EU launches measures to address energy crisis impact

Europe moved on Thursday to blunt the immediate shock of an energy crisis set off by the US-Israel war on Iran, with the European Commission unveiling a package of emergency and medium-term steps aimed at shielding households, businesses and heavy industry from surging costs.

At the heart of the response is a temporary easing of EU state aid rules, giving member states more room to deploy public money to soften the blow of higher energy prices for consumers and industry.

That support could take the form of price controls, income supports and tax breaks, with households, SMEs and energy-intensive sectors among those targeted for relief.

Governments will also be able to deepen taxes on windfall profits made by energy firms, in a move the Commission said is intended to promote “social fairness”.

Separately, the proposed Accelerator EU initiative is designed to speed up measures already on the books, including stronger cross-border grid sharing, faster deployment of renewables, more consumer choice in electricity purchasing and wider uptake of green appliances in homes.

Europe’s benchmark gas ‌price was roughly a third higher than before the US-Israeli war with Iran began

The package also includes guidance on protecting vulnerable customers from disconnections, making it easier and quicker to switch energy suppliers and contracts, encouraging participation in energy communities and self-consumption, and improving both supplier risk management and consumer safeguards during the energy transition.

Ireland’s EU Commissioner Michael McGrath said the Irish Government and the European Commission had worked closely together on the measures announced today.

“We must recognise that the conflict in the Middle East has caused significant disruption to energy markets, placing real pressure on households and businesses of all sizes,” he said.

“The Irish Government has taken action, and there has been close coordination at European level on the measures adopted.

“We are working in partnership with Ireland and other member states, with a clear focus on ensuring that support is temporary, targeted and timely, while staying firmly on course towards decarbonisation.

“Reducing our dependence on imported fossil fuels is in all our shared interests,” Mr McGrath said.

“These measures will equip Member States with additional tools to support citizens and businesses who are shouldering a heavy burden – something that must be fully acknowledged.”

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In a statement, the Commission said it “stands ready to support any member states that need, in the short term, to apply energy tax rates below the current EU minimum levels, while avoiding increasing fossil fuel demand and exacerbating imbalances of supply and demand”.

It described the package as a “toolbox to bring immediate relief to European households and industries, especially the most vulnerable ones, while putting Europe on a steady pathway to energy independence”.

The Gulf conflict has already left the EU paying an extra €24 billion for energy imports because of rising prices, according to the Commission, “without receiving a single extra molecule of energy”.

It added: “The current geopolitical situation is a stark reminder that accelerating the transition to clean, secure and affordable energy is an economic and security imperative.”

European Commission President Ursula von der Leyen said: “The choices we make today will shape our ability to face the challenges of today and the crises of tomorrow.

“Our Accelerate EU strategy will bring both immediate and more structural relief measures to European citizens and businesses.

“We must accelerate the shift to homegrown, clean energies. This will give us energy independence and security, and mean we are better able to weather geopolitical storms.”

Commission President Ursula von der Leyen said the EU must shift to renewable energy

Under the plan, member states will be expected to step up coordination on refilling underground gas storage and on any exceptional releases of oil reserves, in an effort to avoid driving prices even higher through competition between countries seeking to secure supplies.

The Commission has also put forward a proposed Fuel Observatory to monitor EU production, imports, exports and stock levels of transport fuels.

“This will enable swift identification of potential shortages and, in the case of emergency stock releases, inform targeted measures to maintain balanced fuel distribution,” the statement said.

The Commission said it will also “provide clarity” on existing flexibilities within EU rules that could be used to ease high fuel prices and address possible shortages in the aviation sector.

A new Electrification Action Plan is due by the summer and will set out an electrification target as well as measures to remove barriers to electrifying industry, transport and buildings.

The Commission also urged rapid rollout of the Sustainable Transport Investment Plan to speed up the use of sustainable aviation fuels, alongside swift implementation of the European Grids Package, which is intended to expand cross-border grid sharing and lower electricity prices over the longer term.

EU leaders gathering in Cyprus tomorrow and Friday will consider the Commission’s proposals.

Meanwhile, Minister for Foreign Affairs Helen McEntee welcomed the launch of the EU package aimed at responding to the energy crisis.

She said, however, that budget talks ahead will also examine “ways in which we can permanently make changes that leave us less reliant, less impacted by these types of shocks in future”.

Speaking at Iveagh House alongside Germany’s Federal Foreign Minister Johann Wadephul, Ms McEntee said Ireland would examine which EU measures it could draw on if the crisis continues. But she added that the “quickest and fastest way to respond to the crisis is for the war to the end, and the Strait of Hormuz to open up”.

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Additional reporting Gavin O’Callaghan