The Minister of Industry and Trade, Jozef Síkela, wants to remove the capping of gas prices from Russia from Friday’s extraordinary meeting of the energy ministers of the European Union countries. Síkela added that his resort has an almost ready plan to help households and businesses. There are options for capping energy prices for households or public services. However, Síkela pointed out that it will be necessary to deal with interference in the state budget. This will depend on further developments on the energy market and on agreements on the European negotiation platform.
The Czech Republic will try to remove the solution to the possible capping of gas prices from Russia from the agenda of Friday’s meeting of the ministers of the European Union countries responsible for energy. At today’s meeting of the Senate Committee on the Economy, Minister of Industry and Trade Jozef Síkela (for STAN) said this.
At the same time, according to him, the Ministry of Industry has “almost ready” measures for national aid to companies and households.
According to Síkela, in the case of capping gas prices from Russia, it is rather a political tool, not a solution to the current energy crisis in Europe. On Friday, the EU Council of Ministers wants to discuss, for example, the separation of electricity and gas prices, tax changes for energy producers and distributors, or emission allowances.
“In my opinion, this is an unconstructive proposal. It is more about another variant of sanctions against Russia than a current solution to the energy crisis in Europe. And now we don’t want to prepare more sanctions, but to solve the energy situation,” Síkela told the senators.
Restrictions on the sale of emission allowances?
According to Síkel, European ministers should discuss several options for solving the crisis on Friday. The Czech Republic will want to include in the negotiations, for example, the so-called Iberian model, which would separate the prices of electricity and gas on the market.
According to Síkela, this would help especially in the case of electricity, the prices of which, according to his estimation, could be reduced to the level of about 200 to 400 euros per kilowatt hour.
In the case of gas, however, prices would probably remain at a similar level as they are now.
Síkela also warned that this model could lead to greater gas consumption, which could threaten natural gas supplies in Europe in the event of a severe winter.
Another alternative is proposed by the European Commission. The latter is considering capping prices for some cheaper sources of energy, such as nuclear power plants.
According to Síkela, tax adjustments for energy producers and distributors are also an option.
On Friday, the Czech minister intends to open a discussion on the possibility of limiting sales of emission allowances.
According to him, for example, the annual limitation of the allowance program would not mean a deviation from the EU’s climate goals.
“The situation is extraordinary, which is why it would also be an extraordinary measure,” pointed out Síkela.
He admitted, however, that the possibility of limiting the program with emission allowances does not give much chance, because the European Commission is against it.
We are finishing!
The Minister of Industry and Trade told the senators that his department has almost ready a set of measures to deal with the effects of the energy crisis for all groups of Czech consumers.
Among them should be, for example, compensation for companies whose profitability has fallen, Síkela said at Wednesday’s meeting of the senate committee.
According to Síkela, the prepared measures should go beyond any agreements in the EU.
According to Síkela, all the agreements reached by the ministers of the European Union countries will not be enough to solve the crisis.
“We have almost ready a set of measures to regulate and intervene in energy prices. These will be aimed at all groups of consumers – households, public services and the corporate sector,” said Síkel.
According to Síkela, there are options for possibly capping energy prices for households or public services. The state wants to act similarly towards them. At the same time, the minister pointed out that it will also be necessary to deal with interference in the state budget. This will depend on further developments on the energy market and on agreements in the EU field, he said.
The ministry is preparing a proposal for compensation for entrepreneurs and businesses. According to Síkela, the originally proposed compensations for companies that fell into operating losses were not sufficient.
The new proposal should thus offer the possibility of compensation even to companies whose profitability has fallen due to the crisis.
The Minister of Industry explained why the Czech Republic cannot leave the pan-European electricity market.
“We do export electricity to neighboring countries, but on the other hand, we are 100% dependent on the import of gas and oil. Therefore, we cannot leave the electricity market and then demand solidarity in other markets,” Síkela argued.
At the end of the week, representatives of energy-intensive industries sent an open letter to Prime Minister Petar Fial, in which they request a quick intervention against the extreme energy prices that are increasingly crushing Czech industry. They recommend six concrete measures to the government that would help solve the causes or mitigate the consequences of the current electricity and gas prices.
The letter is signed by 932 companies, some of them collectively through business associations. Among the well-known names, we can find here, for example, Agrofert and its subsidiaries, BASF, Cement Hranice, ČEPRO, Českomoravský cement, Kavalierglass, Liberty Ostrava, Orlen Unipetrol, Safina, Spolchemia, Synthos Kralupy, Třinecké železárny or Vítkovice Steel.
Industrialists warn that the current prices of electricity and natural gas are liquidating in the longer term, and in the case of gas there is also a risk of interruption or reduction of supplies. Energy-intensive industries, i.e. chemical plants, steel plants, cement plants, lime plants, brick plants, paper plants, glass plants and ceramic plants, are logically in the most trouble.
“There is a threat of the collapse of many companies and massive layoffs, but unfortunately the government is reacting very slowly. She started discussing really effective interventions on the gas and electricity market, including price ceilings, only at the end of August, which is late,” says Petr Mazzolini from AGC Flat Glass Czech, a company focused on the production of flat glass for cars.
“We want the government to look for a domestic solution to the energy crisis. At the same time, we are anxiously awaiting the results of the meeting of the energy ministers, which takes place on September 9. We certainly have to be active at the European level as well and support a reasonable and gradual path to a low-emission economy,” adds Daniel Urban, chairman of the board of the Steel Union.
So what would industrialists recommend to the government? The letter to the Prime Minister contains six proposals:
- Capping energy prices as quickly as possible.
- Introducing a motivational element for large consumers to save natural gas by offering financial compensation for voluntary reductions in consumption in the form of auctions.
- The start of a European debate on the suspension or change of the emission allowance trading system, the record price of which continues to increase the costs of already hard-pressed industrial enterprises.
- Approval of the program of assistance to companies according to the temporary framework of EU state aid.
- Preliminary activation of kursarbeit in the event that layoffs occur, for example in the event of a sudden interruption of natural gas supplies.
- Intensification of support for the technological and climate transformation of Czech industry, including the transition to alternative fuels.
Representatives of energy-intensive industries are not the first to send a similar challenge to the government. Just a few days earlier, the heads of the Confederation of Industry and Transport of the Czech Republic and the Confederation of Employers’ and Entrepreneurs’ Unions of the Czech Republic followed the same procedure. Also, in their opinion, energy prices have gone beyond the realistic possibilities of industrial customers, which requires extraordinary interventions in the current setting of electricity and gas pricing.
Nervousness on the energy market was once again increased by the Russian regime’s decision not to resume operation of the Nord Stream 1 gas pipeline after a “three-day” shutdown. The price of gas for next year on the Dutch exchange TTF jumped from 182 euros on Friday to 235 euros, electricity for 2023 on the German exchange EEX rose from 510 to 635 euros per megawatt hour.
(hump, dtr, chtk)