The 27 heads of state or government of the European Union Member States will take part in an informal EU summit in Prague on Friday 7 October, where they will seek to provide greater clarity and a message of unity regarding their expectations of the European Commission’s forthcoming proposals to tackle soaring energy prices.
This is at least the hope expressed by the Commission on Wednesday 5 October. “The President (Ursula von der Leyen) expects Friday’s summit to be a discussion that will enable us to (...) determine together what the appropriate European solution should be”, said the institution’s chief spokesperson, Eric Mamer.
“It is important to have clarity about what we are discussing and to have a landing zone”, a senior European official agreed.
According to several European diplomats, the aim of the informal summit is to advance discussions between Member States, sending a message of unity, in order to decide on concrete measures at the European Council on 20 and 21 October.
Member States remain divided on the introduction of a gas price cap.
While some 15 countries are calling for a cap on the price of gas for all transactions on the wholesale market (see EUROPE 13031/8), others, such as Germany, the Netherlands and Luxembourg, fear that this measure will lead to an increase in gas demand and jeopardise the EU’s security of energy supply (see EUROPE 13033/2).
Moreover, it is still unclear how this instrument would be implemented. Should it be a general cap on all gas imports (including liquefied natural gas), limited to Russian gas imported by pipeline or restricted to the EU market? In the event of a generalised cap, should a dynamic cap be introduced as proposed by Belgium or should the Iberian system be extended to the whole of the EU, as advocated by France?
These are all questions that the EU27 will try to answer in order to clarify their expectations.
Commission presents roadmap to guide discussions
Speaking to MEPs in Strasbourg, Ms von der Leyen announced that she would present “a roadmap in a letter to leaders in view of our meeting in Prague later this week”.
She recalled that the Commission was ready to discuss a price cap on gas used to generate electricity in order to reduce electricity prices in anticipation of a structural reform of the electricity market.
“Such a measure requires both binding saving requirements to compensate for weaker price signals and safeguarding cross-border flows of subsidised electricity and to our neighbours”, the President says in her letter.
She also said it was necessary “to look at gas prices beyond the electricity market”, as “the situation has critically evolved”.
Without going into detail, she said that the gas price cap would be “a temporary solution until a new EU price index (editor’s note: an alternative index to the Dutch TTF) ensuring a better functioning market is developed”.
“Pending the introduction of such a complementary benchmark, we should consider a price limitation in relation to the TTF in a way that continues to secure the supply of gas to Europe and to all Member States and that would demonstrate that the EU is not ready to pay whatever price for gas”, she says in her letter to Member States, confirming comments made the previous day by the European Commissioner for Energy Kadri Simson.
However, a gas price cap carries “risks”, the letter continues, and therefore requires “safeguards” to be put in place.
On this point, the letter refers to a need for “more demanding gas saving obligations”, through EU-wide demand reduction auctions and binding solidarity agreements between Member States.
“The Commission will work closely with your authorities to design a possible capacity-limiting measure”, the letter adds.
When asked about the scope of the cap - whether it would be limited to the EU market or extended to imports - Mr Mamer insisted that Ms von der Leyen had never said that the Commission would introduce a price cap on gas imports.
On this point, the President’s letter recommends “stepping up negotiations with our reliable suppliers to reduce the prices of imported gas of all kinds” through price “corridors”.
Ms von der Leyen is also considering a proposal to define the rules for the participation of Member States and industry in the EU’s common energy platform in order to give it a central role in the supply of gas to the EU and to ensure competitive prices on the world markets.
On the structural reform of the electricity market, Ms von der Leyen’s letter assures that the institution will present, by the end of the year, ideas to make the market “fit for a more decarbonised future”.
It should also be noted that Mr Mamer was unable to say whether the Commission will present a new legislative proposal before the informal meeting of Member States’ energy ministers on 11-12 October in Prague.
See Ms von der Leyen’s letter: https://aeur.eu/f/3f9 (Original version in French by Damien Genicot)