The EU`s Toolbox for Action and Support - Tackling Rising Energy Prices?

 

 

On 13 October 2021 the European Commission realesed a Communication to the European Parliament, in which it proposes measures to tackle the currently soaring energy prices in Europe. The toolbox includes 2 types of measures: some are directed towards the Member States and proposes a set of measures for Member States to pick and choose. A second set of measures is directed towards the EU itself. But will this help to alleviate the currently unfolding energy price crisis? This blogpost analyzes the main tools in this box and assesses them in view of their effectiveness.

The toolbox features both short-term, immediate measures on the one hand and medium-term measures on the other hand. In both the Member States as well as the EU itself is being addressed.

 Immediate Measures

The first part of the section on immediate measures is addressed to Member States and outlines a number of measures (toolbox for Member States) that they can take to ease the burden. First of all Member States can take some immediate measures, for instance making specific social payments to those most at risk to help them afford their energy bills in the short term or provide for support for energy efficiency improvements (p.8 Communication). This shall be financed with money from the Emissions Trading Scheme (p.1 Factsheet/p.7 Communication). In addition, Member States can also put in place safeguards to avoid disconnections from the energy grid or can defer payments temporarily, where consumers face short-term difficulties in paying their bills (p.8 Communication).

Moreover, particular groups could be able to obtain support specifically designed for them. Vulnerable energy customers could receive temporary tax exemptions or benefit from reduced tax rates (p.9  Communication) on energy. Besides this particular group, all customers could benefit from direct support for a defined minimum consumption per household or inhabitant (p.2 Factsheet). With a view to the industry it could received targeted support measures to help industries to adapt. However, the Commission places upmost importance on the fact that such industry support measures shall be in full compliance with the state aid framework, not distorting competition or interfering with the EU ETS (p.10  Communication), which will effectively make them less attractive to the Member States, as they must fear an state aid investigation in case they cross this line, on purpose or not.

With a view to immediate measures and EU activities, the Commission promises to ask the European Securities and Markets Authority (ESMA) (coordinator of national financial authorities) to better monitor the European carbon market and identify market distortions. A preliminary assessment should be ready by 15 November 2021 (p.11  Communication). In additon, the Commission promises to investigate anti-competitive behaviour in the energy markets and to have more outreach to improve, inter alkia, liquidity of energy markets (p.12  Communication).

Medium-term Measures 

In the longer run measures to avoid price hikes in the future and to decarbonize energy markets shall help the EU. The toolbox seems rather uninspired at this point, in that it is either recapulating measures thzat are already existing or revisiting legislative measures that were supposed to avoid future gas and electricity crises, but did not manage to avoid the current one.

As far as the EU itself is concerned, plans the Commission to revise in December 2021 the gas security of supply regulation. In this context, the resilience of the EU gas market could be strengthened, for instance through provisions for an easier access to storage capacity across borders, including for renewable and low carbon gases. Cross-border auctioning of storage capacity and joint procurement of reserve stocks shall be part of this effort (p.13 Communication). Other than that, the usual actions shall be taken. Somehow long-term electricity storgae capacity via Power-to-X shall be increased (lacking any details), ACER shall review the wholesale electricity market design (has been done several times already) and by the end of 2022 additional efforts to protect critical energy infrastructure against cyberattacks should have been taken  (pp.13-15  Communication).

With a view to the decarbonization aspect, the Commission promises to issue guidance on how to accelerate permitting procedures for renewable enrgy facilities, help Member STates to better exploit the available EU budget and  complete the revision of the Energy and Environmental State Aid Guidelines (EEAG) (which should already have been done by now) (pp.18/19 Communication).

Member States shall provide information to energy consumers on how they can participate in the enrgy markets and/or easier switch suppliers. Moreover they shall be increasingly instructed on how to join energy communities (pp.16/17  Communication). In that respect a Council Recommendation providing further guidance to Member States on how best to address the social and labour aspects of the green transition shall be elaborated by December 2021. While all of these measures are to be applauded in general, it seems questionable to which extent it makes sense, as a key measure, to ask the Member States to distribute further information to battle future supply crises. 

Finally, (and arguably more importantly) investments in renewable energy, renovations and energy efficiency shall be increased and renewables auctions and permitting processes shall be accelerated (pp.18/19 Communication). Member States should also step up investments in trans-European networks, including interconnectors, storage and transmission and distribution grids (pp.18 Communication).

Overall it seems as if the Commission selected December 2021 as a decisive month for energy in Europe. Not only shall some of the measures outlined above be delivered or planned by that date, but in addition we are also expecting the long-awaited new Gas Directive and -Regulation. December 2021 is, thus, set to become a hot month for EU energy lawyers, irrespective of the temperatures outside.