The vitality value shock presently gripping Europe is settling in for the long run and must be addressed with market reforms to keep away from excessive gasoline costs pushing up the price of electrical energy, writes Teresa Ribera.

Teresa Ribera is Minister for the Ecological Transition of Spain.

After the largest well being disaster in a century and its severe social and financial penalties, we’re experiencing turmoil related to a powerful restoration and the ensuing improve in demand for uncooked supplies.

Within the eye of the storm is gasoline, which has skilled a major value improve as a consequence of, on the one hand, elevated demand in Asian nations, significantly in China, and, on the opposite, rising rigidity with Russia.

The rise within the value of pure gasoline is in itself a serious financial downside. As well as, there has additionally been an unprecedented rise within the value of electrical energy. This improve is just not attributable both to the vitality transition or renewable energies. Nonetheless, it’s a direct consequence of the impact of the worth of gasoline on the electrical energy market, which is intrinsically linked to the market’s regulatory design.

For months, the response has been primarily based on three premises that right now look like incorrect. Initially, it was emphasised that we have been dealing with a short lived downside. Nonetheless, the present scenario has lasted longer than anticipated and is prone to proceed for a while but, given the sturdy demand and the geopolitical context.

The second careworn the significance of the steadiness of the regulatory framework for market operators. Nonetheless, with such a excessive differential between precise price and value paid, one wonders whether or not these costs have been a part of affordable expectations for operators. Sadly, it does symbolize an enormously destabilising issue for industrial customers.

Lastly, it’s value questioning the knowledge of the Fee’s proposals, which give attention to shifting prices from customers’ to taxpayers’ pockets. This proposal has two main issues: along with the chance of social and financial rigidity, which represents a discount in obtainable assets, there’s additionally the chance of higher inequality within the response of the Member States, because the quantity of expenditure depends upon their particular person budgetary and financial capability.

Such a scenario has an apparent reply. We should speed up the vitality transition to scale back our dependence on gasoline, publicity to the volatility of worldwide markets and keep away from persevering with to empty assets that ought to be allotted to socially facilitate the transition, improve innovation and speed up investments in vitality transition, together with renewables storage, digitisation and effectivity.

We might be making a mistake if we thought that this value shock might give important indicators for the market itself to allocate the surplus revenues obtained to speed up the transition. For the second, the one proof now we have is that this case has led to a extremely advanced scenario for customers and trade that has financial penalties for the EU. The patron safety measures allotted by the Member States till January 2022 are estimated at round €21 billion within the case of France. Will we tolerate the quantity of assets allotted to alleviate the affect of the vitality disaster to be on a scale just like that of the financial stimulus and restoration plans?

It’s important to make use of the general public assets at our disposal intelligently and to accompany the deployment of renewables by accelerating the dedication to innovation and analysis into new applied sciences, similar to storage, which ought to be the backup for renewables.

Due to this fact, in our opinion, the EU ought to tackle this context with momentary and distinctive measures to restrict the contagion impact of gasoline costs on electrical energy costs. Gasoline ought to be reimbursed at its price, decoupling it from the worth matching mechanism and stopping it from harming markets with a excessive penetration of fresh applied sciences with low working prices, similar to renewable energies.

All this, with out prejudice to the unavoidable opening of a broad debate, with all stakeholders, on how the regulation designed within the Nineteen Nineties ought to be up to date and tailored to right now’s challenges. The formation of a consensus round this evolution takes time, however beginning the train is right now an unavoidable crucial.

In any case, till all this occurs, we are going to preserve fiscal assist for customers and the trouble to speed up the transition from the micro, from the native, by growing the deployment in our cities and cities of photo voltaic roofs and self-consumption, creating new native vitality communities, lowering client payments, creating micro-plants that favour social participation or betting on effectivity. On this means, we will guarantee entry to the advantages of the vitality transition for all.