SOS-EU ministers asked the Commission to come up with emergency liquidity measures to help strained energy markets

09/09/2022

7 minutes read

2022.09.09 09:30

Budrigannews.com – EU ministers asked the Commission to come up with emergency liquidity measures to help strained energy markets as well as ways to skim off energy companies’ profits.

After talks in Brussels, there were no concrete new measures on demand, according to the conclusions, and a proposal to cap imported gas prices still needs more work.

Key Developments:

EU energy-crisis warnings worsen with need for immediate fix
Simson says extraordinary intervention is needed…
…while Czech Republic’s Sikela says there’s no time to waste
Trading in the euro is all about the energy crisis
Liz Truss’s target to make the UK a net energy exporter means big reversal

Price Caps Need More Work (2:07 p.m.)

After some states objected to imposing a cap on just Russian gas — partly out of fear Moscow would retaliate — there was some discussion of trying to limit the price of all imported gas, diplomats said. In the end, ministers said “further work is needed” on the possible introduction of such a measure.

Dutch Groningen Field Only for Emergencies (1:34 p.m.)

The Groningen gas field in the Netherlands will only be used in the event of a clearly defined emergency, not just to boost production and ease prices, according to Hans Vijlbrief, the country’s state secretary for extractive industries. Dutch authorities — wary of earthquakes triggered by drilling — have previously said they plan to wind down output at the field and would only increase output as a last resort. However, the crisis in Europe has intensified since Russia halted Nord Stream flows last week.

EU Should Assess Price Cap Effects: Norway (1:32 p.m.)

Norway wants the EU to take into consideration the broad effects of a price cap on gas supplies. “We fully understand that the energy crisis in Europe demands political action, both on national and EU-level,” State Secretary Andreas Bjelland Eriksen said.

“Concerning the concrete proposals from the Commission, it is important to assess the effects of a price-cap on the future energy supply,” he added. “It is equally important to assess how the proposal affects the power market, both in the short and the long term.”

German Energy Lobby Questions Price Caps (12:10 p.m.)

Kerstin Andreae, the head of Germany’s largest energy lobby group BDEW, opposed price caps as they would “only cause further uncertainty” about investments in renewable energies. “Interventions in the energy market are highly risky and should only be done after careful considerations of the partly serious side or long-term effects,” she said. To support affected consumers, the lobby group recommends direct state supports.

She also warned that “acute market intervention in the current situation would be counter-productive and impede the return of power utilities.” Instead, she called for more production capacity and less use of fossil fuels.

ECB Can Offer Liquidity to Banks, Not Energy Firms: Lagarde (12:04 p.m.)

European Central Bank President Christine Lagarde ruled out providing short-term financing lines to struggling energy firms — saying that’s the job of European Union governments.

“In this current, very volatile environment, it’s important that fiscal measures be put in place to provide liquidity to solvent energy-market participants, in particular utility firms,” Lagarde told a news conference Friday in Prague.

German Power Network Costs Rise Sixfold (11:58 a.m.)

Amprion GmbH, Germany’s largest power grid operator, said its cost for redispatching — the day-to-day management of electricity flows and shortages — have jumped sixfold. Chief Executive Officer Hans-Juergen Brick also warned of a possible threefold rise in network fees that companies have to pay.

The transmission network fees also push up the costs of using local distribution networks, increasing the financial burden for smaller utilities and businesses. Large industry tends to be directly connected to the transmission network.

The four German transmission system operators will announce the new preliminary usage fees on 1. October.

Ministers Oppose Capping Only Russian Gas (11:44 a.m.)

EU ministers oppose taking measures to cap only the price of Russian gas, according to diplomats familiar with the talks.

Ministers also want steps on excess energy profits; and they all support measures to bring extra liquidity to energy markets straining under massive margin calls, the diplomats said.

Hungary Against Energy Price Cap (11:04 a.m.)

Hungary and the Czech Republic opposed a European Commission proposal to cap energy prices. “The price cap is a cloaked energy sanction,” Foreign Minister Peter Szijjarto said in a Facebook post, while attending a meeting of energy ministers in Brussels. “We’ve made it clear, we won’t even talk about energy sanctions.”

The Czech Republic, which holds the EU’s rotating presidency, said before the meeting that it wants to exclude the debate about an energy price cap from the agenda of the meeting altogether.

EU Scrutinizes Banks’ Readiness for Crisis (10:43 a.m.)

The European Central Bank is intensifying discussions with bank executives over their readiness for a potential surge in company defaults and a drying-up of energy-market liquidity.

The Frankfurt-based bank watchdog wrote to lenders last month, telling them to analyze the impact of a gas stoppage on their businesses, according to people familiar with the matter. Responses are due in mid-September, and follow-up conversations are to come by the end of this month, said the people.

No German Backing for Russia Gas-Price Cap (9:45 a.m.)

Germany doesn’t support a price cap on Russia gas because some countries are still dependent on those supplies, Economy Minister Robert Habeck told reporters in Brussels. “These countries still have dependencies which force them to use this gas,” he said. “So it would be inappropriate to say that Germany always calls for understanding, but other states don’t get any.”

Austria, which is still reliant on gas supplies from Moscow even though the dependence has eased, also doesn’t back a price limit, Energy Minister Leonore Gewessler said.

Germany is also against a general cap on gas prices as it would send the wrong signal to the market, he said. Habeck supports a “price cap on basic energy needs,” but consumers would need to pay more when their use rises above a certain amount.

Poland Cold on Gas Solidarity Deal with Germany (9:15 a.m.)

Poland doesn’t see the need for a bilateral gas solidarity agreement with Germany, according to Climate Minister Anna Moskwa. Germany’s economy minister said earlier this week that neighboring Belgium, Luxembourg, the Netherlands and Poland refuse to engage in “constructive negotiations” about such deals, a move that could exacerbate the gas crunch in Germany.

“Solutions that we have on the table for now are sufficient,” Moskwa said, referring to existing cooperation between Polish and German gas system operators. It’s obvious that if we have surpluses on our gas or power market we share them but based on our own national security and our national interest and not based on some forced mechanisms.”

Poland Calls for Quick Action (8:50 a.m.)

Current energy prices are not acceptable for all EU states and members need to react quickly to protect households and businesses, Poland’s Climate Minister Anna Moskwa said. Friday’s meeting of ministers will have no votes, but the discussions will be key for future decisions on what solutions to approve.

Ireland Says Energy Proposal Needed in Weeks (8:30 a.m.)

Irish Environment Minister Eamon Ryan said the EU needs to deliver concrete ideas on how to deal with the energy crisis as soon as possible.

“The commission proposals have to be delivered within weeks not months,” Ryan told reporters in Brussels. “Doing nothing is not an option.”

He said the key, deliverable measures energy ministers will focus on will be capping revenue for low-cost electricity producers, a solidarity contribution from fossil fuel companies and reducing demand. He added that ministers will meet again to discuss other measures.

Energy Needs Extraordinary Intervention: Simson (8:22 a.m.)

EU Energy Commissioner Kadri Simson said she will will present ministers with five proposals. She said the European Commission needs to offer governments tools for addressing the current emergency. “This is not only about prices. Also about security of supply,” she said, adding the market needs extraordinary intervention. The EU is also planning to revive dialogue with Algeria on gas supply, she said.

More Than Half German Voters Want Nuclear Extension (8:00 a.m.)

More than half of German voters want Economy Minister Robert Habeck to keep the country’s three remaining nuclear power plants in operation beyond April to help secure energy supply, according to a poll published Friday.

Habeck, a member of the Greens party, announced this week that two of the plants would be kept in reserve until mid-April and the third would be shut down at the end of this year as planned, prompting widespread criticism. Less than a third of voters back the minister’s plan, the Sept. 6-8 poll of 1,299 voters for public broadcaster ZDF showed.

Czech Minister Says No Time to Waste (7:57 a.m.)

Czech Industry Minister Jozef Sikela said “there’s no time to lose” in reaching an agreement on EU-wide measures to tackle the bloc’s energy crisis. Sikela said he expects EU member states to agree on a direction on Friday, which they’ll pass onto the European Commission with a legislative proposal coming shortly thereafter.

India May Keep Importing Coal (5:43 a.m.)

Utilities in India may need to continue coal imports to avoid any new squeeze on the nation’s energy sector, according to Power and Renewable Energy Minister Raj Kumar Singh.

With stockpiles falling in recent weeks, power plants must act to maintain adequate inventories and import supply if needed — even though the nation’s longer-term policy is to limit purchases from overseas, he said in an interview. Coal accounts for about 70% of electricity generation in India.

Buying by India’s power firms could add to global competition for seaborne coal that’s already pushed benchmark prices to records.