Opening remarks by Commissioner Simson at the press conference of the Extraordinary Energy Council of 9 September 2022

Good afternoon, everyone

We have just concluded another Extraordinary Energy Council, just 6 weeks after the last one. And I thank Jozef and all colleagues for showing the readiness and willingness to address together, in a spirit of unity, the challenges we are facing.

Before the summer we put in place new tools to improve storage and reduce demand, to ease market pressures and be better prepared for winter. As the Russian manipulation continues with Gazprom's latest moves on Nord Stream 1, I think we can all agree that these were right decisions to make. Our underground gas storage is now almost 83% full and Member States are taking action to cut gas consumption further. We must continue with both.

EU solidarity and coordination must remain at the core of our actions. That is how we ensure that Putin's manipulation and weaponisation of gas supplies will fail.

I am pleased to say that this was the spirit of today's discussions with the ministers: they are ready to support a rapid and coordinated response to tackle the latest spikes in energy prices and ease the pressure on our citizens and businesses.

Over the summer, extreme weather conditions caused by climate change have increased the mismatch between energy supply and demand. In several Member States, droughts have hampered hydro and nuclear power production, or delivery of energy supplies.

Record-high prices followed. Our households and businesses need further relief and protection, on top of all the measures Member States have already deployed from our energy prices toolbox.

This is why we have been working throughout the summer to design a set of measures which, taken together, will help EU consumers cope with their bills, and bring energy markets back into balance.

Let me briefly recall the plans the Commission has outlined this week.

First, we need to reduce electricity consumption in a smart way. This means focusing on peak hours, which is when gas-fired power plants are brought online to cover high demand, driving up electricity prices. We intend to propose a mandatory target for Member States to reduce consumption at peak hours. They will then have to implement it based on their national circumstances.

Second, we need instruments that will ensure a fairer distribution of revenues that are currently enjoyed by some in the energy sector. On the one hand, we propose to cap the revenues for inframarginal technologies. These are technologies that produce electricity cheaper than the price-setting gas power plants, but whose revenues are driven up to unprecedented levels by the price of gas. This measure will generate income that must be used by Member States to fund support measures to energy users and reduce the price paid by households, SMEs and industries for electricity.

We will design our EU framework in a way that will allow national schemes to continue if they are consistent with this objective. We will set the cap at a level that preserves incentives for investment in renewables - which is one of the main benefits of the current market design.

But it does not make sense to cap the revenues of low-carbon sources while leaving fossil fuels untouched. Fossil fuel companies' income has swelled over the past months and we will therefore propose a solidarity levy on their profits. The revenues from this measure will be targeted to help vulnerable consumers and companies, or have to be invested into renewables.

The fourth area for intervention concerns the financial markets for energy products. The uncertainty created by Russia's behaviour is causing additional stress for electricity trading. We need to stabilise the futures markets and avoid that companies suffer because of liquidity problems.

We will engage with securities and banking regulators to take swift action. We will also look into our Temporary State Aid Crisis Framework to see if we can streamline procedures to address liquidity gaps via state guarantees. As I have told the ministers today, the Commission also stands ready to develop a complementary index for LNG. The current pricing benchmark for gas, known as the TTF, is linked to a relatively small and pipeline-based market, which doesn't reflect the current reality in the EU.

Finally, we need to maximize the tools available to us for bringing down gas prices at their source. We are exploring the possibility of imposing a price cap on Russian pipeline gas, a move that could hit Putin's coffers and not allow Russia to maintain revenues despite cutting supply.

Russia's supply of pipeline gas to the EU has drastically gone down over the past year, dropping from over 40% last year to around 9% in recent days. We also intend to step up the work of the Energy Platform to negotiate lower prices for gas from other suppliers, and I plan to visit Algeria in the near future to discuss additional supplies to Europe.

There is no one solution that will significantly lower energy prices and ensure our security of supply. We need to keep up our work and our determination on all fronts: diversification of supplies, demand reduction and investments in renewables are essential to our plan to REPowerEU.

I have also informed Ministers about our energy cooperation with Ukraine. We have to continue supporting our Ukrainian friends, including by increasing electricity trade with them, which is mutually beneficial. This will allow Ukraine to earn revenues and will give the EU access to additional affordable electricity. I have called on the ministers to encourage stepping up electricity trading with Ukraine.

As we discussed today, the time has come to add to our preparedness work further dedicated measures to ease price pressures and best use the revenues being generated in the market to serve our citizens.

I want to thank again the Presidency for organising this exchange of views, which gives me a solid basis to report to the President and continue our work.

We will be proposing unprecedented measures next week, for an unprecedented situation.

Thank you