BRUSSELS — European Union countries are starting a fraught but urgent debate on how to immediately deal with booming energy prices and the prospect of fuel shortages, both linked to Russia’s invasion of Ukraine, as they attempt to cut remaining ties to Russia’s economy. The European Commission on Wednesday unveiled a set of options for EU leaders to look at during a meeting later in the week.
The bloc faces a looming dual energy crisis as its broad sanctions against Russia, along with sanctions from the United States and other Western allies, are failing to stop President Vladimir V. Putin’s plans for the war on Ukraine.
Energy prices, already significantly higher this year because of the pandemic, are spiraling out of control, posing dire implications for European consumers and businesses. Energy costs are not only slowing down the bloc’s postpandemic economic recovery, but they’re also fueling inflation, which is at a historic high, and further undermining growth.
And as the bloc contemplates how to urgently wean itself off Russian oil and gas — and prepares for the possibility that Russia might itself decide to cut or disrupt supply to Europe — EU countries are facing shortages for next winter. How to fill that gap, and how to make their sanctions against Russia more effective, hinges on a complex joint operation of purchasing and storing fuels across the bloc.
European Union leaders are set to discuss their options and possibly reach some early agreement in Brussels on Thursday and Friday, but the debate is acrimonious, as some countries want direct market interventions to subsidize consumers, while others would prefer minimal tinkering with market dynamics.
The options paper presented by the European Commission on Wednesday included different ways of curbing energy prices for consumers and businesses, by intervening at the wholesale and retail levels through price caps, price subsidies and other types of interventions, including cutting tax costs for energy spending.
The paper also lays out ways in which the bloc can take a leap into jointly purchasing fuels and storing them communally. That would mean that the storage for oil, gas and liquefied natural gas in one EU member state could also be used to save fuels for another member that didn’t have sufficient storage capacity. The goal of these options would be to fill up storage facilities immediately and guarantee sufficient supply for the entire European Union for next winter.
The Commission proposal would mandate that member states fill up 80 percent of their underground storage facilities, which would require mass purchases in the immediate future, during the year’s warmer months.
All the options under consideration, the Commission said in its options analysis, would cost EU governments money and probably distort global energy pricing and availability in the spring and summer months, especially if EU leaders agree to mass joint energy purchases immediately.