Energy crisis: EU outlines possible gas price cap strategies

subscribe

BRUSSELS -

The European Commission has outlined possible strategies to cap gas prices as the bloc faces a looming energy crisis this winter. 

Member states are divided over the emergency measures designed to pull down soaring inflation amid Russia's war in Ukraine. 

One proposal is a temporary "flexible" limit on gas prices to ensure that Europe can continue to secure enough gas, EU energy commissioner Kadri Simson said on Tuesday. 

Another option could be an EU-wide "framework" for a price cap on gas used to generate electricity, which would be combined with measures to ensure gas demand does not rise as a result, she said.

EU leaders are meeting on Friday to debate gas price cap strategies.

Last week, France, Italy, Poland and 12 other EU countries urged the Commission to propose a broader price cap targeting all wholesale gas trade. 

But Germany -- Europe's biggest gas buyer -- and the Netherlands are among those opposed.

Russia has slashed gas deliveries to Europe since its February invasion of Ukraine, with Moscow blaming the cuts on Western sanctions imposed in response to the invasion.

Since then, the EU has agreed on emergency laws to fill gas storage and windfall profit levies to raise money to help consumers with bills. 

Price cap critics
One energy analyst told Euronews that an energy price cap was an "unchartered territory" for the European Union. 

The EU's energy sector is largely liberalised and operates under the fundamental rules of supply and demand.

"My impression is that member states are looking at prices and quantities in isolation and that's difficult because of economics," said Elisabetta Cornago, a senior energy researcher at the Centre for European Reform.

"It's hard to picture such a level of market intervention This is uncharted territory."

The energy price cap would "quickly start costing billions" because it would force governments to continually subsidise the difference between the real market price and the artificially capped price, another expert said. 

"If you are successful and prices are low and you still get gas, consumers will increase their demand: low price means high demand. Especially now that winter is coming," said Bram Claeys, a senior advisor at the Regulatory Assistance Project. 

"This increase in demand will push up prices again, putting pressure on your gas cap or your government budget. Again, there will be a risk of not getting enough gas."

Related News

yukon electricity

Demand for electricity in Yukon hits record high

WHITEHORSE - A new record for electricity demand has been set in Yukon. The territory recorded a peak of 104.42 megawatts, according to a news release from Yukon Energy.

The new record is about a half a megawatt higher than the previous record of 103.84 megawatts recorded on Jan. 14, 2020.

While in general, over 90 per cent of the electricity generated in Yukon comes from renewable resources each year, during periods of high electricity use each winter, Yukon Energy has to use its hydro, liquefied natural gas and diesel resources to generate the electricity, the release says.

But when it comes to…

READ MORE
ontario-breaks-ground-on-first-small-modular-nuclear-reactor

Ontario Breaks Ground on First Small Modular Nuclear Reactor

READ MORE

Canada expected to miss its 2035 clean electricity goals

READ MORE

hydro one

Hydro One employees support Province of Ontario in the fight against COVID-19

READ MORE

nuclear plant

Can Europe's atomic reactors bridge the gap to an emissions-free future?

READ MORE