Ursula von der Leyen – 2022 Speech at the European Parliament Plenary on the preparation of the European Council meeting

The speech made by Ursula von der Leyen, the President of the European Commission, on 19 October 2022.

Dear Minister Bek,

Honourable Members,

Yesterday, we saw again Russia’s targeted attacks against civilian infrastructure. This is marking a new chapter in an already very cruel war. The international order is very clear. These are war crimes. Targeted attacks on civilian infrastructure with the clear aim to cut off men, women, children from water, electricity and heating with the winter coming – these are acts of pure terror. And we have to call it as such.

This is the moment to stay the course. We will back Ukraine for as long as it takes. And we will protect Europeans from the other war that Putin is waging – this is his war on our energy. I know that Europeans are concerned; concerned about inflation; concerned about their energy bills; concerned about the winter. The best response to Putin’s gas blackmail is European solidarity and European unity.

In this spirit, the Commission agreed yesterday on a strong legislative framework to address the energy crisis. Let me outline the main points to you.

The first one is as logical as important: Instead of outbidding each other, Europeans should buy gas together. This is very simple. For this, we will purchase together gas at EU level. Aggregation of demand will be mandatory for at least 15% of the volumes needed to fill gas storages. And the companies involved may form a ‘gas purchasing consortium’. We do this because we have learnt the lesson. We literally saw in August of this year, at the height of the filling season, how Member States were outbidding each other and thus really driving up the prices. We definitely can be smarter on that one. Pooling our demand is a must.

My next point is about sharing gas in Europe. We know that some Member States are more directly exposed than others to Russian gas. The situation is especially challenging for landlocked countries in Central Europe. But in the end, if you look at our Single Market with highly integrated supply chains, a disruption in one Member State has a massive impact on all Member States. So, sharing gas is absolutely critical. Member States have already, since five years, an obligation under EU law to conclude solidarity agreements with their neighbours in their home region. However, if you look at what has been concluded so far, of 40 possible agreements only 6 have been concluded. This is simply not enough in times of a crisis like this one. This is why we will put in place default rules for Member States. These rules will be binding, as long as Member States do not conclude individual solidarity agreements. Energy solidarity is a fundamental principle of our Treaties, so let us bring that to life, it is very simple.

Honourable Members,

These three measures – pooling, saving, sharing – will have a positive impact on the prices. But of course, more needs to be done to address the price spikes and to address the Russian manipulation of the energy market. Just to give you two figures: Compared to September 2021, if we look now at September 2022, Russia has cut 80% of its pipeline gas supplies. But Europe has been able to compensate all that. We have diversified towards our trusted partners, like for example Norway and the United States. We have increased the savings. And it is good, we achieved in September a reduction of 15%. We have filled our storages up to 92%. We did not give in to this blackmail. We made it. And I think we can be proud of that. We resisted. That is important. But we also see that resisting the Russian energy coercion comes at a price. European families have seen their gas bills skyrocketing. And our companies are struggling to keep up competitiveness. It is not only about the competitiveness in the Single Market – that is also important. But it is also about the global competiveness that our companies are fighting for.

You might recall that in March, we proposed to the Council the option to cap gas prices. At that time, this did not gain any traction. But today, we are coming back to this. So what is the model? The current benchmark determining gas prices is TTF. TTF is only focused on pipeline gas. What we see now is that the market has really changed, from a pipeline gas market to a LNG market. So we need a new, a specific price benchmark for LNG. The Commission will now develop this complementary benchmark together with the European regulator. But this takes time. So in the meantime, as a stop-gap measure, we will limit prices at TTF. We call this the market correction mechanism. Yesterday, we proposed guiding principles as a first step. On this basis, we will prepare the operational mechanism in a second step. This is concerning the price cap at wholesale level.

But gas also drives up the electricity prices. And here, the Iberian model comes into play. It really merits to be considered at EU level. There are still questions to be answered, but I want to leave no stone unturned. So let us face that, let us look at that and let us work on that.

Honourable Members,

We live in times of high economic uncertainty. And, as I said, I am concerned about the competitiveness of our economy – not only concerning the Single Market, but also concerning the global competitiveness of our economy. So, all our actions have to take this into account, all our actions have to take the competitiveness of our SMEs and our industry into account. This includes that we will introduce a standard competitiveness-check in our regulation. I think it is time to do that. In addition, we have to speed up investments all over Europe. If I speak about investment, it is infrastructure, it is energy efficiency and it is renewables.

This brings me to REPowerEU. When we proposed REPowerEU in March, keep in mind that the situation was as such: There was a huge dependency on Russian gas. At that time, we anticipated that it would take several years to replace the Russian gas. Fact is today, it took us only eight months to replace two-thirds. In other words: We have massively accelerated the diversification to other suppliers of gas from abroad. But this comes at a high price. So the actual solution to maintain our competitiveness is to invest into home-grown sources of energy, especially renewables. That has to happen in all of Europe. However, only Member States with sufficient fiscal space can undertake these critical investments. This will inevitably unlevel the playing field of our Single Market.

Therefore, we do not only need REPowerEU now, so we have to accelerate it, but we have to boost it, we have to increase its firepower. We will come with a proposal on that because it will give every Member State the same opportunity to prepare for the future. This is not only about energy, this is about our global competitiveness and it is about our sovereignty.

Long live Europe.

Many thanks.