Meeting in Brussels on Thursday 24 November, EU energy ministers failed to reach formal agreements on two draft EU regulations aimed at strengthening gas solidarity and speeding up permitting procedures for renewable energy projects respectively, due to divisions over the gas price cap.
However, both texts are the subject of an informal agreement which the Ministers plan to endorse on 13 December (provisional date), at a new extraordinary meeting in Brussels (the fifth under the Czech Presidency of the EU Council).
This gives Member States time to make progress on the European Commission’s legislative proposal to address excessive fossil gas prices by capping the settlement prices of energy derivatives traded on the virtual Title Transfer Facility (TTF), the benchmark index generally used in the EU. Their aim is to adopt the three proposed regulations together at the next ministerial meeting.
“My proposal was to agree on the content of the two regulations (...) and to formally seal the deal together with the gas price cap proposal”, said the Czech Minister of Industry and Trade, Jozef Síkela.
Several ministers from countries that support a gas price cap have called for the three proposals to be treated as a package, in order to achieve a balanced package.
“It would be a huge mistake to approve today the aspects of solidarity and joint purchase, leaving the cap on the price of gas for later, when precisely the price of gas is the key to everything that is happening to us right now”, said, for example, the Spanish Minister for Ecological Transition, Teresa Ribera, upon her arrival at the meeting.
According to our information, the group of 15 Member States that wrote a letter calling for a cap (see EUROPE 13031/8) was the driving force behind this request.
A heavily criticised cap proposal
Presented on 22 November (see EUROPE 13068/2), the Commission’s proposal - known as the ‘market correction mechanism’ - has provoked a wave of criticism from Member States, both from those in favour of a cap and those opposed to such an instrument (see EUROPE 13069/19).
“The gas price cap which is currently in the document does not satisfy any country. It’s a kind of joke for us”, underlined the Polish Minister for Climate and Environment, Anna Moskwa.
“We believe that it is a proposal that could never be carried out and, in that sense, we believe that it is a joke in bad taste on the part of the European Commission”, Ms Ribera joined her in saying.
Along with other Member States (France, Belgium, Italy, Malta and Greece), Poland and Spain believe that the proposed mechanism is insufficient. Not only do these countries consider the conditions for its activation to be too demanding - such as the price level of €275/MWh - but some also criticise its design, in particular the fact that it is a fixed cap.
“It is not dynamic in nature and also the concurrent conditions that are being imposed makes it improbable or almost impossible to actually trigger this corrective mechanism”, deplored, for example, the Maltese Minister for the Environment, Energy and Enterprise, Miriam Dalli, echoing the comments of her Belgian and Spanish counterparts.
The Greek Environment and Energy Minister, Konstantínos Skrékas, for his part, called for a “realistic” cap of between €150 and €200.
On the other hand, the countries opposed to a cap, notably Germany, the Netherlands and Estonia, held a completely different discourse.
Asked about the possibility of lowering the Commission’s proposed cap, the German State Secretary in the Ministry of Economics and Climate Action, Sven Giegold, said that too low a figure will simply lead to a shortage of gas supply.
The solution, he said, lay in bringing more gas to Europe “from trustworthy sources”, replacing gas with renewables and stepping up efforts to save gas (he called for making the 15% gas reduction target binding).
“If we regulate only the price without tackling demand, we will in the end have a new gas crisis”, he said.
Summing up the situation, Mr Síkela acknowledged that the discussion between ministers “was quite heated” due to “very different” views on how the cap should work, including the price level proposed by the Commission. He was nevertheless optimistic that the EU Council would be able to reach an agreement by 13 December.
While many changes could occur in the text presented, the Commissioner for Energy, Kadri Simson, said in particular: “I trust that ministers with their amendments will keep in mind that whatever mechanism we will agree on will work in the way that it does not jeopardise our security of supply”.
Unrealistic demands?
In the face of sometimes harsh criticism from Member States, some experts point the finger of blame at them.
“Some energy ministers complained that the gas price cap proposal did not meet their expectations. But they are losing sight of what was really the task given to the Commission”, analysed Bram Claeys, senior advisor to The Regulatory Assistance Project, an NGO specialising in the transition of the energy sector.
In his view, the Member States may actually have got what they asked for, as the Commission had to manoeuvre within a framework restricted by the European Council conclusions of 20-21 October (see EUROPE 13047/1). The conclusions set out a series of conditions, such as the temporary nature of the cap, guarantees for the security of EU gas supply, priority for gas saving efforts and no disruption of intra-EU gas flows.
“The Commission is in an impossible situation, (because) Member States keep pushing for something that can simply not be delivered”, agreed Simone Tagliapietra, a researcher on EU climate and energy policy at the Bruegel think tank.
Stabilised texts
On the other two regulations, the ministers indicated that the texts were stabilised.
“No further negotiations on these regulations will be necessary”, Mr Síkela said.
Presented on 18 October, the first proposal for a regulation introduces, among other things, temporary rules to stimulate joint gas purchases and ensure solidarity between Member States on gas in the absence of bilateral agreements (see EUROPE 13045/1).
In addition to these solidarity measures, the text provides for the development of an alternative European index to the Dutch TTF for liquefied natural gas (LNG) prices as well as the capping of intraday highs on the energy derivatives market.
The second text aims to stimulate the deployment of renewable energies by facilitating and accelerating the procedures for granting the permits necessary for their installation (see EUROPE 13060/7).
EUROPE will continue to follow this story. (Original version in French by Damien Genicot)