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Tuesday January 31st, 2023 7:10PM

EU nations struggle to find joint approach on energy prices

By The Associated Press
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BRUSSELS (AP) — European Union nations struggled to find full consensus Friday on ways to shield the population from dramatically increasing energy prices that threaten to plunge millions into cold and poverty over the winter as Russia chokes off natural gas supplies.

As tensions with Moscow mount over the war in Ukraine, the energy ministers of the EU's 27 nations could not paper over differences on whether and how to impose a price cap on Russian natural gas, with ever-recalcitrant Hungary refusing to agree, saying it would go against its supply interests.

Other countries differed on whether a price cap should apply only to Russia or to other producers, too.

That “shows that this is a difficult issue and that the (European) Commission had a different goal,” said Agata Loskot-Strachota, senior fellow for energy policy at the Center for Eastern Studies in Warsaw. While EU members are most interested in lowering prices and getting enough gas, “the commission aimed at limiting Russia’s revenues and, I think, taking back control of the situation on the European gas market.”

An immediate solution on all proposals to bring natural gas and electricity prices back to affordability had not been anticipated, but energy ministers gave general recommendations to the European Commission, the EU’s executive branch, on options like instituting windfall levies on some energy companies whose profits have risen along with skyrocketing prices.

Moscow's gas restrictions and threat of a full cutoff has dominated the political agenda of a rich bloc of nations struggling to ensure basic services like heat and light. Russia has cut back supplies of natural gas that power factories, generate electricity and heat homes, driving up prices and fueling inflation that is poised to tip Europe into recession later this year.

“Russia has used its gas supplies as a weapon to foster an energy crisis next winter but also to weaken our economies and divide — politically — the European Union," EU Energy Commissioner Kadri Simson said. “We have to ensure that their efforts will fail.”

Czech Industry Minister Jozef Sikela, chair of the emergency meeting, exhorted his colleagues: “We cannot be blackmailed.”

Sikela and others said that outside the gas cap, a wide degree of convergence was found other potential measures. Besides windfall levies, they include solidarity contributions from fossil fuel producers and cash increases for businesses to keep operating as they struggle with volatile energy markets.

Irish Minister Eamon Ryan insisted that action must be taken “within weeks, not months.” This coming fall, “when we’re really going to see the high prices having effect, that’s when we need the support, that’s when we need to get some of that money,” he told reporters in Brussels.

“There is no time to wait, and we have to be swift and united,” Sikela said.

Despite the urgency, with several northern nations feeling the first chill in the morning air announcing the onset of autumn, the ministers gave only guidelines to the EU commission, which will present a proposal for the member states next week.

At that point, the EU nations will reassess again, and the hope is that a decision can be made by the end of this month.

German Economy and Energy Minister Robert Habeck said the commission has “a clear mandate to work out a viable proposal — or even better, viable proposals” to bring down prices. Friday’s meeting reflected different situations among EU members, but “everyone was determined to bring about relief for European citizens, so no agreement is not an option,” Habeck said.

While hoping for quick progress, Germany is keeping open the option of imposing a levy on high energy profits whose proceeds would be passed to consumers “if it takes too long,” he said.

“We can’t take this card off the table because the other, better way — namely bringing down prices — could certainly be complicated,” Habeck said. “We’re doing something that affects the heart of European energy supply — we’re intervening in the markets.”

The energy crisis is not only threatening households but also industry, with energy-intensive factories being forced to close. Commission President Ursula von der Leyen said Russia is “blackmailing” the EU with its threat to turn off the gas to the bloc. Moscow has already cut supplies partially or entirely to 13 EU countries, blaming alleged technical issues and sanctions.

Russian pipeline gas accounted for 40% of all gas Europe imported before President Vladimir Putin ordered the invasion of Ukraine in February, but now it only accounts for 9%.

The commission believes the EU is prepared for the winter, with joint gas storage levels at 82% — well ahead of the 80% target that had been set for the end of October.

___

Associated Press writers Lorne Cook and Samuel Petrequin in Brussels; David McHugh in Frankfurt, Germany; and Geir Moulson in Berlin contributed.

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