European Union countries’ energy ministers meet in Brussels today to attempt to agree a cap on gas prices – their latest idea to tame Europe’s energy crisis but one that countries are still split over.
Country leaders last week urged their ministers to approve the cap today, in a bid to finalise a measure that countries have debated for months and held two emergency meetings on.
They are now considering a new compromise proposed by the Czech Republic, which holds the EU’s rotating presidency.
The draft, seen by Reuters, would trigger a cap if prices on the Dutch Title Transfer Facility (TTF) gas hub’s front-month contract exceed €188 per megawatt hour for three days – far lower than a previous trigger of €275 per MWh proposed by the European Commission last month.
About a dozen countries including Belgium, Poland and Greece have demanded a cap below 200 eur/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.
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.
They want tighter conditions, such as an automatic suspension of the cap if it has unintended negative consequences.
With a few countries’ positions still unclear, some EU diplomats said both sides may have enough votes to block a deal.
Under the latest proposal, once 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/MWh above a reference level comprised of liquefied natural gas (LNG) price assessments.
The EU price cap would not drop below €188/MWh, even if the LNG price fell to far lower levels.
If the LNG reference price increased to higher levels, then the EU cap would move with it, while remaining €35/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. Countries could approve faster permits for renewable energy projects today, 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.