The Commission had proposed a cap on increases in wholesale gas prices.
(Photo: imago stock&people)
Brussels When the ministers argue in Brussels, there is a good habit: At least those issues on which an agreement seems possible are also highlighted. Polish Climate and Environment Minister Anna Moskwa broke with this custom on Thursday morning.
“We don’t need any papers on solidarity or approval procedures now,” she complained about the agenda. “In Poland it’s already minus ten degrees.” Now, in winter, one has to talk about a gas price cap, other points can be postponed until spring. From their point of view, what the EU Commission had proposed was a “joke”.
Moskwa’s statement shows that the EU Commission may have miscalculated and the dispute over a gas price cap is escalating. Participants at the meeting threatened to hold up other legislation if there was no agreement on a real cap.
Belgian Minister Tinne van der Straeten said that the package of laws presented belonged together. In other words, without an agreement on a gas price cap, Belgium wants to refuse to approve other laws.
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What is on the table is a proposal from the EU Commission, which it only completed on Tuesday. It provides that in certain extreme situations, certain gas transactions above 275 euros per megawatt hour will be prohibited. Even the Commission officials who helped draft the proposal say it is unlikely to happen. We are therefore not talking about a “gas price cap” but about a “market correction mechanism”.
Will the price limit be lowered?
With a few changes, the EU states could turn the proposal into a real gas price cap with lasting effects on the market. Instead of setting 275 euros as the limit, 150 to 200 euros are realistic, said Greek Minister Kostas Skrekas. There is no reason to accept that gas prices in Europe are significantly higher than elsewhere in the world.
>> Read here: Questions and Answers – Why Europe’s new gas price cap isn’t one
However, the effects of a cap are assessed very differently, even among its proponents. Skrekas expects a calming effect on the markets even if the price is below the set limit. Already the discussion about it lowered the price, an agreement will have an even stronger effect.
On the other hand, the Spanish Minister Teresa Ribera said that in the form presented, the correction mechanism could even cause prices to rise. Experts from the energy exchange ICE confirm this according to the “Financial Times”: According to this, traders would have to secure their gas transactions with an additional 33 billion dollars if the market correction mechanism were to be introduced.
The opponents of the price cap presented the differences as surmountable. He sees no hard fronts, said German State Secretary Sven Giegold. Compromises based on the Commission proposal are possible. At the same time, he warned against tightening: If the EU acts too aggressively, there is a risk of gas shortages. He emphasized how important the agreements on solidarity measures are for accelerating the expansion of renewable energies. These are exactly the issues that Polish Minister Moskva said were not currently in demand.
Luxembourg is also one of the opponents of the cap. “Let’s keep cool,” advised Minister Claude Turmes. “We have a month to get the cow off the ice.”
The Poles see it differently. “We need a new proposal. And not before Christmas, but in the next few days,” said Moskva.
More: How the EU Commission is playing for time on the gas price cap