EU to consider lower gas price cap to address energy crisis – Bloomberg
The Czech Republic, which currently chairs the EU Council, offers a compromise option to lower the gas price ceiling to 188 euros/MWh. On Monday, December 19, EU ministers will discuss this proposal.
Bloomberg reports that the Czech government has proposed lowering the cap price to €188/MWh compared to €275/MWh proposed by the European Commission last month.
Energy ministers will discuss the plan at a meeting on Monday, December 19. The proposal to intervene in the market, which was put forward by a group of EU member states back in the spring, caused a deep division among the governments. In recent weeks, Germany has advocated a cautious approach, while Belgium, Greece, Italy, and Poland have called for a more aggressive instrument with a price ceiling below 200 euros.
"At stake is the future of the bloc's $17 trillion economy, where soaring energy prices have already fueled inflation and are threatening to push the region into recession. The crisis has stretched European governments' budgets as they have racked up more than $700 billion in aid to companies and consumers, according to one estimate. But they continue to be under pressure from voters to do more to control soaring costs or risk a backlash," Bloomberg says.
If the energy ministers agree on this particular gas price cap, it will unblock measures "to rein in high energy costs that have sent businesses and consumers reeling" due to russia cutting gas supplies after starting its full-scale invasion of Ukraine.
The new draft allows the European Commission to stop its intervention in the gas market it undermines the measures to reduce the EU's demand for gas.
"The executive body would also immediately suspend the mechanism if it endangers the security of supply. Some critics fear a European price limit could make it less attractive for gas sellers globally," Bloomberg concludes.
