The energy crisis: Council info and EU publications

Electricity market reform - The Council agreed its position (general approach) on a proposal to amend the EU’s electricity market design (EMD). The aim of the reform is to make electricity prices less dependent on volatile fossil fuel prices and shield consumers from price spikes, notably by improving the way the long-term electricity market works.

EU leaders took stock of actions taken at EU level to address high energy prices, reduce gas demand, ensure security of supply and phase out dependency on Russian fossil fuels. Leaders called on the Commission and the member states to ensure preparedness and contingency planning in view of the next gas storage filling and heating seasons. They urged all stakeholders to make full use of the EU Energy Platform to further improve the security of gas supplies at affordable prices. The European Council invited the Commission to promptly finalise the assessment of the emergency measures adopted in 2022 and, where necessary, to propose the extension of their application.

Energy prices : EU energy ministers reached a political agreement on a proposal for a Council Regulation establishing a market correction mechanism to protect citizens and the economy against excessively high gas prices. The Regulation is a temporary emergency measure that aims to limit episodes of excessive gas prices that do not reflect world market prices, while ensuring security of energy supply and the stability of financial markets.

EU energy ministers discussed a proposal for a Council Regulation establishing a market correction mechanism to protect citizens and the economy against excessively high prices. The Council will seek a political agreement on the proposal at the next Energy Council on 19 December.

EU energy ministers agreed on the content of a Council regulation on enhancing solidarity through better coordination of gas purchases, exchanges of gas across borders and reliable price benchmarks. The objective of this regulation is to make the European energy purchase platform operational by setting temporary rules on demand aggregation and joint purchasing on global markets, reliable benchmarks for LNG, gas price volatility management and cross-border solidarity measures.

The Commission presented to ministers its proposal for a Council Regulation on 'Enhancing solidarity through better coordination of gas purchases, exchanges of gas across borders and reliable price benchmarks’, adopted on 18 October 2022. Ministers then exchanged views on the proposal, in light of the European Council conclusions adopted on 21 October 2022, and a non-paper issued by the Commission on policy options to mitigate the impact of natural gas prices on electricity bills in order to give political guidance to the work of the Council.

On 20-21 October 2022, the European Council adopted conclusions on Ukraine/Russia, critical infrastructure, energy and economy, and external relations. The European Council discussed the energy crisis and agreed on the need to accelerate and intensify efforts to reduce energy demand, avoid rationing, secure supply and lower prices. Leaders stressed that the integrity of the single market had to be preserved.

EU energy ministers reached a political agreement on a proposal for a Council regulation to address high energy prices. The regulation introduces common measures aiming to lower energy prices and redistribute the energy sector's surplus revenues to final customers. These are:
- reducing electricity use ;
- capping revenues of electricity producers ;
- securing a solidarity contribution from fossil fuel businesses.

During the extraordinary Energy Council, EU energy ministers held two exchanges of views on the energy situation in the EU. They discussed measures to mitigate high energy prices. The discussion conveyed four main areas in which the member states expect the Commission to act. These include capping the revenues of electricity producers that face low production costs; a possible price cap on gas; measures for a coordinated electricity demand reduction across the EU; measures that would help to solve the issue of decreased liquidity.

Referring to the Versailles Declaration and recent European Council conclusions, EU leaders reiterated the invitation to the Commission to explore with international partners ways in which to curb rising energy prices, including the feasibility of introducing temporary price caps where appropriate. In the face of the weaponisation of gas by Russia, the European Council invited the Commission to urgently pursue efforts to secure energy supply at affordable prices. The European Council also invited the Council, together with the Commission, to take any appropriate measures to ensure closer energy coordination between EU member states.

The European Council adopted conclusions on Ukraine, food security, security and defence and energy.
Taking account of the EU member states’ different energy mixes, conditions and circumstances, EU leaders reviewed progress on the phasing out of Russian gas, oil and coal imports, which should take place as soon as possible as agreed in the Versailles Declaration.

During the extraordinary meeting, ministers exchanged views on the energy situation in the EU in the context of the war in Ukraine and the recent suspension of gas deliveries by Gazprom to some EU member states. They discussed the EU's level of preparedness in the event of a supply crisis and possible emergency and solidarity measures. They also recalled solidarity with Ukraine.

EU leaders consider measures to mitigate energy price impacts and secure energy supply
The European Council addressed the impact of increased energy prices and discussed possible options to mitigate it, based on the proposals presented by the Commission on 23 March 2022.
Leaders discussed:
- market measures
- gas storage and common fuel purchases
- short-term measures to alleviate impacts on citizens and businesses

At an informal meeting of heads of state or government, EU leaders discussed how to ensure security of energy supplies, in the light of the situation in Ukraine as well as the 2050 target of climate neutrality. Leaders agreed to phase out EU dependency on Russian fossil fuels and invited the European Commission to propose, by the end of May 2022, a REPowerEU plan to this effect. They also called on the Commission to put forward a plan to ensure security of supply and affordable energy prices by the end of March 2022 and expressed the intention to discuss options for addressing the impact of increased energy prices on citizens and businesses, especially vulnerable citizens and SMEs.

EU energy ministers met in Brussels to exchange views on the energy situation in Ukraine and Europe following the Russian invasion.

The European Council held a special meeting on 24 February to address the situation arising from the Russian invasion of Ukraine.
In addition to condemning Russia's aggression and expressing full unity with international partners and full solidarity with Ukraine, EU leaders called on the Commission to put forward contingency measures to address the energy market situation.

The European Council addressed the recent spike in energy prices and considered the impact of these price rises on citizens and businesses, especially those striving to recover from the COVID-19 pandemic. EU leaders noted that the toolbox presented by the Commission contained useful measures for both the short and the longer term.

The regulation is a temporary emergency measure that aims to limit episodes of excessive gas prices that do not reflect world market prices, while ensuring security of energy supply and the stability of financial markets.

The Regulation on an emergency intervention to address high energy prices was adopted on 6 October 2022.

The new Regulation on coordinated demand-reduction measures for gas entered into force on 9 August after adoption on 5 August by the Council.

This regulation on gas storage is requiring Member States to fill in at least 80 % of their storage capacity by 1 November 2022 .

The Council has adopted by written procedure three emergency Council regulations as regards the prolongation of their period of application, under article 122 of the Treaty on the Functioning of the European Union, designed for emergency situations. The emergency measures were adopted last year following Russia’s war of aggression against Ukraine in order to enhance solidarity between member states, accelerate the deployment of renewable energy and protect EU citizens from excessively high energy prices.

Ministers have reached a political agreement on extending the period of application of three emergency Council regulations adopted under article 122 of the Treaty on the Functioning of the EU, designed for emergency situations. The emergency measures were adopted last year due to Russia’s war of aggression against Ukraine, in order to enhance solidarity between member states, accelerate the deployment of renewable energy and protect EU citizens from excessively high energy prices.

Russia’s full scale invasion of Ukraine caused severe spikes in energy prices across the EU in 2022. To avoid price shocks in the future, the EU is reshaping its electricity market.

The Council and the Parliament have reached a provisional agreement to reform the EU’s electricity market design (EMD). The reform aims to make electricity prices less dependent on volatile fossil fuel prices, shield consumers from price spikes, accelerate the deployment of renewable energies and improve consumer protection. The proposal is part of a wider reform of the EU’s electricity market design, which also includes a regulation focused on improving the EU’s protection against market manipulation through better monitoring and transparency (REMIT). A provisional agreement on REMIT was reached on 16 November 2023.

The Council reached an agreement (general approach) on a proposal to amend the EU’s electricity market design (EMD). This will allow the Council presidency to start negotiations with the European Parliament to reach a final agreement. The reform aims to make electricity prices less dependent on volatile fossil fuel prices, shield consumers from price spikes, accelerate the deployment of renewable energies and improve consumer protection. The proposal is part of a wider reform of the EU’s electricity market design which also includes a regulation focused on improving the Union’s protection against market manipulation through better monitoring and transparency (REMIT).

Europe is experiencing an unprecedented energy crisis. EU countries are working together to address high prices and secure energy supplies for Europeans.

This page looks back at the calendar of Council meetings that have resulted in important measures to address the energy crisis.

See the section of this page on energy prices and security of supply.
Russia's unjustified and unprovoked war against Ukraine has highly impacted energy markets. EU countries are closely coordinating actions to tackle rising prices and scarcity of supplies.

With REPowerEU the EU wants to end its dependence on Russian fossil fuels by saving energy, diversifying supplies and accelerating the clean energy transition.

EU energy ministers reached a political agreement on a Council regulation that sets a market correction mechanism to protect citizens and the economy against excessively high prices. The regulation aims to limit episodes of excessive gas prices in the EU that do not reflect world market prices, while ensuring security of energy supply and the stability of financial markets.

The Council reached an agreement (general approach) on targeted amendments to the renewable energy directive, proposed under the REPowerEU plan. Member states will design dedicated ‘go-to areas' for renewables with shortened and simplified permitting processes in areas with lower environmental risks. The Council confirmed the target of at least 40% of the share of energy from renewable sources in 2030 in the Union’s gross final consumption, as set in its general approach on the revisions of renewable energy directive, adopted in June 2022.

The EU is accelerating the end of its dependence on Russian fossil fuel imports. Negotiators of the Council and the European Parliament have reached a provisional agreement on the REPowerEU proposal which aims to strengthen the strategic autonomy of the Union by diversifying energy supplies and boosting the independence and security of the Union’s energy supply. The agreed text is subject to approval by the Council and the European Parliament before undergoing the formal adoption procedure.
In practical terms, member states will be able to add a new REPowerEU chapter to their national recovery and resilience plans (RRPs) under NextGenerationEU, in order to finance key investments and reforms which will help achieve the REPowerEU objectives.

EU energy ministers today agreed on the content of the proposal for a Council regulation on further temporary emergency measures to contain high energy prices and improve security of supply. The new measures will improve solidarity in case of a real emergency and gas supply shortage, ensure a better coordination of joint gas purchases, limit volatility of gas and electricity prices, and set reliable gas price benchmarks.

The European Council has agreed that in light of the ongoing crisis, efforts to reduce demand, to ensure security of supply, to avoid rationing, and to lower energy prices for households and businesses across the Union need to be accelerated and intensified, and the integrity of the Single Market has to be preserved. The European Council calls on the Council and the Commission to urgently submit concrete decisions on the following additional measures, as well as on the Commission proposals, having assessed their impact notably on existing contracts, including the non-affectation of long-term contracts, and taking into account the different energy mixes and national circumstances

Ministers responsible for energy met in Prague. The discussions were aimed at clearly defining the European Commission's legislative proposals regarding joint purchases of gas or possible price capping.

EU member states today formally adopted a Council Regulation on an emergency intervention to address high energy prices. The regulation introduces common measures to reduce electricity demand and to collect and redistribute the energy sector's surplus revenues to households and small and medium-sized enterprises. The adoption of the regulation by written procedure follows a political agreement reached by EU energy ministers in the extraordinary Energy Council on 30 September 2022.

The Council agreed its position (general approach) on the REPowerEU proposal, a plan to phase out the Union’s dependency on Russian fossil fuel imports. It aims to strengthen the strategic autonomy of the Union by diversifying energy supplies and boosting the independence and security of the Union’s energy supply. In practical terms, the proposal seeks to add a new REPowerEU chapter to EU member states’ national recovery and resilience plans (RRPs) under NextGenerationEU, in order to finance key investments and reforms which will help achieve the REPowerEU objectives.

EU energy ministers today reached a political agreement on a proposal for a Council Regulation to address high energy prices. The regulation introduces common measures to reduce electricity demand and to collect and redistribute the energy sector's surplus revenues to final customers.

In an effort to increase EU security of energy supply, member states today reached a political agreement on a voluntary reduction of natural gas demand by 15% this winter. The Council regulation also foresees the possibility to trigger a ‘Union alert’ on security of supply, in which case the gas demand reduction would become mandatory. The purpose of the gas demand reduction is to make savings ahead of winter in order to prepare for possible disruptions of gas supplies from Russia that is continuously using energy supplies as a weapon.

The Council has definitively adopted a regulation aiming to ensure that gas storage capacities in the EU are filled before the winter season and can be shared between member states in a spirit of solidarity, despite the disruptions in the gas market. This is an important step in strengthening the security of the EU’s energy supply in the context of the war in Ukraine.

An important step to improve EU security of supply in the context of the war in Ukraine was taken today with the provisional political agreement reached between the Council and the European Parliament on the legislation on gas storage. The proposed regulation aims to ensure that storage capacities in the EU are filled before the winter season and can be shared between member states in a spirit of solidarity.

The Council today reached a mandate for negotiations with the European Parliament on a proposal on gas storage. In order to improve EU security of supply in the current geopolitical context, the proposal aims to ensure that gas storage capacities in the EU are filled before the next winter season and can be shared between member states in a spirit of solidarity. The mandate was agreed by the representatives of the member states in Coreper.

In December 2022, Council and Parliament negotiators reached a provisional agreement on a revision of the RRF regulation. The amendments enable member states to add specific REPowerEU chapters to their recovery and resilience plans to finance investment and reform measures in line with the objectives of the REPowerEU plan. The Council formally adopted the new rules in February 2023.

While the EU remains dependent on imports of fossil fuels, it is continuously diversifying its gas suppliers. Russia’s unjustified and unprovoked invasion of Ukraine and weaponisation of energy has put diversification of supply even higher on the EU’s agenda. Despite the fact that diversification is a lengthy and costly process that requires investment in infrastructure (new pipelines, LNG terminals, etc.), the results are already visible.

EU countries have agreed on a market correction mechanism which will limit episodes of extraordinarily high gas prices in the EU and thus reduce the impact of price hikes on citizens and the economy. A price ceiling for gas transactions will be applied when and if gas prices reach exceptional levels.

Further urgent measures are necessary to secure energy supply at affordable prices in the EU. They will complement the earlier measures swiftly adopted by the Council in recent months to tackle the unprecedented energy crisis. The new rules aim to enhance solidarity among EU countries by allowing them to buy gas together and ensuring gas supplies are shared across the EU. Measures are also being taken to reduce gas price fluctuations. Following the Commission’s proposal presented in October 2022, EU countries agreed on the content of the measures at the extraordinary Energy Council on 24 November 2022.

Energy prices have hit all-time highs in 2022, especially as a consequence of Russia’s unjustified invasion of Ukraine and its use of gas supplies as a weapon of war. The wholesale price of electricity in the EU’s internal market is directly linked to the price of gas – which is mostly imported. The deliberate reduction of gas supplies by Russia is the main cause of the recent skyrocketing gas prices in the EU, which have impacted the price of electricity produced in gas-fired power plants and affected electricity prices overall.

The price of energy in the EU has reached record levels in 2022. The rise, linked to the increase of wholesale energy prices globally, started back in 2021 in the wake of the COVID-19 pandemic and growing international demand. The Russian invasion of Ukraine and climate conditions have had an aggravating effect.

Importing liquefied natural gas (LNG) is one of the ways to diversify the suppliers and routes the EU is using to obtain natural gas. It has become especially important in the context of the Russian invasion of Ukraine and the EU’s plan to reduce dependence on Russian gas imports.

One of the measures which the EU member states agreed on is to increase gas reserves in the short term, in order to secure sufficient supply for Europeans. The Commission has presented a proposal to ensure that storage capacities in the Union are filled before the colder months and can be shared across the Union, in a spirit of solidarity. The Council adopted the regulation in June 2022.

In this report, the European Commission looks back on the EU response to the unprecedented energy crisis of the past two years, assesses the state of play with the green transition at national, European and global level, and sets out the challenges and opportunities ahead as Europe pursues its ambitious climate and energy goals for 2030 and 2050. The Report shows how the EU responded collectively and effectively to Russia's aggression in Ukraine and weaponisation of its energy supplies, by accelerating the clean energy transition, diversifying supplies and saving energy.

The Commission has proposed to reform the EU's electricity market design to accelerate a surge in renewables and the phase-out of gas, make consumer bills less dependent on volatile fossil fuel prices, better protect consumers from future price spikes and potential market manipulation, and make the EU's industry clean and more competitive. The EU has had an efficient, well-integrated electricity market for over twenty years, allowing consumers to reap the economic benefits of a single energy market, ensuring security of supply and stimulating the decarbonisation process. The energy crisis spurred by Russia's invasion of Ukraine has underlined the need to quickly adapt the electricity market to better support the green transition and offer energy consumers, both households and businesses, widespread access to affordable renewable and non-fossil electricity.

A large majority of EU citizens are positive about recent EU actions to tackle the energy crisis. In particular, more than eight in ten EU citizens (82%) agree that the EU should continue to take actions to reduce its dependency on Russian fossil fuels. An overwhelming majority of respondents (83%) think that Russia’s war against Ukraine makes it more urgent to invest in renewable energy. 87% of them believe that it is crucial to protect critical infrastructure such as pipelines and internet cables, while 83% also agree that the price of electricity should not depend on the price of gas.

This website deals with the EU response to the surge in energy prices and implementation of the REPowerEU plan.

The website REPowerEU: affordable, secure and sustainable energy for Europe, provides further details about the plan and its actions.

The platform will play a key role in pooling demand, coordinating infrastructure use, negotiating with the international partners and preparing for joint gas and hydrogen purchases.

The Commission continues its response to the ongoing energy crisis by proposing a Market Correction Mechanism to protect EU businesses and households from episodes of excessively high gas prices in the EU. This complements measures to reduce gas demand and ensure security of supply through diversification of energy supplies. The new mechanism aims to reduce the volatility on European gas markets while safeguarding the security of gas supply.

The ongoing energy crisis requires immediate and targeted action to speed up the REPowerEU Plan. On 20 and 21 October 2022, the European Council called for a fast-tracking of permitting procedures to accelerate the rollout of renewables. REPowerEU already proposed measures to address the lengthy and complex administrative procedures that are an obstacle to the speed and scale of investment in renewables and related infrastructure. However, the situation on the energy markets has worsened since then, prompting the need for urgent measures.

The Commission is proposing a new emergency regulation to address high gas prices in the EU and ensure security of supply this winter. This will be done through joint gas purchasing, price limiting mechanisms on the TTF gas exchange, new measures on transparent infrastructure use and solidarity between Member States, and continuous efforts to reduce gas demand.

Enhancing solidarity through better coordination of gas purchases, exchanges of gas across borders and reliable price benchmarks.

On 23 March 2022, the European Commission adopted a Temporary Crisis Framework to enable Member States to use the flexibility foreseen under State aid rules to support the economy in the context of Russia's invasion of Ukraine. The Temporary Crisis Framework complements the ample possibilities for Member States to design measures in line with existing EU State aid rules. For example, EU State aid rules enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid.

The Commission is proposing an emergency intervention in Europe's energy markets to tackle recent dramatic price rises. The EU is confronted with the effects of a severe mismatch between energy demand and supply, due largely to the continued weaponisation by Russia of its energy resources. To ease the increased pressure this puts on European households and businesses, the Commission is now taking a next step in tackling this issue by proposing exceptional electricity demand reduction measures, which will help reduce the cost of electricity for consumers, and measures to redistribute the energy sector's surplus revenues to final customers.

The proposed set of emergency measures is a response to the urgent priority of shielding EU consumers from higher energy prices this winter. The proposed emergency intervention represents a further step of the Commission's work on price mitigation tools, which started last October and continued over the past year.

New storage legislation adopted today will strengthen the EU's security of gas supply in view of the upcoming and next winters. Faced with the threat of supply disruptions by Russia, the EU Gas Storage Regulation requires that Europe's gas reserves are refilled before the winter, and their management protected from outside interference. In particular, the new rules will require the EU Member States to fill storage facilities to 80% of capacity by November this year – and to 90% in the years after.

The European Commission has today presented the REPowerEU Plan, its response to the hardships and global energy market disruption caused by Russia's invasion of Ukraine. There is a double urgency to transform Europe's energy system: ending the EU's dependence on Russian fossil fuels, which are used as an economic and political weapon and cost European taxpayers nearly €100 billion per year, and tackling the climate crisis.

REPowerEU is about rapidly reducing our dependence on Russian fossil fuels by fast forwarding the clean transition and joining forces to achieve a more resilient energy system and a true Energy Union.

Following up rapidly on the REPowerEU Communication and the Versailles Declaration, the Commission has set out ideas today for collective European action to address the root causes of the problem in the gas market and ensure security of supply at reasonable prices for next winter and beyond. Leaders will continue the discussion on these options at this week's European Council.

The European Commission has today proposed an outline of a plan to make Europe independent from Russian fossil fuels well before 2030, starting with gas, in light of Russia's invasion of Ukraine. This plan also outlines a series of measures to respond to rising energy prices in Europe and to replenish gas stocks for next winter. Europe has been facing increased energy prices for several months, but now uncertainty on supply is exacerbating the problem. REPowerEU will seek to diversify gas supplies, speed up the roll-out of renewable gases and replace gas in heating and power generation. This can reduce EU demand for Russian gas by two thirds before the end of the year.

The Commission adopted today a Communication on Energy Prices, to tackle the exceptional rise in global energy prices, which is projected to last through the winter, and help Europe's people and businesses. The Communication includes a “toolbox” that the EU and its Member States can use to address the immediate impact of current prices increases, and further strengthen resilience against future shocks.

Communication published by the European Commission on 13 October 2021, aimed at addressing the rise in global energy prices.

The proposed reform of the electricity market design maintains crucial elements of the existing system to ensure continued efficient operation. The impact that changing the rules on longer-term contracts will have on consumer prices and investment will depend on the concrete language of proposed legislation as well as its ultimate implementation. Overall, neither the expected mode of impact of individual reform elements, let alone their interaction, is clearly spelled out by the legislators. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Industry, Research and Energy (ITRE).

In response to Russia's invasion of Ukraine in February 2022, the EU took immediate action to stem rising energy prices and secure energy supply to its Member States. In its communication on the REPowerEU plan from March 2022, the European Commission proposed that the Member States use joint purchasing, collecting of orders and matching of supply and demand to support gas storage refilling operations. The Commission also proposed a 'joint European platform' to lead bilateral negotiations with major gas producers. Accordingly, the EU Energy Platform was established on 7 April 2022, initially on the basis of a European Council mandate. The legal basis for the platform is Council Regulation (EU) 2022/2576 of December 2022, which lays down the rules for the joint purchasing mechanism. The latter is to remain in operation for 1 year as of the moment the document enters into force and the service provider in charge of the joint purchasing mechanism is selected. The EU Energy Platform aims to ensure security of supply by purchasing natural gas, LNG and hydrogen for the Member States jointly and at affordable prices, after aggregating their demand (at least 15 % of the Member States' storage filling obligations are subject to demand aggregation).

The European Commission has adopted a proposal to improve the functioning of EU gas markets during the current energy crisis. It introduces a joint purchasing tool, seeks to improve efficiency and security of gas supply, and limits prices and volatility. The proposed Council regulation is under discussion among EU Member States.

Parliament advocates more emergency measures to ease the pressure of rapidly rising energy prices on European households and businesses.

On 30 September 2022, the Council of the European Union agreed an urgent regulation to address the problem of very high energy prices in the EU. The Council regulation would raise revenues for Member States to compensate energy consumers for rising prices. Firstly, Member States would receive the excess revenues of electricity generators that rely on cheaper 'inframarginal' energy technologies. These companies are obtaining windfall revenues from high electricity prices caused by the exceptional rise in gas prices, rather than from any increases in their own cost of production. Under the marginal pricing model, high gas prices are largely setting electricity prices across the EU. Secondly, fossil fuel producers in the EU would be subject to a solidarity contribution on their excess profits, at a rate of at least 33 % across the EU. These revenue-raising measures are accompanied by a voluntary target to reduce electricity consumption by 10 % and a mandatory target to reduce peak electricity demand by 5 %.

Since Russia invaded Ukraine, Europe has found itself in an energy crisis. Skyrocketing gas and electricity prices, coupled with energy supply concerns, have obliged the European Union (EU) to take action to mitigate the situation. Reducing energy consumption is seen as one of the key measures the EU Member States can take to reduce energy bills and tackle supply issues. It can help them reduce their energy import dependency and prepare for a winter of possible gas supply disruptions. It can also help the EU reach its climate goals in line with the European Green Deal. The EU has taken a number of steps both to align its policies with more ambitious climate goals and to boost energy independence.

The Russian invasion of Ukraine in February 2022 has triggered serious concerns about EU energy security. The problem is particularly acute in the gas sector, where Russia is the leading third-country supplier, on which several Member States are heavily dependent. To ensure the EU is prepared for the risk of an interruption of gas supplies next winter, the Commission has proposed an urgent regulation on gas storage, requiring Member States to: fill in at least 80 % of their storage capacity by 1 November 2022 (rising to 90 % in subsequent years); carry out the certification of all gas storage system operators; and provide a 100 % tariff discount on entry and exit points into gas storage. The Commission proposed that this urgent regulation be agreed under an expedited procedure by the Parliament and the Council, so that it could start taking full effect from summer 2022.

Much research has documented how changes in supply and demand for commodities cause price fluctuations, with subsequent effects on the global economy. This paper puts the recent energy price surge in perspective amid geopolitical developments and supply disruptions, and analyses the effects for global activity and inflation, focusing in particular on Europe. It highlights the importance of inflation expectations for transmitting energy shocks to inflation, analyses to what extent such energy shocks can have a significant long lasting effect on actual inflation, and discusses the new monetary policy challenges in the wake of the current situation.

Record-high energy price increases at the end of 2021 and beginning of 2022 put significant pressures on the purchasing power of consumers. These increases followed a marked decline in energy prices at the onset of the coronavirus (COVID-19) pandemic. While the initial rise in energy prices was mainly driven by the recovery in energy demand following the easing of lockdown measures after the first wave of the pandemic, the subsequent price rally during 2021 was also significantly affected by supply-side issues. This development was aggravated in early 2022 by the Russian invasion of Ukraine.