“At first we thought it wasn’t possible.” The Dutch cabinet, and Prime Minister Rutte in particular, has received a lot of criticism for the late decision to intervene in the energy bill, by means of a price ceiling. This while there has been a call at European level since March for the introduction of such a price ceiling.
It is certainly not only the Netherlands that has been shot. The European Commission and the European Council are also on their minds. The Commission has been and still is torn between political necessity and technical feasibility. The European Council seems to have already forgotten how unproductive the previous debates on price ceilings have been.
About the author
Sandrino Smeets is affiliated with Radboud University Nijmegen and conducts research into the major crisis negotiations in the European Union, and is the guest columnist for October. Every month, the editorial team of de Volkskrant someone to publish a column four to five times on volkskrant.nl.
Informal top
At the informal summit in Prague this week, European leaders discussed price caps for the sixth time in a year. For the sake of clarity, there are two different types of price ceilings: on the one hand, a maximum price that Europe would be willing to pay for the purchase of gas in particular, and on the other a maximum price that citizens and businesses would have to pay for their energy bills. This involves the question of whether the price for electricity can be decoupled from the price for gas.
It is a debate with many twists and turns. In October 2021, it was Spanish Prime Minister Sánchez who sounded the alarm about soaring energy prices, something he said was due to the dysfunctional energy markets. The European Commission and many others believed that this was a temporary phenomenon, caused by the revival of the economy after Covid. In December 2021, European leaders concluded that this may not be a temporary problem after all, but that intervention in the energy markets was anything but easy. So the Commission was asked to conduct an in-depth investigation into the possibilities.
Confusing Conclusions
The two European summits in March resulted in long, and extremely confusing, debates and equally lengthy and confusing conclusions about whether and how to intervene in energy markets and prices. As a result, the Commission was given the almost impossible task of putting forward proposals that effectively tackle excessive electricity prices, but at the same time did not undermine the internal market, jeopardize the green transition and security of supply, and ultimately disproportionate budgetary expenditure.
At the beginning of May, ACER – the European Agency for Energy Regulators – released its (from a Dutch perspective) long-awaited report, which concluded that the functioning of the energy markets was not the problem. The European Commission’s REPowerEU plan was also reticent about the possibility and desirability of reforming energy markets.
At the European summit in May, the debate again went in all directions. So the leaders decided to “take note” of the ACER report and pass the file on to the Council’s engine room.
Draghi
At the European summit in June, no one, except Italian Prime Minister Draghi, was waiting for another debate on price caps. However, at the press conference afterwards, President von der Leyen announced that the Commission was going to re-examine the functioning of the energy markets.
At the beginning of September, the President of the European Council, Charles Michel, made a dramatic appeal ‘for the EU to act now’. According to Michel, the European heads of government had unanimously called on the Commission three times to come up with concrete proposals to stem the price increase. In reality, the leaders’ call was neither unanimous nor concrete.
It shows the logic of Brussels decision-making. Lewis Carroll describes in Alice in Wonderland a special kind of race in which each participant is busy with his own race, and has to get prizes at the end. And then the race starts again. State Secretary Vijlbrief put it well in his response to the Belgian minister who announced after the Energy Council of 9 September of this year that there was a deal on a price ceiling: ‘Then she was in a different meeting than I was.’ Figuratively speaking, the Belgian government is indeed engaged in a different race. And that race is not over yet.
It is not only the Dutch government that is surprised by how quickly the rounds are currently following each other. The ACER report, politically speaking, seems like an eternity ago. The European Council is preparing for a seventh debate on price ceilings. Remarkably enough, it is now the Commission that is holding back, and has indicated in internal debates that the technical elaboration of the proposals will take a lot of time. So the leaders will once again call on the Commission to speed up. A new round, with new prizes.