EU to target high energy prices

Published : 13 Oct 2021 09:29 PM | Updated : 14 Oct 2021 05:41 PM

The EU on Wednesday will present a "toolbox" of measures to mitigate an energy crunch that threatens to send Europeans' power bills soaring.

The European Commission has been under pressure to act on the looming crisis, even though individual EU governments are more directly responsible for their energy sources and taxation.

Energy prices have taken off this year as economies bounce back from the effects of the Covid pandemic.

Wholesale natural gas prices, the leading indicator for overall consumer and industrial energy prices, have more than tripled this year in Europe, with storage tanks perilously low ahead of winter. Oil and coal prices have also jumped.

Some EU officials accuse Russia, source of most of the imported gas into the bloc, of "blackmail" by limiting supplies to try to force Germany to activate the newly completed Nord Stream 2 pipeline across the Baltic, bypassing Ukraine.

Outgoing German Chancellor Angela Merkel, however, has questioned that, suggesting there had been insufficient long-term gas contracts from European countries.

The issue will headline an EU leaders' summit next week.

But in a bid to first alleviate some of the pressure, Brussels is expected on Wednesday to urge member states to temporarily cut national taxes that heavily inflate the cost of energy to consumers and businesses.

The EU's commissioner for industry, Thierry Breton, said in a French radio interview on Monday that "all (EU) countries will... benefit from this situation because there are a lot of taxes on energy".

Brussels could also approve a provisional reduction in value-added tax and back initiatives such as "energy cheques" for the poorest households. A proposal for a US-style strategic gas reserve might also be raised.

It was less certain whether it would take up a suggestion from France --which gets most of its power from nuclear stations -- to sever a price link between gas and electricity, or another from Spain for the EU to make joint gas purchases.