MEPs hear from Council and the Commission on what is being done to keep energy bills down and to help EU citizens deal with the social and economic consequences of the war in Ukraine. Opening statements by Ivan BARTOŠ, Czech deputy Prime Minister and by Valdis DOMBROVSKIS, Executive Vice-President of the European Commission in charge of an Economy that works for People.

Strasbourg

debate

plenary session

DOMBROVSKIS, Valdis (EPP, LV, EC)

BARTOŠ, Ivan

consequences of the war in Ukraine (T)

Keep the bills down - social and economic consequences of the war in Ukraine: opening statements by Ivan BARTOŠ, Czech deputy Prime Minister and by Valdis DOMBROVSKIS, Executive Vice-President of the European Commission

SOUNDBITE (English), Ivan BARTO&Scaron;, Czech deputy Prime Minister, Mr. President. Honourable Members. Commissioner, Mr. Vice President of the European Commission, we welcome the Parliament's initiative to keep this issue high on the agenda. Russia's war of aggression against Ukraine and the weaponization of energy supplies have driven energy prices to an unprecedented level and created a very difficult situation for many households and companies.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, Russia's aim is clear: hit our societies and our economies to create internal dissent and to fracture social cohesion. We will not let this happen. The EU is collectively doing all in its power to address various dimensions of the crisis and in particular to mitigate the effect of rising prices. I will address the main dimensions of this coordinated response.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, A. The energy supply. First, we are taking all possible measures to avoid energy shortages this winter. In a few months, we have diversified our supplies, replenished our storage facilities close to their maximum, ensured safety of supply, and taken steps whenever possible to encourage the economy to consume less.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, We see that the price increases weigh more heavily on low income families whose energy needs account for a higher percentage of their budget without government support. Many cannot afford that. The explosion of energy prices is also hitting hard the SMEs and energy intensive companies. Many are facing an explosion of their costs. Many risk going bankrupt. Some production has been discontinued. Some companies have closed down. Others have no alternative but to move their production outside Europe.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, We must stop that in order to address these challenges. Energy ministers at the end of September reached an agreement on allowing to offer regulated electricity prices also to small and medium sized enterprises. Not only households and micro enterprises. Demand reduction measures, including a voluntary overall reduction target of 10% of gross electricity consumption and a reduction target of 5% of the electricity consumption in peak hours.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, Capping market revenues obtained by power generators using low cost technologies other than gas mandatory temporary solidarity contribution applying to the profits of businesses active in the oil, gas, coal and refinery sectors, which has significantly increased compared to prior years.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, The second dimensions are the B, if you like, fiscal measures at the national level. Member States are doing their part and have taken over the past few months numerous fiscal measures to alleviate costs for businesses and families. These include lower indirect taxes, social transfers to households, direct interventions on prices paid by consumers, and extraordinary taxes on windfall profits on which I speak later.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, We need to make sure that these measures are temporary and well-targeted so that they make a genuine difference for the most affected parts of our society. Our fiscal resources are not unlimited. Let's use them efficiently.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, The third dimension is Social measures. On the social front, the Czech presidency decided to dedicate the informal meeting of employment and social ministers a few days ago on 13 and 14 October to discussion on the impact of energy, poverty and Ukrainian crisis. In this context, I am pleased to mention that the recent adoption of Minimum Wage Directive, which is a powerful and very concrete signal of the importance of the EU, attaches to ensuring a decent standard of living of all workers.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, It is only, though, our combined efforts that we can rise to this challenge, and I look forward to an efficient cooperation with you on all the proposals and initiatives we work together on. And finally, the fourth dimension, windfall profits. Let me turn down to issue that that the matter of the windfall profits on the 7th of October, a new regulation on emergency measures to reduce energy prices entered into force.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, The regulation introduces measures to collect and redistribute the energy sectors, surplus revenues to households and small and medium sized enterprises. More particularly, the new regulation addressed to types of windfall profits.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, First, it limits revenues of the electricity generators, including intermediaries that use so-called informed marginal technologies to produce electricity such as renewables, nuclear and lignite. This is done via the introduction of a cap on the market revenues of inframarginal technologies at €180 for megawatt/hour.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, Our Member States will be able to redirect the surplus revenues generated via the introduction of such cap towards supporting and protecting final electricity consumers. Secondly, the Regulation introduces a mandatory temporary solidarity contribution on the profits of businesses active in the petroleum, natural gas, coal and refinery sectors.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, The solidarity contribution will be calculated on taxable profits as determined under national tax rules in the fiscal year standing in 2020 to end all in 2023. The solidarity contribution will apply in addition to regular taxes and levies applicable in the Member States. This regulation was adopted in less than two weeks as an emergency solution to current crisis.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, What I presented here today was an overview of what we, as the EU managed to achieve in only a few months to ensure that families and companies are sheltered from the worst economic consequences of this unjustified war of aggression.

SOUNDBITE (English), Ivan BARTOŠ, Czech deputy Prime Minister, We do not know what the future holds or how long the current conflict will last, but we will certainly maintain our resolve to seek collective and articulated responses to ensure a sustainable cost of living for our citizens. Thank you very much for your attention.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, Honourable Chair, Honourable Minister, Honourable Members of the European Parliament. Russia Illegal aggression against Ukraine is causing a socio economic upheaval across Europe and beyond. Families and businesses face a surge in food and energy prices. So are the financial and monetary implications for lower income households are worse hit as they spend proportionately much more on food and energy.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, Businesses are also affected by rising energy costs, higher financing costs and lower consumer confidence. The current shock is very different from the COVID 19 pandemic, so our policies must be different, too. There are three questions to ask at the moment how to minimise the costs caused by this war. How to distribute those costs fairly. And how to lay ground for future prosperity.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, I will address each one in turn. First, we need to work on the root causes of inflation in the energy markets. This requires action to secure alternative sources of supply, to reduce our energy demand, and to address the current situation in electricity and gas markets. The European Union has set up a platform for joint purchase of gas and we are increasing gas imports from reliable suppliers like Norway and the United States.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, Member States have agreed energy consumption reduction targets and exceptional measures while we prepare a broader review of the functioning of the electricity markets. The Commission will present this afternoon additional measures to address gas prices and guarantees of security of supply for next winter. And we are also mobilising additional financial resources for Member States to introduce our EU chapters in their recovery and resilience plans.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, Honourable Members, the more successful we are regarding energy, the stronger economic and social position will be. Second, we must protect vulnerable households and businesses. It will not be possible to shield everyone from the economic consequences of the war.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, However, the public sector must protect those most exposed to high energy and food prices of all. All this means providing income support to those whose purchasing power is most under threat and the worst affected businesses.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, To achieve that our support must be targeted, temporary and retain incentives to reduce energy consumption, as a price cap on market revenues for inframarginal producers and the solidarity levy for the fossil fuel sector will allow member states to channel these revenues from the very large profits gained through unexpected circumstances towards those who need support the most.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, To provide generalised fiscal support would be not very helpful. It would fuel inflation, bring even higher energy prices, and potentially further weaken the economy. The European Central Bank is doing its job to contain inflation as the EU and the Member States need to do their job as well. Our fiscal policy and monetary policy should not work at cross-purposes.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, This means providing effective support measures that are well-targeted and compatible with prudent fiscal policies that do not add to price pressures. Honourable members, we also must look beyond this crisis.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, So lastly, we must stay on course with the current policies to build a solid basis for Europe's future prosperity. I am referring in particular to the reforms and investments agreed by some Member States in the recovery and resilience plans. Hundreds of billions of euros in grants will be disbursed to Member States over the next few years as a means of milestones and targets identified in their plans. And in the next months, we expect them to request €225 billion in loans that remain available.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the European Commission, To conclude, Honourable Members, although this has been a brief overview, I hope I outlined many initiatives on the comprehensive approach that the Commission is applying to the current situation. Thank you, and I look forward for this debate.