Opening remarks by Commissioner Simson at the press conference of the Extraordinary Energy Council, 24 November 2022
Thank you and good afternoon.
As Jozef already explained, today, we agreed several key measures to tackle the ongoing energy crisis and I am grateful to the Czech Presidency for steering the negotiations as well as to the Member States for their broad support.
The ministers reached political agreement on five crucial issues:
First, making joint purchases of gas a reality. We have a process in place that will allow us to pool our demand through the EU Energy Platform and buy 13.5billion cubic meters of gas together next year, in time to refill our storage.
Second, to give ACER the task of developing a new EU LNG benchmark by the end of March. The current most popular benchmark, TTF, no longer reflects the situation on the EU gas market and a complementary instrument is needed.
Third, we will develop circuit breakers for intra-day derivatives trading, to avoid excessive volatility and ease liquidity stress for energy utilities.
Fourth, to reinforce the EU energy solidarity, to make sure that in the event of an emergency, no Member State will be left alone.
And fifth, we will accelerate the permitting procedures for technologies that can make a difference already for this winter – installing solar PVs and heat pumps, for example. We are also establishing the principle that renewable energy projects are in overriding public interest.
I cannot overstate how important these measures are for our response to the current crisis and I was happy to see very broad agreement around the table. It is paramount to move forward with implementation as swiftly as possible and I therefore hope that the Council will formally adopt the package in the coming weeks. There was no doubt in the room that these measures are urgent and necessary.
Together with the rules on storage that we agreed already in spring and the demand reduction targets adopted in July, this package provides a comprehensive response to the challenges on the gas market. We have already seen the effect of all these steps, with gas prices falling from the summers' peak to less than half of that price. However, there is one piece still missing – a tool to address price spikes that do not reflect the reality of the market.
The Commission proposed the main principles for such a Market Correction Mechanism on 18 October and as requested by a majority of Member States, we presented a full legal proposal two days ago, in time to have the first discussion today.
I want to recall that we were given a very specific mandate by the European Council in the end of October: to propose a temporary measure to limit the episodes of excessive gas prices without risking our security of supply, intra-EU gas flows, demand reduction efforts or financial stability. What we have proposed has to be seen in that precise context.
In line with the European Council conclusions, we propose a ceiling on the month-ahead TTF price in case it exceeds 275 euros per megawatt hour, to be activated when there is a significant difference with global LNG price.
The intention of the Market Correction Mechanism is to intervene when the TTF gas price is no longer reflecting the market fundamentals. This is why we have introduced the second condition, which is crucial to ensure that we continue to attract LNG cargos to replace the lost pipeline volumes of Russian gas.
Designing this proposal has been a balancing act. On one hand, we need an effective measure to cap the gas price when it's necessary. Excessive prices can cause severe hardship both to our citizens and serious damage to EU's industry and businesses. This has been the clear – and fully justified - message from many Member States.
On the other hand, the Correction Mechanism comes with risks, as a number of Member States have rightly pointed out. It is therefore necessary to have safeguards in place to avoid unintended negative consequences. Most importantly, the mechanism can be suspended by the Commission at any moment when security of supply or other risks materialise. In addition, the level of the ceiling and the duration of the intervention have been set cautiously, to minimise the risks.
Today's discussion showed that despite different views around the table, finding a broadly supported solution is possible.
Finally, I want to talk about Ukraine. As Russia's inhumane attacks on civilian infrastructure continue, major cities are facing power shortages and millions of people are without heat and water. These attacks also have a significant impact on Moldova's energy system.
Ukraine's Minister of Energy German Galushchenko was able to join us virtually today and explained what's happening in Ukraine and what is the impact of the latest shellings to their nuclear power plants.
Since the beginning of the war, almost 55 000 items of energy equipment and 500 generators have been provided to Ukraine through the Union Civil Partnership Mechanism, but I have again asked the Member States to step up our joint effort. At the moment, high voltage equipment and in particular transformers are the main priority. Generators also remain an important and urgent need.
The Commission is also working on a new energy hub in Poland to allow donations from third parties and help with their delivery to the exact locations in Ukraine.
I am very grateful to all the Member States, as well as the Commission services and the Energy Community for the support they have already provided to Ukraine, but clearly if shelling targeting civil energy infrastructure continues, we have to strengthen our response.
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