The EU should act to reduce the impact of natural gas costs on power prices, according to European Commission president Ursula von der Leyen, who said options include "subsidising or capping" gas prices, better use of power purchase agreements (PPAs) and contracts for difference (CfDs).
The current market design has "delivered", von der Leyen said, noting "overall" support for the system. "But it is crucial we reduce the cost impact when gas sets the electricity price," she said, adding that state aid was also among the options under consideration.
Speaking to the European Parliament, von der Leyen also defended the bloc's emissions trading system (ETS): "Without ETS, we would now consume 100bn m³ more gas, making us more vulnerable and more dependent. So, we need ETS, but we need to modernise it."
She also noted the need for grid charges so less renewable energy is wasted, and criticised EU member states for taxing electricity far more than gas. "One member state applies 0pc taxes on retail electricity, while some others apply over 16pc," she said.
Von der Leyen said Europe is now "far less" exposed to fossil fuel imports. "Diversification efforts are paying off," she said. "But no matter what we do in terms of measures, as long as we import a significant share of fossil fuels from unstable regions, we are vulnerable and dependent."
She said gas and oil price increases over 10 days of the Middle East conflict have already cost European taxpayers an additional €3bn in fossil fuel imports.
It would be a "strategic blunder" to return to Russian fossil fuels, she added, noting that EU renewables and nuclear have remained at the same price over the last 10 days.
