The Government proposes to create a European platform to centralize gas purchases

The Vice-Presidents of the Government Nadia Calviño and Teresa Ribera have proposed to the European Commission (EC) to create a community platform that centralizes the purchases of natural gas, thus avoiding exposure to fluctuations in energy markets and increasing the negotiating power of the European Union (EU).

This is reflected in a document sent this Monday to the vice-presidents of the EC, Frans Timmermans and Margrethe Vestager, as well as to the European Commissioner for Energy, Kadri Simson, with a series of actions that the Government puts on the table to debate at community level with the aim of reducing the impact that high energy prices have on consumers.

The Government states in its letter that Europe’s strategic autonomy is incompatible with the current level of exposure to fluctuations in international energy markets, and recalls that, although in the short term energy dependence cannot be reduced, the EU’s bargaining power must be increased.

Calviño and Ribera demand from Brussels a solution to the price of electricity, which endangers the recovery

To do this, the Executive believes that it is necessary to centralize natural gas purchases, as has been done with vaccines during the pandemic, with the aim of building energy reserves of gas that mitigate exposure to energy markets.

Thus, with greater bargaining power, Europe could reduce its exposure to market behaviour, where gas producers are behaving strategically to “maximise their profits”.

In addition, it warns of the need for the EU to protect itself so that gas producers do not “use energy prices as a tool for political negotiation in other matters”.

On the other hand, the Government has asked to reform the wholesale market so that consumers see reflected the benefits of having electricity generation based on cheaper renewable technologies.

Despite the fact that in recent years the share of fossil fuels in the generation mix has been reduced, the Government denounces that it is the plants of these technologies that currently mark the price of electricity, and assures that they are the main responsible for the upward escalation of the wholesale electricity markets.

In the document, the Executive also calls for adopting measures that prevent financial speculation in european markets for the emission of carbon dioxide (_CO2) from causing a bubble effect.

Thus, he believes that the CO emissions market₂ should be for energy and industrial companies, restricting the presence of other agents, especially speculators with market power, since there is “a significant correlation between the increase in price levels and the greater presence of non-established companies in the market”.

“If financial speculation, rather than real factors, pushes prices up too quickly, the transition to a clean energy-driven industry will be threatened,” the government warns.

ELECTRICITY PRICES, A ‘EUROPEAN’ PROBLEM

On the current prices of electricity, the Government recalls in its letter that it is not only a national problem, but of a community dimension, which is causing the European regulatory framework to lose “credibility”.

The Executive gives as an example the protests of the “yellow vests” that were formed in France three years ago and warns that, although carbon reduction policies have been understood and accepted in Spain, they may not withstand a continuous period of “abusive” electricity prices.

They therefore call on the EC to establish guidelines that allow EU countries to act during periods of high tension in the energy markets.

“If the rules of the game are set at European level, the remedies should too. Member States should not have to improvise ad hoc measures every time markets malfunction, and then hope that the Commission does not oppose them.”

In this sense, it recalls that the measures adopted by the Government comply “fully” with the European legislative framework, in addition to having a temporary duration until current gas prices are reduced.

And it concludes that with other countries that have adopted less “orthodox” measures than Spain, the EC has maintained a “prudent” approach, so the Government expects, at least, a similar treatment.

Source: The Energy Newspaper