EU Exploring Various Ideas for Price Capping

EU Exploring Various Ideas for Price Capping

According to the EU’s head of energy policy, the European Commission is exploring different forms of gas price capping, including one that targets gas used in power generation and a temporary “flexible” price cap, Reuters reported.

With their government leaders scheduled to argue over the issue at a summit on Friday, the European Union countries are at odds over whether to cap gas prices in an effort to lower surging inflation.

Kadri Simson, the EU’s Energy Commissioner, stated that the outcome of this meeting would determine Brussels’ subsequent course of action, but that the Commission was considering a variety of approaches to control rising gas prices brought on by a decline in Russian supplies.

“One way forward would be to consider a flexible pricing limitation in relation to the TTF in a way that continues to secure the supply of gas, notably LNG, to Europe,” Simson told a European Parliament committee meeting, referring to the Dutch Title Transfer Facility gas price.

According to Simson, such a policy would only be in place while the EU develops a benchmark price other than the TTF.

Another choice, according to her, is to introduce an EU “framework” for a cap on the price of gas used to produce electricity, together with steps to make sure gas demand does not increase as a result.

Last week, France, Italy, Poland, and 12 other EU nations pushed the Commission to suggest a more expansive price restriction that would cover all wholesale gas trade. The Netherlands and Germany, the two countries that purchase the most gas in Europe, are opposed.

The European Union’s energy security would be at stake, and gas shipments between member states would be disrupted, according to a warning from Brussels.

Since its invasion of Ukraine in February, Russia has reduced gas supply to Europe. Moscow attributes the reductions on Western sanctions enacted in retaliation for the war.

Since then, the EU has approved emergency legislation to replenish gas storage, obligatory gas demand reductions in the event of a supply shortage, and windfall profit levies to collect funds for consumer bill assistance. However, several EU nations claim those steps do not go far enough because petrol costs are still too high.

According to draught conclusions for Friday’s EU leaders summit obtained by Reuters, the Commission will be tasked with coming up with “workable solutions” to cap gas prices and lower them.


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