Brussels faces revolt over energy crisis plan unless it adjusts gas cap

Energy ministers have delayed approving EU plans to tackle the energy crisis after several member states threatened to block the measures unless plans to cap gas prices were changed.

Jozef Sikela, the Czech energy minister holding the post of EU presidency, said on Thursday that the ministers should come together again on December 13 to agree on the gas price ceiling and accept the other measures. Some ministers described the European Commission’s plan to limit current gas prices as a “joke”.

Sikela was speaking after a “heated” meeting of energy ministers in Brussels, which was supposed to set out a broad package of proposals – including joint gas purchases, emergency measures to share supplies between member states and easing requirements for the development of renewable projects. logged out.

But a group of EU countries, including Belgium and Spain, said they would veto the plans unless an agreement was reached to cap gas prices. The group was large enough to create a blocking minority under EU voting rules.

Sikela said the decision to postpone should not be interpreted as a sign of discord between the EU’s 27 member states, which are grappling with a dramatic drop in energy supplies from Russia following the full-scale invasion of Ukraine in February. The deficit has pushed up energy bills, which has been the main driver of soaring inflation across the bloc.

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“We’re not opening the champagne yet, but we’re putting the bottle in the fridge,” he said.

“The debate is extremely complicated because there are simply different views. . .[but]we want to work hard in the remaining days to reach an agreement,” Sikela added.

The purpose of the additional meeting is to decide on the mechanism of the gas price ceiling before the summit of European leaders on December 15. Finding consensus is now in the hands of EU ambassadors and energy experts, who must work on a pricing mechanism that most states can back.

Debate over how and whether to impose gas price caps has become increasingly tense in recent weeks, with a split between countries that want to severely limit all wholesale gas transactions and others, such as Germany and the Netherlands, that warn that it would endangers the security of the gas supply to the block.

The committee on Tuesday proposed capping gas prices at €275 per megawatt hour, but the plan was criticized by ministers and analysts who said it would not have been in place even when prices hit an all-time high in August.

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Wholesale gas prices soared to a record high of more than €300/MWh — or more than $500 a barrel in oil terms — over the summer after Russia cut its Nord Stream 1 pipeline to Germany, its main route to Western Europe.

For the upper limit proposed by the Commission to take effect, the prices of forward contracts for the month on the Dutch TTF futures market must exceed EUR 275/MWh for two consecutive weeks and be EUR 58 higher than that of liquefied natural gas 10 on consecutive days.

Teresa Ribera, Spain’s ecological transition minister, said before Thursday’s council meeting that the committee’s plan was “a joke in bad taste.”

In an interview after the meeting, he said countries were “going to kill themselves” if they had to survive with such high prices for so long, adding that member states did not want to limit prices in extreme circumstances, but to “send signal to the market’ to prevent such volatility.

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Market participants have already warned that any limit could result in major financial instability.

Ministers fear mass deindustrialisation in Europe as companies struggle to meet high energy bills compared to cheaper prices in the US, which recently announced a massive aid package.

Harald Mahrer, president of the WKÖ Austrian Chamber of Commerce, said politicians “must speed up” the approval of measures to help businesses and that the EU has lacked “strong and effective decision-making” since the beginning of March.

He added that companies are now looking for facilities in countries where fuel is cheaper.

In order to ensure that the member states have a gas supply for next winter, the commission also set a series of specific targets for filling up underground storages on Thursday. On average, EU countries with storage must aim for at least 45 percent saturation on February 1.

Additional reporting by Andy Bounds and Leila Abboud

Source: https://www.ft.com/content/570446b2-2cd5-4153-9890-29b7caa076b9