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Dispute over EU gas price cap: States want to adopt new measures against high gas prices

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The majority calls for it, others demonize it, experts warn against it: There has been a dispute over a gas price cap in the EU for months. This Thursday, the EU ministers responsible for energy will have a special meeting in Brussels to decide on further measures to combat high energy prices. They will also discuss for the first time a concrete proposal from the EU Commission to cap the price for gas sold on the TTF trading platform under certain circumstances.

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That should cause heated discussions. Italy, Greece, Belgium and Poland in particular are pushing for a gas price cap, but Germany, the Netherlands and some other countries fear supply security bottlenecks.

Other moves to jointly buy gas and speed up approvals for solar and other renewable energy are less controversial. It is expected that ministers can agree on these two initiatives – then they could come into force. The outcome of the meeting is still unclear in view of the gas price cap dispute.

Gas price cap for emergencies

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The EU Commission is proposing to curb particularly severe price swings in European wholesale through a price cap. This affects certain transactions at the wholesale center TTF, to which many supply contracts in the EU are linked. Unlike the federal government’s gas price brake, the cap applies to major customers who shop at the TTF and not to end consumers.

In concrete terms, the cap would apply automatically if the price for gas to be delivered in the following month exceeded 275 euros per megawatt hour for two weeks and at the same time was at least 58 euros higher than the reference price for liquefied natural gas (LNG) on the world market. Orders above the price limit would then no longer be accepted.

However, the price limit has already been criticized for being so high and the conditions so strict that it is unlikely to be used. Therefore, the cap should not go far enough for supporters like Italy, but too far for opponents like Germany.

Joint gas purchases and expedited procedures for solar systems

The concentrated market power of the EU should ensure lower gas prices. The EU Commission proposes filling the gas storage facilities in a coordinated manner in the coming year. This should also prevent states from outbidding each other and driving up prices.

In this way, companies should bundle part of their demand centrally, for which joint offers can then be obtained. The companies could then decide whether to form one or more consortia to buy the gas together.

In order to replace Russian gas, solar systems and other renewable energy projects are to be approved in a rush procedure. The EU Commission proposes that solar systems must be approved within a maximum of one month and heat pumps within three months.

Renewable energy projects would be considered in the “overriding public interest” by the law. Wind farms, for example, would thus be exempt from certain environmental protection rules and would be more difficult to challenge in court. The rules are to apply for a year until long-term legislative changes in the area have been negotiated. (dpa)

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Source: Tagesspiegel

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