EU presents blueprint for tackling soaring energy costs

The European Commission on Tuesday set out a draft plan for forming a united front against runaway energy prices that are threatening to tank economies throughout the bloc.

The draft comes ahead of a key summit of EU leaders in Brussels at the European Council on Thursday with talks running through the weekend.

However, an agreement may be hard to come by with several diverging positions being taken up by the various member states.

In an invitation letter to the 27 EU leaders, EU Council President Charles Michel said the three lines of necessary action were "reducing demand, ensuring security of supply and containing prices."

What did the Commission blueprint set out?

One of the proposals in the package is to earmark funds to the tune of €40 billion ($39.3 billion) from unused regional development aid for alleviating households and businesses from the threat of "energy poverty."

The Commission did not propose a price cap on gas due to the split among the member states over the issue.

Instead, the draft included a proposal to start jointly buying gas as a whole 27-member bloc in order to negotiate better prices.

"We know that Europe's energy demand is very large. So it is logical that, instead of outbidding each other, the member states and the energy companies should leverage their joint purchasing power," Commission President Ursula von der Leyen said.

The proposal also included setting up an LNG (liquified natural gas) benchmark to "provide for stable and predictable pricing for LNG transactions."

The Commission also wants to set up a means of smoothing out supply issues with "solidarity rules" between the member states, pointing out that different states have different access to energy, either via pipelines or LNG terminals.

A statement from the EU's executive body said the proposed package would "prevent price spikes and manipulation, provide more transparency and stability to the market, and ensure fair prices and gas flows also in a crisis situation."

What do the different EU countries want?

The member states are supporting a range of different solutions to the soaring costs of energy.

On one end, Croatia and Lithuania have called for a price cap that would limit the price of energy to a certain level.

On the other end is Germany — the bloc's largest economy — which opposes capping prices and has thrown its weight behind a program of reduced consumption, joint purchases and boosting supply.

Finland, one of the countries that traditionally opposes market interventions has called for a "temporary" price cap on gas, but said that boosting renewable energy was the way to go.

"Instead of subsidizing individual households, we should rather boost investment in green energy," Finnish EU Affairs Minister Tytti Typpurainen said.

The blueprint was announced on the same day that the EU signed a "green partnership" with Morocco that will seek to "progress towards their [Morocco and the EU's] common goals of becoming low-carbon, climate-resilient economies and transition to a green economy," according to a statement from the EU.

ab/wmr (AP, Reuters, dpa)