Brussels Edition: Energy emergency

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union

EU energy ministers are set for another spat over how to cushion consumers and companies from soaring power and natural gas prices. At an emergency meeting in Luxembourg today, several countries will call for the EU to come up with new intervention tools, reflecting their varying energy sources and industrial strengths. Spain and Greece are advocating for a common platform to purchase natural gas. France is urging a review of how the power market is designed, while Poland wants immediate changes to the EU carbon market to curb speculation. At the other end of the spectrum, a group including Austria, Germany, Denmark and the Netherlands is poised to argue that the increase is temporary and shouldn’t lead to hasty changes to energy laws or ambitious climate reforms. Such divisions do little to assuage concerns over potential energy blockades to other countries as winter nears.

— Katharina Rosskopf

What’s Happening
Easy on Banks
| The EU plans to soften the blow to banks from new capital rules, according to a draft proposal we’ve seen, anticipating that an easier stance will allow lenders to keep funding a recovering economy. In implementing the Basel III global banking standards, the Commission will include flexibility on several issues banks had lobbied for, but stops short of allowing banks to retain wide-ranging freedom to assess loan risk. 

COP Warmup | EU climate chief Frans Timmermans is set to meet China’s special envoy Xie Zhenhua in London tomorrow in what will be a warmup before UN talks in Glasgow starting Sunday. The stakes are high. China still hasn’t delivered its revised emission-cutting plan and hopes for a coal phaseout aren’t as high as they were. Here’s our Big Take on Chinese companies’ huge pollution problem.

Nuclear Talks | Iran and the EU will hold talks tomorrow designed to clear the way for a wider diplomatic push to revive the 2015 nuclear deal, the Islamic Republic’s lead negotiator said. Deputy Foreign Minister Ali Bagheri Kani said he’ll meet Enrique Mora in Brussels, adding that other signatories to the accord should “call out” the U.S. on its sanctions record.

Rate Skeptics | Financial markets have stubbornly ignored recent warnings from European Central Bank figures, including Chief Economist Philip Lane, that they’re wrong to anticipate a rate hike at the end of next year. Bank officials have some convincing to do this week about their commitment to rock-bottom interest rates. 

Conditional Extension | Italy may have to weigh potential divestments or other changes to satisfy EU regulators if it extends a deadline to sell off Monte Paschi beyond this year. An extension changes the terms Italy agreed to when it won EU support to recapitalize the troubled lender in 2017. Take a look at how Italy’s latest money pit is getting deeper.

In Case You Missed It
Dodge the Bullet | President Recep Tayyip Erdogan dropped his demand for 10 Western ambassadors to be expelled from Turkey, deescalating a diplomatic row that had shaken the lira and was set to bring Ankara’s ties with key partners to the brink of collapse. “Our intention is never to cause a crisis,” he said in televised comments after a cabinet meeting yesterday.

Brexit Deadlock | The U.K. said EU proposals to resolve post-Brexit economic disruption in Northern Ireland “don’t go far enough,” as the two sides remain deadlocked in negotiations which could end in a trade war. “The gaps between us remain significant,” Brexit minister David Frost told a parliamentary committee yesterday. The two sides restart talks in London today.

Tesla Wins | Tesla’s Model 3 was the top-selling vehicle in Europe last month, the first time an electric car has outsold rival models with combustion engines. Taking the monthly sales crown is a major milestone for EVs. It’s also the first time a car made outside of Europe has claimed the region’s top spot. Read more. 

Italian Power | Italy generates far less of the energy it requires than its European peers, producing under 24% of gross domestic consumption, compared with an EU average of 42.5%. That puts the country 24th among the 27 EU states in terms of energy self-sufficiency, according to the Commission’s latest energy balance figures. However, Italy scores slightly better than the EU average when it comes to renewable energy. 

Poland Backpedaling | Poland sought to assuage outrage after Prime Minister Mateusz Morawiecki said the EU could start “the third world war” by withholding access to funds in a dispute over democratic values. In a Financial Times interview published yesterday, the Prime Minister said the EU was holding a “gun to our head.” Cabinet spokesman Piotr Muller now said the comments were “hyperbole” and shouldn’t be taken literally.

Chart of the Day

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Few people in Germany support issuing a digital euro, with around 13% in favor and 56% against such plans, according to a Bundesbank survey published yesterday. Around three-quarters of the skeptics said they were satisfied with existing payment methods, suggesting that the ECB hasn’t managed to convey the benefits to the wider public. The institution has said it may launch a digital euro around the middle of this decade.


Today’s Agenda
All times CET.

  • 1:45 p.m. EU vice presidents Margrethe Vestager and Valdis Dombrovskis speak to parliament members about trade and transatlantic relations
  • EU energy ministers hold emergency meeting in Luxembourg to discuss price spikes 
 
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