Thread by @AgoraEW

This Friday, EU energy ministers aim to decide on measures to soften the impact of the escalating #gas and #electricity bills on households and businesses. The decisions should be guided by the following principles. A 🧵 1/10

Direct, timely & targeted payments to households & companies that need support are better than general public spending to lower energy prices for all consumers. The latter is very costly & can undermine the crucial need to save as much energy as possible before winter. 2/10

Current pricing mechanisms in #electricity market work and must be maintained. Marginal pricing is central to the integration of renewables and necessary to incentivise uptake of #heatpumps and #electricvehicles. Read more in our new paper (in German) bit.ly/3fs6Rmj 3/10

The proposal to cap non-gas energy producers’ revenues on the power market is an option to raise funds for targeted support. Advantage: it keeps the basic price formation at the wholesale market intact; temporary and reversible nature of intervention is key. 4/10

But details matter! Gov’s need to be careful to avoid unintended side-effects on new investments, storage, short- and long-term electricity markets, etc. This piece by @ingmarschlecht @LionHirth @maurerchr outlines potential solutions. bit.ly/3SnYtmo 5/10

A windfall tax is better than direct market interventions. Ideal design: moderate rate and broad coverage across energy carriers. The revenues must support relief measures and investments in #renewables and #energyefficiency. 6/10

Any permanent power market reforms shouldn't be rushed, as the EU #marketdesign must be fit for the long haul. We need a thorough analysis on markets' role in the transition to #climateneutrality. 7/10

As heating season is upon us, high gas bills are a bigger concern than electricity for the 39% of European households that use gas heating. A rapid and coordinated reduction of fossil gas demand is a no-regret solution under all circumstances. 8/10

Ramping up energy saving efforts for electricity and gas is crucial. EU gov’s must implement actions to support & oblige energy savings. For example, through information campaigns, support to adjust boiler settings and check heating systems. 9/10

Strengthening Europe’s energy sovereignty in a sustainable way must be at the core of the emergency responses. Energy ministers must pull out all stops for renewables deployment, grid investments and scaling of heat pumps. Read more in our paper: bit.ly/3DUY1HY 10/10