European Union leaders struggled for hours during the 2-day summit which ended on Friday, to find a compromise on a deal aimed at curbing electricity prices that have adversely affected households and businesses across the 27-nation bloc.
There was a clear divide between the bloc’s southern and northern nations during the day-long talks in Brussels, with Mediterranean countries led by Spain pushing for intervention in the market with measures like price caps while Germany and the Netherlands resisted drastic options.
Leaders, however, did agree on a proposal from the European Commission to move toward the joint purchase of natural gas and ensure that the bloc’s storage facilities are nearly full to try to avoid another energy crisis tied to the EU’s dependency on Russian energy.
The war in Ukraine has made EU nations realize they have been way too reliant on Russia for natural gas and oil to warm their homes and run their industries.
Earlier in the day, the United States and the EU announced a new partnership to reduce the continent’s reliance on Russian energy. Under the plan, the U.S. and other nations will increase liquified natural gas exports to Europe by 15 billion cubic meters this year. Even larger shipments would be delivered in the future.
Facing protests at home from farmers, truckers and the fishing industry, Spanish Prime Minister Pedro Sanchez had put forward plans to the EU to decouple electricity from gas prices. Yet his options failed to gather an immediate consensus. The EU will revisit the matter in May but Spain and Portugal could receive special dispensation to weather price hikes in the meantime.
EU Commission President Ursula von der Leyen said: “The Iberian peninsula has a very special situation. There, their energy mix is with a high load of renewables… Therefore, we agreed on a special treatment… so that the Iberian peninsula can deal with this very specific situation they are in and manage the electricity prices in the way we have been discussing.”
With energy prices high and supplies low, the EU is looking at its last crisis — the COVID-19 pandemic — as a blueprint. The member states joined up to buy vaccines in huge quantities for equitable distribution.
von der Leyen continued: “The root cause of high electricity prices is… high and volatile gas prices. So we will join forces, pool our demand and use our collective bargaining power when purchasing gas. In addition, we must complete pipeline infrastructure and ramp up our storage. This will be our insurance policy against supply disruption. It’s also time to look at the design of our energy market.”
Europe was already facing a tricky test before Russia’s invasion because of an outlook for slowing economic growth accompanied by surging inflation, which is being driven by high energy prices. The European Commission has predicted that the bloc’s economic growth would slow from 5.3% last year to 4% this year and 2.8% in 2023.
Read more about the European electricity prices crisis here.