EU leaders reach compromise on energy after lengthy debate | Economic news

By SAMUEL PETREQUIN and RAF CASERT, Associated Press

BRUSSELS (AP) — European Union leaders struggled for hours on Friday to broker a deal on a deal to cut energy prices that have soared and hurt households and businesses in the 27-nation bloc .

There was a clear divide between southern and northern nations of the bloc at day-long talks in Brussels, with Mediterranean countries led by Spain pushing for market intervention with measures such as price caps while Germany and the Netherlands resisted drastic options.

However, the leaders agreed on a proposal from the European Commission to move towards the joint purchase of natural gas and to ensure that the block’s storage facilities are almost full to try to avoid a new energy crisis linked to the EU’s dependence on Russian energy.

The war in Ukraine made EU countries realize that they were too dependent on Russia for natural gas and oil to heat their homes and run their industries.

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Earlier today, the United States and the EU announced a new partnership to reduce the continent’s dependence on Russian energy. Under the plan, the United States and other countries will increase their liquefied natural gas exports to Europe by 15 billion cubic meters this year. Even larger shipments would be delivered in the future.

In the face of protests from farmers, truckers and the fishing industry, Spanish Prime Minister Pedro Sanchez had proposed plans to the EU to decouple electricity from gas prices. Yet the radical options failed to garner immediate consensus. The EU will revisit the issue in May, but Spain and Portugal could get a special waiver to deal with price hikes in the meantime.

“The Iberian Peninsula has a very special situation. Their energy mix there is heavily loaded with renewables, that’s great,” European Commission President Ursula von der Leyen said after the summit. “Therefore, we have agreed on a special treatment (…) so that the Iberian Peninsula can deal with this very specific situation in which it finds itself and manage electricity prices in the way that we have discussed.”

French President Emmanuel Macron said the differences of opinion within the Council have paved the way for a very long debate, “because the interests and energy models of the different states are not the same”.

With high energy prices and low supplies, the EU sees its latest crisis – the COVID-19 pandemic – as a model. Member states have teamed up to buy vaccines in large quantities for equitable distribution.

“The root cause of high electricity prices is, in large part, high and volatile gas prices,” von der Leyen said. “So we will join forces, pool our demand and use our collective bargaining power when buying gas. In addition, we “We need to complete the pipeline infrastructure and increase our storage. This will be our insurance policy against supply disruptions. It is also time to look at the design of our energy market.”

Europe already faced a delicate test before the Russian invasion due to the prospect of slowing economic growth accompanied by runaway inflation, fueled by high energy prices. The European Commission has predicted that the bloc’s economic growth will slow from 5.3% last year to 4% this year and 2.8% in 2023.

EU leaders agreed in principle at a March 11 summit to phase out dependence on Russian gas, oil and coal imports by 2027. The EU currently imports 90 % of natural gas used to generate electricity, heat homes and supply industry, with Russia supplying almost 40% of the EU’s gas and a quarter of its oil.

Sylvie Corbet in Paris contributed to this report.

Follow all AP stories on the effects of the war in Ukraine at https://apnews.com/hub/russia-ukraine.

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Abdul J. Gaspar