The EU prepares emergency talks on caps on the price of Russian gas

By Kate Abnett

BRUSSELSSep 8 – European Union countries are studying a series of proposals from Brussels ahead of emergency talks on Friday, aimed at finding bloc-wide measures to cut skyrocketing energy costs before winter.

European Commission President Ursula von der Leyen has unveiled plans that include a price cap on Russian gas, raising concerns in some capitals, a bloc-wide cut in electricity demand and a levy on generators that do not use gas.

Ministers are not expected to approve any measures at their meeting on Friday, but they are expected to make clear which options have the most support and which should be included in the final proposals.

The Baltic countries, long-time supporters of curbing gas imports to reduce Russia’s income, are in favor of limiting the price of their gas, along with countries that do not depend on Moscow for fuel, such as Portugal, which mainly imports liquefied natural gas.

The Portuguese environment minister said on Wednesday that a price cap would help curb market speculation, which would also help countries that do not buy Russian gas.

Others have been favorable to the idea after Russia further cut gas deliveries to the 27-member bloc last month, but warned that unity among EU members would be needed.

“If there is unity around this point, we will support it. If, on the other hand, it is something difficult to digest for some, we will have to analyze it carefully,” said a senior diplomat from an EU country.

Brussels has not specified the design of a cap on the price of Russian gas, but certain types of community laws require the approval of all EU countries.

However, some Central and Eastern European countries are cautious, fearing the move could completely cut off their gas supply, which is already declining.

President Vladimir Putin said Wednesday that Russia will stop supplying gas to Europe if a price cap is imposed.

Given the low volumes Moscow currently ships, some countries have suggested a price cap would accomplish nothing significant and have little impact on gas prices within the bloc.

“It wouldn’t solve anything,” said an EU diplomat.

Russian gas shipments via the three main routes to Europe have fallen by nearly 90% in a year, according to Refinitiv data.

European leaders have accused Russia of “militarizing” its energy supplies, while Moscow has blamed technical problems caused by Western sanctions for its invasion of Ukraine.

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EU governments are exploring many other options in their search for measures that all states can support.

Italy and Belgium want the price of gas in the EU to be capped. In a position paper seen by Reuters on Thursday, Belgium proposed a “dynamic” price cap for gas transactions on European exchanges, with the price cap linked to the price JKM from Asia for liquefied natural gas.

Germany and the Netherlands are among the countries wary of caps across the bloc, and part of a group that has warned that hasty interventions in energy markets could have unintended consequences.

Meanwhile, the European Commission has suggested a tax on the income of electricity generators that do not use gas, to raise revenue that governments can use to curb the bill.

Electricity prices in Europe are usually set by gas-fired power plants, so the cap would be aimed at reducing the cost of electricity produced by wind farms and nuclear power plants, which have lower running costs because they are not exposed to rising gas prices.

A draft of the Commission’s proposal, seen by Reuters, says the cap would be 200 euros per megawatt hour and would apply after energy transactions are settled, so that trading in bag.

EU ministers will also study the possibility of granting emergency aid to energy companies, some of which are facing increased collateral needs to deal with liquidity shortages caused by high electricity prices.

The Czech Republic, which holds the rotating EU presidency and will chair Friday’s meeting, said the governments’ first task would be to improve the liquidity of European energy markets.

“That means that if electricity producers don’t have enough money for cash deposits, they would be provided with liquidity, either in the form of loans from member states or from some intervention fund,” Industry Minister Jozef Sikela said. , on Czech television.

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