EU considers joint gas buying as short supply bites Europe

/ News & Interviews / Friday, 25 March 2022 13:51

The short supply of Russian gas is being felt across Europe.  In a bid to tackle this looming crisis, the European Union has recommended that EU countries jointly buy gas to shore up supply but has cautioned that seeking to cap wholesale prices would cause problems and undermine efforts to shift to green energy.

The European Commission has said that it will come up with a plan in May to quit Russian fossil fuels by 2027. Russia supplies 40% of EU gas.

Many countries are looking for ways to fight the rising energy costs and find alternative supplies in case Russian flows are disrupted.

The Commission recommended EU countries jointly purchase gas from suppliers, following a similar model to how the bloc bought COVID-19 vaccines, with a Commission-led task force of negotiators pooling demand and seeking gas ahead of next winter.

Buying electricity by government-controlled entity and selling to consumers below market price is being seen as an alternative option. Another would be to cap power prices and compensate generators for the difference between the cap and the market price.

However, if countries did this individually, it could push power into countries without the cap and cause supply concerns elsewhere, the Commission said.

A power price cap could also undermine the case for investments in new renewable energy generation, while capping fuel prices would make fossil fuel generators more competitive, the Commission said. Compensating such measures would also require large government funding.

EU countries have already poured billions into national tax cuts and subsidies to lower consumer bills, after electricity prices soared to record levels in recent months.

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