EU proposes five lines of action to stop unstoppable European energy crisis

“High energy prices and volatility are fueling rising inflation and have serious repercussions for all businesses and consumers, including but not limited to the most vulnerable, the energy poor and increasingly middle-income households,” he warns. EU presidencythis semester was administered by the Czech Republic, work certificate It will be on the table, along with the analysis that the European Commission is currently working on in parallel, preparing to feed the debate among the Twenty-Seven.

The check document actually reflects the vague diagnosis made by the European Commission in the USA. preparatory report: Less electricity production due to nuclear power shortages in some Member States, decline in European hydroelectric production, low water levels in rivers, coal transport affected and very adverse wind conditions. Factors like these boosted demand for gas by 30%, with prices soaring on Monday following Gazprom’s decision to turn off the tap.

“It is clear that the upcoming heating season will test the resilience of the EU energy market”, Czechs warned. daily fluctuations and liquidity problems pose other challenges. “Daily price fluctuations have sometimes caused margin requirements for futures contracts to increase significantly. This is making it nearly impossible for a growing number of companies to maintain their hedge positions, causing them to withdraw from the futures markets. This low level of participation in the futures markets reduces liquidity in the markets, which in turn exacerbates the volatility of prices in a negative cycle they create. five line business.

parse prices

It is the first commitment to separate gas prices from electricity prices, which Spain, France or Portugal have claimed since last year and included among possible solutions within the framework of electricity market reform, which Brussels wants to finally start over. 2023. The options included in the Checks to respond to the emergency interval are “temporarily limiting the price of gas used for electricity generation”, “Temporarily limiting the price of gas imported from certain jurisdictions”, With reference to Russia, but without mentioning this country and “temporary exclusion of electricity generation from gas from the ranking of merit and price fixing in the electricity market”.

More liquidity to the market

The Czech presidency also proposes the creation of “immediate lines of credit for market participants, including a specific solution at the European level through the ECB”. They also propose “reforming trading rules on energy exchanges. temporarily changing regulatory requirements For guarantees in electricity trading, including review of automatic adjustment of maximum prices”, “temporary suspension of European energy derivatives markets” and “support of futures in certain bands”.

saving electricity

The presidential document also includes the idea of ​​coordinating a cooperation put forward by Brussels. decrease in electricity demand, In line with the agreement to reduce demand in the gas sector, reached in July 2022 with the aim of reducing consumption by 15% between August and March 2023.

Limit marginal revenue

Among the possible measures proposed by the checks are, as the Commission did in its preparatory document last week, an upper bound on the price of sub-marginal energies Other than gas, this income is renewable or nuclear to help households and industry.

Emissions trading system

The last line of work proposed by the Czechs Friday’s discussion is about considering options for using the CO2 emissions trading system to address current high electricity prices.