LONDON – European Union leaders are set to press ahead with measures to shield consumers from record-high energy prices that have curtailed industrial production and hiked consumer bills.
EU leaders will meet on Oct. 21-22 to discuss the energy price spike and a “toolbox” the European Commission published this week which confirmed the measures national governments can use to provide immediate relief to consumers.
A draft of the leaders’ conclusions, seen by Reuters, invites the Commission and EU countries to use that toolbox “to provide short-term relief to the most vulnerable consumers and to support European companies.”
As of Wednesday, twenty EU countries had drawn up such measures, including price caps, cuts to energy taxes and subsidies for poorer households.
That number is set to grow, with Germany planning to cut the surcharge on consumers’ energy bills which helps fund renewable energy investments.
The Commission said it would also assess measures the EU could take in the longer term to protect countries against price spikes, including joint purchasing of gas.
EU leaders will ask the Commission to “consider medium and long-term measures that would mitigate excessive price fluctuations, increase the EU’s energy resilience and ensure a successful green transition,” the draft conclusions said.
EU ministers “will take this work forward immediately” at an emergency meeting on energy prices on Oct 26, according to the draft, which could change before it is adopted by leaders.
The leaders will also ask the European Investment Bank, which is owned by EU governments, to “look into its capital headroom to speed up investment in the green transition, with a view to reducing future disruption risks.”
Brussels has said a faster shift to green energy is the best defence against future price spikes, since it would reduce exposure to the volatile price of imported fossil fuels.
OIL KEEPS CLIMBING
President Vladimir Putin told Europe this week that Russia, the region’s largest gas supplier, could provide more gas if asked but some European politicians accuse Moscow of using the fuel crisis for leverage, a charge Russia denies.
Oil prices rose again on Friday to trade not far off their highest since 2014 close to $85 per barrel for benchmark Brent crude as the global gas and coal crunch encourages some consumers to switch to refined products.
Poland’s climate minister said on Friday the government will provide consumers with an additional 1.5 billion zlotys ($380 million) in subsidies to ease the pain as retail prices climb.
Germany confirmed it was slashing a green energy surcharge on consumers’ bills to help with soaring utility bills.
European wholesale natural gas prices are unlikely to return to “normal” levels before 2023, warned Dutch bank ABN Amro.
Norway, Europe’s second biggest gas supplier, has been among the winners of the energy crisis, reporting a record trade surplus up 28 per cent to 53.7 billion Norwegian crowns ($6.37 billion) last month thanks to soaring revenues from selling gas, official data showed.
DEEPENING CRISIS
China’s energy crisis deepened on Friday with coal prices hitting a record high as cold weather sweeps in and soaring gas prices prompting major energy companies to seek long-term deals with US suppliers, sources told Reuters.
energy security has shot to the top of government agendas in Asia and Europe as shortages of coal and rocketing gas prices have triggered power outages and choked up factories supplying big name brands such as Apple just as the global economy reawakens from coronavirus restrictions.
To shield consumers from soaring prices as winter approaches, European Union leaders look set to greenlight emergency measures by member states including price caps and subsidies, at a summit next week.
China, the world’s top exporter, has been particularly hard hit and to bridge the gap major energy companies such as Sinopec Corp and China National Offshore Oil Company (CNOOC) are in advanced talks about long-term contracts with US exporters of liquefied natural gas (LNG), sources told Reuters.
The discussions could lead to deals worth tens of billions of dollars that would mark a surge in China’s LNG imports from the United States at a time when relations between the two countries are still tense. At the height of Sino-US trade war in 2019, gas trade briefly came to a standstill.
“As state-owned enterprises, companies are all under pressure to keep security of supply and the recent price trend has deeply changed the image of long-term supplies in the mind of leadership,” said a Beijing-based trader.
In a blow to the fight against global warming, China and other countries have turned to coal in the short term. Beijing has also taken a slew of measures to contain price rises, including raising domestic coal output and cutting supply to power-hungry industries.
The most-active January Zhengzhou thermal coal futures contract CZCc1 hit a record high of 1,669.40 yuan ($259.42) per tonne early on Friday, having risen more than 200 per cent year to date.
China has assured consumers that energy supplies will be secured for the winter heating season.
