On Wednesday, the President of the European Commission Ursula von der Leyen proposed five "immediate moves" that the EU could implement to tackle the rising energy prices and protect vulnerable consumers and businesses.
As households and companies continue to struggle with the continued increase of gas prices in Europe – where the price is ten times as high as in the United States, and twice as high as in Asia – the Commission will bring the proposal forward officially next week.
"We are facing an extraordinary situation because Russia is an unreliable supplier and is manipulating our energy markets," said von der Leyen during a press conference.
Nonetheless, the President stressed that the EU is prepared and that Russia's grip on the energy supply has weakened as demand drops. She added that the EU's common storages are at 82% capacity, which is well ahead of the November deadline.
"Through diversification, we have increased deliveries of LNG or pipeline gas from the US, Norway, Algeria, Azerbaijan, and others," she said. "Norway is now delivering more gas to the EU than Russia. And we are making massive investments in home-grown renewables through RePowerEU."
However, von der Leyen acknowledged that the manipulation of the gas markets destabilises the electricity market, confronting households with "astronomic electricity prices" and companies with "enormous market volatility."
Consequently, the EU has proposed five "immediate measures" to help vulnerable consumers and businesses.
The first measure is smart savings of electricity: "Global energy supply is now scarce. This calls for a smart reduction in demand. We need a strategy to flatten the peaks which drive the price of electricity."
The Commission will propose a mandatory target for reducing electricity use at peak hours, working closely with the Member States.
"Second, we propose a cap on revenues of companies producing electricity with low costs. Low-carbon energy sources are making unexpected revenues which do not reflect their production costs."
Von der Leyen stressed that it should be consumers who benefit from the relatively low cost of energy sources such as renewables. To this end, the Commission proposes using these unexpected profits to support vulnerable people and companies to adapt.
"The same goes for unexpected profits of fossil fuel companies. Oil and gas companies have made massive profits. We will propose a solidarity contribution for fossil fuel companies because all energy sources must help address this crisis."
These revenues should then also be invested to support vulnerable households and invest in clean home-grown energy sources.
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As a fourth measure, energy utility companies should be supported to cope with market volatility, said von der Leyen. "Their costs are also going up unexpectedly which threatens their capacity to trade."
The Commission has proposed a Liquidity Support from Member States for energy companies and will update its framework to enable state guarantees to be delivered rapidly.
"Finally, we propose a cap on Russian gas. The objective here is very clear, we must cut Russia's revenues which Putin uses to finance this atrocious war against Ukraine."
Von der Leyen stressed that EU efforts are paying off: "At the beginning of the war, Russia's pipeline gas accounted for 40% of all imported gas. Today it is just 9% of our gas imports."
"These are tough times but I am convinced that Europeans have the economic strength, the political will, and unity to keep the upper hand."