Towards a Gas Price Cap?

The idea of a cap on gas prices is increasingly being discussed. EU energy ministers meet on September 9. They should address this issue.

Spain pleads for a cap on gas prices

Spain’s Minister of Energy Transition, Teresa Ribera, has spoken out. She announced that she had urged Spanish utilities to prepare for more restrictions from Russia.

She states:

“We have told Spanish companies and those operating in the industry that it is important to prepare and get guarantees before a potential limit to access to tankers with liquefied gas from Russia.”

As a result, Spanish companies have increased sea deliveries of LNG from Russia during the summer. Nevertheless, T. Ribera says that annual shipments will remain around 7% of imports as in previous years.

Compensating for price increases

T. Ribera also said that the European Commission had circulated proposals to the ministers. These include caps on the price paid by EU countries for Russian gas delivered by pipeline or by sea.

However, the ministers are considering various options. These include a price cap on imported gas and a price cap on gas used to generate electricity. These options also include the temporary removal of gas-fired power plants from the current EU electricity pricing system.

According to T. Ribera, the construction of a new gas pipeline linking the Spanish and French gas networks, the Midcat pipeline, will probably also be discussed.

German Chancellor Olaf Scholz last month pushed for the construction of a European gas pipeline. It would better connect the Iberian Peninsula to Europe, linking Portugal to Central Europe. It would then be one of the possible solutions to wean Europe from Russian energy dependence.

However, Emmanuel Macron said on Monday that such a pipeline was not necessary because the capacity of the two existing trans-Pyrenean pipelines was underused.