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Council debates rising energy prices and costs in Europe

Meeting on 4 March, energy ministers discussed the impact of rising energy costs and prices on European consumers and on the EU's industrial competitiveness

Energy ministers meeting in the Council held a detailed policy debate on the Commission's recent communication on energy prices and costs in Europe. Their discussions focused on three areas:

  • how to more closely align wholesale and retail prices
  • the high variation across member states in the different elements that make up prices
  • actions proposed by the Commission to reduce energy costs

Ministers welcomed the Commission's communication and broadly supported the proposed actions to reduce energy costs. Their discussions highlighted the need to complete the internal energy market by 2014 and to develop new energy infrastructure to ensure secure, uninterrupted supply. In addition, they emphasised that households and industry still need to take action to reduce their energy consumption by improving energy efficiency.

On the question of the effect of high energy prices on the competitiveness of European industry, ministers underlined the need to create a level-playing field on the world energy market and to lessen the gap in energy prices with competitors from outside the EU. Ministers also agreed that supporting the competitiveness of EU industry, reducing energy costs and enhancing energy efficiency could help increase social cohesion, reduce unemployment and contribute to Europe's climate objectives.

Energy prices and costs

Energy price refers to the price paid by consumers for each unit of energy they use, while energy costs refers to the amount of money consumers have to pay for their energy consumption.

Energy bills are generally made up of three parts:

  1. Energy price - the cost of fuel purchase or production
  2. Network costs - transmission and distribution infrastructure costs
  3. Taxies/levies - including VAT, excise duties, as well as any specific levies or charges on energy

Other topics on the agenda

Ministers also held a policy debate on the Commission's communication on a 2030 framework for climate and energy policy. The main elements of the communication include a reduction target of 40% below 1990 levels for greenhouse gas emissions, a renewable energy target of at least 27% of energy consumption, and a focus on energy efficiency. The communication was also discussed by environment ministers in the Council on 3 March 2014. The outcome of both debates will feed into discussions at the European Council meeting on 20-21 March.

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