EU leaders seek ways to give support amid high energy prices

EU leaders are discussing ways to support the continent’s economies as they face skyrocketing energy prices amid the crisis aggravated by Russia’s invasion of Ukraine

European Union leaders on Friday tried to find ways to support the continent's economies as they face skyrocketing energy prices amid a crisis aggravated by Russia's invasion of Ukraine.

Talks at a summit at the Versailles palace outside Paris aim to find a strategy to make Europe “stronger, more sovereign, more independent," European Council President Charles Michel said.

Amid key issues, leaders of the 27-nation bloc were to address energy prices and how to support people's purchasing power and companies' competitiveness, Michel said.

Europe was already facing a tricky test before Russia’s invasion because of an outlook for slowing economic growth accompanied by surging inflation, which is being driven by high energy prices.

The European Commission, the EU’s executive arm, predicted last month that the bloc’s economic growth would slow from 5.3% last year to 4% this year and 2.8% in 2023.

Since Russia’s invasion of Ukraine and intensifying sanctions against Moscow, European officials have signaled those numbers are now too optimistic and will be lowered in the next set of economic forecasts scheduled for May.

French President Emmanuel Macron, who holds the rotating presidency of the EU Council, pushed Thursday for “joint European investments” modeled after the 750 billion-euro ($827 billion) recovery plan launched in summer 2020 to help European economies through the COVID-19 pandemic.

Macron acknowledged that some money from the COVID-19 recovery plan has not been used and that talks will address whether “new decisions” are to be made.

Divergences on how the EU should tackle the energy price surge have appeared ahead of the meeting.

Greece proposed a six-point plan that includes a price-cap mechanism to address spiking energy costs, but that idea has been dismissed as unrealistic by other members.

Spain and France — the latter of which derives about 70% of its electricity from nuclear energy — are calling for splitting apart electricity and natural gas prices. The French argue that the influence of natural gas costs in setting wholesale electricity prices is disproportionate.

The European Commission said this week that it will discuss with member states the possibility of granting temporary aid to companies affected by the energy price crisis. It also said it is considering “options for emergency measures” such as temporary price limits.

On Thursday, EU heads of state and government focused on how to wean the bloc off its dependency on Russian energy. Although the latest European sanctions against Russia — including a ban on transactions with the Russian central bank — are unprecedented, the bloc has been careful to avoid disrupting the flow of energy.

The commission unveiled proposals ahead of the summit to reduce EU demand for Russian gas by two-thirds before the end of the year and phase out its reliance on Russian energy by 2027. Proposals include diversifying natural gas supplies and speeding up renewable energy development.

The EU imports 90% of the natural gas used to generate electricity, heat homes and supply industry, with Russia supplying almost 40% of EU gas and a quarter of its oil.

But as Russia intensifies its attacks on Ukraine, calls are growing for the EU to join the U.S. in immediately banning Russian energy.

“It’s a very difficult situation that, on the one hand, we have these financial sanctions that are very hard but on the other hand, we are supporting and actually financing Russia’s war purchasing oil and gas and other fossil fuels from Russia,” Finnish Prime Minister Sanna Marin told reporters Friday. “We have to get rid of the fossil fuels coming from Russia as soon as possible.”

Some EU countries are much more dependent on Russian energy than others, creating a lack of consensus in the bloc necessary for any European fossil-fuel embargo against Russia.