EU tries to agree gas prices
2022.12.19 02:14
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EU tries to agree gas prices
Budrigannews.com – The energy ministers of the countries that make up the European Union will meet on Monday in Brussels to try to reach an agreement on a price cap for gas. This is the latest idea they have to control Europe’s energy crisis, but countries still disagree about it.
In an effort to finalize a measure that nations have debated for months and held two emergency meetings on, country leaders urged their ministers to approve the cap on Monday.
The Czech Republic, which currently holds the rotating presidency of the EU, has proposed a new compromise.
The draft, which was seen by Reuters, would put a cap in place if prices on the Dutch Title Transfer Facility (TTF) gas hub’s front-month contract were to exceed 188 euros per megawatt hour for three days. This is much lower than the European Commission’s previous trigger, which was 275 euros per megawatt hour.
To address the high gas prices that have inflated citizens’ energy bills and stoked record-high inflation this year after Russia cut off most of its gas deliveries to Europe, roughly a dozen nations, including Greece, Poland, and Belgium, have demanded a cap below 200 eur/MWh.
However, Austria, Germany, and the Netherlands are among those who are concerned that the cap will cause a disruption in Europe’s energy markets and divert much-needed gas cargoes outside of the EU. They want stricter rules, like automatically suspending the cap if it causes unintended harm.
Some EU diplomats said that both sides may have enough votes to stop a deal because the positions of a few countries are still unclear.
The most recent plan calls for the EU gas price cap to prevent trades on front-month to front-year TTF contracts at prices greater than 35 eur/MWh above a reference level based on liquefied (LNG) price assessments once it is activated.
Even if the LNG price dropped significantly, the EU price cap would not fall below 188 eur/MWh. The EU cap, which is designed to ensure that the bloc can bid above market prices to attract scarce fuel, would move in tandem with any rise in the LNG reference price while remaining 35 eur/MWh above the LNG price.
The destiny of other EU energy strategies additionally depends on the gas cost cap. On Monday, countries may speed up the approval of permits for renewable energy projects, which have been held up twice pending a cap agreement.
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Additionally, ministers will try to get their negotiating position on a new EU law to cut methane emissions that cause climate change approved. According to documents seen by Reuters, some nations want to weaken the rules for oil and gas companies.
