EU: gas price cap divides

The EU (European Union) faces division and discontent over the proposed €275 gas cap.

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The EU (European Union) faces division and discontent over the proposed €275 gas cap.

A European debate

EU energy ministers oppose a proposal to cap gas prices at €275/MWh. They question its effectiveness. In addition, they also question its impact on supplies and incentives to reduce consumption.

In recent months, the EU has approved a series of measures to mitigate the crisis. They range from consumption savings to one-off taxes to recoup the profits of energy producers. However, the question of whether and how to cap gas prices divides the European Union.

Germany, the EU’s leading economic power, is behind the opposition. The Netherlands, Sweden, Austria and Finland, argue that a cap could shift supply elsewhere and reduce incentives to reduce consumption. However, 15 EU member states want a cap to be set in order to contain energy costs.

This proposal comes after gas prices soared to record levels last August. Indeed, the reduction of supplies from Russia to Europe is a result of Western sanctions related to Moscow’s war against Ukraine. In addition, these disagreements block other policies to mitigate the energy crisis.

Differences of appreciation

The Polish Minister of Climate, Anna Moskwa, calls the €275 project presented by the European Commission a “farce”. The Belgian Minister of Energy, Tinne Van der Straeten, also intervened. She states:

“The text that is on the table is unsatisfactory (…) it is not clear whether it will have an effect on prices.”

For the Greek minister, Konstantinos Skrekas, announces that a ceiling of 150-200 euros/MWh would be realistic. He states:

“This could help us reduce gas prices and therefore reduce electricity prices, which is a major challenge in Europe this winter.”

Malta’s energy minister, Miriam Dalli, was also unhappy with the proposed cap.

The Commission proposes to limit the price of the first month on the Dutch gas exchange TTF (Title Transfer Facility). This proposal will be made if it exceeds 275 euros/MWh for two weeks.

The launch of joint gas purchases in the EU and the acceleration of the authorization procedure for renewable energies remain on hold. According to diplomats, the 27 EU countries have agreed on the principle of these two proposals. However, they deferred formal approval to another meeting scheduled for December 13.

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