EU struggles to react to rising energy prices

France, Spain and a few other countries have stepped up their calls for a reform of EU energy market rules to cope with high prices, but faced a rival group of states, including Germany, at the energy ministers' meeting on Thursday.

European energy prices rose to record highs this fall due to scarce supplies and high demand for gas from economies recovering from the COVID-19 pandemic. Although prices have fallen from their highs in October, they remain high.

Most EU countries have already put in place temporary measures to protect consumers from higher bills, including energy tax cuts and household subsidies. The EU estimates that these measures total more than 3.4 billion euros.

However, the EU states disagree about their longer-term measures.

Germany, Denmark, the Netherlands and six other countries spoke out against reforms of the EU energy market before the meeting on Thursday. Capping prices or switching to a different system of setting national electricity prices could hamper electricity trading between countries and undermine incentives to expand lower-cost renewables, they said.

Spain, France, Italy, Greece and Romania then called for a change in EU rules to protect consumers from price fluctuations. They are also calling for EU countries to buy gas together to build strategic reserves and for an investigation to identify reforms in the Community's electricity market.

The European Commission announced that it would propose a framework for joint procurement of strategic gas supplies as part of a proposal to improve EU gas market rules due to be presented on December 14th.

Energy Commissioner Kadri Simson said improvements were also needed in electricity interconnections and the flexibility of European electricity grids. "Work on all of these issues is ongoing," she said.

A report by EU energy regulators last month did not identify any major problems with the design of the EU electricity market. An investigation by the EU securities regulator found that there is no evidence of market abuse in the EU emissions market.

The results were criticized on Thursday by some countries calling for curbing financial speculation in the carbon market, which they believe has helped drive carbon allowance prices to record highs.

"We can no longer pretend that the ETS (Emissions Trading System) is a perfectly functioning system ... it requires a profound reform," said Polish Climate Minister Anna Moskwa.