EU leaders struggle to bridge gas price cap gap


European Union leaders struggled on Friday to bridge major differences over a natural gas price cap as winter approaches and Russia’s war in Ukraine fuels a major energy crisis, pushing prices higher for consumers and businesses.

The price cap is one of several measures the 27-nation bloc is preparing to contain an energy crisis in Europe that some say could lead to blackouts, factory closures and a deep recession over the course of of winter in economies already weakened by the coronavirus pandemic.

Russia has reduced or cut off natural gas supplies to 13 EU member countries as European governments step up support for Ukraine in the form of arms, money, aid and sanctions against Moscow. The potential for shortages has led to a spike in gas and electricity prices which could spike as demand peaks during the cold months.

The simple fact that each member country depends on different energy sources and different suppliers has stood in the way of a deal and they are struggling to agree on the best way forward.

Latvian Prime Minister Krisjanis Karins summed up the challenge for the EU as it considers a possible gas price cap.

“A gas price cap, if it could be achieved, would be grand – with the caveat that we cannot jeopardize security of supply,” Karins said. “So we can’t set the price so that nobody sells gas in Europe.”

Belgian Prime Minister Alexander De Croo said he hoped the “last hurdles” to a price cap would be overcome at the meeting, but also that the leader should agree on a common course of action to send two messages important.

“One to the energy markets, to make it clear that we no longer accept these prices, we will not continue to pay for this market manipulation. Second, an important signal to our people, to our businesses, that we are going to tackle the problem at the root,” he said.

In a choreographed moment, French President Emmanuel Macron, Dutch Prime Minister Mark Rutte and German Chancellor Olaf Scholz entered Prague Castle together on foot, past a small but boisterous crowd of pro-Ukraine protesters.

A group of 15 member countries has urged the EU’s executive arm, the European Commission, to propose a gas price cap as soon as possible, but the idea has not won unanimous support, with Germany notably blocking .

Scholz’s government is also annoying some of his fellow EU members. Polish Prime Minister Mateusz Morawiecki has criticized Germany’s plan to spend up to 200 billion euros (dollars) to help keep gas prices low for its own consumers and businesses.

“The German plan undermines and destroys the European common market,” Morawiecki said, giving German industry an edge over those of its partners. Many, including France and Italy, believe the move should have been coordinated with them or that EU money should have been used instead.

For now, according to the European Commission, Europe’s gas storage capacity stands at around 90%, even though Russian gas supplies to the EU fell by 37% between January and August, United States and Norway having stepped in to supply liquefied natural gas. But these replacement supplies have not come cheap.

“I therefore recommend intensifying negotiations with our reliable suppliers to reduce the prices of imported gas of all kinds,” commission chair Ursula von der Leyen said in a letter to leaders ahead of Friday’s summit in the Czech capital. .

Von der Leyen also recommended that countries work together to “develop price-limiting intervention in the natural gas market,” where prices have fluctuated wildly due to wartime jitters and potentially unfavorable national responses. coordinates to the problem.

As high gas prices drive up electricity prices, von der Leyen said, the EU should also work on a temporary cap on the price of gas used to generate electricity.

She also called on the EU to strengthen its energy independence by investing in infrastructure such as pipelines and efficiency measures such as installing better insulation in homes or buildings and heat pumps. Pipelines, power plants and transmission cables also need better protection, she said.

For now, a breakthrough on the price cap seems a distant prospect, but leaders could make enough progress to strike some sort of deal when they meet again in Brussels on October 20-21.

For all its difficulties, striking a gas deal is another key to resisting what the Europeans believe is Russia’s manipulation of energy markets in an attempt to weaken their resolve to support a ravaged Ukraine. the dispute.

The EU on Thursday agreed to a new set of sanctions against Russia, hitting trade, including in the technology sector, imposing travel bans and asset freezes on 30 other officials and targeting seven organisations. But the bloc is running out of economic ammunition to punish Russia.

“We need to lower energy prices. But it’s an economic issue as much as a security issue,” EU foreign policy chief Josep Borrell said. “Energy is today becoming the most important geostrategic issue, linked to war, but also to the balance of power in the world.”


Mike Corder in The Hague and Samuel Petrequin in Brussels contributed to this report.


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