EU leaders to meet this week in Brussels for a summit on the energy crisis

Heads of government and state of the European Union (EU) are meeting on Thursday and Friday in Brussels at a European Council marked by an energy crisis to discuss measures to cut prices, given that “it’s time to act”, namely gas.

Two days after the European Commission unveiled new measures to tackle the energy crisis, European leaders will then discuss proposals such as a temporary price cap mechanism on the main European natural gas exchange, the creation of legal instruments for joint gas purchases by the Union. which should only move forward in the spring of 2023, as well as solidarity rules in the Community bloc, so that in case of emergency, gas is available to all member states.

The community leader also proposed that unused cohesion funds totaling up to 40 billion euros could be made available to member states and regions to help overcome the current energy crisis and guarantee progress in the structural reform of the electricity market.

At the European summit, which is expected to be “long”, the heads of government and state of the EU will then discuss a package of measures presented by the community executive, which will serve as the basis for work that, in addition to the goal of lowering prices, will also take into account that “states- members have different situations” in terms of energy, according to European sources.

Despite differing opinions on the Community measures, it is clear that “it is time to act”, according to the same sources, given that the European summit is taking place at a time of high prices in the energy sector and when there is fear, this winter, of disruptions in Russian gas supplies to the EU.

Another measure under discussion, which has not yet received any proposals from the European Commission, but which already deserves opposition from some Member States precisely because of the change in their energy balance, is the application in the EU of a system similar to the Iberian law in force since June last year, which limits the price of gas in the production of electricity.

While countries such as France and Italy support the introduction of such a mechanism even before the structural reform of the electricity market due to start next year, other member states more dependent on gas are more skeptical, although 27 countries show “accessibility for analysis of the Iberian models”, according to European sources.

Since mid-June last year, a temporary Iberian mechanism has been in place to limit the average price of gas in electricity generation to around 50 euros per megawatt-hour, which was requested by Portugal and Spain in March last year due to the energy crisis. … and the war in Ukraine, which put additional pressure on the energy market.

According to European sources, this Iberian model “may not work in other regions”, namely because in other countries gas prevails over renewable energy sources and because there is a risk of the low prices caused by the mechanism spreading to other countries linked to the European market . such as the UK, Switzerland and the Balkan countries.

In the current configuration of the European market, gas determines the world price of electricity.

There is a consensus in the EU that the current marginal pricing model is the most efficient, but the acute energy crisis exacerbated by the war in Ukraine has sparked debate.

The idea of ​​imposing a ceiling on the price of imported gas, namely Russian gas, is ruled out for the time being, given the implications that this will have on the security of supplies to the EU.

Another issue that will be discussed at this European Council is how to support companies and families in the face of the current energy crisis, which can be done with additional funds from the REPowerEU energy package, but “it is not yet known how”, according to European sources. .

After there was criticism in the EU of Germany’s new bazooka, a €200 billion bailout package for German households and companies to fight high energy prices, a provisional European credit-based mechanism was allowed to be set up on favorable terms, but there is other ideas.

Portuguese Prime Minister António Costa has already said that the EU should reuse for this purpose about 200 billion euros of the total debt already issued but not yet spent, with Portugal responsible for a share of 12 billion euros.

This discussion about funds will be followed in the European Council by another discussion on financing the reconstruction of Ukraine, with billions of euros expected to support such a reconstruction, given the devastation caused by the Russian invasion that began last February.

The European Summit kicks off Thursday afternoon with European Parliament President Roberta Metsola, followed by a video conference with Ukrainian President Volodymyr Zelensky to start discussions on energy.

On Friday, the discussion will focus on relations with third countries such as China, Belarus or Iran, with additional sanctions on those responsible for the latter two for supporting Russia in circumventing European sanctions.