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Commissioner Simson : Four points discourse at the Energy Council

We have a clear mandate from the Leaders to make the best use of the EU toolbox and work on the medium and longer-term measures that I presented two weeks ago. It is now up to us to take this work forward.

We all share the concern for the most vulnerable. Our immediate priority is to protect our people and businesses from the impact of the exceptionally high prices.

The Commission’s communication from 13 October presents a set of tools that can be used, in line with the existing EU rules, to mitigate the impact – from direct income support to tax reductions and state aid.

Each Member State can implement those measures that are most appropriate to their situation and to their citizens. All are following the developments closely, and many have already acted.

It is important to coordinate these actions to ensure the proper functioning and benefits of our common energy market. But Member States vary widely in terms of their energy mix, tax policies and social situation, which means there is no ‘one-tool-fits-all’ solution available.

In addition to immediate action, the Commission also laid out medium and long-term measures to make our energy market more resilient and avoid price volatility in the future.

Calling these measures medium and long-term does not mean we will wait to act. Quite the opposite, the work has already started.

First, we are looking into the functioning of our electricity market. There is a broad consensus when it comes to the drivers of the current price hike – it has been caused by the extraordinary global gas demand, not our market design.

The current market model provides a stable framework that delivers more renewables, enhances cross-border integration and generally, ensures cheaper energy for all consumers.

Last year, during periods when renewables provided the majority of electricity production, it was not unusual to see negative electricity prices. In the present set-up, fossil fuels are only used when there is not enough affordable green or low-carbon energy to meet the demand.

By the way, we have published this morning our State of the Energy Union report, which shows that in 2020 renewables overtook fossil fuels for the first time as our top power source for electricity generation.

I am convinced this system remains the best to deliver clean, secure and affordable electricity across the EU. And we heard from many ministers today that we should not rush into rash decisions. But we cannot ignore the price volatility we are experiencing right now, and we must analyse what can be done to mitigate these risks in the future.

We have therefore asked ACER, the body of European energy market regulators, to provide an evidence-based assessment of the functioning of our electricity market. I met the Director of ACER, Christian Zinglersen, yesterday to discuss this task.

I asked him to share initial findings already by mid-November and a full study in April 2022. By then, ACER will also propose recommendations for the Commission to consider.


Second, we will improve the functioning of the European gas market. While the current difficulties have underlined the need to decrease our dependency on fossil gas, it will have a role to play in the transition – replacing more polluting energy sources like coal and lignite and balancing the use of intermittent renewables, while other sources of flexibility are being developed.

In December, we will put forward a comprehensive legislative package designed to decarbonise our gas market and establish the market for hydrogen. This also allows us to assess the liquidity, transparency and flexibility of the gas market in general and look into issues around storage, joint procurement and consumer empowerment. We will discuss these topics in more detail with the ministers over lunch today.


Third, we will continue to ensure that the European energy markets are free of speculation and manipulation. When electricity, gas and carbon markets work well, they guarantee that the needs of our consumers are met and that we are moving towards a greener, better integrated and more flexible energy system.

ACER and national regulators perform EU-wide market oversight of wholesale energy markets based on REMIT – the Regulation on Wholesale Energy Market Integrity and Transparency. I have asked them to cooperate closely and exercise their powers to detect, deter and investigate any potential misbehaviour.

In addition, we must make certain that our carbon market works as intended. There is no evidence in recent market information that speculation is a major driver of the price in the carbon market. But we have asked the European Securities and Markets Authority (ESMA) to examine more closely patterns of trading behaviours and the potential need for targeted actions. The first preliminary assessment is due by 15 November and the full analysis by early 2022.


Last but certainly not least, we all agree that the only lasting solution to price volatility and our dependence on fossil fuels is more renewable energy and energy efficiency.

We have of course already taken and proposed significant steps to boost the share of renewables and increase energy savings, especially with the Fit For 55 package that is currently under discussion in the Council and the European Parliament. It is imperative that we do not scale back our ambition but accelerate the green transition.

One area where we need to push even further is permitting for renewable energy and grid developments – this has become a serious bottleneck for faster deployment of renewables. We need to cut red tape and remove unnecessary administrative barriers, so that permits are given out within two years as the EU rules require, not 6 to 7 years as can be the case today.

The Commission has proposed measures to simplify and accelerate authorisations for offshore wind projects in the context of the TEN-E revision. I call on both the Council and the European Parliament to ensure that these provisions are not watered down.

I will also present early next year a guidance document based on best practices, to inspire and steer more progress in this area.

There is no denying that the current market situation puts Europe under pressure.      But as is always the case, we should use this challenge to make our Energy Union more resilient, more competitive and more independent. We have the tools at hand to do so.

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