The EU’s energy bill unexpectedly swelled by billions – the Commission revealed how it plans to work

President of the European Commission Ursula von der Leyenin according to the Middle East crisis has had an exceptionally large economic impact on the European Union.

The crisis has continued for 44 days, and during that time the EU’s fossil fuel consumption has increased by more than 22 billion euros, even though energy imports have not increased.

“This shows in a stark way how huge an impact this crisis has on our economy,” von der Leyen said at a press conference on Monday. Before that, the Commission held a discussion on the effects of the Iranian crisis on the price and availability of energy, as well as on the measures aimed at responding to the crisis.

Von der Leyen said that the actions are intended to utilize the lessons learned from the 2022 energy crisis. He also emphasized the importance of the unity and coordination of the member states.

According to Von der Leyen, the Commission is trying to prevent a situation where member countries compete with each other on the same market. That is why the Commission is preparing EU-wide coordination in gas storage and the release of oil reserves.

Another key set of quick actions concerns support measures that member countries can use to protect vulnerable households and industries that suffer the most from high energy prices. According to von der Leyen, we have learned from the previous energy crisis that subsidies must be precisely targeted, quickly implemented and temporary.

The Commission intends to start negotiations with the member states on the temporary flexibility of state aid rules. The goal is to approve the new temporary state aid framework during April.

The third short-term measure is to curb energy demand. Von der Leyen reminded that the cheapest energy is the one that is not used. The aim is to reduce the demand, for example, by energy efficiency renovations of buildings and renewal of industrial processes and equipment.

The Commission’s proposals for quick action will be included in a communication to be published next Wednesday, which will be discussed by EU leaders at an informal EU summit in Cyprus on Thursday.

Get rid of fossil addiction

Along with quick actions, the EU is preparing structural reforms to permanently reduce the price of energy.

The EU’s long-term strategy is to accelerate the transition to renewable and nuclear energy. Von der Leyen said that currently they already produce more than 70 percent of the EU’s electricity, but according to him, integration, power grids and energy storage still need to be strengthened.

The chairman of the commission stated that the largest part of the energy bill is the source of energy, but the price is also affected by electricity taxes, transfer fees and the EU’s emissions trading system.

Emissions trading is the smallest part of this whole, but according to von der Leyn, it is also planned to deal with its price fluctuations.

The Commission has already proposed changes to the market stability reserve for emissions trading. They concern, among other things, the suspension of the cancellation of emission rights and the strengthening of the reserve. The measures aim to increase the predictability of prices without weakening the effectiveness of emissions control. The overall reform of emissions trading is planned to be presented in July.

Legislative proposals on electricity taxes and transfer fees are also being prepared and are expected to be published in May.

The Commission considers that the only sustainable way forward is the modernization of energy production and the rapid electrification of the economy. This requires better grid integration, more storage capacity and flexibility, and faster power grid connections.

The commission presented the legal package on electricity networks in December, and the goal is to have it approved by the end of the summer.

“Electrifying Europe means making Europe independent,” von der Leyen said.

In order to boost investments, member states are encouraged to make use of existing EU funds, such as cohesion funds. Von der Leyen hopes that member countries will use them to build electricity networks and battery technology.

The chairman of the commission said that in addition to public funding, private investments are also significantly needed. That’s why the Commission plans to convene an investment conference to speed up the channeling of private capital into power grids and batteries.