EU energy ministers met in Stockholm on February 28th to discuss the future of the European energy mix and the legislative reforms around it, Politico reported. After an “intense but constructive” debate, officials agree that reforms are needed but are far from reaching unity on the details.
The informal meeting of ministers was organized by the Council’s current Swedish presidency to serve as a platform away from the usual enmities in Brussels in a location where competing visions can find common ground more easily. Still, there is a long road ahead until the European Union decides which way to move forward with the much-needed electricity market reforms.
“One of the great takeaways” from today’s meeting according to the host, Swedish energy minister Ebba Busch, is that “if we navigate this [crisis] in a wise way, the net zero goal is a great opportunity to strengthen EU competitiveness.” Another key point the minister underlined after the meeting was the importance of making the right decisions regarding energy policy as it impacts every other sector, from finances to geopolitical security.
EU members “need to be able to discuss not only short-term measures and emergency resolutions, but also sort of—as we say in Swedish, at least—lift our gaze to the horizon and give time for the long-term perspective,” the minister said. The discussion of short and long-term solutions was indeed among the hottest topics of the debate, but it revolved around the clash of competing national interests more closely related to energy prices than carbon neutrality.
Two camps appear to have emerged this past year, with two sets of interests that are not easy to combine. One group of countries, led by France and Spain, Europe’s nuclear and renewable powerhouses, pushes for major and immediate changes in the legislation of energy pricing. As these member states produce up to 80% of their electricity from low-carbon sources such as nuclear, wind, and solar power (costly to install but cheap to operate), they don’t want to pay higher market prices only because others still rely on fossil fuels.
The other camp, spearheaded by the Germans and Dutch, is not so enthusiastic about making a rushed decision, instead arguing for slower, gradual reforms. Their position is also understandable, as they produce more than half of their electricity using fossil fuels, for which they are already paying more. Changing the rules of energy pricing on the European market, therefore, would not mean a significant reduction in prices for them while their utility companies are desperate for profits to reinvest in building their own low-carbon infrastructure.
Moving away from fossil fuels is more or less on the agenda of every EU member state; if not for the environment, then for reducing energy prices in the long run. The energy prices have skyrocketed in the past year, in part due to cutting the relatively cheap Russian hydrocarbons from the mix and replacing them with more expensive American or Gulf region alternatives.
The ongoing crisis is apparent throughout the continent, as energy subsidies (aimed to shield consumers from the high market prices) have cost Europe nearly €800 billion in the past 18 months. There is no short-term solution to the crisis that would fit all members, but investing in renewables and nuclear now could give Europe a break in the following decades.
However, those who already did (France, Spain, and others) don’t want to wait for the rest and instead would want a quick way out of the current situation. According to Politico, France wants the reforms—breaking the link between fossil fuels and electricity prices—to be concluded by the end of this year, but Germany argues that such decisions can’t be rushed and should be put aside until after next year’s European Parliamentary elections, meaning that there won’t be any major change adopted before at least early 2025.
Instead, Berlin offered a “two-step” solution, consisting of “quick and no-regret measures” enacted before the election, followed by more systematic reforms after. Madrid, however, was quick to reject the proposal, arguing that keeping the energy prices high across the board hurts the competitiveness of the entire bloc. A consensus still appears to be emerging that’s closer to the German position, projecting the approval of at least partial reforms by next year. The EU is expected to publish the exact reform proposal on March 16th.