Energy crisis: 15 countries call for EU price cap on all gas imports

The European Union should impose a broad value cap on all gasoline imports getting into the bloc as a way to carry hovering power payments below management, a bunch of 15 member states has stated in a joint letter.

“The worth cap (…) is the one measure that can assist each member state to mitigate the inflationary strain, handle expectations and supply a framework in case of potential provide disruptions, and restrict the additional earnings within the sector,” the letter stated. “This cover is the precedence.”

The doc, seen by Euronews, marks the primary time the supporters of the gasoline cap be a part of forces in an on-the-record declaration of intent.

It was signed by Belgium, Bulgaria, Croatia, France, Greece, Italy, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain, and despatched on Tuesday night to European Commissioner for Power Kadri Simson.

The doc comes within the lead-up to Friday’s assembly of EU power ministers, who’re anticipated to endorse an preliminary bundle of three emergency measures.

The requires an EU-wide value cap on gasoline imports have gained traction in latest weeks after the record-breaking costs in August reached an all-time excessive of €346 per megawatt-hour.

Costs regularly decreased since that peak and at present hover just under the €200 mark — virtually 5 instances the degrees a yr in the past.

The international locations supporting the transfer imagine the EU — utilizing its leverage because the world’s largest single market — ought to impose a restrict on the worth it’s keen to pay for gasoline imports.

The bloc’s tight power market, which suffers from a supply-demand mismatch, is seeing increased charges than its Asian and American counterparts.

As the costliest gasoline to satisfy all energy calls for, gasoline units the ultimate value of electrical energy, even the place cheaper and greener sources contribute to the entire combine.

By capping gasoline costs, electrical energy payments may very well be artificially contained, the signatories imagine.

“The power disaster that began final fall has gotten worse over time and is now inflicting untenable inflationary pressures that are hitting our households and our companies arduous,” the letter says.

Germany opposes gasoline cap as European Fee exhibits hesitance

The 15 international locations urged the European Fee to place ahead an preliminary proposal for the gasoline cap at Friday’s ministerial assembly and later develop a proper authorized textual content for negotiation and approval.

But, the European Fee is hesitant concerning the EU-wide gasoline cap and continues to be finding out its potential dangers.

The chief fears the unprecedented measure may scare shippers away at a time when the bloc is desperately on the lookout for non-Russian provides, significantly of liquefied pure gasoline (LNG), to make it by the winter with out main blackouts or rationing.

Competitors for LNG tankers is predicted to warmth up as soon as temperatures start falling and will improve even additional if the Chinese language financial system picks up after a slowdown interval.

Germany, the EU’s largest gasoline client, has raised related considerations and stays opposed.

“For those who introduce a value cap, because the EU unilaterally, and all the opposite shoppers around the globe do not do it, then the gasoline will go to different shoppers and thus we would have a scarcity in gasoline provides,” Germany’s Minister of State for Europe and Local weather Anna Lührmann stated final week.

Norway, which this yr changed Russia because the EU’s main gasoline provider, has stated it’s open to discussing decrease charges however is “sceptical” a couple of large ceiling.

Up to now, the European Fee has solely recommended a value cap on Russian pipeline gasoline as a way to deprive the Kremlin of revenues that may be presumably funnelled into the continuing full-scale invasion of Ukraine that has confirmed to be very expensive for Moscow to this point. 

“The method in the direction of Russia and different companions needs to be totally different,” Commissioner Simson instructed Euronews final week.

Worth restrict not meant to focus on Moscow completely, letter says

However of their joint name, the 15 international locations unambiguously rejected the concept of a value restrict completely designed towards Russian gasoline. 

In flip, their proposal is indiscriminate, focusing on all gasoline imports regardless of geographical origin.

“The cap ought to be utilized to all wholesale pure gasoline transactions, and never restricted to import from particular jurisdictions,” the letter says.

“It may be designed in such a manner as to make sure safety of provide and the free stream of gasoline inside Europe, whereas attaining our shared goal to scale back gasoline demand.”

The one-page letter doesn’t present technical particulars, similar to how excessive the cap ought to be.

It’s understood, nonetheless, that the cap must be by some means increased than the worth paid in Asian and American markets as a way to guarantee Europe stays a sexy vacation spot.

As a market instrument, the gasoline cap would require a certified majority of member states to be accepted and launched.

As issues stand now, the 15 signatories would fall wanting the mandatory votes, though they might recruit some international locations which might be seen as undecided, similar to Sweden, Eire and Cyprus.

The endorsement of coastal international locations similar to Spain, Italy, France and Belgium is essential as a result of they’re those who obtain nearly all of LNG imports.

The Czech Republic — the present holder of the EU Council’s rotating presidency — didn’t add its identify to the letter to take care of its place of neutral moderator.