The European Commission continues to push for the introduction of a pan-European gas price cap. Many – if not all – Member States want to lower energy prices again in this way. But the introduction has been discussed for months. On Thursday, EU ministers responsible for energy will meet again for a special meeting in Brussels to decide on further measures. At its heart is the Commission’s proposal to set a price cap under certain circumstances.
Thursday’s negotiations promise 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 bottlenecks in security of supply. Other moves to co-procure gas and accelerate approvals for solar and other renewables are less controversial.
It is expected that ministers can agree on these two initiatives – then they can go into effect. The outcome of the meeting is still unclear given the dispute over the gas price cap.
Strong price curves need to be curbed
The EU Commission proposes to curb particularly strong price fluctuations in the European wholesale trade by means of a price cap. This has consequences for certain transactions at the wholesale center TTF, to which many supply contracts in the EU are linked. Contrary to the German federal government’s gas price brake, the cap applies to large customers who buy from the TTF and not to end consumers.
Criticism of the price limit
In concrete terms, the cap would apply automatically if the price for the gas to be delivered in the following month exceeded EUR 275 per megawatt hour for two weeks and at the same time was at least EUR 58 higher than the reference price for liquefied natural gas (LNG) on the world market. Orders above the price limit will 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. That is why the cap should not go far enough for supporters like Italy, but too far for opponents like Germany.
Joint purchase already decided
The concentrated market power of the EU should also lead to lower gas prices. The European Commission proposes a coordinated filling of the gas storage facilities next year. This should also prevent states from outbidding each other and driving up prices.
In this way, companies would have to centralize part of their demand, for which joint offers could then be obtained. The companies can then decide whether to form one or more consortia to purchase the gas together.
Accelerated procedure for solar systems
To replace Russian gas, solar systems and other renewable energy projects must be approved in an urgent procedure. The EU Commission proposes that solar systems should be approved within a maximum of one month and heat pumps within three months.
Renewable energy projects would be considered “overriding public interest” under the law. For example, wind farms would be exempt from certain environmental protection rules and would be more difficult to challenge in court. The rules apply for one year until long-term legislative changes in the area are negotiated.
Source: Krone
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