Greece proposes EU-wide mechanism on rising energy costs

Greece has proposed an EU-wide mechanism for hedging against steep gas price fluctuations to help households tackle rising energy prices across the bloc. Gas prices have surged so far this year as world economies are recovering from the coronavirus pandemic and global demand is picking up much faster than supply.

EU leaders will discuss this week whether the spike requires a coordinated response. In a joint letter to the head of euro zone's finance ministers, Paschal Donohoe, Greek finance and energy ministers called on the European Commission to consider setting up an EU-wide fund for hedging against gas price spikes.

The mechanism could draw funds from advance payments of carbon emission allowances that would be allocated to EU countries based on their heating and power consumption and on their gross domestic product per capita, Greek Finance Minister Christos Staikouras and Energy Minister Kostas Skrekas said in the joint letter. The Greek proposal also includes auctioning of additional allowances of carbon emissions through the EU's emissions trading system, which would produce extra revenues for EU countries to help them fund compensating schemes for consumers in the winter season.

"The unprecedented spike in gas prices, and by extension in electricity prices, is a major challenge for all EU Member States that cannot be dealt with, solely, at the national level," the letter said. Greece said European consumers could face an additional energy cost of 100 billion euros ($115.98 billion) in the upcoming winter.

European Union leaders will discuss later in October the idea of setting up an EU strategic gas reserve and the decoupling of electricity prices from gas prices, the head of the European Commission Ursula von der Leyen said on Tuesday. ($1 = 0.8622 euros)

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