In Brussels, Scholz is in the minority with his rejection of a gas price cap.
(Photo: dpa)
Brussels Chancellor Olaf Scholz is in danger of having to accept a serious defeat in European politics: Germany could be outvoted on an important point at the Brussels meeting of heads of state and government this Thursday and Friday.
The question is whether the gas price that European importers pay on the world market should be capped in exceptional cases in the future. There is talk of a “market correction mechanism”.
The federal government considers such interventions to be wrong, but the Commission wants to get its proposal through and is sure that a majority of the member states will be on its side. A lot has been building up in the past few weeks. Countries like Italy are extremely upset about the behavior of the Germans.
According to Brussels, Scholz failed to promote his position and organize majorities. His predecessor Angela Merkel had a feeling for the mood in the European Council and regularly picked up the phone herself before EU summits in order to create a consensus on important issues.
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Along with France, Greece and Belgium, the Italians have been pushing for months to limit gas prices. They actually want much more than the market correction mechanism proposed by the Commission. But even this meets with reservations in Germany.
Germany is skeptical about the EU plans
Scholz reiterated his position shortly before he left for Brussels in a government statement in the Bundestag. The gas market is characterized by scarcity, he warned. You will have to talk about “how we deal with price peaks”. The government will “take a close look” at the Commission’s proposals.
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However, Scholz expressly warned of an upper limit for the gas price. In government circles it was said that there was still a “need for discussion”.
The EU Commission proposed the market correction mechanism on Tuesday. The bill provides “a temporary mechanism to limit episodes of excessive gas prices.” Should Member States agree on this, the details would have to be worked out by the Commission’s experts.
The Commission is concerned with interventions in exceptional cases. For example, if there are short-term delivery failures. The Brussels authority is aware that such interventions are delicate. She therefore emphasizes that the gas market must not be disrupted so that enough gas continues to be supplied and consumption does not increase.
Nevertheless, the Germans are skeptical. They are politically supported by the Netherlands. Apart from that, however, they hardly have any allies.
Iberian price cap would be even riskier
Parallel to this “market correction mechanism”, there will also be a discussion at the summit about a much more extensive “Iberian gas price cap”, which is intended to depress prices permanently and noticeably. This cap is not aimed outwards at the world market, but inwards: it would ensure that gas customers never have to pay more than a certain amount per megawatt hour. In order for the market to function anyway, the states or the EU would have to compensate for the difference to the market price.
The EU Commission President must find a solution together with the member states.
(Photo: dpa)
A variant of this lid exists in Spain and Portugal, hence the “Iberian” model. The problem is that the power plants are subsidized and there is no incentive to use less gas. There is also a risk that the electricity subsidized in this way will flow abroad.
For these reasons, the German federal government also emphatically rejects this cap: “However, a politically set price cap always carries the risk that the producers will then sell their gas elsewhere and that we as Europeans will end up not getting more gas, but less,” argued Scholz in the Bundestag.
However, Germany is also losing support for this position. So far, the EU Commission has provided the most important support.
Von der Leyen changes position
The officials from Brussels see similar dangers as their colleagues from Berlin. Commission Vice-President Frans Timmermans said earlier this week that the Iberian model “cannot be replicated across Europe”.
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The EU Commission President Ursula von der Leyen was much more open this week. The financing of the Iberian model and the possible gas outflows abroad are technical issues and could possibly be solved, said the CDU politician.
The supporters of the Iberian gas price cap now want to use the summit to speak out clearly in favor of this model. The more countries adopt this attitude, the more difficult it will be for the EU Commission to oppose it.
Preventing the Iberian gas price cap will be the most important task for Olaf Scholz at this summit. Accordingly, he may have to accept defeat in the market correction mechanism.
More: “There is no magic wand that can be used to conjure up cheap gas from expensive gas” – EU Commission Vice-President Frans Timmermans in an interview