EU countries struggle to find joint response to energy price spike

Energy ministers from European Union countries meet to debate their response to high gas and electricity prices

Energy ministers from European Union countries meet on Thursday to debate their response to high gas and electricity prices, with countries still divided over whether the recent price spike should be met with an overhaul of energy market rules.

European energy prices surged to record highs in autumn as tight gas supplies collided with high demand in economies recovering from the COVID-19 pandemic. While gas prices have retreated from the record highs seen in October, they remain relatively high.

EU member states have struggled to find a common response to the high prices, despite leaders and ministers holding multiple emergency meetings in recent months to debate the issue.

Germany, Denmark, the Netherlands and six other countries published a joint statement on Wednesday opposing other governments' calls to reform EU energy markets.

Price caps or switching to a different system of setting national power prices could discourage electricity trade between countries and undermine incentives to add low-cost renewable energy to the system, the countries said.

Meanwhile, Spain, France and Poland are among the countries in favour of reforms, proposing measures including curbs on financial speculators' participation in the EU carbon market or joint gas buying among countries to form strategic reserves.

Many EU countries have used temporary national measures to shield consumers from higher bills, including energy tax cuts and subsidies for households.

The Commission has said it will study the benefits of longer-term options, and asked regulators to investigate whether the EU's carbon and electricity markets are functioning properly.

An initial report by the EU agency for the cooperation of energy regulators, published last month, did not identify major issues with the current power market design. A separate investigation by the bloc's securities watchdog said there was no proof of abuse in the EU carbon market.

Ministers will also assess progress in negotiations to set tougher EU targets to improve energy efficiency and expand renewable energy this decade.

The EU's "sustainable finance taxonomy" may also feature in the talks, as countries await a closely-watched decision by the Commission - expected early this month - on whether the rules will label gas and nuclear energy as green investments.

(Reporting by Kate Abnett; editing by David Evans)