** Check against delivery **

Good afternoon and thank you Mr Krasnodebski for your introductory remarks.

It is a pleasure to be with you today to discuss two very important topics. First, continuing our exchanges on the energy prices situation. Second, later today, I would like to present and hear your views also on the three newly adopted proposals on the hydrogen and decarbonised gas market, EPBD, and methane regulation.

But first of all, I would also like to take a moment to congratulate you and the Chairman of the ITRE Committee on your re-election to lead this important committee. Our cooperation has been so far excellent and I am looking forward to this good relationship continuing.

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To begin, on energy prices, I want to reflect on where we are at this moment.

Last December, electricity and gas prices reached a historic peak. After reaching €180/MWh, wholesale gas prices have dropped thanks to a ramp up of LNG deliveries, mild weather conditions and some demand reduction in the industrial sector. However, energy prices remain very high and markets remain very volatile amid uncertainties around geopolitical tensions.    

Overall, despite the easing price dynamics are still very volatile. Energy is expected to account for around half of the 5% total annual inflation in December 2021.

In parallel, the level of gas storage in the EU is constantly reducing, like it does during every heating season. Right now, it is around 40%. That is 10% lower than at the same time in the previous years. Half of this gap is linked to the underground storage owned by Gazprom in the EU, which is currently filled at 16%.

On top of this, we are observing some unusual patterns of pipeline gas flows to Europe. Gas flows from East to Western Europe dropped by almost half compared to the same week of the previous year. This is due to low flows on Ukrainian and Belarusian routes, which results for instance in gas flowing from Germany to Poland instead of the other way round.

This was the situation until last night. After 5 weeks, there are now flows from Poland back to Germany.

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From the security of supply point of view, this is a real challenge as well as a concern.

The past months gave us an indication of our resilience and capacity to react to diminishing gas flows from Russia. The market reaction in January, with increased imports of LNG, has showed that Europe can count on a diversified and fully functioning gas infrastructure. This has helped the market rebalance and compensate, at least in part, for lower-than-usual pipeline flows. There is still spare capacity that can be used to receive additional gas supplies, in particular through LNG terminals.

Thus, we think that the available gas stocks in the EU and our good network of LNG terminals will protect us against major security of supply problems. However, it is very important that we continue monitoring the situation, and carefully prepare at regional and national level for any scenario. In this regard, we are regularly ensuring coordination and monitoring through the Gas Coordination Group meetings with Member States. I attended the last meeting two weeks ago. It is important that all Member States work on preparedness, and review contingency plans to ensure they are fit for purpose. The Commission is conducting an assessment of the situation at European level, in liaison with the Member States and the results will be ready by mid-February.

At this juncture the political question is whether Europe is strong enough and well enough equipped to face prolonged high prices or, potentially, extremely high prices if the geopolitical situation deteriorates.

The policy response to the increased energy prices has been timely and coordinated between the EU and Member States.

The Toolbox Communication has offered a common framework for action.

So far, 23 Member States have adopted measures to protect households and companies from high prices mobilising already more than €21 billion so far to support the most hard-hit. According to our preliminary assessment, the measures taken, including some taxation and duties, benefit around 70 million household customers and several million SMEs and micro enterprises.

At the same time, ETS extra revenues have offered an additional source of funding. We calculate that in 2021, EU ETS revenues amounted to €25 billion, with an increase of €10.6 billion compared to 2020.

All of this shows that the toolbox has been useful, and remains relevant to guide our action. Building on the toolbox, we can broaden the options at our disposal and the Commission has started reflections on it.

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During the last informal meeting of energy ministers under the French Presidency two weeks ago, I had a useful exchange on the way forward with my fellow ministers. I would like to also use this meeting to hear your views on what additional measures could be envisaged. I believe we should reinforce our action on three fronts:

First, we should continue to protect those who are the most affected by the energy prices. Complementing direct support measures, stronger consumer protection can provide benefits in the short term. We should use the space under existing legislation to see that fixed price contracts for longer periods are available. Member States can also take action to ensure that consumers receive clear, timely and transparent information about both the opportunities and potential risks of dynamic price contracts.

In the longer-term, high quality information on energy efficiency, including via eco-labels, helps consumers save money, cut energy bills and alleviate energy poverty. We should ensure reliable protection against the bankruptcy of suppliers. Most Member States have established a supplier of last resort regime and it is useful to study these experiences and the space for additional measures, including hedging.

The December European Council also tasked us with deepening our analysis of how the electricity market works. ACER had already presented some areas for reflection in its November preliminary assessment and we will hear about that soon after I will end my statement.

Second, we should use this moment to push for faster deployment of renewable energy and accelerate the implementation of energy efficiency measures. The Green Deal is the solution and we need more instruments that provide price certainty for consumers of renewable energy, such as power purchase agreements. Today, they are not used to their fullest potential. We are working on pricing instruments that could help de-risk the use of PPAs, and help small and medium sized companies to be able to conclude them.

We also need to reduce the time for constructing new renewable installations. My services and I are conducting an exercise to compare best practices in authorization and permitting. And we want to present some recommendations on how to speed up the roll out of new renewable capacity soon. Here we also need to reflect on how citizens and communities can benefit more from renewables deployment. Only if they perceive their full benefits, will they buy-in to this project.  

In the field of energy efficiency, it is important to accelerate our efforts towards concrete improvements, including in the renovation of buildings.

There are a lot of activities already ongoing and many Member States have reflected that with the recovery funds they will also prioritise renovation activities.

Third, we need to ensure that our storage capacities are filled in this Spring and Summer. We cannot find ourselves again in the same situation as this Winter.

The toolbox announced a proposal reinforcing security of gas supply by improving storage and enabling joint purchase of strategic gas stocks. The Commission delivered on this promise in the December Hydrogen and Gas markets and decarbonisation package. In the current context, it would be important if the European Parliament advances rapidly in the discussion of this proposal.

In parallel, we are looking for alternative sources of gas supply, if they are necessary.

I am also engaging with partners to explore a possible expansion of supply, in particular LNG. Recently, I have visited Qatar and I am attending the Ministerial Meeting of the Southern European Gas corridor, in Baku later this week. Given the importance of transatlantic solidarity for energy security in Europe, I will travel directly from Baku to the United States and attend the EU-US Energy Council in Washington next week. This will also offer an important opportunity to continue these discussions.

This is what I wanted to set out to frame our discussion, and I look forward to hearing your views.