European Commission president Ursula von der Leyen urged European citizens to keep steadfast in their support for Ukraine and to help Kyiv press forward its gains against Russia in her annual state of the union address.
“With the necessary courage and the necessary solidarity, Putin will fail and Ukraine and Europe will prevail,” Dr von der Leyen told a sitting of the European Parliament in Strasbourg, at which Ukraine’s first lady, Olena Zelenska, was a special guest.
“We are seeing in the last days that the bravery of Ukrainians is paying off,” she said. “The sanctions are here to stay. This is time for resolve, and not for appeasement.
“We are in for the long haul.”
The commission chief laid out a series of proposals to address the high cost of energy, which has put governments under pressure all over Europe and raised concerns that public support for Ukraine could waver as a difficult winter looms.
Where energy companies are making extraordinary profits due to the surge in the price of gas caused by the war, “profits must be shared with those who need it most”, Dr von der Leyen said.
A draft copy of the commission’s proposed legislation to enact this idea involves siphoning off revenues earned by certain kinds of energy companies, such as renewable and nuclear plants, that produce energy at a low cost but sell it at the price of gas because of the way the wholesale electricity market is designed.
The proposal would cap the price of such electricity at €180 per megawatt hour, according to the document, down from a level of €200 in a previous draft.
There would also be a “solidarity” levy on fossil fuel companies, imposing a tax of at least 33 per cent on any profits made in the 2022 fiscal year that are over 20 per cent greater than average profits in the previous three years, according to the draft.
The draft also proposes member states should identify three to four hours in each weekday in which national electricity use peaks, and reduce electricity use by 5 per cent during those hours according to a “binding” target. This is to avoid the use of gas power, which kicks in during surges in demand and sends prices spiking.
Other measures proposed by Dr von der Leyen included a shift to a “more representative benchmark” than the one currently used in the gas market.
She also proposed amending collateral rules and introducing measures to limit intraday price volatility to address the knock-on problem of high gas prices — that energy companies must hold vast cash collateral to make trades, causing many to quit the market.
State aid rules would also be amended to allow governments to give guarantees to energy companies to avoid bankruptcies, amid fears that such turmoil could interrupt electricity supply.
Looking to the longer term, the commission chief said the EU had to reform the energy market to “decouple the dominant influence of gas”, which causes the price of electricity from all sources to be high. “Consumers must benefit from the cheap price of renewables,” she said.
