The reform of the European electricity market has become the battleground for a continent-wide class struggle. While Ursula von der Leyen’s team attempts to referee the final negotiations—the infamous “Trilogues” where laws are decided behind closed doors—soaring bills are turning the Green Deal into a social time bomb. Between protecting industrial profits and ensuring citizens’ survival, Brussels can no longer afford to make mistakes.
Why do we pay for green energy at the price of gas?
From the offices of the European Commission (the Berlaymont) to the summits where Member State ministers meet (the Council), one question haunts lawmakers: how could our pricing system, designed to protect us, have backfired so spectacularly? This issue, which European leaders have dragged like a heavy burden since the start of the war in Ukraine, exposes the flaws in the major legislation (Directive 2019/944) governing our market.
The current system relies on a rule known as the “merit order.” On paper, the logic seems sound: prioritize the use of the cheapest energy sources first, such as wind or solar. But there is a catch: to set the final price, Europe systematically aligns with the most expensive energy source needed at that moment—which is often gas.
It is a paradoxical situation: while producing green electricity becomes cheaper, your bill continues to rise whenever global gas prices soar. For officials in Brussels, the situation is untenable. They can no longer explain to citizens why their bills remain tethered to gas prices when wind turbines are spinning for free right next door.
According to our information, several countries, including Italy and Spain, have sounded the alarm: if bills do not fall sustainably, there is a risk that citizens will reject EU policies en masse at the next elections. For many, a Europe unable to protect purchasing power from financial markets loses its legitimacy. To avoid this collapse in confidence, the challenge is to impose a “decoupling” of the markets.
The idea is simple but radical: separate the price of clean electricity (wind, solar) from that of gas-generated power. By breaking this link, consumers would pay the “true price” of green energy. This revolution sends shivers down the spines of free-market advocates, who believe there should be a single price, however unfair.
The Franco-German standoff: Beyond nuclear power
As observed during recent energy ministers’ meetings, the conflict is no longer just about nuclear power, but about the survival of factories. Paris, backed by its nuclear fleet already paid for by taxpayers, demands reform so that French companies can pay for electricity at a “cost-based price.”
Conversely, Berlin fears such freedom could fragment the Single Market. The Germans worry that if France sells electricity cheaply to its own industries, German factories—burdened by higher costs due to their reliance on gas—will lose competitiveness. It is a battle to determine who will dominate the industry of tomorrow.
The fight also centers on CfDs (Contracts for Difference), a mechanism acting as a shield against speculation. The principle is a form of insurance between the State and the producer: both agree on a fixed, fair price. If the market price skyrockets, the producer pays the surplus back to the State, which can reinvest it to lower citizens’ bills. If prices collapse, the State compensates the difference to ensure production continues.
It is a powerful tool for long-term economic stability, yet it faces fierce opposition from Berlin. The German government accuses Paris of turning this shield into a disguised state subsidy for its nuclear plants, raising the specter of a “two-speed Europe” where only fiscally strong states can protect their industries.
Why is social welfare the great forgotten issue in Brussels?
The social aspect of the transition is no longer an option; it is a condition for survival. In Estonia, Poland, and Greece, energy inflation threatens the foundations of European cohesion. The carbon tax on heating and transport (ETS 2), scheduled for 2027, is already perceived as a major political risk.
The reality is stark: while EU carbon auction revenues have poured billions into national budgets, redistribution to vulnerable households remains in its infancy. The Social Climate Fund, with a budget of €86.7 billion, is deemed largely insufficient by experts at the European Economic and Social Committee (EESC). According to an internal report we have seen, this amount would need to be tripled to truly cushion the blow for the poorest 20% of EU households.
The danger is political: a total breakdown of trust between citizens and leaders. From Budapest to Madrid, populist movements are using the “cost of ecology” as a weapon to denounce a Brussels elite seen as out of touch. The clash between the “end of the month” and the “end of the world” has never been so brutal. If Europe fails to address the social emergency, it risks seeing populations turn their backs on the project for good.
The Carbon Adjustment Mechanism (CBAM): Protectionism in disguise?
Simultaneously, the EU is rolling out its Carbon Border Adjustment Mechanism (CBAM). This flagship tool aims to protect industries from imports from countries with lower environmental standards (China, Turkey, India). But there is a major stumbling block: by taxing imports of steel, aluminum, and fertilizers, the EU drives up construction and agricultural costs at home.
This “greenflation” is the challenge of the decade. Trading partners already decry it as disguised protectionism. For Brussels diplomats, it is a balancing act: defending European industry without triggering a global trade war, while ensuring costs don’t trickle down to citizens’ bills.
Towards shared sovereignty: The role of interconnections
A credible but often overlooked solution lies in accelerating cross-border interconnections. A clearer integrated market would smooth out price spikes by sharing surplus northern wind power with the south’s solar needs.
However, projects are stalling. Between red tape and “NIMBY” (Not In My Backyard) resistance, building a high-voltage line can take over a decade. Everyone wants green energy, but no one wants a pylon outside their window.
The EU must change its role: from rule-setter to builder. The REPowerEU plan (€300 billion) aims to cut ties with Russian gas by accelerating renewables. The money is there, but political will often crumbles before local opposition, leaving energy solidarity in limbo.
Key to understanding the reform
Merit Order: The current pricing rule where the most expensive plant (usually gas) sets the price for all electricity.
Green Deal: The EU roadmap to carbon neutrality by 2050.
Energy Poverty: The inability of households to access essential energy. Affects over 40 million Europeans.
Energy Mix: The breakdown of energy sources (nuclear, gas, renewables) used by a State.
The moment of decision
Europe can no longer settle for half-measures. Climate policy cannot drive the economy if it crushes social welfare. The reform of the European electricity market must reconcile three imperatives: decarbonization, security of supply, and affordability.
The Commission must show political courage: challenging market dogmas to protect the European social contract. If Brussels fails to translate technocratic jargon into purchasing power, the Green Deal will go down in history as a noble but politically suicidal ambition.
Focus
- 40 million: The number of Europeans who cannot properly heat their homes.
- Zero: The marginal cost of wind or solar energy. Yet, you pay for it at the price of gas.
- The solution: Removing energy from speculative market laws to make it a “common good”?
