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EU gas market review, taxonomy rules 'present policy rethink opportunity': Global Counsel

Highlights

Crisis 'already shifting Fit for 55 priorities'

Affordability issues coming to the fore

State aid a possible concession area

A review of the EU gas market framework in December and publication of taxonomy rules for gas and nuclear will present a first opportunity to see whether the energy price crisis will drive a broader rethink of European energy policy, Giorgio Corbetta of advisory firm Global Counsel said Oct. 15.

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The European Commission on Oct. 13 unveiled a toolbox of measures designed to help EU member states tackle the price crisis. While the EC's primary focus was on near-term support for consumers, medium-term pledges covered the potential for policy change.

"The debate on energy prices has already affected positions in the Council in negotiations on the "Fit for 55" package, with greater priority being given to the elements that seek to increase production (such as the renewable energy targets) and slower progress on extending emissions trading," Corbetta said in a note.

The next package of commission proposals, due in December, was already controversial, with decisions due on the role of natural gas, hydrogen, and their treatment, together with nuclear, under the sustainable finance taxonomy.

"Should prices continue to rise, it is likely that affordability issues will weigh more significantly in those decisions," he said.

The EC's narrative that high energy prices pointed to EU overdependency on fossil fuels, and the need to speed up investment in renewables, was not convincing to member states that had pushed back on an accelerated energy transition, Corbetta told S&P Global Platts.

Some concessions may be needed, with the easiest file to compromise on potentially being outside of the Fit for 55 package, namely state aid, the inclusion of natural gas and nuclear in the taxonomy, and the review of the gas market, he said.

The EC had encouraged member states to make use of state aid, and the ongoing revision of the file "could provide leeway to deal with the impact on end consumers and businesses," he said.