© Reuters. FILE PHOTO: Flags of the European Union flutter outside the EU Commission headquarters in Brussels, Belgium, September 28, 2022. REUTERS/Yves Herman//File Photo
By Kate Abnett
BRUSSELS (Reuters) – European Union nations’ energy ministers meet in Brussels on Monday to try to agree on a gas price ceiling – their latest idea to tame the energy crisis of Europe but a crisis in which the nations are still divided.
National leaders last week urged their ministers to approve the cap on Monday, in a bid to finalize a measure that states have debated for months and hold two emergency meetings. .
They are currently considering a new compromise proposed by the Czech Republic, which holds the rotating EU presidency.
The draft, seen by Reuters, would trigger the cap if prices in last month’s contract for gas hub Dutch Transfer Facility (TTF) exceed 188 euros per megawatt hour for three days – much lower compared to the previous activation level of 275 euros/MWh proposed by the European Commission last month.
About a dozen countries including Belgium, Poland and Greece have demanded a cap below 200 euros/MWh to tackle the problem of high gas prices that have increased people’s energy bills and caused record inflation. this year after Russia cut off most of its gas supplies to Europe.
But Germany, the Netherlands and Austria are among those concerned the cap could disrupt Europe’s energy markets and divert much-needed gas out of the EU. They want stricter conditions, such as automatic suspension of the limit if it causes unintended negative consequences.
With the stance of some countries still unclear, some EU diplomats said both sides could have enough votes to block a deal.
According to the latest proposal, once activated, the EU gas price ceiling would prevent transactions made on TTF contracts from the previous month to the previous year at a price of 35 euros/MWh above the level. The reference includes a liquefied natural gas (LNG) rating.
The EU price ceiling will not fall below 188 euros/MWh, even if LNG prices fall to much lower levels. If the LNG reference price rises to a higher level, the EU limit will change to that level, while maintaining the 35 euro/MWh mark on the LNG price – a system designed to ensure the bloc can pay prices higher than market prices to attract scarce fuel resources.
The fate of other EU energy policies also depends on the gas price ceiling. Countries could approve permits faster for renewable energy projects on Monday, after delaying approval twice to wait for an agreement on the cap.
Ministers will also try to pass their negotiating position on new EU legislation to cut planet-warming methane emissions. Documents seen by Reuters show a number of countries are seeking to weaken the proposed rules for oil and gas companies.
