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EU chief Ursula von der Leyen in Ukrainian colors
EU chief Ursula von der Leyen held her annual "State of the European Union" address in Ukrainian colorsImage: Jean-Francois Badias/AP Photo/picture alliance
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Ursula von der Leyen announces cap on electricity revenue

September 14, 2022

EU chief von der Leyen announced a cap on the revenues of electricity production companies and a crisis contribution from fossil fuel producers during her State of the European Union address.

https://p.dw.com/p/4GoU8

European Commission President Ursula von der Leyen laid out plans to combat the energy crisis and the ongoing response to Russia in her annual State of the European Union speech on Wednesday.

In the speech, Von der Leyen announced that she would be traveling to Kyiv on Wednesday to help bring Ukraine into the European Union’s single market.

Amid praise for the EU's rapid response to the Ukraine crisis, von der Leyen stressed that the EU's support for Ukraine will remain "unshakeable". 

The Ukrainian First Lady, Olena Zelenska, wife of President Volodymyr Zelensky, was an honorary guest at the address, while top lawmakers alongside von der Leyen were dressed in matching Ukrainian colors.

Von der Leyen pledged that EU sanctions on Russia would continue as they were weakening the Russian economy.

EU chief: "Much is at stake"

Restructuring the energy sector 

Von der Leyen announced a cap on the revenues of electricity production companies and a crisis contribution from fossil fuel producers.

She said the measures will raise an additional €140 billion (140 billion USD).

The EU chief criticized past subsidies for fossil fuels, and called for greater investment in renewable energy. 

To this end, she announced an additional €3 billion euros to help build a future hydrogen market.

She said it was crucial that the EU rid itself of the dependency on Russian oil and gas. Since the Russian invasion, imports of Russian now make up just 9% of EU imports, down from a previous 40%. 

Gas storage reserves for the upcoming winter were at 80% capacity, showing that the EU agreement was working, she said. 

She further stressed the importance of a digital and sustainable economy. 

She said the "Next Generation EU" plan signified a "relief for the European economy" and a "constant stream of investment" into sustainable energies such as solar plants and wind parks. 

Strengthening democratic values 

Von der Leyen announced new partnerships would be determined by the guarantee of sharing values and ideals similar to the EU. 

A trade deal with Chile, Mexico and New Zealand will be put forward for ratification. 

And further agreements with partners such as Australia and India were under negotiation, she announced.

"We need to learn from mistakes of the past," she stressed, meaning that trade deals had to be conducted with countries that shared similar values and ideals with the European Union.

On top of this, it was crucial to strengthen democracies on the European continent, she said.

Ursula von der Leyen told the European Union's eastern neighbors Moldova, Ukraine and Georgia that their future lay within the EU.

"You are part of our family, you are the future of our union," von der Leyen said. "Our union is not complete without you," she added. 

Ensuring critical raw materials for the EU 

Von der Leyen announced that critical raw materials for the EU were crucial to ensure the wider use of electric vehicles and further sustainable technologies. Both trade agreements and further legislation were needed to make these more secure for the bloc in future.

However, China currently holds a stronghold over metals such as lithium – which are incremental to the green 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. 

That's why "strategic projects all along the supply chain" and "strategic reserves where supply is at risk" had to be built up. The proposed legislation would help in the identification of these areas. 

Relive the speech: Live updates from when she spoke

European Commission President Ursula von der Leyen is holding the annual "State of the European Union" speech to address challenges such as the looming energy crisis and Russia's invasion of Ukraine. 

Invited as her guest of honor is Ukrainian First Lady Olena Zelenska, wife of President Volodymyr Zelensky. 

Ukraine, Moldova, Georgia belong in the EU: von der Leyen

Ursula von der Leyen told the European Union's eastern neighbors that their future lies in the EU.

"You are part of our family, you are the future of our union," von der Leyen said. "Our union is not complete without you," she added.

The Western Balkan countries, which are former Soviet republics, are seeking membership in the EU after Russia invaded Ukraine this February.

New trade deals with Chile, Mexico and New Zealand 

Von der Leyen announced new partnerships to ensure raw materials and to pursue European values at the global level.

An agreement with Chile, Mexico and New Zealand will be put forward for ratification. 

New trade deals with Australia and India were under negotiation. 

"We need to learn from mistakes of the past," she stressed, meaning that trade deals had to be conducted with countries that share similar values and ideals with the European Union.

The processing of metal was just as critical, but the industry was dominated by China, von der Leyen continued. 

That was why strategic projects from processing to recycling and strategic reserves where supplies were at risk would be implemented, she said. 

Green and digital transition needs to be accelerated

Von der Leyen stressed the importance of a digital and sustainable economy. 

She proposed better access to the EU's single market by introducing one set of tax rules to help small and medium enterprises.

Von der Leyen highlighted that the "Next Generation EU" plan signified a "relief for the European economy" and a "constant stream of investment" into sustainable energies such as solar plants and wind parks. 

To combat the workers shortage, qualified nationals from third countries should be encouraged to join the EU. A faster recognition of their qualifications would have to be implemented, von der Leyen emphasized.

New reality of coping with energy crisis

Von der Leyen said Russian gas accounted for 40% of imported gas last year, but the figure was down to 9% today. 

Still, Russia was trying to influence the market "actively", a reason to get rid of Europe's dependency on Russia fully.

She said Batic countries had invested heavily in renewable energy and LNG terminals over the year, and even though that was expensive, "dependency on Russian fuels comes at a much, much higher price."

She highlighted the agreement, which aims for gas storage to be shared among EU countries, was working.

Adding that climate change was also weighing down on Europe's energy demands, with heatwaves driving up electricity demands among other things.

Decries past subsidies on fossil fuels

Von der Leyen has criticized past subsidies for fossil fuels, and called for greater investment in renewable energy. To this end, she has announced an additional €3 billion euros to help build a future hydrogen market.

She says the EU will push for ambitious agreements at upcoming UN conferences on climate change and biodiversity.

And to help fight the effects of climate change, she says the EU will double the capacity for EU firefighting capabilities. 

"No country can combat the destructive force of extreme weather events by themselves," she said. 

Energy sector cap to raise €140 billion

Von der Leyen has announced a cap on the revenues of electricity production companies and a crisis contribution from fossil fuel producers.

She says the measures will raise an additional €140 billion.

"These companies are making revenues ... they never even dreamt of," she said. "In these times it is wrong to receive extraordinary record revenues benefiting from war and on the back of our consumers"

"Profits must be shared and chaneled to those who need it most."

Von der Leyen invites Ukraine to single market

Von der Leyen has announced that she is traveling to Kyiv today to help bring Ukraine into the European Union single market.

She said she wants to expand trade between the EU and Ukraine, particularly in the energy sector.  

Ukraine will also be welcomed into the European free roaming area, which allows seamless mobile phone use throughout the bloc.

Praise for Ukraine's courage, sanctions on Russia to continue

The European Commission president praised Ukraine's first lady, Olena Zelenska, for her courage in standing up to "Putin's cruelty."

"Europe's solidarity with Ukraine will remain unshakeable," she said. 

Europe has stood by Ukraine with military, humanitarian support as well as "toughest sanctions the world has ever seen."

Ursula von der Leyen said Russia's financial sector was on life support, elaborating that the European Union "cut off three quarters of Russia's banking sector from international markets, and nearly 1000 companies have left the country." 

Von der Leyen praises rapid EU response

Von der Leyen praised the rapid response of the European Union to the Russian invasion of Ukraine.

"This year, as soon as Russian troops crossed into Ukraine, our response was united, determined and immediate."

She compared this to the slow response time to the global financial crisis, and the weeks it took to respond to the global pandemic.

Lawmakers don Ukraine colors

Von der Leyen, as well as many other top-tier politicians, are wearing blue and yellow, the color of Ukraine's national flag, to demonstrate solidarity with the country. 

los/aw (AFP, dpa, Reuters)

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