The main elements of the proposal should include a functional platform for joint gas purchases, increasing the transparency of the TTF price index and strengthening its resilience to speculative behaviour and enhancing energy savings and solidarity between Member States.
During the working lunch, the ministers discussed the energy preparedness of individual countries, the EU as a whole, as well as neighbouring regions before the coming winter.
In the afternoon session, the ministers also talked about broader aspects of the functioning of the European electricity market. “We also discussed the way how the market should be set up so that it can better respond to the current crisis situation and at the same time be prepared for the future energy mix. It will be low-carbon and more based on nuclear and renewable energy sources. We gave the representatives present the opportunity to comment on the possibility of solving this problem and thus provide the European Commission with guidelines for further work in the area” adds Minister Síkela.
The informal meeting of energy ministers was attended by the Director of the Agency for the Cooperation of European Regulators (ACER) Christian Zinglersen, Executive Director of the International Energy Agency Fatih Birol, Director of the Secretariat of the Energy Community Artur Lorkowski, Vice President of the European Investment Bank Thomas Östros. Ukrainian Minister German Galushenko, described in his video-message the current situation in his country and called on all present to show solidarity and help with the supply of energy equipment.
“Check against delivery”Thank you, Jozef, good afternoon, everybody.
In the last seven months, we have seen a fundamental shift in the EU energy policy, as a response to Russian aggression against Ukraine and the resulting exceptionally high-energy prices and security of supply concerns.
Immediately after the start of the war, we committed to ending our dependence on Russian energy and set out a strategy to achieve it. In Spring, we put in place a new common storage policy. In July, we agreed jointly and proactively to reduce the EU gas demand and created the EU alert to be better prepared for winter.
Last week, Council reached an agreement on our proposal to reduce electricity demand and provide the Member States with funds to mitigate the impact of the crisis. It is worth taking a moment to appreciate the scale of this shift both in our thinking and in practice.
These steps are hugely significant and would have been unthinkable a year ago. They have ensured that our storage is full, that serious energy savings are underway across Europe and that we have managed to replace most of the lost Russian gas with alternative supplies And having these necessary conditions in place allows us now to take the next steps.
Because despite the unprecedented action and measures that would have been taboo only recently, it is clear that more is needed to tackle this crisis. The prices are still unsustainably high, the Russian pipeline flows have dropped under 10% and attacks on EU’s energy infrastructure increase the uncertainty further. This is why the Commission is working to present a package of proposals on the 18th October. It will not be the last such package, as we must continue to develop our tools and adjust our approach as the situation develops.
As I shared today with the ministers, the upcoming initiatives and proposals will have four elements that will work together to lower prices and reinforce solidarity and security of supply.
First, on the gas prices. As I have said before, the TTF gas benchmark is a crucial area of work. It is no longer representative of the reality of the EU’s energy market and artificially inflates the prices. We need to develop an alternative benchmark and the Commission is preparing a legislative proposal to that effect. Next week, we will lay out what this would mean in more detail.
I expect the benchmark to be in place by the next filling season, but our people and businesses cannot wait until then. We must tackle the prices now. The Commission’s preference has been to do it via negotiations with our partners, but we have to be ready if these negotiations aren’t quick enough. We need a temporary mechanism to limit the prices. As part of the upcoming package, we will set out how this mechanism could work and how to mitigate the risks such mechanism inevitably entails.
Second, any intervention in the gas market requires further reduction of gas demand. This is not a nice-to-have, but a necessity to guarantee the security of supply in the context of a market intervention. One option is to trigger the EU alert, that would make the 15% demand reduction target mandatory. But a different approach or further measures may be needed to ensure that the level of savings is sufficient. Any measures we take to lower prices must not send the wrong signals that drive up consumption across the EU; consumption of natural gas that will not be available at sufficient volumes.
Third, a joint approach to limiting prices demands solidarity. As not all Member States have mutual solidarity agreements in place, we will propose an arrangement that would be directly applicable in this case. This will ensure that we will be prepared and ready to act in case these agreements will be needed. And we are looking into the need for further proposals for situations where some regions are facing a larger supply crunch than others.
And finally, we will bring forward a proposal to facilitate the joint purchases of gas. This will allow the EU to use our collective purchase power to limit prices and avoid that Member States are outbidding each other on the market, and by doing so driving up the prices. It will ensure transparency and help in particular smaller Member States, who are in a less favourable situation as buyers. Our focus will be on, but not limited to, coordinating and aggregating the filling of gas storage for next winter.
Let me end by mentioning two other topics we discussed today.
As you know, in addition to the emergency interventions on the electricity market to tackle the unprecedented prices, the Commission has been preparing to improve our electricity market design in the longer term.
The main objective of this reform is to bring the benefits of affordable renewables and low-carbon technologies to consumers, while also preserving the benefits of a common, market-based electricity system. We will make sure that no energy carrier can cause market disruption like natural gas currently does.
I have committed to deliver to present first results with the main elements of the reform by the end of this year, as announced by President von der Leyen. This will serve to consult with the ministers and other stakeholders on a concrete set of ideas brought forward by the Commission. This process is currently expected to lead to a Commission proposal in early next year.
And last but not least, we talked about the situation in our wider Energy Community and in Ukraine in particular.
In the last days we have seen, among other atrocities, that the Russian army is specifically targeting energy infrastructure in Ukraine, to increase the suffering and hardship of ordinary people and disrupt the economy. This is cowardly and unacceptable.
To support the Ukrainian energy sector that is under attack, we work via the EU Civil Protection Mechanism and the Energy Community to supply Ukraine with the necessary equipment to repair and rebuild damaged energy infrastructure. I also call on the Member States and energy companies to contribute to this effort either with financial or in-kind donations and thank these partners who have already done so.
We have also been actively working to ensure stable electricity and gas supplies to Moldova, that is facing serious security of supply challenges.
I welcome that commercial exchanges between Romania and Moldova have been activated yesterday and would like to thank the Romanian Minister for his support. There are also emergency supply contracts in place that Moldova can rely on.
These are difficult times for the EU and our partners and the situation in the energy sector is particularly challenging. The only way to overcome these challenges is to act together, decisively and in solidarity. Today’s discussions gave me the reassurance that we are ready to do so.
