Energy ministers from the European Union’s member countries agreed to reduce their overall electricity consumption by a minimum of 10 percent.
Based on a draft document seen by the Wall Street Journal (WSJ), countries in the EU will specifically reduce electricity consumption by at least five percent during peak price hours. This followed the bloc’s agreement last summer to reduce gas consumption by 15 percent, beginning in the fall through the winter.
According to WSJ, the suggestion to ration electricity gathered support from most of the EU’s member states. The energy ministers who attended also expressed openness for the energy rationing measures to be made mandatory should the need arise.
The Sept. 9 summit of the energy ministers discussed skyrocketing consumer energy bills and a price cap on natural gas coming from Russia, which had fallen by almost 90 percent in the last year following the Russia-Ukraine war. However, the meeting concluded without a concrete plan as ministers have clashed over the plan to put price caps on natural gas.
“Nothing is decided on proposals to curb Russia’s income on oil,” said Kadri Simson, the EU’s energy commissioner. She, however, defended the plan to put a price cap on Moscow’s gas as reasonable.
“The context of this measure is that Russia is gaining huge profits by manipulating and limiting, artificially, supply to drive up prices,” Simson told reporters. “The cap would reduce these profits.”
Despite this plan to put a cap on natural gas prices, Moscow still continues to reap billions of dollars by channeling its oil exports eastward – to Asian markets.
Price cap setting up Europe into long, freezing winters
Several nations voiced out their agreement to cap Russian gas prices.
Belgian Energy Minister Tinne Van der Straeten warned that “the next few years to a decade” of winters in Europe will be “so bad” unless the EU urgently puts a price cap on runaway gas prices.
“The next winter will be terrible if nothing is done,” she tweeted. “We must act at the source, at the European level, and work on freezing gas prices.”
Van der Straeten also remarked that the European electricity price formation system needs to be reviewed.
“Electricity is produced today at a price that is much lower than the price at which electricity and gas are sold. There is no longer any link between the cost of production and the selling price.”
Meanwhile, German Economic Affairs and Climate Action Minister Robert Habeck said he was in favor of a price cap on Russian gas – but only if countries like Hungary were on board with the idea. Despite this, he said that Germany can now manage without natural gas supplies from Moscow.
But it appears that Habeck’s proposal won’t take off. Prior to the Sept. 9 assembly, Hungary already expressed opposition to any price cap as doing so would go against the interests of Budapest and Brussels. The Central European nation, highly dependent on Russian gas, has expanded its imports.
Nevertheless, the EU is still deliberating on the proposal to cap the price of Russian gas until mid-September.
In response, Moscow announced on Sept. 1 that it will ban exports of oil and other petroleum products to countries that would impose a cap on the price of Russian crude. (Related: Russia to halt oil exports to nations that impose a price cap on Russian crude.)
“We will simply not supply oil and petroleum products to companies or states that impose restrictions, as we will not work non-competitively,” said Russian Deputy Prime Minister Alexander Novak.
The deputy prime minister warned that the price cap would completely destroy the market. Moreover, he also argued that interference with market mechanisms in commodities like oil would have a destabilizing impact on energy security worldwide.
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Watch the below video that talks about European leaders’ mandatory reduction of electricity use to “flatten the curve.”
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