With the EU plans now clearly set out by the European Commission to advert the winter energy crisis, Member States are moving towards taking action, although in a direction that seems far from being unanimous. According to a document prepared by the Czech Republic’s Presidency of the EU, countries are now seeking exemptions from the proposed measures.

The Presidency is preparing the Member States’ delegations for a meeting that will be held in Brussels, to polish the proposed files and reach a final agreement. The Czech briefing proposes several edits to the original text of the Commission’s proposal for Regulation: a first major difference is the treatment of coal. Under the Czech Presidency’s proposal, EU countries may still decide “to maintain or set a specific cap on the market revenues obtained from the sale of electricity produced from hard coal”. According to the document, a specific revenue cap for hard coal “shall allow for those costs and a reasonable profit margin to be covered,” adding that the exemption is meant to “ensure that the higher costs of those producers are fully taken into account”. The document also specifies that certain technologies should not fall under the €180/MWh revenue cap as they allow for flexibility in the electricity system, like demand-response and storage and alternatives to natural gas. In addition, new proposed articles include the provision that hybrid plants using conventional energy sources should fall outside the scope of the cap where this “leads to a risk of increasing CO2 emissions and decreasing renewable energy generation. The addition in Article 13 of the proposed Regulation about conditionality in temporary solidarity contribution for fossil fuels based on “equivalent national measures” has also generated scepticism among observers.

At the same time, EU Member States have been active in the past weeks looking for alternative supply options and contingency measures. Germany has put a lot of effort in trying to seal a deal on increased LNG imports from the United Arab Emirates and Qatar, as it builds new LNG terminals. The agreement comes in addition to the deal signed with France to increase gas flows between the two countries, a move that other Member States have criticised for its supposed unilaterality. In Spain, the government has already targeted energy-intensive companies, stating that closures during peak times should be considered and will be followed by financial compensation. Portugal has also warned its citizens that the winter will bring new challenges, urging the European Commission to move forward with plans for a joint EU gas purchasing platform and defining import prices.

In the meantime, Member States have not kept still waiting for the crisis to bite. Recent research from think-tank Bruegel shows that governments in Europe have earmarked nearly €500 billion in the last year to cushion citizens and companies from soaring gas and power prices. The EU’s 27 countries have collectively allocated €314 billion for measures to ease the pain, while the United Kingdom has set aside €178 billion. Counting also cash governments have earmarked to nationalise, bail out or provide loans to ailing energy utilities, EU governments have spent closer to €450 billion. “This is clearly not sustainable from a public finance perspective,” said Bruegel senior fellow Simone Tagliapietra. “Governments with more fiscal space will inevitably better manage the energy crisis by out-competing their neighbours for limited energy resources over winter months.”