The EU is making a final push for a gas cap deal this year

The EU is making a final push for a gas cap deal this year

European Union energy ministers are meeting in Brussels on Monday in an effort to agree on a cap on gas prices, an emergency measure that has divided opinion across the bloc in an attempt to stem the energy crisis. National leaders last week urged their ministers to approve the cap on Monday to end a policy that has been debated for months without agreement despite two emergency meetings.

They are now considering a new compromise proposed by the Czech Republic, which holds the rotating EU presidency. The draft, seen by Reuters, would trigger a cap if prices in the Dutch gas hub’s title transfer (TTF) contract for the previous month exceed 188 euros per megawatt hour for three days – well below the 275 euros/MWh originally proposed by the European Commission. Last month.

About a dozen countries, including Belgium, Poland and Greece, demanded a cap below 200 euros/MWh to counter high gas prices that inflated citizens’ energy bills and fueled high inflation this year after Russia cut off most of its gas. Deliveries to Europe. “It’s about our energy future. It’s about energy security. It’s about how we have affordable prices, that we avoid deindustrialization,” said Belgian Energy Minister Tin van der Straeten.

But Germany, the Netherlands and Austria fear the cap could disrupt Europe’s energy markets and divert much-needed gas shipments from the EU. They sought stricter conditions, such as automatically suspending the cap if it had unintended negative consequences. “No one in Germany is against low fuel prices, but we know that we have to be very careful not to wish for good but to do bad,” said German Economy Minister Robert Habeck.

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Two senior EU diplomats said pro-Cap countries now had enough support to approve the move without the backing of Germany, Europe’s biggest economy and gas market. If that happens, “we’ll have to live with it,” Habakkuk said.

Under the latest proposal, once activated, the EU cap would prevent trading of TTF contracts between the forward months and the forward year at a price of more than €35/MWh above the reference level which includes liquefied natural gas (LNG) price estimates. The EU price cap will not fall below €188/MWh, even if the price of LNG falls to much lower levels. If the benchmark LNG price rises to higher levels, the EU cap will move with it, while remaining €35/MWh above the LNG price – a system designed to ensure the bloc can bid above market prices to attract the scarce fuel.

The fate of other EU energy policies is tied to the cap. States have twice delayed approving faster renewable energy permits, pending an agreement on the cap. Ministers will also try to confirm their negotiating position on a new EU law to cut planet-warming methane emissions. Documents seen by Reuters show some countries are seeking to weaken the proposed rules.

(This story was not edited by the Devdiscourse team and was automatically generated from a syndicated feed.)

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