During the plenary session of the European Parliament in Strasbourg (4-7 October 2021), MEPs debate on the European solutions to the rise of energy prices for businesses and consumers, especially the role of energy efficiency and renewable energy and the need to tackle energy poverty. Opening statements by Kadri SIMSON, European Commissioner for Energy and Anže LOGAR, Slovenian Minister of Foreign Affairs. This transcription speech is the result of an automatic process. Check against delivery.

statement

Strasbourg

debate

plenary session

energy union (T)

consumers' protection (T)

SIMSON, Kadri (EE, EC)

LOGAR, Anže (SI)

European solutions to the rise of energy prices for businesses and consumers: opening statements by Anže LOGAR, Slovenian Minister of Foreign Affairs and by Kadri SIMSON, European Commissioner for Energy

SOUNDBITE (Original), Roberta METSOLA (EPP, MT), EP vice-president, Announcement of the results of the second voting session (05/10)

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Madam President, honourable members. After steadily declining for more than a decade and enterprises are once again making headlines in Europe, gas prices reached record breaking highs in October. Electricity wholesale prices surged by more than 200 percent in the first nine months of this year, driving up retail prices.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, This chart price is the result of a combination of factors. The world economy has started to rebound after the pandemic and is hungry for energy, most notably in Asia. At the same time, Europe's gas supply has tightened and unusually cold winter and spring last year that depleted the gas storage in Europe.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Then, over the summer, maintenance work on gas pipelines delayed by the pandemic reduced deliveries. LNG supply was hampered by technical problems and lower investment. Europe's domestic gas production has also decreased. By long term, contracts from Russia are respected, no extra capacity was booked despite the rising prices.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, But to make things worse, there's less wind than usual in Western Europe, and less hydropower reduced the available amount of renewable energy. The carbon price has also increased steadily due to economic recovery and greater use of carbon intensive fuels. But this explains only a limited part of the electricity price increase.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, All of this has driven up gas prices across the globe and created the ingredients for an abrupt price surge in Europe. Market expectations indicate that this is a temporary situation, but gas prices will remain high throughout the winter and should gradually decrease from spring next year based on current demand forecast.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Gas underground storage is about 75 percent across Europe, this level is lower than 10 year average. It is tight but adequate to cover the winter season needs. The evolution of the winter season is a key variable to watch closely. This price shock cannot be underestimated. It is hurting our citizens and particularly the most vulnerable households, weakening competitiveness and adding to inflationary pressure.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, If left unchecked, it risks compromising Europe's recovery as it takes hold. There is no question that we need to take policy measures. Europe has gone through high energy prices many times in the past and responded to them through diversification of supply sources and market integration.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Today, the price rise happens while a profound transformation of the energy system is underway. We need to design a fair and forward-looking response. We have to be clear the current price hike has little to do with our climate policies and much to do with our dependence on imported fossil fuels and their water prices.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, The Green Deal provides the only lasting solution to Europe's energy challenge. More renewables and improved energy efficiency, wind and solar have continued to generate the cheapest electricity in Europe in recent months. They are not exposed to price volatility.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Some are pointing at the European electricity market design as a part of the problem. Yet when demand and price are high everywhere in the world, it is impossible for the EU to be immune. The best response to the price challenge is to progress faster towards our target goal of 65 percent of renewable electricity by 2030.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, The electricity market design is tailor made to deliver more renewables and cheaper energy to all consumers and to enhance cross-border integration. Last year, member states with the highest share of renewables in their mix had the lowest wholesale electricity prices, the several cases of negative price on the day ahead market.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, We believe this framework is sound, but we see the challenges and we are ready to launch, she started to say sir. On the current electricity market design and its ability to deliver a lower cost and secure transition to a net zero energy system. So what can be done now? In the commission view, Europe must respond to it by delivering swift ordinated action at member states level by leveraging the strengths of its single market and by increasing its preparedness for future crises.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, The Commission will present next week a toolbox measures member states can take in line with EU law, both short and medium term, providing targeted support to consumers, direct payments to those most at risk of energy poverty, cutting energy taxes, shifting charges to general taxation, are all measures that can be taken very swiftly under EU rules.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, The immediate priority should be to mitigate social impacts and protect vulnerable households, ensuring that energy poverty is not aggravated. Higher than expected the ETS revenues provide space for doing so. Business and in particular, SMEs can be given relief through state aid or by facilitating longer term power purchase agreements.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Second, we need to ensure that markets work in a fair and transparent way. Competition authorities and national regulators disaster have a role to play in market surveillance and prevention of uncompetitive practises. Protecting consumers, including by preventing disconnection and supporting self consumption and then achieving this is also key.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, Finally, it's a sense it's essential to strengthen Europe's preparedness and resilience to price hikes. We need to invest in flexibility and storage to integrate more reliable renewable energy in the electricity market. We need well-functioning and liquid gas markets in the transition, ready to integrate growing shares of renewable gases.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, By the end of the year, I will propose a reform of the gas market and will review in that context issues around storage and security of supply. More ideas have been put forward by the member states and members of the Parliament, such as forms of joint puchases of emergency gas reserves, and we are analysing all of them.

SOUNDBITE (English), Kadri SIMSON, European Commissioner for Energy, We need also to remain mindful of the importance of the geopolitics of energy and develop a more strategic approach to external energy policy. This price shock is an unexpected crisis at a critical juncture. We must respond together and stay to the course towards a cleaner, more secure and more affordable energy future. Thank you for your attention, and now I'm looking forward to hearing your views on this important topic.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, Madam Chair, Commissioner, honourable members. The issue of increasing energy prices affect all European citizens, and therefore it is a highly relevant topic to discuss with us today. The Council is vigilant and active on this important subject following the sharp rebound in recent months.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, This is a multifaceted phenomenon. Some of it was expected in the light of economic recovery and the relaxation of travel restrictions. However, such a rebound steam mainly from a surge in gas prices more than 170 percent since the beginning of the year. While higher emission trading system prices had an impact, this was only secondary.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, On this basis, we need to discuss how the EU can help to mitigate the impact of soaring energy prices. As you know, the rise in energy prices was discussed at the informal meeting of energy and transport ministers in September. The Competitiveness Council of 28 September followed up on those discussions by insisting on the importance of affordable carbon decarbonised energy.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, The environment Council was also will also be seised on the matter at its meeting today. In this way, the Presidency encouraged exchange of best practises on how to mitigate negative consequences of increasing energy prices at the national level, but also a reflection on the potential collective action at the EU level.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, We are looking forward to the communication on rising energy prices that the Commission had promised to unveil on 13 of October. We understand that this new tool box will consider available options both at national and at EU level. We also welcome the fact that the topic will be on the agenda of the October European Council.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, This will give heads of state and governments the opportunity to address this complex issue in depth. The Fit for 55 package is a needed resource of the current surge of energy prices, nor a short term solution.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, In the long term, the decarbonisation of the European economy can contribute to mitigating fluctuation energy prices and to fighting energy poverty. A reinforcement of EU energy efficiency policies can help moderate our energy demand and support member states in addressing energy poverty.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, In parallel, the reinforcement of the renewable directive can reduce EU import dependency on gas, reducing our exposure to its price fluctuations. The newly proposed Climate Social Fund aims to mitigating the price impact of the new carbon pricing by providing temporary direct income support for vulnerable households.

SOUNDBITE (English), Anže LOGAR, Slovenian Minister of Foreign Affairs, I'm convinced that the negotiation for the Fit for 55 package will help us define the best and the most cost effective tools to reach our common goal of climate neutrality, and at the same time, a long term solution for sustainable energy mix of member states. Thank you very much for your attention.