The European Commission will present a package of proposals to tackle rising energy prices on Tuesday 18 October, the Commissioner for Energy, Kadri Simson, announced in Prague after an informal meeting of EU energy ministers.
This will be the second emergency package proposed by the Commission, following the one adopted by the Council of the European Union on 30 September (see EUROPE 13033/1). This new package will cover gas, whereas the first one focused more on electricity.
It will deal with “those aspects where we have maximal consensual support”, the Commissioner stressed.
Clarifying its content, she said that the package will include a legislative proposal for the development of an index for the price of gas alternative to the Dutch TTF (the current benchmark index used in the European gas market). The latter “is no longer representative of the reality of the EU’s energy market and artificially inflates prices”, said Ms Simson.
As this new index would probably not be in place until “the next (gas stock) filling season”, the Commissioner stated that work is also needed on a temporary mechanism to limit gas prices in the short term.
She added: “As part of the upcoming package, we will set out how this mechanism could work and how to mitigate the risks such mechanism inevitably entails”.
This instrument should allow the EU “to be ready”, if negotiations with EU gas suppliers are not quick enough, Ms Simson stressed, while recalling the Commission’s preference to limit imported gas prices “via negotiations through our partners”. She indicated that she will soon visit Norway to discuss the introduction of price corridors.
The approach of negotiating with gas supply countries is also favoured by Germany and the Netherlands. This is an option “much preferred to a cap on gas import prices”, say the two countries in a non-paper prepared ahead of the ministers’ meeting.
Price cap idea on hold
In view of Ms Simson’s statements, the option advocated by more than 15 Member States (17 according to the Polish minister) of a general cap on wholesale gas prices (see EUROPE 13031/8) is not expected to be part of the package of measures scheduled for next week.
“At this stage, the options that are proposed to rework the TTF are more reassuring for those who have concerns about Europe’s (gas) supply”, a member of the cabinet of French Energy Transition Minister Agnès Pannier-Runacher confirmed to EUROPE.
Another option that has been left aside for the time being is the capping of the price of gas used for electricity generation.
On this point, the Commissioner said that the Commission will consider how to proceed “over the weekend”, if a large majority of Member States support this measure.
France intends to gather as many EU countries as possible around a joint letter defending the generalisation of the Iberian mechanism (see EUROPE 12968/4) to the whole of the EU, later this week.
Measures in the electricity sector that could increase gas demand should be considered with caution and should also include load sharing, Germany and the Netherlands stressed in their joint paper.
Further reduce gas demand
The Commission also intends to highlight the need for further reduction of gas demand.
“This is not a nice-to-have, but a necessity to guarantee the security of supply in the context of a market intervention”, Ms Simson warned.
To this end, the Commissioner is considering the possibility of triggering the alert at EU level. This mechanism is provided for in the regulation on the reduction of gas consumption in the Member States and makes the 15% gas demand reduction target mandatory (see EUROPE 13000/1).
“Further measures” may be needed to ensure that gas savings reach a sufficient level, she also said.
Facilitating joint gas purchases
The package will also include a proposal to facilitate joint gas purchases, focusing “on coordinating and aggregating the filling of gas storage for next winter”.
The stated aim is to use the EU’s collective purchasing power to limit prices and prevent Member States from overbidding on the market.
“There is a clarity that we will purchase the gas for the next winter together through the (EU) joint purchasing platform”, said the Czech Minister of Industry and Trade, Jozef Síkela, when asked about the points of agreement at the meeting.
In order to ensure solidarity between Member States, the Commission also intends to present a proposal for an applicable arrangement to address the fact that not all Member States have mutual solidarity agreements in place.
“This will ensure that we will be prepared and ready to act in case these agreements will be needed”, Ms Simson stressed, while assuring that she is considering the need to make other proposals for situations where certain regions face a greater supply shortage.
See Germany and the Netherlands’ non-paper: https://aeur.eu/f/3k9 (Original version in French by Damien Genicot)