EU leaders seek to lower energy prices

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The European Council has reportedly agreed on wide-ranging resolutions largely based on European industry demands, including support for more cost-efficient technologies and restructuring the EU’s current climate policy.

Member states are said to be in agreement on the measures, described as "crucial" in the European Council’s draft resolutions.

The Council will hold a debate on EU energy matters on May 22 with resolutions expected to be finalized on June 7.

In a letter to Irish Prime Minister and current European Council President Enda Kenny ahead of the debate, Markus J. Beyrer, director general of business lobby group BusinesEurope, highlighted a number of issues the organization maintains are hampering growth, jobs and competitiveness among EU businesses.

Chief among the hindrances is the high cost of electricity for industrial consumers in the EU, which the group argues is up to three times higher than in industrial states in the U.S.

"Over the last decade the gap between industrial electricity prices in the U.S. and in the EU has significantly widened and prices for oil and gas are also diverging significantly," Beyrer writes.

According to a new report commissioned by BusinessEurope on the EU’s energy and climate policy, renewable energy regulations, carbon pricing and the structure of electricity markets are playing a significant role in the high prices of electricity in Europe.

Citing the report, Beyrer points out that “support schemes for renewable electricity significantly affect the price of energy in Europe.”

The EU Emission Trading Scheme, designed to lower CO2 emissions and combat climate change with a "cap and trade" system, has likewise resulted in higher electricity prices and will likely continue to do so in the future, the study found.

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Shale gas exploitation in the U.S. has led to the divergence in electricity prices in the EU and the U.S. and Beyrer argues that the EU needs to refocus policy in support of shale gas exploration.

Hydraulic fracturing, or fracking, the method through which shale gas is produced in mass quantity, remains a controversial practice in Europe and it is currently banned in France and Bulgaria, countries with some of the largest shale gas reserves in Europe.

EU Energy Commissioner Guenther Oettinger has said the EU will look at fracking more closely this year and has called on Germany to create the necessary legal framework for demonstration projects and practical tests for the technology.

The report’s findings, says Beyrer, show that the EU’s current energy and climate policy "will continue to drive energy costs up unreasonably, increasing the energy price gap with global competitors."

In light of major internal and international energy prices developments, the EU needs to take a critical look at its climate policy, Beyrer adds, saying "it is time for a change."

In addition to EU member states, which appear ready to heed industry demands, the European Commission is preparing a plan to support the steel industry that calls for the freezing of taxes for two years and exempting energy-intensive businesses of charges for renewable energy and the expansion of the electricity grid, according to German newspaper Sueddeutsche Zeitung.

Speaking to the newspaper, Green MEP and energy expert Claude Turmes criticized the plan, calling it "a step back into the past."

Turmes warns that if the industry has its way and secures energy tax exemptions and price caps, private consumers could end up paying the billions of euros necessary for the grid expansion on their own.

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