Reuters: Europe’s heavy reliance on energy imports has left it exposed to spiralling prices since the Strait of Hormuz was effectively closed and Tehran started striking energy infrastructure in the Middle East. A fifth of global oil and liquefied natural gas supplies normally passes through the narrow strait near Iran.
The price of benchmark Brent crude rose again on Thursday after Iran targeted energy facilities in Qatar and Saudi Arabia, and European gas prices were double their level when the US-Israeli war on Iran began on February 28.”If that becomes structural, we’re in deep trouble,” Belgian Prime Minister Bart De Wever said of the energy price rise as he arrived at the summit. In the longer term, Europe is betting on replacing fossil fuels with local low-carbon energy production to end the bloc’s exposure to volatile oil and gas prices.
Shorter-term fixes are hard to find. Some EU countries doubt the bloc, whose 27 member states have vastly different energy mixes and national taxes on energy, can offset a near-term price spike resulting from the disruption in global markets.”We will not find the magic solution, unfortunately,” one EU diplomat said.
‘Targeted temporary measures’
Draft conclusions for the summit, seen by Reuters, said leaders would instruct the executive European Commission to “present without delay a toolbox of targeted temporary measures to address the recent spikes in the prices of imported fossil fuels”. European Commission President Ursula von der Leyen on Monday laid out options the EU executive is exploring that promise tweaks to the bloc’s emissions trading system, a cornerstone of EU climate policy. She also suggested governments cut national taxes or increase state aid for struggling industries.
Allowing more state aid at the member-state level could deepen divides between wealthy and poorer countries, while cutting energy taxes is challenging for governments racing to increase public spending on defence. Leaders are divided over how to approach the emissions trading system (ETS), which forces power plants and industries to buy permits to cover CO2 emissions.
Von der Leyen said the Commission would adjust a reserve regulating the ETS’ supply of emission permits to curb prices in the short term. Ten EU leaders have demanded deeper changes, including more free CO2 permits for industry.
Other countries, including Spain and the Netherlands, oppose weakening the system, which since its launch in 2005 has cut emissions 50% from sectors in the ETS.”We’re not going to revoke policies that are, in the end, crucial to make sure that this continent is greener and stronger in the long term,” Dutch Prime Minister Rob Jetten told reporters.
