EU leaders struggle to find common ground on energy prices

The bloc's 27 member states have been squabbling for months over measures to lower energy bills, and will arrive at their Brussels summit in a dark mood

Photo: Reuters
Photo: Reuters


Published: Thu 20 Oct 2022, 10:19 AM

On Thursday, EU leaders will debate how to handle Europe's energy shock, with capitals at loggerheads over imposing a cap on gas prices pushed skywards by the conflict in Ukraine.

The bloc's 27 member states have been squabbling for months over measures to lower energy bills, and will arrive at their Brussels summit in a dark mood.

Countries such as Italy are pushing hard for a swift and ambitious cap on prices, in the teeth of opposition from Germany, the EU's biggest economy.

"Seven months of delay has brought us a recession," Italian Prime Minister Mario Draghi told his counterparts at a summit earlier this month, according to an official with knowledge of the matter.

The European Commission — the EU's executive arm — has tried to satisfy these differing views with a series of proposals that it hopes will help Europeans pay for their heating as winter approaches.

The push for a common approach has been further hampered by discord between France and Germany, which burst into the open on Wednesday, when they delayed a regular meeting between cabinet ministers.

Breakthroughs in the EU are difficult to achieve when the bloc's biggest powers do not see eye to eye.

"There has been a lot of progress, but no fundamental breakthrough," a senior EU diplomat involved in the negotiations said, ahead of the two-day summit.

"Priorities differ: Germany has chosen security of supply because it can afford the high prices, but many countries cannot keep up with the cost," the diplomat added.

The Commission's proposals include an idea to allow joint purchases by the EU energy giants in order to command cheaper prices to replenish reserves.

Another proposal is to give the Commission the power to establish a pricing "corridor" on Europe's main gas index, to intervene when prices get out of control.

Meeting in Brussels, the EU leaders will go back and forth over the Commission's proposals, with some countries seeking something much more far-reaching than what is on offer.

"We should not have to ask the Commission four times for the same thing in order to have a proposal," Spain's Ecological Transition Minister Teresa Ribera told AFP ahead of the summit.

"It is frustrating to see how slow and painstaking Europe's response to the challenge we face is," Ribera said.

A big problem is the link between gas and electricity prices. Under EU rules, a gas price index helps set the price of electric power across the continent.

However, the index has skyrocketed since the beginning of the Russia-Ukraine conflict, since it was Moscow that supplied 40 per cent of the EU's gas imports before the war.

Several countries are calling for an exception to the gas price mechanism.

This was already granted to Spain and Portugal earlier this year, giving them freer rein to keep electricity prices lower despite surging prices.

Germany opposes this idea, arguing that cheaper gas will dissuade users from cutting back on their energy use.


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