During the day-long talks in Brussels there was clearly a rift between the southern and northern bloc nations. Spain led the Mediterranean countries pushing for intervention to the market through price caps and Germany and the Netherlands refused drastic measures.
However, leaders did agree to a proposal by the European Commission to purchase natural gas together and ensure that the bloc’s storage capacity is nearly full in order to avoid another energy crisis due to EU’s dependence on Russian energy.
The conflict in Ukraine has forced EU nations to realize that they are too dependent on Russia for their natural gas and oil, which is heating their homes and running their industries.
The United States and the EU announced earlier in the day a new partnership to decrease the continent’s dependence on Russian energy. The plan will see the U.S. and others increase their liquified gas exports to Europe this year by 15 billion cubic metres. In the future, shipments could be even larger.
Spanish Prime Minister Pedro Sanchez presented plans to the EU for decoupling electricity and gas prices to counter protests from truckers, farmers, and fishermen. The radical proposals failed to gain consensus. The EU will revisit this issue in May, but Spain and Portugal may be granted special relief to weather price increases in the interim.
“The Iberian Peninsula has a very unique situation. After the summit, Ursula von der Leyen, President of EU Commission, stated that their energy mix includes a lot of renewables. “We agreed to a special treatment… so the Iberian Peninsula can deal with the very particular situation they are currently in and manage electricity prices the way we have been discussing.”
Emmanuel Macron, the French President, stated that divergent views within Council paved the way to the long debate. “Because the different energy models and interests of the states are not the same,”
The EU looks back at the COVID-19 pandemic as a model, considering that energy prices are high and supplies are low. To ensure equitable distribution, the member states joined forces to purchase large quantities of vaccines.
Von der Leyen stated that high gas prices are the root cause of high electricity costs. “So we will unite, pool our demand, and use our collective bargaining strength when purchasing gas. We must also complete our pipeline infrastructure and increase our storage. This will be our policy of insurance against disruptions in supply. Also, it’s time to review the design of our energy markets.”
Europe faced a difficult test prior to Russia’s invasion. The outlook for slowing growth and surging inflation is driving high energy prices made it look like Europe was already in trouble. According to the European Commission, economic growth in the bloc will slow from 5.3% last years to 4% this year to 2.8% by 2023.
At a summit held March 11, EU leaders reached a principled agreement to reduce dependence on Russian oil, gas and coal imports by 2027. The EU imports 90% of the gas it uses to generate electricity, heat homes, and industry. Russia supplies almost 40% of EU’s gas and 25% of its oil.
