European industry representatives, including Eurofer, have called for immediate support to address the skyrocketing energy prices that they say are jeopardising the post-pandemic recovery. Ahead of the European Council meeting, they are also calling for structural measures to secure affordable low-carbon energy.
Gas and electricity prices have risen exponentially in recent weeks, to a level 4-5 times up on last year, due mainly to the imbalances in the gas market. Also contributing are seasonal factors that have reduced renewable energy production, reduced nuclear energy production and increased carbon costs passed on in electricity prices, the industry associations say in a joint statement.
Energy-intensive companies that are most exposed to such price spikes have been forced to curtail production or temporarily close plants. Protracted high prices on spot markets are also being reflected in futures for the first semester of 2022. “Such a trend represents a major threat for the full post-pandemic recovery,” the associations comment.
Besides European steelmakers, the European Cement Association (Cembureau), European Aluminium, The European Lime Association, Eurometaux, Euromines, Fertilizers Europe and Glass Alliance Europe, among others, have lent their voices to the statement, Kallanish notes.
The European Commission’s toolbox presented last week should be fully utilised by national authorities. “However, it is clear that this unprecedented crisis requires additional, urgent initiatives,” the statement reads.
“In order to address the imbalances of the gas market, the EU should use fully its commercial and diplomatic pressure on the major gas suppliers,” the associations point out. “Furthermore, ad-hoc state aid rules are necessary to enable member states to react more prominently than currently allowed during periods of energy market stress. At the same time, a close monitoring mechanism of electricity and gas markets needs to be established to prevent further ‘outages’ during the upcoming winter.”
“Sudden increases of the carbon price under the EU Emission Trading System should be avoided and effective carbon leakage protection needs to be secured in the revised ETS Directive; long-term corporate Power Purchase Agreements (PPAs) should be promoted to facilitate access to competitive carbon free electricity at more predictable prices than spot markets,” the associations observe.
Adam Smith Germany
