According to the European Commission, it is inevitable that the consumer price of electricity will rise as a result of the expensive emission rights for producers. The Committee sees this as a necessary evil to reduce CO2 emissions.
EU sources indicated the current price mechanism is an incentive for energy companies to invest in new technologies. This will help them achieve the transition to a climate neutral Europe. According to these sources, the high electricity price is not only a result of the expensive CO2 rights, but also of the worldwide increase in the gas price.
Request for electricity market reform
The European Commission’s request not to regulate the price with government intervention coincides exactly with the request for electricity market reform from Minister Teresa Ribera of Ecological Transition. She thinks it unjust that the bill for the emission rights is on the plate of the Spanish consumer. Her request caused some surprise in Brussels. In May 2019, after almost three years of negotiations, an agreement was reached to which Ribera herself gave her preferred vote.
Price increase needed to achieve transition
On the basis of that agreement, the EU adopted the Climate Act, which states that by 2050 Europe must be climate neutral. After that, a series of laws were passed in July that should reduce CO2 emissions by 55% by 2030, instead of the initial 40%. In practice, according to the EU, this inevitably entails an increase in electricity and fossil fuels.
Regulation for vulnerable families
The European Commission does not deny the consequences of this will be greater for all households at or below the poverty line; especially after the start of the corona pandemic. National governments are therefore free to regulate the electricity price only for this group of residents.
The moment renewable energy sources provide all households with electricity, the price will also fall – partly due to international competition. This will be less true for Spain, because 65% of all energy comes from the national energy companies Endesa, Iberdrola and Naturgy.