Debate: A truly interconnected Energy Single Market to keep bills down and companies competitive
Date: WEDNESDAY, 23 NOVEMBER 2022
Speaker: Kadri Simson
Language: EN

Just yesterday, the Commission adopted the emergency temporary intervention proposal. The best way to explain why we need such a proposal is to offer a very frank assessment of where we are in this energy crisis. We are now many months since Russia has begun using energy supplies as a weapon. Our effort of disengaging from Russia as our main gas supplier has worked better than we expected. We have replaced entirely the gas no longer delivered from Russia with LNG or additional pipeline gas from reliable sources. Diversification, demand reduction, a common storage policy and our REPowerEU actions are making a difference.  We are in a broadly adequate security of supply situation for this Winter. But this is coming at a cost. Prices remain high. Yesterday’s proposal therefore is an intervention to protect the EU markets against significant price spikes. Several Member States in the Energy Council called on us to present a legal proposal on a price correction mechanism as swiftly as possible. Yesterday, that proposal came to life. We turned the elements we set out in Article 23 of the October proposal into a self-standing legal initiative. The proposed market correction mechanism combines static and dynamic elements: we set a maximum upper ceiling to the value of the month-ahead TTF, that we propose to set at EUR 275, and we set a minimum divergence of the TTF prices from the LNG prices in Europe at EUR 58. Both thresholds need to be met for a certain period of time. I believe the trigger levels we propose are high enough to minimise risks, and they are consistent with our intention to have an instrument that deters episodes of very high price spikes.  But, of course, many argue that we are creating an instrument outside the classic market economy toolbox. We have always recognised the risks this entails, and their importance. That’s why in the proposal we follow closely all the safeguards that we have listed in our October proposal and are repeated in the European Council conclusions. Gas demand reduction across the Union is an integral part of our approach to reduce risks. Moving on, I would also like to touch on permitting today. As you know, the Commission has also been working to address the short—term bottlenecks of the energy transition and to speed up the permitting process. On 9 November the Commission adopted a regulation to accelerate the deployment of renewable energy. The proposal simply includes the least controversial parts of the REPowerEU that can lead to a meaningful acceleration of renewable power generation. This regulation is therefore aimed to act as a bridge until the Renewable Energy Directive is agreed by the co—legislators and implemented in the national legal systems. Forward—looking proposals such as these on permitting and market correction must be matched by other efforts to create safe, secure infrastructure across the EU.  A decade into implementing our European infrastructure policy, Member States’ energy grids are now better interconnected thanks to projects of common interest in gas and electricity. In electricity, key interconnectors ended Member states’ isolation, strengthening their grids and allowing for the expected scale-up in offshore and onshore renewables.  In the South-West of Europe, the Biscay Bay project will connect the Iberia Peninsula and France.  In the Northern Seas region, the Celtic Interconnector will provide a first connection between Ireland with the rest of the EU. The North Sea Wind Power Hub will help develop hybrid offshore wind capacity and related offshore and onshore infrastructure.  In the Baltic Sea region, the commissioning of electricity interconnections between the Baltic Region and its European neighbours and in particular Finland, Sweden and Poland has already allowed ending the isolation of the Baltic region and the coupling of the Baltic and Nordic electricity markets. The synchronisation of the electricity grids of Baltic States, with financing of over EUR 1.2 billion from the EU remains the priority. Let us also not forget the interconnectors between Malta and Italy and the EuroAsia interconnector which links Cyprus with the rest of Europe. These are all important projects that will enhance the security of supply. In gas, only this year, key diversification projects like the gas interconnection between Poland and Lithuania, the Poland-Slovakia interconnector, the Baltic Pipe between Poland and Denmark and Norway and the Greece-Bulgaria pipeline will be adding significant gas transmission capacity. All these projects combined simply mean that we are better prepared for any possible disruption, and Member States can rely on each other to enhance the security of supply. Honourable Members, this is the broad overview from my side. I am looking forward to the debate.