Energy
Business 06/10/2021

Brussels promises a plan to reform the gas market before the end of the year

Von der Leyen acknowledges that there is a storage problem in line with Spanish demand

2 min
The President of the European Council, Charles Michel, with the Spanish Prime Minister, Pedro Sánchez.

Brussels"Between now and the end of the year we will propose a reform of the gas market and we will review problems surrounding storage and security of supply". These are the words of the Commissioner for Energy, Kadri Simson, this Wednesday in the plenary session of the European Parliament, which debated the escalation of electricity prices across Europe. The President herself, Ursula von der Leyen, admitted that the root of the problem was the heavy dependence on Russian gas. And she reiterated that there is a gas storage problem, a debate that had been brought up by Spanish president Pedro Sánchez . In the framework of the European summit with the Western Balkans, the Socialist leader has again called for a reform of the electricity market and a joint gas purchase to address the rising cost of electricity.

In fact, the Spanish demand has been joined by France, Romania, Greece and the Czech Republic, which are also pressuring Brussels for a response before the winter cold arrives. In a letter, these five countries called for action to tackle the root of the "dramatic" increase in the cost of electricity, "better coordinate" purchase and storage of gas and move towards "the [EU's] energy independence". "Together we are stronger. We did it with the purchase of vaccines and this guaranteed access to the vaccine for the whole of the Spanish and European population", the Spanish President said.

And this time his demands have found an interlocutor on the other side, despite the fact that the answers to such a complex problem will be far from immediate. Von der Leyen has repeated that in the short term it is member state governments who have the tools to act and mitigate the price increases, a position that Brussels has maintained since Madrid's first complaints in August. Even so, as several countries have joined in, next week the European Commission will present a guide including all the tools states can adopt, ranging from tax reductions to the use of social funds to cover the most vulnerable. But the pressure on the EU executive is growing and that is why Simson has announced this shock plan to reform the gas market in December, even though it is a long-term reform and the Commission itself admits that the answers have to come from member states.

The debate on autonomy

Brussels has had to react because this energy crisis comes in the midst of the debate on the strategic autonomy of the European Union, in areas such as defence, but also energy, just when plans to decarbonise the continent's economy are underway. Part of the reform that Spain is asking for, for example, has to do with carbon emission rights, a European mechanism that seeks to discourage the use of fossil fuels and that is related to 20% of the increase in electricity prices.

Hungarian Prime Minister Viktor Orbán has blamed the European Green Deal directly for the rise in electricity prices. That's why President Von der Leyen has insisted several times that the problem was not the price of renewable energies, which has remained stable or even decreased in recent years, but the dependence on gas.

The substantive debate, where some joint European pronouncement is expected, will take place at the Brussels summit on 21 and 22 October, where the President of the Council, Charles Michel, has already included this point on the agenda. Michel himself has assured on Wednesday that "there is political room" to seek a "common strategy" to respond to this challenge.

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