EU Faces Divisions Over How to Cut Energy Prices
European leaders are preparing to debate new ways to lower electricity prices at a summit later this month, as governments face growing pressure from industry over high energy costs.
Among the options being discussed are proposals to further decouple electricity prices from gas markets and address the growing number of periods with negative power prices — when electricity supply is so high that producers effectively pay consumers to take power from the grid.
The debate has gained urgency as geopolitical tensions push up energy costs. Following the escalation of conflict in the Middle East, gas-fired electricity prices in the EU have risen by around 51%, highlighting the risks of relying heavily on imported fossil fuels.
However, divisions are emerging among member states over whether Europe’s electricity market should undergo major reform.
Seven EU countries, including the Netherlands and Sweden, have warned the European Commission against interfering with the current system that sets wholesale electricity prices. They argue that the existing market structure helps attract investment in new energy projects and that significant changes could create uncertainty.
Instead, those governments say the EU should focus on expanding renewable energy, strengthening electricity grids and reducing dependence on imported fuels to bring prices down over time.
Italy has taken a different approach. Prime Minister Giorgia Meloni has called for changes to the European Union Emissions Trading System, arguing that the bloc’s carbon market has become an increasing burden on businesses.
Speaking after approving a national decree aimed at cutting energy bills, Meloni said Italy wants to separate the cost of carbon allowances from the price of renewable electricity such as hydro and solar power. She described the move as a “courageous structural choice” designed to improve the competitiveness of European industry, though it would require approval from the European Union.
The debate highlights the complex challenge facing the EU as it tries to balance climate targets, energy security and industrial competitiveness while keeping power affordable for households and businesses.