News: Brussels will hold the largest intervention in the history of the EU in the energy market – Expert

The European Commission (EC) proposes to carry out the largest, according to Fabian Rönningen, senior analyst at Rystad Energy Rystad Energy, intervention in the energy market of Europe during its existence – to redistribute more than 140 billion euros of income from the energy sector in Europe. Ursula von der Leyen, who chairs the EC, proposed on September 14 an interim plan that would take 142 billion euros from energy companies that produce electricity and extract fossil fuels and give it to consumers who now have to pay astronomical energy bills.

How large the amount can be judged at least by this example: if this money is invested in the production of energy from renewable sources, for example, from solar energy, then an additional 121 GW can be generated, which is enough for a whole year in such a far from the smallest country like Poland. In total, by the way, 160 GW of solar energy is produced in Europe.

At the same time, the EU plans, reminds Oil Price, to reduce electricity consumption through a mandatory reduction of 5% of peak load. Brussels has set a target to reduce energy consumption on the continent as a whole by 10% by March 31, 2023. To do this, the EC invites EU members to identify the 10% of hours with the highest energy load per day and take measures to reduce energy consumption during these hours.

However, Rystad Energy believes that this generally logical and good plan will take too long to implement. Meanwhile, only a little more than two months remained before the arrival of winter. Its implementation will be another test for the European Union. Suffice it to say that despite all the efforts on the economy in August, energy consumption decreased by only 2% compared to July or by 1% compared to August 2021. So a 5-10% reduction will be an extremely difficult task for both households and businesses and the entire economy of Europe.

Never before has the highly liberalized European energy market been subject to an energy price ceiling. It is proposed to reduce the excess profits of companies producing energy using cheaper technologies than generating energy from gas. First of all, we are talking about renewable energy sources, nuclear energy and lignite. A number of companies, having kept the cost of their energy production stable, have recently been able to receive very high profits due to very high electricity prices. The EC wants to set a MWh price ceiling of no more than 180 euros. Everything that will exceed these figures, and this, according to the authors of the plan, will be about 117 billion euros, is proposed to be withdrawn and redistributed among energy consumers.

By the way, Rystad believes that the direct introduction of price limits for electricity and gas is inefficient and even harmful, because it will not encourage producers to save energy and “blue fuel”, i.e. will not help to reduce energy consumption and demand for it.

The EC also wants to impose a temporary 33 percent tax on the excess profits of oil and gas, coal and refinery companies. The rate is more than 20% higher than the average profit for the last three years. It is believed that this measure will bring another 25 billion euros.

In addition to these three main points of the plan, Brussels is going to develop liquidity tools that will give market participants enough collateral for margin calls and avoid high volatility in the futures market. In the plan proposed by the European Commission, there are also a number of small measures that need to be improved.

Leave a Reply

Your email address will not be published.

Back to top button