EU member countries reach compromise on gas price cap
BRUSSELS –
European Union ministers on Monday finalized a long-awaited deal to implement a pure gasoline worth cap that they hope will assist households and companies higher climate extreme worth surges.
EU member international locations failed to beat their variations at earlier emergency conferences, however a number of EU leaders mentioned final week that fixing a most ceiling to pay for gasoline was more likely to be achieved this time. After talks in Brussels on Monday, the Czech presidency of the European Council, which represents member international locations, mentioned a deal had been reached.
“We have succeeded in finding an important agreement that will shield citizens from skyrocketing energy prices,” mentioned Jozef Sikela, the Czech minister of Industry and Trade, including that the mechanism will steer the 27-nation clear “from risks to security of supply and financial markets stability.”
Since it couldn’t discover a consensus on the divisive matter, the Czech presidency opted for a “qualified majority” because the voting rule to succeed in the political settlement. Under EU guidelines, a professional majority requires that 55% of member international locations, or 15 out of the 27, vote in favour of a proposal. Such a vote additionally requires that these nations symbolize not less than 65% of the bloc’s inhabitants.
Under the settlement, the mechanism will kick off if costs exceed 180 euros (US$190) per megawatt hour for 3 days and whether it is 35 euros larger than a reference worth for LNG on international markets for a similar interval. Once triggered, the mechanism will stay lively for not less than 20 days.
Sikela mentioned the 180 euros restrict “is not a cap as such” and that costs can nonetheless go above this degree if costs on the LNG markets are larger than 145 euros per megawatt hour.
“In other words, this is not a fixed cap, but rather a dynamic one,” he mentioned.
The measure will apply from Feb. 15 subsequent 12 months as soon as formally accredited by written process.
The EU’s government Commission final month proposed a “safety price ceiling” to kick in if pure gasoline exceeded 275 euros (US$290) per megawatt hour for 2 weeks and whether it is 58 euros larger than the worth of liquefied pure gasoline on world markets.
Such a system won’t have averted hikes as excessive as in August — when costs hit almost 350 euros per megawatt hour on Europe’s TTF benchmark however fell beneath 275 euros inside days — and was met with derision by many international locations together with Spain, Belgium, Greece and Poland, pushing for a decrease set off.
The 27 EU nations have caught collectively via 9 rounds of sanctions in opposition to Russia over the warfare in Ukraine and energy-saving measures to keep away from shortages of the gasoline used to generate electrical energy, warmth properties and energy factories.
But they had been unable till Monday to shut a deal on setting the difficult worth cap for pure gasoline. The cap was promised in October as a strategy to cut back vitality payments which have soared throughout Russia’s invasion of Ukraine.
“We have proved that the EU is united and will not let anybody use energy as a weapon,” Sikela added.
The gasoline cap subject is a divisive one due to fears that international suppliers would bypass Europe when different consumers supply more cash.
“No one, least of all me, has anything against low prices on the gas market. We have to bring gas prices down,” German Economy Minister Robert Habeck mentioned upon his arrival on the assembly. “We just know from previous market interventions that we must be very careful not to want to do something good and trigger something bad.”
Hungary’s overseas minister, Peter Szijjarto, mentioned Budapest continues to oppose the introduction of a gasoline worth cap as a result of it’ll result in worth improve. He mentioned that the EU ought to as an alternative deal with constructing pipelines and LNG terminals whereas on the lookout for new sources.
The Council mentioned an emergency brake has been devised to droop the mechanism if “gas demand increases by 15% in a month or 10% in two months, LNG imports decrease significantly, or traded volume on the TTF drops significantly compared to the same period a year ago.”
The mechanism can even mechanically deactivate as soon as LNG costs drop again beneath 180 euros, Sikela mentioned.
The scare of exorbitant costs got here within the warmth of summer time when a large August spike surprised customers and politicians, forcing the bloc to search for a cap to comprise risky costs which might be fueling inflation.
The compromise on the worth cap unlocked plans for joint gasoline purchases and a solidarity mechanism to assist the neediest international locations because the vitality measures had been agreed on as a package deal.
“I welcome today’s agreement in the Energy Council on joint purchasing, speeding up permitting for renewables and the market correction mechanism,” mentioned European Commission President Ursula von der Leyen, who heads the EU’s government arm. “These decisions will enable the EU to prepare for the next winter more effectively and fast-track the deployment of renewables.”
Member international locations additionally agreed on a proposal to cut back methane emissions, one of many greatest causes of local weather change, second solely to carbon dioxide. The gasoline additionally causes critical well being issues.
“This will help us meet our commitments under the Global Methane Pledge to cut methane emissions by 30% by 2030,” Sikela mentioned.
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Associated Press author Geir Moulson in Berlin contributed to this story.
