BRUSSELS, Oct.6 (Reuters) – The European Union said on Wednesday it would review the design of its electricity market and consider proposals to overhaul EU regulations, as the bloc seeks to maintain its plans to fight against climate change on track against a backdrop of record energy costs.
European electricity and gas prices have skyrocketed this year as strained gas supplies collided with strong demand in economies recovering from the COVID-19 pandemic.
Soaring energy prices dominated the EU’s political agenda on Wednesday, with environment ministers and the European Parliament meeting each time to debate the issue, after leaders of EU countries discussed their response on Tuesday evening.
“There is no doubt that we need to take political action,” EU Energy Commissioner Kadri Simson told the European Parliament.
The crisis has divided countries over the intervention of Brussels. The Commission will publish a menu of options next week on how governments and the EU might respond.
Simson said the Commission will launch a study to determine whether the EU’s electricity market is fit for the bloc’s planned transition to green power. Spain and France have called for an overhaul of European electricity regulations in order to decouple the price of electricity from the cost of gas.
“We think this framework is strong, but we see the challenges,” said Simson.
Spanish Prime Minister Pedro Sanchez said he and other countries had asked Brussels to offer a “bold” response.
“We need extraordinary and innovative measures (…) we have asked for a joint purchase of gas,” he said.
Not all countries are convinced. EU regulators expect gas market conditions to ease in the spring and some governments say the problem is best addressed with national subsidies and tax breaks to protect consumers from high bills – measures that many countries have deployed.
“This is mainly something that Member States have to tackle,” said Dutch Prime Minister Mark Rutte. “We should be looking at what Europe can do collectively. There are proposals – some crazier, others less crazy.”
The price spike has come as the EU prepares for a major upgrade in climate policies, stoking concerns among poorer states in the central and eastern EU that measures to increase the cost of polluting fuels could push more households into fuel poverty.
Brussels is determined to ensure that soaring prices don’t derail its emissions reduction plan and has offered a multibillion-euro fund to help poorer households invest in green options.
“Let’s keep an eye on the ball. The problem here is the climate crisis,” said EU climate policy chief Frans Timmermans. “The faster we move towards renewable energy, the faster we can protect our citizens against high prices.”
Reporting by Kate Abnett, Robin Emmott, Marine Strauss, Philip Blenkinsop; Editing by John Chalmers and Edmund Blair
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