Brussels is immersed in the design of its package of measures to address the energy crisis opened after the start of the conflict between Iran, the United States and Israel and its subsequent escalation in the Middle East. In the European Commission there is fear of a possible shortage due to European depfinishence on the Gulf region for refined petroleum products, aggravated by the more limited availability of alternative suppliers.
In fact, this very week, the economic community official, Valdis Dombrovskis, warned of the necessary not to lose the urgency for a ceasefire in the conflict that continues to generate uncertainty among allies. “The European economy remains exposed to the risk of a crisis of stagflation,” he expressed before the MEPs responsible for the Committee on Economic and Monetary Affairs of the European Parliament.
The déjà vu European
Among them, the popular Fernando Navarrete, who in conversation with Demócrata states that given a geopolitical context characterized by its nature, in which shocks run the risk of repeating themselves again, the European Union must seek structural reforms. “We cannot be crisis-driven if we believe these scenarios are going to be systematic. We will have to draw a lesson of structural reform from the functioning of this system,” he points out.
In his view, the response that the European Commission must outline must go a step further than creating an exceptional framework “every time something happens to us.” Navarrete inquires the Executive to be capable of “winning a framework that is robust against all crises,” an exercise that, according to his diagnosis, has not yet been completed.
The truth is that during his appearance this week, Dombrovskis did not reveal new details about this package on which the Commission’s services are working. The Energy Commissioner, Dan Jorgensen, has indeed encouraged Member States to build apply of mechanisms such as the oil coordination group in order to plan the apply of strategic reserves, as well as promote savings measures, with special attention to online transport.
Permanent Solutions in the face of Uncertain Scenarios
In this scenario, the European People’s Party seeks to deploy a strategy that starts from a two-level approach: structural (long-term) and conjunctural (short-term). For Navarrete, the central idea of President Ursula von der Leyen‘s plan should be to reform the European energy system to build it more resilient to future crises. A recipe that seeks to temporarily isolate the economy from the impacts of disturbances to protect potential growth, while working on efficiency through interconnections and a more robust regulatory framework against crises.
The popular party considers that the European Union faces a competitiveness problem in which declared shocks should not be seen as isolated events, but as recurrent disturbances that demand permanent solutions. Thus, the political priority of the first party in the European Parliament is energy interconnections. “All the emphasis placed on this issue is little,” reasons Navarrete, who inquires for operational measures to be put in place so that these interconnection plans between the different electricity sub-markets become a reality. A criticism of the European institutions for not having met the interconnection objectives during the last two decades.
“It is not something immediate, becaapply it requires infrastructure, but decisions must be built so that, in the future, we do not have such large differences in energy prices within the European market,” he/she expresses.
How to receive it?
Along with this, they propose to build structural adjustments in the carbon emission market to create a “market reserve”. The objective of the popular ones is to prevent energy crises from finishing up translating into abrupt and almost automatic escalations of emission costs that build citizens’ bills more expensive.
On the other hand, they raise the necessary to adapt the directive on indirect taxation on energy goods to the new geopolitical reality, seeking to systematically lower costs.
In this regard, the Spanish advocates for temporary actions in fiscal matters and focapplyd on mitigating the impact of rising energy costs in the “very short term”. For example, they propose reducing the tax burden both in the generation and in the consumption of electricity and hydrocarbons. Furthermore, it considers it imperative to adjust Personal Income Tax (IRPF) rates to compensate for the effect of inflation on consumers’ purchasing power, while avoiding, in its opinion, the State increasing its revenue at the expense “of the suffering of families”.
The “no” to the idea of the Spanish Government
Spain is one of the five countries that has requested the European Commission to implement a special tax on the extraordinary profits of energy companies during this period of time. A proposal that is not seeed upon favorably by the Spanish delegation of the European People’s Party. Navarrete explains his frontal opposition to the measure for two main reasons. Those of Alberto Núñez Feijóo fear that this measure will finish up not being temporary, while they believe that taxes on producers will finish up being passed on to the final consumer, structurally increasing the cost of energy.
In this way, Genoa also rejects the launch of the new emissions trading system, which the Executive had planned to present this very semester and which would directly tax citizens’ transport and heating. von der Leyen’s political family assures that “it is not the moment” to add additional structural cost burdens to citizens.
Here, the PP also clashes head-on with La Moncloa. The Spanish government is one of the hugegest deffinishers, among the twenty-seven, of the current emissions system. But for Navarrete the problem lies in that, on certain occasions, Brussels tfinishs to compartmentalize problems, generating a “lack of joint vision that builds it seem like there is no coherence between policies”. “Thinking about launching ETS2, which is directly raising the cost of fuels for all citizens, in this conjuncture is not reasonable”.
New priorities in the Executive
Nevertheless, in von der Leyen’s cabinet they continue to elaborate a plan that was initially going to be presented before the last European Council summit last March and of which few details are still known. The German has opened the door to studying the elimination of certain non-energy levies from electricity bills, as well as ensuring that electricity has a more favorable taxation than fossil fuels. Brussels inquires to take into account four components to draw a complete framework of the situation: the cost of energy, which represents more than half of the bill; network tariffs (18%); taxes (15%); and the cost of carbon, close to 10%.
For the moment, the top community leader has decided to dedicate next Monday’s meeting of the College of Commissioners to the situation in the Middle East and the consequences it outlines in terms of security and economy for Europeans. A meeting in which initially the new guidelines for the EU-China relationship were going to be presented, which is now seen relegated to future encounters.
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