EU fails to agree price cap on Russian gas

There was little progress at the meeting of EU energy ministers with regard to plans to limit the prices of Russian gas. Member states failed to find a mechanism that could overcome the differences deriving from the huge disparity between them with regard to the dependence of their economies on the fuel.

The ball is in the hands of the European Commission and its President Ursula von der Leyen. Convened with high expectations and extreme urgency, the meeting of ministers in charge of energy in European Union member states resulted in vague recommendations for keeping the economy stable and a shift in direction concerning a possible price cap on Russian gas.

“We managed to agree on a common direction for temporary emergency measures and give a clear task to the commission to come forward with a robust and tangible proposal in a matter of days. We will do whatever it takes to help our citizens and companies who are facing high energy prices,” said Czech Minister of Industry and Trade Jozef Síkela, who led the meeting, but he had little to back his claims with.

Talks result only in guidelines

For now, the ministers discussed possible EU-level measures that could be implemented in the short term. They authorized the European Commission to make proposals for capping the revenues of electricity producers that face low production costs, to impose a price cap on gas (not just Russian gas) and for measures for a coordinated electricity demand reduction and a liquidity boost, the European Council said.

EU energy ministers told the European Commission to propose a price cap mechanism for all gas, not just the one coming from Russia

The officials responsible for the energy policy in EU countries have presented the preparations for the winter. The council claimed the 27-member bloc is all set. Underground gas reserves have been filled by an overall 82.5% of their capacity, well ahead of the November 1 deadline set in the gas storage regulation.

Electricity market reform reaches only windfall tax discussion phase

The commission was tasked with designing a market reform that would sever “the link between expensive gas and power prices,” the announcement reads. The ministers called for steps to skim off energy companies’ profits, while there were no concrete measures to force a reduction in demand – the crucial factor, the council acknowledged.

Cingolani: It is very difficult to find the silver bullet

Italian Minister for Ecological Transition Roberto Cingolani said all EU countries have different energy mixes and grid capacities and added that “it is very difficult to find the silver bullet.” Namely, Hungary, the Czech Republic and Germany are among the states that fiercely  opposed the idea to cap the prices of Russian gas, which highlights their dependence on the fuel despite the modestly optimistic stance from the European Council.

Hungary’s Minister of Foreign Affairs and Trade Péter Szijjártó pointed to the Kremlin’s threats it would halt all gas shipments if only the price of Russian gas is capped.

“The EU is now experiencing tight electricity markets. This is predominantly due to the impact of Russia’s war against Ukraine and related gas supply disruptions and increase of gas prices,” the notes from the event read.

Von der Leyen is expected to present the European Commission’s proposals on September 14.