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Soaring power prices drive anxiety over EU climate plans – POLITICO

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Surging energy prices are weighing on European wallets — and the bloc’s climate plans.

Concerns over a popular backlash were evident Tuesday when members of the European Parliament debated the European Commission’s Fit for 55 climate legislation proposals.

“Citizens start asking questions,” said Anna Zalewska of Poland’s ruling Law and Justice party. “First of all, they ask about price increases across the board, because it’s them who are going to foot the final bill. It’s them who are going to unfortunately pay for the ambitions of the EU.”

Polish Prime Minister Mateusz Morawiecki points the finger at Brussels. “Polish power prices are tied to the EU’s climate policies,” he said last week.

The Commission insists that those prices aren’t the fault of the EU’s Emissions Trading System, which has seen the cost of a permit to emit a ton of CO2 more than double over the last year to around €60. The power price increase is instead largely driven by high gas prices and structural issues in Europe’s electricity market — but the Commission is still wary of its net-zero Green Deal project getting the blame.

Commission Green Deal chief Frans Timmermans told MEPs Tuesday that just “one-fifth” of the higher power costs could be attributed to the rising ETS price, with the rest caused by low gas supply. 

He argued that those increasing costs actually strengthen the case for a rapid shift to cleaner energy sources.

Some MEPs sided with Timmermans. “We need to act radically, but there is a problem: Slovakia and Europe are facing rising power prices, and this puts the most vulnerable and poorest at a disadvantage. Why? Because of our dependence on fossil gas,” said Slovak lawmaker Martin Hojsík of Renew Europe. 

The political danger to the Commission’s Fit for 55 program is obvious.

Pascal Canfin, the French MEP who chairs the Parliament’s environment committee, said his liberal Renew Europe group opposed the Commission’s proposal to expand emissions trading to road transport and buildings. 

“We believe that the political cost is extremely high and the climate impact is very low,” he said.

In response to a reporter’s question about the risk to the Green Deal if the costs were laid on the middle class, Green MEP Philippe Lamberts said: “How can you imagine that we are not thinking about this? Are we so stupid?” 

A Continental problem

Governments across the EU are feeling the pressure.

In Italy, electricity bills have risen by 20 percent in the last quarter and are expected to rise by 40 percent from October, according to Minister for the Ecological Transition Roberto Cingolani. He told POLITICO he agreed with Timmermans that the lesson from the current price hikes was that “we should be super fast in increasing the renewable energy power stations.”

Despite this, Cingolani was alive to the political risk. “You’re measuring directly the impact of the decarbonization concept,” he said, warning that people “should not perceive that the transition means you pay more for electricity and that’s all.” With people being forced to make wrenching changes to their lives, such a “historical transformation” carries costs and will be difficult.

In Spain, the government is facing a political crisis caused by record-breaking power prices — which have tripled to €172.78 per kilowatt-hour over the last half-year. On Tuesday it approved measures to lower bills with temporary tax cuts, limiting the amount that prices can rise, and clawing back about €2.5 billion in utilities’ profits to redistribute to consumers. The goal is to keep bills about where they were in 2018.

“We are going to reduce the profits of energy companies and redirect the benefits to consumers,” Prime Minister Pedro Sánchez said.

Outraged nuclear power companies threatened to shut down their reactors — which supply about a fifth of the country’s power — early if the government goes ahead with its plan.

The Greek government said Tuesday that it would spend €150 million to cut consumer bills through the end of the year.

“There is an international energy crisis,” Energy Minister Kostas Skrekas told reporters. “Our government has decided to support those who have seen their bills growing.”

The problem, said Cingolani, is that Europe is part-way through its transition toward 100 percent clean energy, with “a mix of old and new power sources in which the carbon dioxide will increase its price.” 

Market signals

The idea behind the ETS was to put a price on carbon, imposing higher costs on polluting energy sources like oil, coal and gas and encouraging low-carbon…

Read More: Soaring power prices drive anxiety over EU climate plans – POLITICO

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