Analysis. The heads of state and government are unwilling to put their signatures to detailed conclusions, but only to ‘exhortations.’

On the transition to clean energy, the EU is in no rush

There isn’t even time for the usual empty babble on climate and the ecological transition anymore, despite the €177 billion that the EU has allocated for the climate transition (for the 22 countries that have so far obtained approval for their recovery plans). Energy prices are exploding, and EU governments are fearing yellow-vest-style riots.

On Thursday, at the European Council, the representatives of the 27 arrived and remained divided, and the majority, caught in the storm of immediate issues, put the plans to reduce CO2 on hold. On the table was the Commission’s toolbox to deal with the crisis in the short term, inviting the states to take advantage of its resources: that is, emergency aid to families (35 million Europeans are in difficulty to pay for energy), state aid to businesses, reducing taxes (which on average make up a third of the final price of a product), measures already taken in various countries, starting with Spain, Italy, Portugal, Greece, Slovenia, while on Thursday the Czech Republic set VAT to zero for gas and electricity, and France announced a freeze of gas and electricity prices for the entire 2022 and will give €100 to those who have a salary of less than €2,000 per month.

The heads of state and government are unwilling to put their signatures to detailed conclusions, but only to “exhortations,” and are passing the hot potato to the Environment Ministers, who will meet on October 26 in Luxembourg, to define medium and long-term measures. The empty babble of EU “ambitions” will return for the COP26 in Glasgow at the end of the month, with the commitment to intervene in favor of the energy transition, while on Thursday, Germany, the Netherlands, Denmark and Sweden sided against measures that could interfere with the energy transition.

Major divisions remain on the way forward. The 27 are starting from different energy mixes between countries, which depend on national policies, not EU policies. France and Germany are clashing on nuclear power: for Paris, this must be part of the “taxonomy” for the transition, while Berlin is defending gas (and the agreement with Russia through the North Stream 2 pipeline).

The 27 are giving a mandate to the EIB to increase investment in the transition, all emphasizing that this new crisis highlights an excessive dependence on imported energy, which for the Commission is a question of “energy sovereignty in the twenty-first century.” But there is no agreement between those who continue to think, like the Commission does, that the market mechanisms, which have allowed the EU to be the only region in the world that is not experiencing blackouts, should not be touched, and the countries that think we need a public intervention supported by Brussels.

For Mario Draghi, public intervention “is necessary” for the energy transition (and for the digital one). Spain’s proposal to make group purchases of gas and establish common stocks will be “studied,” but Germany and the northern countries (the Netherlands, Denmark, Finland, Austria) are not at all persuaded. For these countries, the price increase is a temporary issue, linked to the post-Covid rocket recovery, and eventually the situation will return to normal. Only 50% of member states have a national requirement to have stockpiles of gas, some have low reserves (Austria, the Netherlands), and the Commission is proposing a “regional” strategy.

In the end, everyone is defending their own interests: Greece proposes to be the bridgehead for the import of gas from Egypt, France is thinking of a reform of the functioning of the energy market (it would like to be able to “disconnect” when the marginal price is too high—calculated according to the price of gas—in order to take advantage of the lower domestic price of nuclear energy). Poland is defending coal and asking to postpone the Green Deal and the Fit for 55 program.

Another big topic at Thursday’s Council was Poland and the lack of respect for the rule of law, an existential challenge for the EU. On this front as well, there was no definite “conclusion.” Should they wait for the decision of the European Court of Justice, to which Warsaw has appealed (together with Budapest) against the “conditionality” of funding, or should they act immediately to stop the drift of Polish lawlessness, after the Polish Constitutional Court declared the “primacy” of national laws over European ones?

Angela Merkel, at her farewell summit, defended “dialogue.” Emmanuel Macron aligned himself with that position too, because he wanted to make sure Poland would not create problems during the upcoming French presidency of the Council (starting from January, while in April there are the presidential elections). Only the Benelux is itching to apply sanctions.

The Commission has put three options on the table: new infringement proceedings (but there are already four in progress against Warsaw); recourse to Article 7 (but there is already a procedure from 2017, and to get to sanctions requires unanimity, while Poland and Hungary back each other); and applying conditionality on funding, a regulation in force since January 1.

The European Parliament voted on Thursday (by 502 votes in favor out of 671) to denounce the Commission if it does not enforce the rule of law in Poland through the application of “conditionality” (blocking of funding) and a new Article 7 procedure. In a letter to the 27, President David Sassoli stressed that “never before has the Union been questioned in such a radical way.”

It was the first Council in months where Covid was not the main topic. But the pandemic is still worrying. Particularly in the Baltics, Romania and Bulgaria, where contagion numbers are blowing up, the vaccination rate is low and this might end up putting a damper on free movement. And there is embarrassment regarding the EU’s contribution to Covax, the international aid program: the European Union, which has ordered 4 billion doses for itself, exported just one million to 150 countries, and promised 250 million by the end of the year, but for now has only managed to deliver 56 million.

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