Speech by President von der Leyen at the European Parliament Plenary on the preparation of the European Council meeting of 21-22 October 2021
© European Union, 2021, Source: EC - Audiovisual Service, Ursula von der LeyenThank you Madam Vice-President,
Minister,
Honourable Members,
We will be discussing many important topics at tomorrow’s European Council. One will certainly be, indeed, COVID-19. I think here to take stock is an important moment because we have now reached 1 billion of doses of vaccine that have been exported from the European Union. And this is exceptional because we are the only region in the world – the only one – which kept exporting doses of vaccine through all the different difficult months that we have just overcome. So we have been able really to keep our promise, to say that every second dose that is being produced in Europe will be exported, by now it is to 150 countries in the world. We will also be discussing, of course, different topics, like cyber or the digital; the Polish debate we had yesterday. So I will not focus on that. I wanted to focus today on the topic of electricity prices – very important for us.
And here, let me begin with three simple facts. The first fact is that gas prices are – and have always been – cyclical, and they are set by global markets. So it is not a regional or local phenomenon, it is a global phenomenon. But, of course, because of the price rise in gas, we see that it is for many families now difficult to make ends meet and we see businesses, for example, at risk of closing. The second fact is that the renewables are on a winning path. If you look at the solar energy today, it is ten times cheaper than it was ten years ago. And if you look at wind power – which is, by definition, more volatile – it is today 50% cheaper than a decade ago. And the third topic is the question of import. And here, we see, if we look at gas, that 90% of the gas we use is imported, and actually 97% of the oil. These three facts show us that the transition to clean energy is not only vital for our planet – it is also crucial for our economy and for the resilience to energy price shocks.
Now, what are the causes of the current spikes? First of all, the global economy recovers from the pandemic and, of course, with that the energy demand is rising. Second, we had an unusually long and cold winter – so lots of heating – followed by an unusually hot summer – so lots of cooling and use of energy –, and this was a fact in the entire Northern hemisphere. Third, the whole world, of course, is affected. So that means that, irrespective of countries’ energy or climate policies, or the energy mix they have, they are affected by the rise of energy prices and electricity prices we see. And in fact, we see that the prices in Asia are even higher than they are here in Europe.
Yet, there is something specific to the European situation. If we look at the gas and the suppliers, while Gazprom has honoured its long-term contracts with us, it did not respond to higher demand as it did in previous years. So Europe is today too reliant on gas, it is too dependent on gas imports. As I said, we import 90% of the gas we use. And this makes us vulnerable. The answer has to do with diversifying the suppliers. But the answer also has to do with keeping the role of natural gas as a transitional fuel – we have to debate that in depth – and, crucially, of course with speeding up the transition to clean energy. So the European Green Deal is in the mid and long term a crucial pillar of European energy sovereignty in the 21st century. But of course – I was speaking about the mid and long term – rightly so, citizens expect us to act now, they want quick responses.
Therefore, let me turn to the measures we are deploying to address the situation, first of all in the short term. Our priority is to give relief to vulnerable families and businesses. Some measures can be taken very swiftly, under the current EU rules. This includes relief for businesses or families – if you look at businesses, of course I am talking about the SMEs – through state aid, through targeted support to consumers, and cuts of levies and taxes. Because I want to remind ourselves that, if you look at the price itself, on average, one third of the wholesale energy price is set by the market – so one third is a market price; one third depends on infrastructure; but one third, on average, depends on taxes and levies. There are some Member States where 50% are taxes and levies on the electricity price. So this is where Member States can act very quickly. And by now, 20 of our Member States are also doing that.
In the medium and long-term, the Commission will take action in five crucial areas. First, we must end speculation on the energy markets. This is why we are increasing our monitoring of the gas and carbon markets. And we have asked the European Securities and Markets Authority to examine trading behaviour in emission allowances. Second, we will assess the functioning of the electricity market. The design of our electricity market has given us good results.
Yet right now, gas prices are driving up all other prices. We have therefore asked the Agency for the Cooperation of Energy Regulators, ACER, to produce, by mid-November, a preliminary assessment of the system in the light of current experience. It will then formulate recommendations on how to better address extreme price volatility.
Third, we are reaching out to foreign suppliers of gas. For example, Norway’s Equinor has already announced increased supplies. And, in early 2022, we will come forward with an international energy engagement strategy, to also help Member States coordinate their global outreach.
Fourth, we will address the issue of gas storage. We currently have no European framework on strategic reserves for gas, as we have, for example, for oil. We could improve our preparedness by organising regular stress tests of our storage and response capacity. Alongside strategic gas reserves, we will also explore the potential of, for example, joint gas purchasing on the global market, possibly on a voluntary basis for Member States. This would then allow us to create considerable market advantages, economies of scale, by joining forces at European level. Here, too, a joint European approach could have a strong, positive, leverage effect.
Finally, this crisis has shown that we need to accelerate investment in renewable energy. Every kilowatt of electricity produced from renewable sources is not only an insurance against rising energy prices. It also helps us to reduce our dependency on imports, making our societies and our economies more resilient. We must therefore do more to invest in renewables and in an energy system with adequate storage capacity, an energy system with cross-border interconnections, sufficient base-load and flexible power generation.
And these investments are exactly what we are doing through, for example, NextGenerationEU, our recovery programme. Under the national plans submitted so far – we have 22 Member State plans now approved – 36 billion euros are earmarked for clean energy, beginning with green hydrogen, right through to offshore wind.
Finally – and this is an important point for me, even if it might sound obvious – what is crucial as we move forward into our energy future, if I can call it that, is true European teamwork. One key challenge here concerns permits. This sounds extremely obvious but it is a huge issue. On average, it takes between 6 and 7 years for a wind plant to be authorised. At that point, it is still a long way from being in place, let alone up and running. And this has to change.
Let me be completely clear: this concerns all of us, i.e. local level, national level and European level. No one can say ‘everything is fine with me’. We all need to do better here. Next year, the Commission will therefore be tabling guidance on permitting, as part of the Renewable Energy Directive. My appeal here is for us to work extremely closely with the Parliament and Council on this, so that this isn’t watered down again and doesn’t leave us in this permit snare and with these delays.
Honourable Members,
Science has been telling us for years that we must accelerate the transition towards a carbon-neutral economy. Now, the economy is adding another reason to do so. The upcoming COP26 in Glasgow will be the moment for the whole world to speed up action. Because the world is not yet on track to match our commitments under the Paris Agreement. We should be fully aware of that. So much more needs to be done to prevent global temperatures from rising more than 1.5 degrees over pre-industrial levels. The European Union will bring to Glasgow the highest level of ambition. And we do it for all future generations. We do it for our planet. And we do it for Europe.
Thank you.
