European Official: Reducing Reliance on Fossil Fuels is the Structural Solution to Energy Price Crisis

Brussels, Oct 8 (KUNA) -- European Commission Commissioner for Economy and Financial Affairs Valdis Dombrovskis said on Thursday that reducing Europe’s reliance on fossil fuels is the only structural solution to address the fallout from the energy price shock that began outside the continent’s borders. Speaking at a press conference after a Eurogroup meeting, Dombrovskis noted that the European economy has so far shown resilience to the repercussions of the energy price crisis, but price pressures could persist in the short term as winter sets in. He explained that over recent months, the European Commission had put forward proposals aimed at cutting dependence on fossil fuels and strengthening energy security, including expanding the scope of flexibility available under the “national escape clause” related to defense to cover measures enhancing energy security. He added that the Commission had positively assessed Greece’s and Italy’s requests to benefit from this expanded flexibility. Dombrovskis stressed that short-term measures to mitigate the impact of rising energy prices should be targeted specifically at the most vulnerable groups, warning that broad-based measures would be financially costly and would simultaneously boost energy demand and prices, thereby failing to provide the intended support to those in need. He called on member states to adhere to the medium-term structural fiscal targets of their plans and to use the flexibility available under the expanded national escape clause prudently, noting that the EU’s new financial framework already includes various flexibility elements to address current conditions in a balanced manner. He emphasized that the European Union cannot continuously create new financial flexibilities, cautioning that doing so could undermine collective commitment to the rules-based financial framework, given that credibility in fiscal sustainability is of paramount importance. He clarified that improving budget composition and enhancing spending efficiency could yield significant fiscal gains, noting that better budget composition could generate savings of up to 3 percent of GDP, while increased spending efficiency could add 1.5 percent of GDP over the medium term. (End) Arn / M.M.J