Brussels At their meeting this Tuesday in Prague, the energy ministers of the EU countries made every effort to present a harmonious picture. A large group of 17 of the 27 states have a common idea of how the price of gas can be capped, the Polish representative said. You understand the arguments of the others and there will be a solution in the end.
In fact, there is much more at stake than questions of detail. Germany and the Netherlands in particular are trying to prevent a price cap in general. One should not “ruin the price signal,” said State Secretary Sven Giegold.
Instead, in a joint strategy paper, Germany and the Netherlands are now calling for future gas procurement to be pooled at European level. The proposal, which has been discussed for months, to set up a “joint gas purchasing platform” must be implemented “immediately”, according to the so-called “non-paper” available to the Handelsblatt.
“Bundling the EU’s gas purchases would help to avoid mutual outbidding and an impairment of security of supply,” the authors continue. If Europe uses its concentrated purchasing power, it no longer has to “accept any price”.
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However, it is important that “energy companies and large gas consumers are involved in the process and take a leading role”. These parties bring important “procurement knowledge” with them.
>> Also read here: Gas price: Europe is angry with Germany
The EU platform should not become a new super authority. The concern that joint gas procurement could centralize too much power in Brussels accompanied the consultations from the start and was the main reason why the Berlin Chancellery was initially skeptical.
Germany’s great concern is that a price cap will lead to higher gas consumption and make the supply problems even more dramatic. The representative of the International Energy Agency once again emphasized that there could still be a shortage in the winter of 2023/24.
This means that every kilowatt hour that is consumed now could be missing. The high prices ensure that many consumers behave as sparingly as possible and, for example, also convert gas-fired power plants to diesel.
Nevertheless, the pressure on Germany remains high to agree to a price cap. Many in the EU have the impression that the federal government wants to buy its way out of the crisis at the expense of others. The “double boom” package has met with much criticism because other countries cannot afford such measures.
Gas Commission proposals create confusion
In order to act as resolutely as possible in Germany, the federal government had added up various expenses and had come up with an amount of 200 billion euros. In the circle of EU states, the ministers are now emphasizing that this sum will be spread over three years and may not even be spent in full.
This is intended to cushion criticism from other governments of Germany going it alone.
>> Read here: Ego trip or smart course? Scholz defends “double boom” against criticism from EU partners
In addition, the Gas Commission’s proposals from the weekend are causing confusion. The Commission wants to help gas customers with a lump sum. However, it was reported in European media that it would take over the December bill from gas customers. That would be a kind of gas price cap that could increase consumption – exactly what Germany wants to prevent at EU level.
The whole debate about a gas price cap only arose because the EU had not yet managed to buy gas together, Giegold said in Prague.
There are differing views as to why this is so. Some blame the EU Commission. This now wants to react with a drastic measure: The joint procurement platform should become mandatory. Every European company that buys gas will have to do so to a certain percentage via the platform, the Financial Times reports, citing Commission officials.
It remains to be seen whether Germany can use this to avert a gas price cap. In the coming week, the EU Commission wants to be specific about the measures it is proposing. Then the heads of state and government should deal with it on October 20th and 21st.
Currently, almost every new delay in the discussion uses the German position. Because the gas price is falling. Some stock market values are around a third of their peak at the end of August.
Proponents of the gas price cap not fully in line
In addition, the proponents of a gas price cap are not as unanimous as it seems. Some states want to set a maximum price on imports, others want subsidies for gas used for electricity supply, and other states are in favor of a price cap in intra-European wholesale trade, although it is unclear how trade will then be maintained. As long as there are such great ambiguities, the EU Commission can hardly pour the demand for a price cap into law.
If the pressure persists, Germany could also agree to new joint debts to ward off the price cap. The “Sure” program, with which the EU helped its member states to finance short-time work during the corona crisis, would serve as a model.
Jointly taken out loans would thus ensure that countries particularly affected by the crisis can help their citizens and companies to bear the burden of the high energy costs. So far, Germany has also resisted this proposal.
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