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EU considers natural gas purchase in response to surging energy prices

The EU is considering joint purchase of natural gas in response to the energy price surge that has sent household bills and industrial costs soaring across the continent.

One idea being floated by the European Commission is the collective purchase of gas stocks to form a “strategic reserve” that would be released during an emergency, according to an EU source. As with the EU’s common procurement of coronavirus vaccines, participation would be voluntary. But any action is not likely to be swift.

Across Europe, gas prices are at record highs, as a post-Covid economic rebound has sent global energy demand soaring while gas stocks across the continent are low after a cold winter. Adding to the trouble, a long spell of calm days has reduced the supply of wind energy to the grid.

Wholesale electricity prices increased by more than 200% in the first nine months of the year, prompting governments to take a wave of emergency measures, from energy price caps to creating funds to alleviate fuel poverty.

The EU energy commissioner, Kadri Simson, who will outline the ideas on Wednesday, has promised a “toolbox of measures member states can take in line with EU law” in the short and medium term.

She will not set out legal proposals on Wednesday, but spell out what EU member states can do already in line with EU law, such as direct payments to consumers and cutting energy taxes. Business, especially small- and medium-sized enterprises, can be given aid under EU competition rules.

But speaking to the European parliament on 6 October, she said: “There is no question that we need to take policy measures.”

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The commission was analysing joint purchase of emergency gas reserves, she said, adding: “We need also to remain mindful of the importance of the geopolitics of energy and develop a more strategic approach to external energy policy.”

EU governments pressing for speedy action are likely to be disappointed. Legislative proposals to reform the gas market, which might include common procurement, will not be published until the end of the year.

The EU response to the price spike comes as Russia claimed it had already begun pumping gas from its reserves to stabilise prices.

The Kremlin has been accused by European lawmakers of deliberately withholding gas from short-term “spot” markets, in an attempt to pressure regulators to speed up approval of the controversial Nord Stream II pipeline, which connects Russia and Germany, bypassing Ukraine – the traditional transit country that has benefited from pipeline revenues.

Russia’s deputy foreign minister, Sergei Ryabkov, rejected these allegations. “We favour energy security of Europe, we want to work collaboratively,” he told the BBC’s Hard Talk programme. “Gazprom has in fact started pumping out from its reserves into the pipelines to stabilise the market,” he added, without elaborating.

EU leaders will discuss energy at a Brussels summit next week, but divisions have already emerged.

Spain’s prime minister, Pedro Sánchez, has led calls for “audacious” action, including common procurement of gas stocks. Together with France, Spain wants to reform the EU energy market, to “decouple” the price of electricity from the price of gas.

Although natural gas supplies only one-fifth of the EU’s electricity, it helps set prices under EU energy rules. France, a big producer of nuclear energy, has said this system is unfair, because French consumers are exposed to volatile gas prices.

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EU officials, however, are lukewarm about overhauling the energy market. Simson has said the EU electricity market design is “sound” and expects prices to decrease from next spring. The commission is likely to propose deeper regional coordination, instead of an overhaul of energy market rules, according to a leaked version of the commission’s response to the energy price spike, seen by the EU news website Euractiv last week.

Other member states have sounded a cautious note about collective action. The Dutch prime minister, Mark Rutte, said the energy price rises were mainly for member states to address. “We should look at what Europe can do collectively. There are proposals – some wilder, others less wild,” he said.

Hungary’s Viktor Orbán has launched a full-frontal assault on EU climate policy, in an attempt to elide the current surge in energy prices – which is driven by a range of factors, chiefly global demand for gas – with the EU’s plan to move to a net zero-carbon economy by 2050.

The EU’s green deal is based on rising carbon prices, although the commission has called for measures to help the worst-off households.

“We’re most threatened by the European commissioner called Timmermans,” said Orbán, referring to Frans Timmermans, the European Commission vice-president in charge of the EU green deal. “He’s threatening the people of Europe with high energy prices.”

Without going into details, Orbán told local radio that Hungary had formed an alliance with the Czech Republic and Poland “to change certain rules, to withdraw certain regulations, and to mobilise funding designed to be used in the European Union in times of crisis”.

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The commission has rejected this analysis. “The current price hike has little to do with our climate policies and much to do without dependence on imported fossil fuels and their volatile prices,” Simson told lawmakers. “The green deal provides the only lasting solution to Europe’s energy challenge: more renewables and improved energy efficiency.”


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