Energy ministers from European Union member countries will today meet in Brussels to attempt to agree on a cap on gas prices as part of their quest to tame Europe’s energy crisis but one that countries are still split over.
In a bid to finalise a measure that countries have debated for months and held two emergency meetings on, country leaders last week urged their ministers to approve the cap on Monday.
They are also now considering a new compromise proposed by the Czech Republic, which holds the EU’s rotating presidency.
The draft is expected to trigger a cap if prices on the Dutch Title Transfer Facility (TTF) gas hub’s front-month contract exceed 188 euros per megawatt hour for three days, which is far lower than a previous trigger of 275 euros/MWh proposed by the European Commission last month.
About a dozen countries including Belgium, Poland and Greece want a cap below 200 euros/MWh to tackle the high gas prices that have inflated citizens’ energy bills and stoked record-high inflation this year after Russia cut off most of its gas deliveries to Europe.
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But Germany, the Netherlands and Austria are among those who fear the cap could disrupt Europe’s energy markets and divert much-needed gas cargoes away from the EU, calling for tighter conditions such as an automatic suspension of the cap if it has unintended negative consequences.
While a handful of countries still have their positions unclear, some EU diplomats said both sides may have enough votes to block a deal.
Under the latest proposal which is hoping to be triggered, the EU gas price cap would prevent trades being done on the front-month to front-year TTF contracts at a price more than 35 eur/MWh above a reference level comprised of liquefied natural gas (LNG) price assessments.
Even if the LNG price fell to far lower levels, the EU price cap would not drop below 188 euro/MWh and if the LNG reference price increased to higher levels, then the EU cap would move with it while the remaining 35 eur/MWh above the LNG price – a system designed to ensure the bloc can bid above market prices to attract scarce fuel.
The fate of other EU energy policies also hinges on the gas price cap and countries could approve faster permits for renewable energy projects on Monday, having already delayed approval twice pending a deal on the cap.
Ministers will also attempt to approve their negotiating position on a new EU law to cut planet-warming methane emissions. Documents seen by Reuters show some countries are seeking to weaken the proposed rules for oil and gas companies.
Story was adapted from Reuters.
