EU countries clash over gas price cap

  • EU approves windfall energy profit levies
  • Countries consider capping gasoline prices as next step
  • States divided on how to contain exorbitant prices

BRUSSELS, Sept 30 (Reuters) – European Union countries disagreed on Friday on whether and how to cap gas prices, with Germany among those opposing the move. measure that 15 other States deem necessary to deal with the energy crisis in Europe.

Meeting in Brussels on Friday, ministers from the 27 EU member states approved levies on the windfall profits of energy companies to try to contain a spike in energy prices made worse by Russia’s war on Ukraine.

The deal covers a levy on fossil fuel companies’ excess profits made this year or next, another levy on excess revenue that low-cost power generators make from soaring electricity costs and a mandatory 5% reduction in electricity consumption during peak periods.

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The Czech Republic, however, said that was not enough and that many EU countries were waiting for a proposal from the bloc’s executive European Commission on gas price caps.

Speaking after the meeting, EU Energy Commissioner Kadri Simson said there was no agreement on what such a cap would look like.

“We will (…) try to negotiate a price corridor, not a fixed ceiling, which allows us to lower the costs for our consumers,” she said at a press conference.

“A wholesale gas price is a legitimate option, but it requires radical market intervention,” she said, adding that several “non-negotiable terms” would need to be put in place alongside such a cap for it works.

Italy’s energy minister says a group of countries will discuss among themselves next week ideas for a cap or ‘smart indexing’ to help the Commission draft a legal proposal that all countries can support .

“The priority right now is to drastically reduce the price of gas. But there is a second priority: to prevent this kind of action from leading to a shortage of gas,” said Roberto Cingolani.

Fifteen countries, including France, Italy and Poland, asked Brussels this week to propose a price cap on all wholesale gas transactions to contain inflation.

German Economy Minister Robert Habeck said he believed EU ministers could find a “better solution” to a broad price cap before their next meeting on October 11.

“A hard cap on the price of gas can only work if we answer the question of what happens if not enough gas comes to Europe… The only answer I hear is that then the amount would be divided. I don’t think it’s politically possible,” he said.

‘STOP THIS FIGHT AGAINST’

The Commission warned countries this week that a wide cap would require “significant financial resources” to finance emergency gas purchases if market prices were to rise above the EU cap.

Denmark, Austria and the Netherlands have sided with Germany to oppose the idea, which they say could leave countries struggling to buy gas if they cannot. not compete with buyers in competitively priced global markets.

Brussels suggested the EU could go ahead with a tighter price cap, for example by simply capping supplies of Russian gas, but countries like Belgium and Hungary were against it. Another idea, similar to what Spain was already doing at home, was to specifically target gas used for electricity generation.

By introducing EU-wide measures, Brussels hopes to overlay governments’ uneven national approaches to the energy crisis, which have seen richer European countries spend far more than poorer ones to hand out cash struggling businesses and consumers struggling with bills.

Germany, Europe’s biggest economy, on Thursday presented a 200 billion euro package to tackle soaring energy costs, including a curb on gas prices.

Claude Turmes, Luxembourg’s energy minister, has urged the EU to step in and put an end to a “senseless” spending race between countries.

“This is the next frontier, to get more solidarity and end these infighting,” Turmes said. ($1 = 1.0182 euros)

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Reporting by Kate Abnett and Gabriela Baczynska, Philip Blenkinsop, Bart Meijer, Marine Strauss, Alvise Armellini and John Chalmers; Editing by Alex Richardson

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