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EU nations work on rift over gas price cap as cold sets in

On winter’s doorstep, European Union nations have not been able to surmount bitter disagreements as they struggle to effectively shield 450 million citizens from massive increases in their natural gas bills as cold weather sets in.

An emergency meeting of energy ministers on Thursday only shows how the energy crisis tied to Russia’s war in Ukraine has divided the 27-nation bloc in almost irreconcilable blocs.

A massive August spike in natural gas prices stunned all but the wealthiest in the EU, forcing the bloc to look for a cap to contain volatile prices that are fuelling inflation. Following several delays, energy ministers are back trying to break a deadlock between nations that are demanding cheaper gas to ease household bills – including Greece, Spain, Belgium, France and Poland – and those like Germany and the Netherlands that are insisting a price cap could cut supplies.

A solution was nowhere near the horizon – to the frustration of many.

“It’s already minus 10 (degrees Celsius) in Poland,” said the nation’s energy minister, Anna Moskwa. “It’s winter now.”

Natural gas and electricity prices have soared as Moscow has slashed gas supplies to Europe used for heating, electricity and industrial processes. European officials have accused Russia of energy warfare to punish EU countries for supporting Ukraine.

So finding a deal is not only about providing warmth to citizens, but also about showing a united front to Russian President Vladimir Putin.

Talks have dragged on for months, and even if a summit of EU leaders proclaimed some sort of breakthrough last month, nothing has been visible on the ground. Nations had been waiting for a proposal from the European Commission, the EU’s executive arm, to set a threshold for a price cap, and when it came on Tuesday, there was dismay and accusations it could never work.

The commission set a threshold for a “safety price ceiling” to kick in if prices exceed EUR275 per megawatt-hour for two weeks, and if they are EUR58 higher than the price for liquefied natural gas, or LNG, on world markets.

In political language, it means that such a system might not even have averted hikes as high as in August.

“Setting a ceiling at EUR275 is not actually a ceiling,” said Greek Energy Minister Konstantinos Skrekas, who called for a cap that could go as low as EUR150.

“We are losing valuable time without results,” he added.

In comparison, the price stood at EUR125 per megawatt-hour on Europe’s TTF benchmark on Thursday. Since the price has fallen from the summertime peaks, diplomats have said the urgency has abated somewhat, even though it could pick up quickly again if the weather is colder than normal and supplies get tight.

Some 15 nations are united around these views, but Germany and the Netherlands lead another group wanting to ensure that gas-supply ships would not bypass Europe because they could get better prices elsewhere.

“Security of supply is paramount. Europe still has to be an attractive gas market,” Estonian Economy Minister Riina Sikkut said.

No decisive breakthrough was expected out of Thursday’s meeting.

Czech Industry Minister Jozef S?kela, who chaired the emergency meeting, said he was well aware of the “emotional reactions” the commission proposal had sparked and predicted that talks would be “rather spicy”.

As a result of trade disruptions tied to Russia’s war in Ukraine, EU nations have reduced the overall share of Russian natural gas imports to the EU from 40 per cent before the invasion to around 7 per cent. And gas storage has already far exceeded targets and stand nearly at capacity.

The EU has relied on increased imports of LNG, including from the United States, to help address the fall in Russian supplies.


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