Investing 23-11-2022 14:19 12 Views

European Union Members Divided Over a Proposal to Cap Gas Prices

The energy crisis in Europe continues to draw division among EU member states regarding the best way to address it. Some members are now against plans to cap natural gas prices at €275 per megawatt hour.

One of the most contentious responses from the EU to the energy crisis brought on by Russia’s incursion of Ukraine has been the introduction of a ceiling on gas pricing.

Member states supported the proposal in October.

The proposal received political support from the 27 EU members in late October, following months of deliberation. However, a few countries request specific protections before approving the idea, while others claim the threshold is quite high.

After the EU set the cap, Greece’s minister for energy and environment, Kotas Skrekas said:

A price cap at the levels that the commission is proposing is not in fact a price cap. So [a] price cap at 275 euro is not a price cap, nobody can, can stand buying gas at this expensive price for a long time. We surely believe that the price cap below 200 euro, between 150 and 200 euro, would be more realistic.

On Tuesday, EU energy ministers met to discuss the price cap proposal, which received support from nations such as  Belgium, Greece, Poland, and Spain, among others. On the other hand, Germany and Netherlands have been sceptical regarding the benefits of the price cap.

EU’s proposal could be hard to implement

The European Commission has presented a price cap that might be hard to implement to bring all 27 member states together on the proposal. 

According to an EU official from one of the member nations who sought anonymity, the meeting will be for grumpy people. However, the official added that the commission should offer additional guarantees that the measures won’t distort markets.

European commissioner for energy Kadri Simson said that their proposal is balanced and is meant to curb excessive gas prices. Early in the week, a group of energy exchanges called Europe said they were concerned about market correction mechanisms that might impact financial stability. However, Simon said that the Market Correction Mechanism proposal has already factored this in, and risks for supply are minimal.

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