John Thys | AFP | Getty Images The European Union will embark on a “deep and comprehensive reform” of the electricity market, European Commission President Ursula von der Leyen said on Wednesday. In her annual State of the Union address, delivered at the European Parliament building in the French city of Strasbourg, von der Leyen said the market was designed on a merit-based basis and was not fit for purpose. “Consumers need to reap the benefits of low-cost renewable energy,” he said, “So we need to decouple the dominance of the price of natural gas from the price of electricity.” Von der Leyen also said there had been a shift from pipeline gas to increased use of liquefied natural gas, but the benchmark used in the natural gas market, the TTF, had not adjusted. He said the committee would work to develop a more representative trading benchmark to reflect this change, and also reduce liquidity pressures on energy suppliers by amending collateral rules and taking measures to limit intraday volatility in prices. An energy crisis of both supply and pricing in Europe came to a head earlier this month as Russia indefinitely cut gas flows to Europe through the key Nord Stream 1 pipeline. EU energy ministers met on Friday to discuss a five-point plan that includes a price cap for Russian natural gas, a windfall tax on fossil fuel company profits, a cap on the revenue of renewable and nuclear companies, a mandatory target to reduce peak-hour energy use by 5% and emergency lines of credit for power companies. Russian President Vladimir Putin threatened to ignore existing contracts and completely cut off energy supplies to Europe after the plan was announced. Addressing the unexpected plans for tax and revenue caps, von der Leyen said that while profits were not necessarily a bad thing, “it’s wrong to get record revenues and profits that benefit from war and on the backs of our consumers.” “In these times, profits must be shared and channeled to those who need them most.” He said millions of households and businesses across the European Union are struggling with price rises and fearing for the future. The tax on fossil fuel profits will provide 140 billion euros ($139.8 billion) to be shared among member states to support the energy bill, he added. Von der Leyen said a priority for the bloc should be ending its dependence on Russian gas, with imports from the country already down from 40 percent last year to 9 percent now. “We agreed to join the storage space, we are now at 84%, exceeding our targets,” he said. But he continued: “This will not be enough. We need to diversify from Russia to reliable suppliers like the United States, Norway, Algeria and others,” as well as invest more in renewable energy and LNG terminals.
“Putin will fail”
Ukraine’s first lady Olena Zelenska attended Strasbourg as a guest of honor and was applauded by MPs. Zelenska tweeted that she wanted to “personally thank” von der Leyen for her contribution to Ukraine becoming a candidate for EU membership. Von der Leyen, who delivered the speech wearing the Ukrainian flag’s colors of yellow and blue, made impassioned remarks about the war, saying Ukraine had faced the “face of evil” after Russia’s February 24 invasion. “Much is at stake, not only for Ukraine, but for all of Europe and the world at large,” he said, paying tribute to the victims of the war, which he said was also an attack on the economy, energy, values and the future of Europe. . “This is autocracy against democracy, and I stand here with the belief that with the necessary courage and solidarity, Putin will fail and Ukraine and Europe will prevail.” “Today courage has a name and that name is Ukraine. Courage has a face and that face is the face of Ukrainian men and women resisting Russia’s aggression.” Kiev’s forces have retaken thousands of kilometers of Russian-held land in recent days, prompting fears of Moscow’s next move. Russia launched heavy shelling in the Kharkiv region on Saturday. Von der Leyen also said that sanctions against Russia were “here to stay” and that it was “time for determination, not appeasement”. Three-quarters of Russia’s banking sector had been cut off from international markets, nearly 1,000 international companies had left the country, car production was down 75% compared to last year and its “industry is in tatters”, with the military stripping home appliances for components due to a shortage of semiconductors, he noted. He added that he wanted to extend “seamless access” to the EU’s single market to Ukraine and would travel to Kyiv on Wednesday to discuss it with Ukrainian President Volodymyr Zelenskyy.
