Spain functions as rising energy prices are putting pressure on the EU government

Newsletter: Europe Express

Europe’s soaring electricity and gas prices are heating the EU government, and Spain has announced temporary tax cuts to ease the blow to consumers. Other countries are also trying to minimize the political damage caused by the rise.

Spain’s Prime Minister Pedro Sanchez said in a television interview Monday night that electricity taxes will be reduced by € 1.4 billion by the end of this year, and € 650 million from energy companies’ extraordinary profits will be “directed to consumers.” Said. “.

“We have assured that all citizens will pay the same electricity bill. [this year] Like 2018, “said the prime minister, saying that the current level of profits of energy companies is” unacceptable. ”

Spain’s steady rise electric billReaching record levels in the wholesale market throughout the summer, has become the country’s most burning political issue and is putting pressure on Sanchez’s left-wing minority government, which is lagging behind in polls.

The government has already announced a temporary cut in VAT on energy, a move that has been diminished by continued price increases.

Some commentators were skeptical about whether Sanchez would reach his high-stakes goals. Toni Roldan, a former liberal MP director of the Center for Economic Policy at Esade Business School in Madrid, said:

“We need to start assuming that energy costs will be higher for some time as climate change,” Roldan added, adding that rising demand for natural gas also explains about 50 percent of Spain’s price increases. Stated.

Spain’s retail electricity prices rely on foreign sources, especially liquefied natural gas, for nearly three-quarters of the energy mix, as many consumers pay variable rates rather than fixed rates. Is especially closely related to.

However, continued price increases are affecting Europe as a whole due to factors such as China’s demand for LNG as an alternative to coal, rising carbon prices and reduced supply from Russia.

“In Spain, people are feeling a personal financial pinch, but this is not a Spanish issue,” said Angel Talavera, Dean of the European Economics Department at Oxford Economics. The problem is that much of the world is not yet aware of it because the Spanish market works differently, but sooner or later the same trend will occur in other countries. “

In fact, in the past few days, the French government has proposed to consider increasing the number of people eligible for direct fuel payment subsidies, and Greece has € 150 million to compensate for the recent rise in electricity prices. Announced the Energy Transition Fund.

Last week, benchmark wholesale electricity prices for supply in Germany next year reached more than € 90 per megawatt hour, surpassing the previous summer 2008 record when oil prices approached $ 150 a barrel. ..

Julien Hoarau, head of Energy Scan, France’s utility Engie’s analytics division, said the market would remain tight and prices would rise without a clearer level of Russia’s gas supply to Europe during the winter. I warned that I would do it. We are very worried in the coming months as the demand for heating gas increases. “

Rising energy prices also put political pressure on the European Commission, which proposed the next big package in July. Green policyIncludes carbon prices for car fuel and building heating.

The proposal claims to provoke backlash from countries such as Spain and France, hitting poor people who cannot easily switch to more environmentally friendly low-emission fuels.

The MEP will discuss reforms in Strasbourg that require the approval of the majority of Member States and the European Parliament on Tuesday morning. To stop criticism, the Commission has proposed billions of euros worth of social funds to support households most affected by the new carbon pricing system.

Additional report by Eleni Varvitsioti

Spain functions as rising energy prices are putting pressure on the EU government

Source link Spain functions as rising energy prices are putting pressure on the EU government

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