EU ministers struggle to find common solutions to high energy costs

(Reuters) European Union energy ministers met in Brussels on Friday to find a common approach to tackling soaring electricity prices that have left consumers and businesses struggling.

German Economy Minister Robert Habeck said upon arriving at the meeting that he supported emergency measures to help households, but urged caution when it came to intervening in the electricity market.

“We have to know very well what we are doing,” Habeck said.

The European Commission presented a series of proposals on Wednesday for ministers to consider, including for EU countries to start creaming off surplus income to make money available to households and businesses in need.

The price of electricity in the EU is determined by the most expensive source of energy needed to produce it, which means that the rise in electricity prices is due to power stations burning expensive gas to produce electricity while others generate high profits.

Another proposal is a mandatory 5% target to reduce electricity consumption during periods of high demand to avoid burning expensive gas in addition to cheaper energy sources.

“It’s important that we reduce demand to have a chance of overwintering,” Habeck said.

A price cap on gas imported from Russia is also under discussion. Habeck said he would support the measure if EU countries that still receive gas from Russia were in favor of it.

Germany would currently only receive a “homeopathic dose” of Russian gas, Habeck said. Some EU countries, including Hungary, remain dependent on imports from Moscow.

European Union finance ministers are meeting in Prague to discuss the various measures already taken by member states of the bloc to help households and businesses affected by record inflation.

The meeting comes a day after the European Central Bank decided to raise the key rate by 75 basis points to 1.25%, after inflation hit 9.1% in the euro zone in August.

Fiscal discipline to fight inflation cannot be abandoned as Europe faces its multiple crises, German Finance Minister Christian Lindner warned as he arrived at the meeting in Prague.

“We have to deal with inflation and the way to fiscal policy is sound public finances, debt reduction,” Lindner said.

Czech Industry Minister Jozef Sikela, speaking in Brussels, said he wanted ‘clarity’ by the end of the month on how European Union countries can jointly manage crises .

“We need to define and send a clear and strong signal that we will do whatever it takes to protect our households, our economies,” said Sikela, who is chairing an emergency meeting.

He expressed optimism that EU ministers could agree on a common way forward at Friday’s meeting.

This would allow the European Commission to present a first draft law as early as next week, which will then be discussed and possibly amended by EU capitals before it can be approved.

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