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A European Commission proposal to set a cap on the price of imported natural gas was meant to quell demands for action to curb high prices – instead it sparked a political crisis.
The Commission presented the proposal earlier this week after fierce pressure from a group of 15 countries, but now they are appalled that the cap is set at such a high price that it is toothless and does not would not even have been triggered during this period. record price of the summer. Also furious are a group of countries, who wanted nothing to do with a cap – fearing it would disrupt the market.
This anger will reach its climax on Thursday, at a summit of European energy ministers.
The meeting is expected to reach an agreement on an emergency package mainly focused on lowering energy prices next year, including through the joint purchase of gas and the creation of a new benchmark for natural gas. liquefied – but that could be derailed by the fight for the gas price cap.
A group of countries are seeking to form a blocking alliance unless the package and the price cap are tackled together, three diplomats have said. However, diplomats differ on whether the group is made up of nine countries – enough to block – or just seven.
If there is no progress, the Czech Republic, which currently leads the rotating EU Council presidency, could convene another extraordinary Energy Council in mid-December to discuss these issues further. , said two diplomats.
“No one is happy”
For months, the idea of a price cap has divided countries. It is backed by a group including Belgium, Poland, Greece and Italy, while a bloc including Germany, Austria, Denmark and the Netherlands fears it could scare off supplies.
The “market correction mechanism” proposed by the EU executive did not please anyone. It would set a limit on wholesale gas prices at €275 per megawatt hour for the coming month – although this would only be triggered if prices stayed above that level for two years. weeks and were more than €58 per MWh higher than the prices of liquefied natural gas on the world market for 10 days.
Proponents of the price cap complain that even if there were a repeat of the wholesale gas price records seen in late August – where futures briefly traded at €350 per MWh – it would not reach the high bar to activate the commission cap. Gas futures on Dutch hub TTF, the European benchmark, were at €122 per MWh on Wednesday.
But those who are reluctant to a cap argue that the measure still lacks sufficient safeguards and lament that there has not been enough time to carry out a proper impact assessment showing that this decision would not threaten their safety. supply.
“Right now nobody is happy,” said an EU diplomat, who added: “We are not making progress… [and] back to where we were at the start.
It also provoked fury at the Commission from some countries who criticized the EU executive for being slow to present the proposal and attach conditions to the cap.
“How screwed up can you be and how well can you handle all of this?” fumes a diplomat.
“It is clear that the Commission sided with the Netherlands and Germany,” another diplomat said, adding that the cap was set “at a level where it will never be applied.”
This is not the only source of anger.
As part of the price cap proposal, the Commission said it would ask capitals to make binding the gas demand reduction targets agreed earlier this summer. But that is “not necessary”, said a diplomat, citing near-full gas reserves in the EU. “I’m not going to screw up my industry because Germany has aligned itself with Russia” to buy gas in the past.
In a sign of how toxic the discussion has become, the proposal nearly sparked open conflict between the Commission and some EU countries, according to two diplomats.
One idea briefly discussed in the Commission included withdrawing the gas price cap proposal altogether if countries attempted to change the level of the price cap.
“Politically, it is very dangerous,” said an EU diplomat, who added that there would be “consequences if this happened”, including countries likely to delay other legislative files in response .
The Commission declined to respond to a request for comment.
Charlie Cooper and Karl Mathiesen contributed reporting.