As Member States’ energy ministers meet in Brussels on Tuesday 13 December, the Czech Presidency of the EU Council submitted to national delegations a new (third) draft compromise on the legislative proposal to cap gas prices in the event of sharp increases (‘market correction mechanism’).
The document, reviewed by the Member States over the weekend, is the fourth iteration and was being discussed by the Member States’ ambassadors to the EU (Coreper) at the time of going to press on the evening of Monday 12 December.
A dynamic ceiling
While it does not change the conditions for activating the mechanism compared to the previous version (see EUROPE 13078/15), the draft compromise transforms it into a dynamic rather than a fixed ceiling.
In concrete terms, once activated, the ceiling would be set at €35/MWh above the reference price for liquefied natural gas (LNG). It would apply for at least 20 consecutive trading days, unless the European Commission decides to suspend it.
The ceiling would then be deactivated if its level is below €220/MWh for 5 consecutive trading days.
Furthermore, the draft compromise specifies that the ‘market correction mechanism’ concerns only regulated markets, and not ‘multilateral trading facilities’ (MTFs).
It also adds a provision allowing the Commission to assess, by 1 July 2023 at the latest, whether the conditions for activating the ceiling are still appropriate in the light of market and security of supply developments, and to propose an amendment to the legislation.
This possibility of revision is in addition to the obligation to review the mechanism by 1 November 2023 at the latest, which was already provided for in the text.
A meeting with an uncertain outcome
Despite the efforts of the Czech Presidency, the Member States remained strongly divided on the eve of the ministerial meeting.
“At this moment in time, probably not one Member State is happy with the proposal we have on the table. We will see tomorrow whether there is a political possibility to come to an agreement [but] we are absolutely not there yet”, was the analysis of a senior European diplomat on Monday 12 December, a few hours before the final Coreper discussion.
Belgian Energy Minister Tinne Van der Straeten, who is in favour of a cap, said she was “optimistic” and “confident” that the ministers would be able to “implement common solutions to the energy crisis”.
According to several sources, it is not unlikely that the ministers will agree on the functioning of the mechanism, leaving the definition of the numerical parameters temporarily aside.
However, Prague hopes to settle the matter on Tuesday, by gathering as much support as possible among Member States. While the ministers’ adoption of the text requires a qualified majority, failure to reach an agreement would probably lead to the heads of State or government of the Member States taking up the matter at the European Council on 15 December, which would then require a unanimous decision.
As a new draft of the European Council conclusions obtained by EUROPE indicates, EU leaders will indeed address the energy issue. However, the part of the conclusions on a potential gas price cap remains missing at this stage, pending the outcome of the ministers’ meeting.
In addition to the subject of the ‘market correction mechanism’, two other proposals for Council regulations are also on the agenda for this meeting: - one on gas solidarity, joint gas procurement and the creation of a benchmark for liquefied natural gas (LNG) transaction prices; - and the other on accelerating the permit-granting process for certain renewable energy projects.
If an agreement emerges on the cap, both texts will be adopted without debate. The ministers had agreed on their content at their previous extraordinary meeting, but were unable to adopt them due to divisions over the gas price cap (see EUROPE 13071/2).
See the draft compromise: https://aeur.eu/f/4ml
See the draft conclusions of the European Council: https://aeur.eu/f/4m1 (Original version in French by Damien Genicot)