EU wants price cap on Russian gas, energy companies to pay; Putin issues threat
BRUSSELS: European Union countries should set a price cap on Russian natural gas and seek a "solidarity contribution" from European oil and gas companies making extraordinary profits as the war in Ukraine drives up energy costs, European Commission President Ursula von der Leyen said on Wednesday.
With winter approaching, the 27 EU members are struggling to contain an energy crisis that could lead to rolling blackouts, shuttered factories and a deep recession.
Russia has already cut gas supplies partially or entirely to 13 EU countries that use the fuel to heat homes, generate electricity and run factories.
"We are facing an extraordinary situation, because Russia is an unreliable supplier but also because Russia's actively manipulating the gas market," von der Leyen told reporters in Brussels.
"We must cut Russia's revenues, which (President Vladimir) Putin uses to finance his atrocious war in Ukraine."
She declined to recommend any price cap levels, saying that should be agreed during emergency talks among EU energy ministers on Friday.
The bloc's executive arm is putting a raft of proposals on the table for the ministers to discuss.
Putin threatened to completely cut energy supplies to the West if it tries to cap prices of Russian exports, saying the move would violate contracts.
"In that case, we will just halt supplies if it contradicts our economic interests," Putin said on Wednesday at an economic forum in the far-eastern port city of Vladivostok.
"We won't supply any gas, oil, diesel oil or coal."
Meanwhile, Von der Leyen said the EU's executive Commission, which proposes EU rules and policies, noted that oil and gas companies have made "massive profits".
A European drought is fuelling higher electricity demand and limiting the production of hydropower, just as Russia is wielding its energy might.
"We will therefore propose a solidarity contribution for fossil fuel companies," von der Leyen said, urging member countries to "invest these revenues to support vulnerable households and invest in clean homegrown energy sources".
She gave no other details.
Some countries already have passed taxes on the windfall profits of energy companies.
Russian pipeline gas accounted for 40 per cent of all imported gas into Europe before Putin ordered the invasion of Ukraine in February but now only accounts for 9 per cent, von der Leyen.
Norway now delivers more gas to the bloc than Russia.
The commission believes the EU is prepared for the winter, with joint gas storage levels at 82 per cent; well ahead of the 80% target that had been set for the end of October.
Also on Wednesday, Austria proposed a power price cap that should ease costs for an average household of three by about 500 euros (USD 494) per year, Chancellor Karl Nehammer said.
"An attempt to limit prices by administrative means is just ravings, it's sheer nonsense," Putin said.
"If they try to implement that dumb decision, it will entail nothing good for those who will make it."
He warned that such a move by the EU would represent a clear breach of the existing conracts, saying that Russia could respond by turning off the faucets.
"Will they make political decisions violating the contracts?" he said.
"In that case, we will just halt supplies if it contradicts our economic interests. We won't supply any gas, oil, diesel oil or coal."
The Russian leader charged that Russia will easily find enough customers in Asia to shift its energy exports away from Europe.
"The demand is so high on global markets that we won't have any problem selling it," he said.
Putin added that "those who try to enforce something on us aren't in a position today to dictate their will", pointing at protests in the West against rising energy prices.
Just hours before it was due to resume natural gas deliveries to Germany on Friday after a three-day stoppage for repairs, Russia's state-controlled Gazprom gas giant claimed it couldn't do so until oil leaks in turbines are fixed.
German officials and engineers refuted that claim.
The Kremlin blamed the suspension of supplies on Western sanctions against Gazprom, charging that they hamper normal maintenance of the pipeline's equipment and signalling that supplies may not resume until the restrictions are lifted.
EU officials rejected the claim as a cover for a political power play.
Putin dismissed the EU's argument that Russia was using energy as a weapon by suspending gas supplies via the Nord Stream 1 gas pipeline to Germany, charging that the sanctions made the pipeline turbine unsafe to operate.
"They have driven themselves into deadlock with sanctions," he said.
He repeated that Moscow stands ready to start pumping gas "as early as tomorrow" through the Nord Stream 2, which has been put on hold by the German authorities.
Turning to Ukraine, Putin declared again that the main goal behind sending troops into Ukraine was protecting civilians after eight years of fighting in the country's east.
"It wasn't us who started the military action, we are trying to put an end to it," Putin said, repeating his long-held argument that he ordered the military action to protect Moscow-backed separatist regions in Ukraine, which have fought Ukrainian forces in the conflict that erupted in 2014 following Russia's annexation of Crimea.
"All our action has been aimed at helping people living in the Donbas, it's our duty and we will fulfil it until the end," he said.
"In the longer run, it will help strengthen our country both domestically and internationally."
Putin emphasised that Russia will keep protecting its sovereignty in the face of what he described as an attempt by the US and its allies to preserve their global domination, saying that "the world mustn't be founded on the diktat of one country that deemed itself the representative of the almighty or even higher and based its policies on its perceived exclusivity".
The Russian leader acknowledged that the national economy will shrink by 2 per cent this year, but said that the economic and financial situation in Russia has stabilised, consumer prices inflation has slowed down and unemployment has remained low.
"Russia has resisted the economic, financial and technological aggression of the West," Putin said.
"There has been a certain polarisation in the world and inside the country, but I view it as a positive thing."
Everything unnecessary, harmful, everything that has prevented us from going forward will be rejected."
Commenting on scores of critical media outlets being forced to shut down after the start of the military campaign in Ukraine following the passage of a new law that criminalised any reporting on military action that differs from the official line, Putin said their reporters were happy to leave the country.
"They were always working against our country while they were here, and now they happily moved out," he said.
Russia's top independent newspaper, Novaya Gazeta, was among the outlets that were forced to shut down under official pressure.
On Monday, a court in Moscow upheld a motion from Russian authorities to revoke its license.
Dmitry Muratov, Nobel Peace Prize-winning editor-in-chief of the newspaper, called the ruling on Monday "political" and "not having the slightest legal basis".
Putin sought to slight Muratov's prize, describing it as politically driven and, in a side jab, compared it to the Nobel Peace Prize awarded to Barack Obama while he was the US president.
"We had business-like relations with President Obama, but what did they give him the Nobel prize for?" Putin said.
"What did he do to help protect peace? I mean military operations in some regions of the world the president conducted."
Commenting on the European Union's decision to make it harder for Russian citizens to enter the 27-nation bloc, Putin said that Russia won't respond in kind and will continue to welcome visitors.
"We aren't going to halt contacts, and those who do it, they isolate themselves and not us," he said.
Putin is weaponising energy, the White House has alleged, a day after he threatened to cut off all energy exports to the West if the US proceeded with its gas cap.
Putin on Wednesday threatened to completely cut energy supplies to the West if it tries to cap prices of Russian exports.
He also vowed to press on with Moscow's military action in Ukraine until it achieves its goals.
"This shows that Putin is, again, weaponising energy, by his very words, also by his actions. But the President (Joe Biden) and our partners in Europe predicted this playbook. We saw this coming, and we have been preparing for months. We have talked through the different processes of how this price cap could look," White House Press Secretary Karine Jean-Pierre said on Wednesday during her daily news conference.
The US and European Union, she said, have set up a task force to work on ways to increase alternate sources of natural gas to Europe and help reduce Europe's demand for Russian energy through increased efficiency and clean energy deployment.
"That is something that we're going to continue to do to be helpful to Europe as they head into the winter months. But this process of the task force already has had a positive effect as we've seen. Europe's gas shortage will be full by the critical winter heating season. Germany will reach their target gas storage, despite the Russian cuts, ahead of schedule. And Europe as a whole will reach a significantly higher level than last year," she said.
"We prepared for this. We knew this was going to be part of the playbook, in Russia weaponising energy as they have been for the past several months, and so we will be prepared for this move," said the press secretary.
Separately in a different press briefing, State Department's Deputy Press Secretary Vedant Patel told reporters that the Black Sea Grain Initiative is a humanitarian arrangement to bring desperately needed food to the world's hungry populations.
"The US did not offer nor did it provide any sanctions relief in exchange for Russia's participation in the Black Sea Grain Initiative. As a matter of fact, US sanctions have always had clear exemptions for food and fertiliser, and our sanctions have never targeted humanitarian assistance," he clarified.
"We want to see food and fertiliser reach global markets. And Russia must continue to live up to its commitments through the Black Grain Sea Initiative. And some of these other allegations that we've seen that, one, global food prices are rising, just aren't the case. In fact, global food prices have fallen as a result of the Black Sea Port arrangement," he said.
Here is how Europe is gearing up for a potential energy crisis
Austria
The Austrian government on Wednesday announced plans for a power price cap to curb the rise in energy costs tied to Russia's war in Ukraine.
Chancellor Karl Nehammer said the cap should ease costs for an average household of three by about 500 euros (USD 494) per year.
The government will provide around 3-4 billion euros to finance the measure, which will come into effect in December and last through the end of June 2024.
"No one in Austria should be unable to afford their basic electricity needs," the chancellor told reporters in Vienna.
"This is about quick and unbureaucratic help, which is why no one needs to apply for it," he added.
"The electricity price cap is handled automatically for every household. It is another building block in the relief of people in a difficult time."
Nehammer added that low-income households can apply for additional financial support.
The cost-relief plan comes at a time when Austria and other European countries are struggling to contain an energy crisis and rising prices as Russia has throttled back supplies of natural gas.
European officials have said it's energy blackmail, aimed at pressuring and dividing the European Union as it supports Ukraine against Russia's invasion.
The 27-nation EU should set a price cap on Russian natural gas and pass other measures to ease the energy crisis, European Commission President Ursula von der Leyen said on Wednesday.
Individual governments across Europe have passed relief for households as high energy prices drive up utility bills and fuel inflation.
Austria's government announced other financial aid earlier this year, including extra payments of child bonuses and financial aid for retirees on low pensions.
Germany
Germany is well-placed to get through this winter with enough energy thanks to efforts to shore up supplies in the face of Russian gas delivery cuts, Chancellor Olaf Scholz said on Wednesday, dismissing criticism from the opposition.
Centre-right opposition leader Friedrich Merz charged in parliament that Scholz's three-party coalition lacks any "strategic thinking" and assailed a decision this week to stick in principle to a long-held plan to shut down Germany's last three nuclear power plants at the end of this year.
The government, he said, "maybe damaging German companies irreparably".
An unusually combative Scholz responded that his coalition has worked since it took office in December to prepare for problems that ministers from Merz's party in the previous government failed to anticipate.
He pointed to a decision to require filling natural gas storage facilities for the fuel used to heat homes, generate electricity and power industry.
Those facilities are now over 86 per cent full, at a time when Russia has cut off gas supplies through the main pipeline to Germany, Nord Stream 1, as tensions mount over the war in Ukraine.
Russia started reducing gas deliveries via that route in mid-June, citing alleged technical problems.
German officials dismissed that excuse as a political gambit.
Scholz noted that his government has moved to build liquefied natural gas terminals, the first of which are due to open this winter, and reactivate coal-fired power plants.
Germany is "in a situation in which we can say we will probably get through this winter, despite all the tensions, with the preparations we have made", Scholz said.
"No one could have said that three, four, five months ago, or at the beginning of this year."
"Because we started so early. We are now in a position in which we can go bravely and courageously into this winter, in which our country will withstand this," he said.
While the nuclear shutdown is supposed to go ahead as scheduled, the government wants to keep the option of reactivating two of the three reactors in case of an energy shortage in the coming months.
Merz, who has urged a three-or four-year extension of the reactors' lives, said the decision was a bad compromise".
He urged Scholz to "stop this madness".
Scholz, who suggested that Merz was overly fixated on nuclear power, defended the decision.
He said, "You're simply talking past the issue and the problems of this country."
One power plant operator PreussenElektra, a subsidiary of energy giant E.ON, cast doubt Wednesday on how easy it would be to keep its Isar 2 reactor in reserve and switch it back on at short notice.
Germany's economy minister, Robert Habeck, expressed surprise at those concerns, telling reporters in Berlin that the government plans to give operators sufficient advance notice if their reactors are needed so they can be safely fired up again and run until mid-April.
"It's obvious that this passed the technicians at PreussenElektra by," he said.
Greece
Greece's government on Wednesday announced a carrot-and-stick drive to cut public sector energy use by 10 per cent this year, linking compliance to funding and urging state employees to switch off lights and appliances when leaving the office.
Environment and Energy Minister Costas Skrekas said Greece wants to cut public sector energy consumption an overall 30 per cent by 2030, and will in coming days be making savings recommendations for households and businesses.
Governments across Europe have been urging their citizens to save energy ahead of this winter's anticipated crunch in gas supplies following Russia's invasion of Ukraine.
Measures range from tweaking office temperature levels and reducing night-time floodlighting of public buildings to telling people to take shorter and colder showers, or forego neckties to stay cooler.
Skrekas said the government has set up a digital platform to monitor public sector energy use, and will link compliance to funding for budgets, with bonuses for over-performing branches and cuts for those who fail their savings targets.
"We are asking everyone working in the public sector to see that there is no pointless use of energy in their workspace," he told a press conference in Athens.
"At the end of the working day, when employees leave they must ensure that their computers are switched off, together with lights and other appliances that are not in use."
Skrekas said an energy supervisor will be appointed in every building used by the public sector, tasked with ensuring that savings action is taken.
Temperature settings will be adjusted for "reasonable use," windows will be left open at night to cool offices and air-conditioning and heating units will undergo maintenance.
Municipalities will be pressed to reduce night-time lighting of buildings for decorative purposes, and revise street-lighting time schedules.
This month, a 640-million-euro program will be launched for the energy upgrade of 2,5 million square metres of buildings used by public sector.
Russia has already cut off gas exports to several EU nations.
There are fears that Moscow will use the gas exports as a political weapon to get sanctions against Russia reduced, or even cut the exports to Europe off altogether in the winter when demand peaks.
"Russia is increasing its blackmail of Europe by cutting natural gas flows, and in the end sending energy prices to unprecedented levels," Skrekas said.
Greece is less dependent on Russian gas imports than other EU countries, and also buys gas from Azerbaijan and North Africa.