is due, among other things, to the different energy mixes and the fact that Germany has concluded long-term gas purchase contracts, while Spain buys on the spot market, where prices fluctuate more. According to the comparison portal Verivox, the price of electricity in Germany was around nine percent higher in October than in the same month last year, gas was on average 28 percent more expensive.
Countries like France and Spain want to revise the system of how prices are created on the wholesale market for electricity. They hope that the electricity price will be less dependent on the sharp rise in gas prices. Then consumers could also feel the benefits of a sustainable energy mix, said Aagesen. At the moment, the wholesale price for electricity in European markets is determined by the most expensive energy source needed – that is currently gas.
If demand falls, the price will again be determined by cheap renewable energy sources. According to the EU Commission, this creates an incentive to invest in clean energy. The Brussels authority has promised to take a closer look at the electricity market and to examine proposals from Spain for joint gas purchases and gas storage.
The market should regulate energy prices
Countries like Germany or Luxembourg, on the other hand, assume that the price increase will be temporary. They therefore want to react to this with market-based solutions. In a paper that was published shortly before the special meeting on Tuesday and is now supported by eleven countries, they speak out against reforming the electricity market.
“In our opinion, the price increases do not give any reason to intervene in the European internal market,” said State Secretary Feicht during the public debate. “Free pricing and competitive markets are a key basis for ensuring that our energy supply security continues to be at a high level, for promoting important innovations for the energy transition and for keeping energy affordable.”
It is also not expedient to intervene in the EU emissions trading system, said Feicht. “On the contrary, emissions trading works. It is not the current driver of energy prices.” He contradicted Poland and Hungary, among others, who make the trade in carbon dioxide (CO2) jointly responsible for the price increase.
In the EU emissions trading system, for example, electricity providers have to pay for the emission of greenhouse gases such as CO2. The system is to be expanded as part of the EU climate package. In response to a request from some states, the European Commission now wants to take a closer look at speculation on the CO2 market. The first results are to be discussed at an EU summit in December, when energy prices are expected to be back on the agenda.