Energy: The EU is trying to escape the trap of disunity in Prague

Energy: The EU is trying to escape the trap of disunity in Prague

European Union leaders will meet in Prague on Friday (7 October) to try to bridge their disagreements to outline a common response to soaring energy prices caused by the war in Ukraine.

The leaders of the 27, meeting in the Czech capital’s castle, will discuss new measures proposed by European Commission President Ursula von der Leyen.

Energy strategy is dividing the Franco-German couple and lively debates are expected on the day after a more consensual day dedicated to the launch of the European Political Community.

The old continent’s economy is entirely dependent on its hydrocarbon imports and is suffering like no other from the supply cuts imposed by Russia.

But finding a common answer is struggling as interests diverge between countries that back nuclear power, like France, those that back coal, like Germany, or those historically linked to Russian hydrocarbons in central Europe walk.

Temptation of the Lone Rider

Frustrated by Europe’s slowness, EU member state leaders risk giving in to the temptation to go it alone.

Germany last week announced a €200 billion plan to protect its economy, sparking an outcry. France had also unilaterally lowered fuel prices at the pump.

“Some countries think they can do it on their own, with their own budget. You can do that for a few months. Then it’s a race to see who has the deepest pockets. But even the deepest wallet has its limits at some point.Belgian Prime Minister Alexander De Croo warned on Thursday.

In a letter to the Twenty-Seven on Wednesday, Ms. von der Leyen agreed “Consider a gas price cap” paid to exporting countries. 15 Member States, including France, require this.

However, Germany is hesitant about this still-unclear mechanism, believing it could exacerbate supply difficulties. It contains “Significant Risks”recently estimated the Bruegel Institute and judged that it “Could boost gas demand while undermining Europe’s ability to attract much-needed supplies.”

Another topic of confrontation: the reform of the European electricity market, which penalizes consumers with high tariffs linked to those of gas.

Ms von der Leyen proposed on Wednesday to discuss a temporary cap on wholesale electricity prices, a measure that would be a first step before the structural measures demanded by Paris in particular.

“The discussion must lead to a message of unity”, was pointed out in the Elysée. But the concrete results should wait a few weeks.

OPEC nudge

The Europeans also have to deal with the reluctance of their suppliers.

Twenty-three oil-producing countries, led by Saudi Arabia, on Wednesday announced sharp cuts in their production to prop up prices, a boon to Moscow and a snub to Westerners.

The affair illustrates the difficulties buyers have in imposing their own prices on suppliers “Friends”. Federal Economics Minister Robert Habeck also complained on Wednesday about the “astronomical” prices that countries such as Norway and the USA charge for their gas.

The EU, which has decided to halt its purchases of Russian oil by sea from December 5, is also likely to have the greatest difficulty in getting third countries to accept the G7 cap on Russian oil prices in order to sanction Moscow .

Ms von der Leyen also suggests developing joint gas purchases, but also going beyond the €20 billion in European subsidies already decided on infrastructure to get rid of Moscow.

It’s urgent. Since the invasion of Ukraine in February, wholesale gas and electricity prices in the EU have increased 15-fold, Bruegel said. At the end of September, European employers warned of an “imminent” threat to the survival of thousands of companies.

So far, the Twenty-Seven have agreed to pull some of that « Super wins » Energy producers to help consumers reduce their electricity and gas consumption together.

European leaders must also reiterate their continued support for Ukraine on Friday.

French President Emmanuel Macron hinted Thursday night that he could announce new arms shipments, particularly Caesar arms.

Reference: www.euractiv.fr

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