On October 18 there will be more energy measures. More specificity, which is what the EU leaders asked of the European Commission at the last summit in Prague. The problem is that almost each country has a recipe, because each country has a different energy mix, too, with different supply and supplier problems. But the truth is that the 27 asked the Community Executive last Friday to land their proposals in legislative texts. And that is what will happen on October 18, according to the European Commissioner for Energy, Kadri Simson.
Now, what exactly is the European Commission going to present? Simson has not given details after the informal meeting of EU energy ministers in Prague on Wednesday. Will there be a cap on the price of imported gas? It is not clear. Will there be a price for gas for electricity as defended by the President of the European Commission, Ursula von der Leyen, along the lines of the Iberian exception? “Our proposals on October 18 will consist of measures that have the maximum consensus. And we will see over the weekend how we can limit gas for power generation if there is a large majority of member states that support this measure.” I mean, not even that seems 100% closed.
What does seem quite closed is the idea of the joint purchasing platform. “We are going to present a proposal to facilitate joint gas purchases”, said Simson, “this will allow the EU to use our collective purchasing power to limit prices and prevent Member States from competing in the market and, in doing so, raise prices.” That platform could start in 2023, according to the Czech Minister of Energy, Josef Síkela, a country that rotates as president of the EU Council.
Simson said at the end of the meeting: “The steps are enormous, unthinkable a year ago. Now more steps must be taken, more must be done to face this crisis. That is why we are going to present a package on October 18 with more measures. The initiative will have four elements to lower prices and guarantee supply.” In this sense, what he has pointed to is the Dutch TTF Dutch index, which contaminates the price of most of the gas imported by the EU: “The TTF is no longer representative of the reality of the EU energy market and artificially inflates prices. We need to develop an alternative benchmark, and the European Commission is preparing a legislative proposal. I expect the benchmark to be ready for the next storage season. But our citizens and our businesses cannot wait, and we must address prices now. The Commission’s preference is to do this through negotiations with our international partners. But we have to be prepared if these negotiations are not fast enough. We need a temporary mechanism to limit prices. As part of the next package, we will establish how this mechanism could work and how to mitigate the risks that it inevitably entails.”
What risks? “Any intervention in the gas market requires a further reduction in gas demand”, said Simson: “This is not a pleasant thing, but a necessity to guarantee security of supply in the context of an intervention in the market. . One option is to activate the EU alert, which would make the 15% demand reduction target mandatory. But a different approach or additional measures may be needed to ensure that the level of savings is sufficient. Any measures we take to lower prices must not send the wrong signals that boost consumption across the EU; a consumption of natural gas that will not be available in sufficient volumes”.
Sven Giegold, German State Secretary for Climate, a country that is reluctant to put gas caps, said: “We have had many meetings between the Member States, which until now had quite divergent views on the way out of the crisis. And now we are moving towards a common analysis with common solutions. We need to implement joint gas purchases; we need to talk to the partners that supply gas to Europe to help reduce excessively high prices; we need to further coordinate our demand reduction measures and are confident that it is possible to find ways to reduce prices while avoiding rationing and ensuring that market forces remain present to help us limit demand.”
The Vice President of Ecological Transition, Teresa Ribera, said for her part: “We have made enormous progress in the lines that the European Union must adopt in order to be able to respond in a united, solidary and flexible way in this energy crisis. Much work remains to be done. We need a much clearer reference and adjusted to the reality of gas prices to be able to respond at source to the crisis we are experiencing”.
Sources from his team conveyed “caution and prudence” after the meeting, from which they left “satisfied” insofar as they described it as “productive” for having produced a “closer position”. However, they recognized that “there is still a long way to go”.
According to the European Commissioner for Energy, “the plan is to encourage the reduction of demand and guarantee solidarity between the Member States. We will also intervene in gas prices and facilitate the joint purchase of gas. We all know that there is an urgency to act. But we have to keep in mind that we have to act together and it has to be based on a broad consensus.”
The country that is out of tune with this general consensus is Hungary. The Foreign Minister, Péter Szijjártó, attending the meeting, has shown his opposition to any restrictive measure with Russia: “We hope that the Commission does not make any proposal, and we hope that the Council does not accept any proposal that endangers the security of the energy supply of any Member State. What matters is that there are no proposals that decrease the volume of gas or any other source of energy available to the continent. The Russians made it very clear that should the gas price ceiling be introduced, they would reduce gas deliveries, jeopardizing the safety of suppliers. So it’s obvious we wouldn’t support it.”