The European Union seems ready for a new confrontation with Russia over gas supplies.
The bloc revealed plans for a price cap on Russian gas imports in retaliation for the war in Ukraine and measures to help member states deal with the energy compression.
Ursula von der Leyen, the President of the European Commission, presented five proposals on Wednesday, hours after the Russian leader threatened to turn off the taps to all Western countries that were considering imposing price caps on energy from his country.
She said Russia had become an “unreliable supplier” after state-owned Gazprom decision to close the taps on the main Nord Stream 1 gas pipeline indefinitely last week, adding that the EU’s reliance on Russian gas had dropped significantly since the invasion and stocks were back at 82% across the bloc.
One of the other measures, however, betrayed the perilous position the bloc continues to face ahead of winter.
Ms Von der Leyen has proposed a mandatory reduction in electricity consumption in the EU to conserve electricity by 10% per month based on a five-year average and an additional 5% during peak periods .
She also planned to cap revenues from non-gas-powered generators – buoyed by record gross energy costs – to redirect their “windfall profits” towards measures that support households and businesses.
A windfall tax on fossil fuel companies was also being considered, she said, along with aid to utility providers struggling with the brunt of wholesale prices.
The plans, which will have to be approved by member states, could face opposition.
Some EU countries are reluctant to cap Russian gas prices in case it costs them the dwindling supply they are still getting from Moscow.
This follows confirmation that the UK is planning to cut its own energy bills through a taxpayer-funded bailout. Details are expected this week.
Von der Leyen explained that the planned cap on wholesale prices from Russia was now possible after the bloc eased its dependence on Russian energy.
“We have strengthened our preparedness and weakened Russia’s grip on our energy supply through reduced demand – which has allowed our joint storages to be at 82%,” she said.
“Thanks to diversification, we have increased LNG or pipeline deliveries from the United States, Norway, Algeria, Azerbaijan and other countries. For example, Norway now delivers more gas to the EU than Russia.”
The UK has also been pumping record volumes to the EU via interconnectors for months as part of EU efforts to boost storage.
Ms Von der Leyen said Russian gas accounted for 9% of imports, down from 40% in February before the invasion of Ukraine.