"La transició verda no és el problema, sinó la solució" Donohoe

Following today’s (4 October) Eurogroup, Irish Finance Minister and Eurogroup President Paschal Donohoe said that ministers had discussed the hike in energy prices and their impact on people and businesses. 

Donohoe invited Christian Zinglersen, director of the European Union Agency for Co-operation of Energy Regulators (ACER) to make a presentation on recent developments and make an assessment outlining prospects for the market. The discussions focused on inflationary pressures and ministers agreed with the ECB assessment that the situation was likely to be temporary.

Ministers were adamant that the situation did not undermine ambitious climate objectives. Donohoe said: “The green transition is not the problem. It is part of the solution.” He added that the situation meant that we should maintain and speed up efforts to improve energy efficiency.

Economy Commissioner Paolo Gentiloni pointed to high demand on gas globally, especially from Asia, the need to fix infrastructure that hadn’t taken place because of the pandemic and, to a lesser extent, the increase in the EU’s Emission Trading Scheme (ETS) price, which he hastened to add only accounted for around 20% of the price rise.   

Spain and France call for European approach to managing the gas market

Ahead of the meeting, French Economy and Finance Minister Bruno le Maire, the Spanish Finance Minister Nadia Calviño called for more concerted European action and a European approach to managing the market. 

In response the Commission will propose a toolbox of policy measures that can be deployed to mitigate the impact of the additional cost, the Commission will also launch a reflection on how to better secure energy supply for EU citizens and businesses in the medium term, with a view to shaping energy legislation proposed for December. 

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Gentiloni said any measures would need to be temporary, targeted, respectful of state aid rules and consistent with the transition to a decarbonized economy, which he added was the structural response to volatility and dependency on fossil fuels.

The hike in prices has been particularly sensitive in Spain where it has become a sensitive political question, with the government imposing a large windfall tax on energy providers.

Le Maire said: “It is time to have a look at the European energy market. The European energy market has one key advantage, it secures the supply of energy everywhere in Europe, in all countries, at all times. This is clearly one of the key advantages of the European energy markets, but it also has one major downside, which is the alignment of electricity prices on the gas price. This is totally inefficient and we can no longer accept to have the electricity prices aligned to the gas price.”

Two solutions were put forward by the ministers. Firstly, to improve the regulation of gas stocks. The second one is to have a direct link between the average cost of production of electricity in every country, and to the price paid by the consumer. Gentiloni acknowledges that measures are needed, but that a balance has to be found that isn’t contrary to climate objectives. 

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