EU Commission warns “We need to understand that the pre-war situation with abundant, cheap fossil fuels is not coming back.” 

During an EU press conference to address high energy prices, the EU commission decided to drop the bombshell that “cheap fossil fuels” are “not coming back” to the EU. 

If this was a short term blip in the energy prices commissioner Timmermans would have said so, instead the commissioner made it clear cheap energy is a thing if the past. 

Is this because the EU are continuing to push ahead with the Green deal? 

Executive Vice-President Timmermans said: It has now been almost 7 months since Putin started its illegal, barbaric war against Ukraine. We have since seen some incredible acts of bravery from the Ukrainians and despicable acts of barbarism from the Russians, but we have also seen strong solidarity from Europeans.

Putin’s war has stoked an energy crisis in Europe that continues to have huge repercussions. In response, we have moved swiftly to secure alternative supplies, accelerate the rollout of renewables, and start reducing gas demand to ensure European citizens are safe for winter.

Major Brand Discounts

But we are still confronted with a profound mismatch between supply and demand on the energy market. What was once a free and functioning market has been sabotaged.

We need to understand that the pre-war situation with abundant, cheap fossil fuels is not coming back.

Putin’s weaponization of energy is confronting us with increasingly unbearable energy bills that households, and especially small and medium-size enterprises, are grappling with. 

The situation is unprecedented and so our proposals to tackle it should be unprecedented.

Our package today therefore does several things:

First, it brings a European reduction in electricity consumption of 10%. During peak-hours, electricity consumption must go down at least 5% so we avoid using the most expensive gas-fired power plants and bring down the price of energy. This will be mandatory, so that the targets are met by everyone.

Let me underline here as well that reducing our gas and electricity consumption as such is fundamental to the success of any measure to tackle this energy crisis. Demand reduction helps rebalance the energy market, lower energy bills, reduces emissions, and makes us immune to Russia’s gas games. Without demand reduction, this is not going to work.

Second, our package proposes a European mechanism for collecting and redistributing the exceptional surplus profits and revenues that the war in Ukraine has brought several energy companies. This can generate up to € 117 billion for Member States to support European households and businesses who face unsurmountable energy bills.

Today, gas-fired power plants have extremely high operating costs. And these plants set the market price. This means that power generators with lower operating costs have been able to reap extraordinary profits, way beyond what may have been reasonably expected based on investment decisions. So we propose to cap the revenues of these so-called infra-marginal producers at € 180 per MWh. This level still grants them a profit margin and preserves their incentive to invest.

But fossil fuel companies outside the power sector have also benefitted enormously from the current market situation. We’ve seen it this summer: share buy-backs, exceptional dividends, etcetera. So as our third measure we ask them for a solidarity contribution, to help support electricity consumers.

To distribute these funds to families and businesses, we offer Member States several suggestions: from direct transfers to end-users and premiums for cutting energy use, to setting lower price for limited volumes which is a good way to offer specific support to lower- and middle-income households.

At this stage, prices remain high. And there is no quick fix. I really need to emphasise that. The next winters – not just this one – will be difficult, make no mistake about that.

But I am confident that these measures will bring progress, just like our previous ones did. Our dependence on Russian gas is down from 40% to 9%. Storage in every Member State is quickly nearing the required 80%, and the EU-average, as the President said this morning, is close to 84%. We are all saving more and more energy. And the pace of renewables being rolled out is steadily rising.

In the end, our green energy transition is the only way to rid ourselves of Putin’s energy yoke and it will create energy sovereignty in Europe. The era of cheap fossil fuels is over and the faster we move to cheap, clean, and home-grown renewables, the sooner we will be immune to Russia’s energy blackmail and anybody else who may think they can blackmail us with energy.

Major Brand Discounts

Putin seeks to divide us. But we need to show him that we are much stronger than that. Looking back to where we started, it’s clear that when Europe is united, when we lock arms and stand together, there is nothing we can’t do.

Have your say by leaving a comment.