European States Spar Over Gas Price Cap

Date: 09 December 2022 - 22:09

News ID: ۱۰۹۹۵۹

BRUSSELS (Dispatches) -- Six European Union countries, including Germany and the Netherlands, have warned that they cannot accept other member states’ attempts to lower further the level at which the bloc will cap gas prices, according to an email seen by Reuters.
The group, which also includes Austria, Denmark, Estonia and Luxembourg, laid out their red lines on the proposed EU-wide gas price cap, which countries are aiming to approve at a Dec. 13 meeting of energy ministers in Brussels.
“We are concerned by the lowering of the figures. The figures of the [gas price cap] ceiling and the triggers cannot be lowered any further or replaced,” ambassadors from the six countries said in the email to the Czech Republic, which holds the EU’s rotating presidency.
The six countries are skeptical of capping prices, which they warn would disrupt the normal functioning of Europe’s energy market and make it harder to buy fuel, if gas suppliers divert cargoes to regions where prices are not capped.
The European Commission last month proposed a price cap that would kick in if the front-month contract on the Dutch Title Transfer Facility exceeds 275 euros/MWh for two weeks and is also 58 euros higher than a Liquefied Natural Gas (LNG) reference price for 10 days.
Belgium, Italy, Poland and Greece are among the countries who say a price cap is needed to shield their economies from high gas costs. They want a far lower price limit than the one proposed by the Commission.
The European Central Bank is worried about the potential risks to financial markets from an EU-wide cap on natural gas prices.
The central bank said in a document Thursday “the ECB considers that the current design of the proposed market correction mechanism may, in some circumstances, jeopardize financial stability in the euro area”.
The impasse over the measure highlights how sensitive — and technical — it is.

Indeed, some energy ministers have described the initial proposal to cap prices at 275 euros per megawatt hour as a “joke.”
Many nations, such as Poland, Greece, Spain and Portugal, are keen to implement the price cap. These countries are less able to mitigate the impact of the energy crisis on consumers, and have been pushing for EU-wide solutions as a result.