EU heads of state and government will meet again in Brussels on Thursday to discuss their fellow citizens' energy bills. The first time Europeans discussed rising energy prices was a year ago. Russia had not yet invaded Ukraine or slashed its gas supplies to the EU, but post-Covid-19 growth had created inflationary pressures. At the time, the discussion was already lively, as the countries of the south, led by Spain and Portugal, were worried about the consequences of a price hike that was only just beginning.
Ursula von der Leyen is holding off on proposing a gas price cap seemingly because Germany does not want it, infuriating southern European countries. Prime ministers and presidents from the EU’s 27 countries are gathered in Brussels today for a summit that will focus on the continued energy challenges stemming from the Ukraine war, and fears for the coming winter. They are expected to give their nod to a package of proposals for unprecedented interventions in the energy market unveiled by the European Commission on 18 October, but they will spend most of their time on what is missing from this package: a cap on the wholesale price EU countries pay for gas imports.
A total of 15 EU countries – including Belgium, France, Greece, Italy, Portugal, Romania, Slovenia and Spain – have called for this cap, while 11 countries – including Germany, Sweden, Austria, Denmark and the Netherlands – oppose it. The opponents say it would backfire on the EU because the liquefied natural gas (LNG) Europe so desperately needs would go to global competitors willing to pay more.
“What will we do if LNG tankers are redirected to Asia?” asked Luxembourg’s Energy Minister Claude Turmes on Tuesday. “A cheaper and safer alternative is to reduce consumption first, and cap only gas used in electricity production.” The other problem with capping the price of imports is this could require the creation of a new EU coordination agency that would need to manually allocate gas supplies if energy demand in several countries spiked at the same time – and the price cap restricted supplies to meet that demand.
On Thursday, October 20, European heads of state and government will meet again in Brussels to discuss the issue, and exchanges are expected to be heated, given the considerable economic and social stakes involved. On Tuesday, October 18, the Commission presented new proposals in the area of energy, but they do not tackle head-on the issue of their citizens' energy bills.
So far, the EU-27 have been able to respond to the first challenge posed by the war in Ukraine: doing without Russian gas this winter. They have reduced their gas consumption (by 15%) and have committed to reducing electricity consumption (by 5% at peak times). They have filled their reserves to over 92% and increased their purchases from other suppliers, such as Norway and the United States.
However, the issue of electricity prices being linked to gas prices remains unresolved. As the employers' organization BusinessEurope reiterated in a statement on October 17, the current situation could lead to "the closure of thousands of companies" that cannot pay their energy bills and to the relocation of entire sections of European industry.
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EU heads of state and government are meeting in Brussels on Thursday to try to reach a consensus on how to curb high energy prices and make sure Europeans can weather the economic storm ahead.
Leaders will consider the latest package of measures proposed by the European Commission which includes joint gas purchases and a dynamic cap for transactions at Europe's benchmark, the Dutch Title Transfer Facility (TTF).
The other main topic for leaders to discuss will be how to protect the bloc's economy, hit hard by high energy prices.
Countries are also expected to discuss Russia's war in Ukraine following a virtual address by Volodymyr Zelenskyy and EU-China relations as President Xi Jinping's leadership was renewed for a third unprecedented third term.
