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Opening remarks by Commissioner Simson at the press conference of the Extraordinary Energy Council, 30 September 2022

European Commission

Speech
30 September 2022
Brussels

"Check against delivery"

Thank you, Jozef, good afternoon everyone.

Today, we took another step forward to address the current energy crisis. Under the leadership of the Czech Presidency, the Council agreed emergency interventions in electricity markets. I would say that this was done in record time, but these kinds of delivery speeds are becoming the new normal. I am very grateful to you Jozef, your team and colleagues across the EU for getting this done.

The final text preserves the main elements of the Commission proposal, while addressing the concerns of Member States and providing flexibility where necessary. I am very glad to see that all measures remain mandatory, which ensures that they will also remain impactful. It is now crucial to implement these steps quickly so that they can start having their intended effect.

What we decided today comes in a long list of measures we have taken to address the energy crisis. But I agree with the ministers that we need to do more, in particular to address the issue of gas prices before the winter. In the current situation, an EU-level market intervention is necessary to bring down the cost of the gas purchased by EU customers and reduce the power generation cost from gas.

Today, I set out to the ministers the Commission's strategy to achieve these aims.

First, we need to address all the pipeline gas that arrives to the EU. Due to the Russian war, this gas comes with a heavy premium.

Limiting this premium is essential, but it cannot be done unilaterally. It requires dialogue and negotiations with trusted partners who have maximised their gas deliveries to meet the EU demand. But the aim is the same - to achieve prices at a more sustainable level.

Russia is a special case and personally, I believe we could impose a price cap on all Russian imported gas, including LNG.

However, some Member States see this as a sanction and we do not yet have a consensus on this step, how to limit Russia's ability to finance the war in Ukraine.

Pipeline gas for Europe covers two thirds of our gas consumption. But this winter, we will also need every molecule of LNG that we can secure. We should therefore also look at the global LNG market. Prices in the EU are today significantly higher than in Asia or elsewhere. This is partially explained by the nature of the main reference benchmark, the TTF, that can add up to 30% to the gas price. This is in my view a key area to address. We have kick-started work to develop a complementary EU price index that better reflects the energy reality of today and does not artificially inflate the prices.

In addition, we need to address what happens on our domestic market. The Commission is ready to develop a temporary EU-wide measure to limit the price of gas in electricity generation. This should be done at a level that helps bring down electricity prices without increasing gas consumption.

These are far-reaching measures that intervene substantially in the functioning of the European gas market. We are not proposing this lightly. And I was glad to see that there was interest in all these elements.

Other options were also put forward. A number of ministers supported today a wholesale gas price cap covering all transactions, both imports and the domestic market. This would clearly have an effect on prices, but would also effectively mean the suspension of EU's gas market and create risks to security of supply.

To take such a drastic step in a responsible way, a number of preconditions would be non-negotiable, first among them an unambiguous mandatory commitment by the Member States to save gas demand beyond our current 15% reduction plan.

We had a frank discussion on these aspects and on the best way forward. While views differ across the Member States, there is also common ground.

We all agree that the market is not working normally and intervention is necessary, that we need effective measures that preserve our security of supply and are accompanied by a strong commitment to demand reduction. Many of the ministers emphasised the need to address the TTF and the need for supply side action.

Based on today's input, the Commission will work with the Member States and develop these ideas further before the European Council next week. This work would ultimately form the basis of a legislative proposal that we would put forward swiftly.

Finally, I have shared with the Council our assessment of the sabotage of NSI and NSII pipelines that has resulted in millions of cubic meters of gas leaking into the Baltic Sea and of the policy measures that we need to take to protect in the future European critical infrastructure.

I will work with my colleague Commissioner Johansson to propose to the Member States a stress test of the physical protection of critical energy infrastructures. Given the possible serious impact of an incident on the internal market and across borders, an EU-wide approach is needed. We will work with Member States to define the best scope and timing to reinforce the resilience of the EU's energy system to threats.

Thank you.