EnerGeek European Union: Economy Ministers face soaring energy prices Written by: La Rédaction next events:

The increase in energy prices, in particular natural gas, is at the heart of the meeting of the Ministers of the Economy of the European Union, on October 4 and 5, 2021, in Luxembourg. Faced with this situation, Spain proposes in particular to create a European gas reserve. For his part, Bruno Le Maire, French Minister of the Economy, calls for the reform of an “aberrant” electricity market.

What European response to rising energy prices?

Energy prices, fuel, gas, electricity, have risen sharply in recent weeks around the world. The European Union is particularly affected, especially on the natural gas front, where European storage capacities are low, and where Norway and Russia have refused to increase their deliveries, despite the economic recovery.

This issue largely occupies the meeting of the Ministers of the Economy of the European Union (in Eurogroup then in Ecofin), which is being held on October 4 and 5, 2021, in Luxembourg, in preparation for the next European Council of 21 and October 22.

On September 30, 2021, the French Minister of the Economy, Bruno Le Maire, sounded the alarm in a letter to the European Commission. In particular, he asked "that EU countries coordinate their responses, as in 2005 and 2008 to the sharp rise in oil prices", after several states had taken national measures. France has thus frozen the price of natural gas, so that it does not exceed, for the entire winter of 2021-2022, the price of October 2021.

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Bruno Le Maire also invites the Twenty-Seven to diversify their sources of natural gas supply. Spain has also stepped up to the plate, through the voice of its Prime Minister, Pedro Sánchez, by proposing to create a European strategic reserve of natural gas: "If the group purchase of vaccines works, why don't we increase our bargaining power via a joint purchase […] of gas? “asked the Spanish Prime Minister.

France wants to renovate the single electricity market and further support nuclear power

Bruno Le Maire's letter also calls into question the single European electricity market, whose operation he considers "aberrant". Indeed, the rise in gas prices brings with it that of electricity prices, including in France, where gas is nevertheless a very minor part of electricity production, more than 70% provided by nuclear power plants: "We we did not do all this to depend on the goodwill of Vladimir Poutine, ”points out Bruno Le Maire.

“Gas represents only 20% of energy consumption and yet overdetermines the entire energy bill. We must avoid this extreme volatility, which poses very clear political problems, ”explains the Minister of the Economy. France is thus campaigning for longer-term contracts, or even more regulated tariffs. Spain proposes to take more into account the national mix to fix the price of electricity.

Germany and the Netherlands are, as often, more hesitant about the idea of ​​regulating the electricity market. This question is all the more burning as the energy transition, the climate emergency and the Green Deal of the European Union should lead to an increase in the cost of carbon energy.

In this context, some states in Eastern Europe would like to take advantage of this surge in prices to relax regulations against fossil fuels. On the contrary, France sees in it an additional reason to support nuclear energy. Its “rapid inclusion in the European taxonomy and the rules relating to State aid is absolutely necessary”, repeated Bruno Le Maire once again.

The European Commission should publish this week a “toolbox” of measures available to member states to deal with this increase in energy prices.