STRASBOURG, France — The
EU plans a “deep and comprehensive” reform of the electricity
market to cope with an energy crisis spurred by Russia’s war in Ukraine,
European Commission chief Ursula von der Leyen said Wednesday.
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The measures
include a cap on electricity producers’ profits that would raise 140 billion
euros and “cushion” consumers from high prices, she said in her annual State of
the European Union address.
Other steps involve
rationing energy, temporary state aid and decoupling the prices of gas and
electricity.
She also announced
the creation of a new bank designed to spur investment of up to three billion
euros in hydrogen as a Green alternative to fossil fuels.
The measures were
in response to soaring energy costs as Europe painfully unhitches its
decades-long dependency on Russian fossil fuels.
Sanctions on Russia
and
Moscow retaliation cutting off gas supplies have sent prices skyrocketing,
leaving Europe to confront a difficult coming winter.
“Russia keeps on
actively manipulating our energy market. They prefer to flare the gas than to
deliver it,” von der Leyen said.
“This market is not
functioning anymore.”
Gas reserves
To partly prepare for a tough winter, the bloc has hastily stockpiled gas
reserves, hitting 84 percent of capacity well ahead of an October deadline, von
der Leyen said.
But the hole left
by missing Russian supplies will still hurt.
The idea to tax
profits by non-gas electricity providers is to divert the money to households
and businesses to weather the situation.
“These companies
are making revenues they never accounted for, they never even dreamt of,” von
der Leyen said.
“In these times it
is wrong to receive extraordinary record profits benefiting from war and on the
back of consumers,” she said.
She said “major
oil, gas, and coal companies” would also “have to give a crisis contribution”.
At the same time,
von der Leyen highlighted that the EU is pivoting to “reliable suppliers”,
naming the US, Norway, and Algeria among them.
Longer-term, the EU
wants greater reliance on renewable energies, von der Leyen said, hammering a
key promise of her mandate. The hydrogen investment bank proposal is another
step towards that future.
Kyiv trip
Another announcement made by von der Leyen was planned legislation to
secure critical raw materials for the EU as it shifts towards greater use of
electric vehicles and other more environmentally friendly technologies.
In her speech, she
highlighted the stranglehold China has over resources such as lithium that are
key to the energy transition.
“Today,
China controls the global processing
industry. Almost 90 percent of rare earths and 60 percent of lithium are
processed in China,” she said in her annual address.
The proposed law
would identify “strategic projects all along the supply chain” and “build up
strategic reserves where supply is at risk,” she said.
As for Russia, the
EU chief signaled that the bloc would maintain its sanctions pressure on Russia
as long as it waged its war in Ukraine.
“I want to make it
very clear, the sanctions are here to stay. This is the time for us to show
resolve, not appeasement,” she said.
Ukraine’s first
lady Olena Zelenska attended the gathering in Strasbourg, receiving a standing
ovation from lawmakers.
Von der Leyen told
MEPs that she would travel to Kyiv to meet Ukrainian President Volodymyr
Zelensky, her third trip to the Ukrainian capital since the war started.
“I will travel to
Kiev today to meet President Zelensky” to discuss “in detail” the continuation
of European aid, she said in her major annual political address.
“For the first time
in its history, this Parliament is debating the state of our union while war is
raging on European soil,” said von der Leyen, dressed in Ukrainian colors.
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