Record high power prices make case for faster green transition, EU says

BRUSSELS/LONDON, Sept 14 (Reuters) - Record high power prices in European Union countries show the bloc must wean itself off fossil fuels and speed up the transition to green energy, the EU's top climate change official said on Tuesday.

Wholesale European power prices have doubled this year, driven by factors including soaring coal and gas prices, surging CO2 prices and lower than usual renewable energy output. read more

The EU's Green Deal seeks to overhaul the bloc's economy to reach net zero greenhouse gas emissions by 2050 - a goal that will require huge investments in low-carbon power and infrastructure.

"Had we had the Green Deal five years earlier, we would not be in this position because then we would have less dependence on fossil fuels and on natural gas," European Commission Executive Vice-President Frans Timmermans told the European Parliament in Strasbourg.

Timmermans said that even as fossil fuel prices have soared, costs for renewable generation have remained low and stable.

That should encourage the EU to speed up its green transition, to ensure more citizens have access to affordable renewable energy, he said. read more

European carbon prices, which also impact the cost of electricity, have also surged to record highs this year, but Timmermans said they were not the main culprit for soaring energy costs.

"Only about one fifth of the [power] price increase can be attributed to CO2 prices rising," he said.

The EU carbon benchmark contract is trading at around 61 euros ($72.01) a tonne, not far off an all-time high set this month as more ambitious EU climate targets have helped buoy prices.

A Bank of Spain analysis published last month said that gas prices were responsible for roughly half of the recent surge in Spanish electricity prices, while carbon had caused a fifth of the power price increase. read more

To bring down soaring power costs, the Spanish government said this week it would cap gas prices, cut taxes and redirect energy company profits. It also plans to auction 3.3 gigawatts of renewable capacity, betting that building out clean energy will lower prices in the long term. L1N2QF2AC

($1 = 0.8471 euros)

Reporting by Kate Abnett and Susanna Twidale Editing by Mark Potter

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