Expectations remain low based on European media, which believe the issue will be referred back to Thursday’s summit
EU energy ministers are meeting today, seeking consensus to put a brake on soaring gas and electricity prices.
However, expectations remain low based on European media, which estimate that the matter will be referred back to Thursday’s Summit as neither the Commission’s proposal nor the compromise of the Czech presidency have been deemed satisfactory.
“Probably not a single member state is satisfied with the proposal we are discussing,” acknowledged a senior European diplomat, who described the price cap as “one of the most complicated and difficult files you can imagine.”
Countries such as Belgium, Poland, Italy and Greece say the limit is necessary to protect their economies from high energy prices. On the other hand, Germany, the Netherlands and Austria, among others, are concerned that it could reduce supply in Europe.
European diplomatic sources say they are not at all sure that a deal will actually be struck today. One option is to refer the matter to the European Council tomorrow and return to ministers next week.
Details
Any agreement will depend on technical details, in particular how high the cap will be, which contracts it will apply to, and clauses such as the ability for the EU to suspend the measure if it has unintended consequences.
“We are moving in the right direction, but we are not there yet,” another European diplomatic source said.
The draft compromise discussed at the weekend provides that the cap will come into effect if prices exceed €220 per megawatt hour for five days in short-term futures contracts on the Dutch gas exchange (TTF) and if they are also €35 higher than the reference of liquefied natural gas (LNG).
This limit is well below the 275 euros per megawatt hour proposed by the Commission, but more than ten countries, including Italy and Greece, would like to see the ceiling even lower.
Both camps — both countries that support the cap and those that oppose gas pricing — have enough votes to veto it. France, which initially favored the cap but last week expressed concern about the potential impact on financial markets, is likely to be decisive, according to three European diplomatic sources.
Last week, the Intercontinental Exchange warned that the European proposal could actually raise gas prices; the European Central Bank, for its part, expressed concern that it could jeopardize financial stability.
The EU has already approved a series of emergency energy measures this year, notably the obligation to fill storage infrastructure. The gas price cap, however, could decide the fate of other EU energy policies, in particular whether they will be issued with faster procedures for renewable energy projects, as some governments have signaled they will not approve them without an agreement on the price limit.
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