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The European Commission is under mounting pressure to propose a cap on the price of imported natural gas this week, with at least 13 EU countries pushing for the measure to curb rising energy prices.
“The energy crisis… is now causing unsustainable inflationary pressures, hitting our households and our businesses hard,” said a letter seen by POLITICO, which has now been signed by at least 13 member countries and sent to Energy Commissioner Kadri Simson. “The most serious issue of all remains to be addressed: the wholesale price of natural gas.”
So far, the Commission has balked at proposing a cap – and it’s unlikely to be part of measures proposed ahead of an emergency summit of EU energy ministers on Friday.
Instead, there is broad consensus on the three core measures proposed by Commission President Ursula von der Leyen earlier this month, two EU diplomats told POLITICO, with a general agreement expected as early as Wednesday before ministers meet on Friday. The commission will also send an “action plan” to the capitals on the same day, the diplomats said.
The three measures include a revenue cap for companies that don’t use gas to generate electricity and a windfall tax on the profits of EU-based fossil fuel companies – both of which would raise funds to help Europeans with high energy bills – as well as mandatory electricity rationing.
But Monday’s letter aims to push the introduction of a cap on the price of gas. The letter, signed by Italy, Spain, Poland, Greece, Belgium, Malta, Lithuania, Latvia, Portugal, Slovenia, Slovakia, Croatia and Romania, calls on the Commission to come up with a proposal for ministers to be discussed on Friday, followed of a further formal legislative initiative “as soon as possible”.
Von der Leyen originally proposed capping only the price of Russian gas, but that fell through amid fears Moscow would retaliate by cutting off all supplies. Instead, the debate in some EU countries has shifted towards capping the price of all gas imports.
The commission was previously opposed to such a move, but von der Leyen has since announced it would set up a task force that would travel to countries like Norway – now the bloc’s biggest gas supplier – “to… look lower[ing] the price of gas in an appropriate way.”
Last week, Norwegian Prime Minister Jonas Gahr Støre told POLITICO that “no solution should be off the table”, including a price cap, although he warned it risked limiting overall supply.
There is opposition to the idea in some member countries – the Netherlands and Hungary are said to object, while others like Denmark have concerns about security of supply, diplomats said. At the last Energy Council earlier this month, 15 countries reportedly backed the idea, although fewer had signed Monday’s letter at the time of publication.
“I suppose many countries are also concerned about security of supply from Russia,” said a senior EU diplomat, adding that “there are also concerns about friendly suppliers like the US, Norway, but also Algeria and Azerbaijan.”
Gas futures on the Dutch TTF hub, the EU benchmark, also fell further, taking some of the ammunition out of the case for a gas price cap. Prices hit a low of €169 per megawatt hour on Monday after peaking at €347 per MWh in late August.
Introducing a price cap “beyond Russia would be a real challenge,” said Murray Douglas, a senior analyst at Wood Mackenzie, adding that the EU would need to offer its energy suppliers “something relatively compelling” like a price floor or longer-term agreements to get them to bring to an agreement.
Referring to a proposal to cap the price of EU gas imports, a Commission spokesman said: “We are working on a range of other measures to tackle high energy prices… These will be presented in due course.”
America Hernandez contributed coverage.
This article has been updated to change the number of signers to 13 with the addition of Slovakia.
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