EU seeks to break impasse over gas price caps, ‘no regret’ plan floated

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The question of how, when and whether to cap gas prices is set to dominate another meeting of European Union countries on Wednesday, as they pursue a joint plan to target high gas prices – a compromise that has eluded them for weeks.

The 27-country EU is plotting its next move to tame soaring energy prices and shield consumers from surging bills, as Europe heads into a winter of scarce Russian gas, a cost of living crisis and the looming threat of recession.

EU energy ministers meeting in Prague will attempt to provide clearer instructions on what the European Commission should propose as the bloc’s next emergency energy measure.

“We’re all agreed we do need to do something further. The exact mechanisms may take some time,” Irish climate minister Eamon Ryan said on his arrival at the meeting.

EU Commissioner for Energy Kadri Simson said Brussels would propose fresh energy measures next week and any further EU-wide measures should be backed by “broad consensus” among countries. So far, that has been hard to find.

With gas prices almost 90% higher than a year ago, most EU countries say they want a gas price cap, but disagree on its design. Talks among EU leaders last week on the issue did little to clarify the issue. Those discussions “went in all directions”, one EU diplomat said referring to the numerous options being floated, including a price cap on all gas, pipeline gas, or just gas used to produce electricity.

Some countries, including Germany, Europe’s biggest gas market, remain opposed, warning a broad cap on prices could mean countries struggle to attract supplies from price-competitive global markets, as they scramble to replace Russian supplies.

Germany and the Netherlands put forward their own proposals ahead of Wednesday’s meeting suggesting 10 “no-regret” EU measures, including a new benchmark price for liquefied natural gas, tougher targets to save gas, and negotiating lower prices with other suppliers, such as Norway.

“Negotiations with our partners to look for mutually beneficial partnerships are much preferred to a cap on gas import prices,” they said in a document seen by Reuters. Norway’s energy minister Terje Aasland, who joined the meeting on Wednesday along with other European non-EU members, said his country “doesn’t recommend” a gas price cap.

One senior EU official was optimistic a compromise could be found, and said countries were leaning towards the “Iberianmodel” of capping the price of gas used for power generation.

Spain and Portugal implemented that scheme in June, which helped curb local power prices. The idea has gained support among other countries, although some worry it could raise EU gas demand, since Spain’s gas use increased under the measure.

EU countries have already rushed through emergency energy windfall profit levies, gas storage filling obligations, and electricity demand curbs to address the surge in energy prices driven by Russia slashing gas supplies since it invaded Ukraine.

But the pressure to agree on more EU-wide measures has increased after Germany said it would spend up to 200 billion euros to shield its consumers and businesses from high energy costs – prompting a backlash from some countries about the uneven rollout of national support.

European leaders scramble to avert an energy crisis as gas, electricity prices rise