“It’s a bad joke”: the energy ministers have rejected the proposal for an EU ceiling on gas prices

Energy ministers slammed the European Commission’s latest proposal to set a Europe-wide cap on gas prices, calling it unsuitable, unrealistic and a “bad joke” during a meeting in Brussels.

Their sharp disagreements over the price cap delayed the passage of two separate emergency regulations to address the energy crisis, where consensus had already been reached.

“It is absolutely unenforceable, inefficient and out of reach,” Teresa Ribera, Spain’s ecological transition minister, said on Thursday morning. “It’s a bad joke.”

Her Maltese counterpart, Miriam Dalli, said the cap, as designed by the European Commission, was “not fit for purpose” and “definitely not dynamic in nature”.

“The concomitant conditions that are being imposed make it unlikely or nearly impossible to actually trigger this corrective mechanism,” Dalli told reporters. “That’s not what we asked for.”

Meanwhile, the Netherlands, a country staunchly opposed to any price intervention, said the instrument was “defective” and potentially “harmful” to the EU’s security of supply and financial stability.

“More homework needs to be done,” Dutch Energy Minister Rob Jetten said.

The Czech Republic, which holds the rotating presidency of the EU Council, intended to open a discussion on the price cap and move forward with two separate regulations: one on the price joint gas purchases and one second ahead faster authorization rules for renewable technologies.

But a group of 15 per-cap countries, deeply dissatisfied with the European Commission’s draft, pushed to tie the price cap to the other two packages in order to get amendments in their interest.

Luxembourg, Austria, Finland, Denmark, Ireland, Estonia and the Netherlands have opposed the idea, diplomats told Euronews, but the Czech Republic has accepted the compromise and will convene a new extraordinary meeting in mid-December to give the green light. to the three energy regulations.

“We are not uncorking the champagne yet, but we are putting the bottle in the fridge,” said Czech Industry Minister Jozef Síkela, who described Thursday’s meeting as “pretty heated”.

“We are ready to do what we can,” added Síkela. “There’s just too much at stake.”

At the heart of the controversy is the draft introduced just two days ago by the European Commission.

The executive has designed a “last resort” limit that will apply to the Dutch Title Transfer Facility (TTF), Europe’s main hub for gas trading. The platform has seen sharp ups and downs since Russia launched its invasion of Ukraine and disrupted global energy markets.

The proposed limit will be activated automatically but only if two basic conditions are met:

  1. If TTF prices reach or exceed €275 per megawatt hour for at least two weeks.
  2. If the TTF prices are €58 higher than the liquefied natural gas (LNG) market reference for at least 10 consecutive trading days.

Furthermore, the Commission has introduced a number of “safeguards” that can suspend the mechanism altogether in the event of unforeseen and unintended consequences, such as a drop in supplies or a loss of liquidity.

“We stand ready to facilitate a deal and help resolve concerns,” said Kadri Simson, European Commissioner for Energy. “This is an extraordinary tool for extraordinary times.”

Simson noted that it was up to ministers to tweak and amend the draft text but stressed the cap was not “about a number”. The safeguards, he said, were needed to ensure the EU continues to receive cargoes of LNG, which can easily be diverted to other regions in search of higher profits.

“It’s best to think twice and calibrate,” Simson said.

Price range in question

But the 15 Member States those who have spent the past few months advocating for a forceful and far-reaching intervention see things differently.

For them, the conditions are so stringent and specific that the roof will be rendered useless.

“The conditions appear to be designed in such a way that the price cap is never enforced,” Ribera said. “This proposal could stimulate a rise in prices rather than contain them.”

For Ribera, the 275 euro sticker requested by the Commission is excessively high and static.

The bloc only breached that barrier a handful of days during the summer when the TTF experienced record-breaking spikes. The latest TTF prices are between €115 and €125 per megawatt-hour.

“If we have gas prices of 275 euros (per megawatt hour) for 15 days, Europe will never recover from that economic shock,” Ribera said, instead suggesting a dynamic price range with an attached premium.

His Greek counterpart, Kostas Skrekas, echoed his comments and said Europe was paying for “the most expensive natural gas in the world”.

“Put a ceiling on 275 euros is really not a ceiling,” Skrekas told reporters. A range between €150 and €200 would be “a realistic ceiling,” he suggested.

France, Italy, Belgium and Malta have also expressed criticism of the European Commission’s draft text and the strict activation criteria that have been introduced.

Even in the group of countries considered skeptical of price intervention, sentiments were mixed.

The proposal is “flawed” and carries “many risks” to security of supply and financial stability, Dutch Energy Minister Rob Jetten said. “I’m very critical, but from a different point of view,” he said.

For Germany, a country whose main priority is to secure as much gas as possible to compensate for the loss of Russian supplies, the proposal goes in the “right direction” and only some “minor changes” will be needed.

“It is crucial for us that safeguards are in place and that we avoid gas rationing in Europe,” said Sven Giegold, German state secretary for economics and climate action.

“The gas logic would be the wrong answer for citizens and businesses in such a crisis.”

Estonia, which shares similar concerns to Germany’s, also expressed a generally positive view.

“The proposal on the table is fine, more or less. But the measure must be temporary and only work for extreme price increases,” said Riina Sikkut, Estonia’s minister of economic affairs and infrastructure.

“Security of supply is paramount. Europe has yet to be an attractive gas market. We cannot question that.”

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