EU Summit: Leaders meet to hash out new measures to curb gas prices

EU leaders are assembly in Brussels for a two-day summit with one merchandise topping the agenda: the power disaster.

The 27 heads of presidency and state will debate a brand new package deal of emergency measures unveiled earlier this week by the European Fee, the second of its form in two months.

For the primary time, the package deal contains the format of an EU-wide cap to convey excessive fuel costs below management, however the measure, which remains to be below improvement, would solely be triggered in circumstances of utmost volatility and hypothesis available in the market.

The worth cap could be dynamic and act as a most ceiling for transactions on the Dutch Title Switch Facility (TTF), Europe’s main hub for fuel buying and selling, and different comparable venues.

“The time has come,” mentioned European Fee President Ursula von der Leyen when she offered the proposal. “You will need to transfer with a transparent sign that we’re keen to be dependable companions in the marketplace however not at any worth any extra.”

The measure, whereas revolutionary, falls wanting the broader worth cap demanded final month by a gaggle of 15 member states, together with France, Italy and Spain. Their proposal would artificially restrict the worth of all fuel imports coming into the bloc and all fuel transactions happening.

Von der Leyen, nonetheless, has left the door open for a extra focused cap that may apply solely to the fuel used for energy era. Spain and Portugal have already launched such a mannequin, which relies on an enormous subsidy programme that covers the distinction between the wholesale fuel worth and the state-sponsored cap. 

However extending the so-called Iberian mannequin to your entire EU entails a number of dangers.

Key questions stay

EU officers and diplomats acknowledge there are nonetheless a number of key questions left unanswered, such because the monetary value of an EU-wide state support programme, potential leakages of low cost subsidised energy outdoors the bloc’s borders, and a more-than-likely enhance in fuel consumption as soon as costs are capped.

“We don’t know if the Iberian mannequin will work elsewhere,” mentioned a senior EU diplomat, talking on situation of anonymity. “No matter measure we’re taking, we have to be certain of what the impression goes to be.”

Moreover worth caps, the European Fee’s newest package deal contains different measures that seem to have wider consensus throughout the political spectrum, akin to joint purchases of fuel to safe decrease costs, a brand new benchmark devoted to liquefied pure fuel (LNG), and solidarity guidelines to make sure member states assist one another out in the event that they endure from acute fuel shortages.

The talk on power is predicted to be heated, as member states maintain diverging opinions on how one can curb fuel costs whereas preserving safety of provides. As a result of complexity of the problem, EU leaders shall be compelled to interact in very technical particulars, one thing uncommon for high-level summits.

“An clever worth cap doesn’t hamper provides in the event you apply it properly,” mentioned a diplomat from a Western nation.

One other level of friction would be the thought of issuing frequent EU debt to cushion the painful impression of the power disaster. This sort of collective response was agreed throughout the coronavirus disaster and resulted in a historic €750-billion restoration fund, comprising grants and low-interest loans.

Some international locations are cautious of potential fragmentation throughout the one market if capitals proceed to pursue uncoordinated, go-it-alone options. Germany’s shocking €200-billion support programme fuelled these issues and shed mild over the hole between rich and debt-ridden states.

“The debates are intense however it’s not one nation towards the others. Everybody has doubts and they’re authentic,” mentioned a diplomat from a Southern state.

Officers additionally level out the very fact there are nonetheless greater than €200 billion left unused from the COVID-19 fund, which the Fee desires to rework into a brand new plan to slash dependency on Russian fossil fuels.

Along with power, EU leaders will focus on the worrying evolution of the bloc’s economic system, current developments in Russia’s conflict in Ukraine and EU-China relations.

On Thursday, Ukrainian President Volodymyr Zelenskyy will nearly handle heads of governments and state.

The main target can even be on Iran, because the nation continues to supply the Russian military with kamikaze drones and army coaching. Russia has allegedly used the drones in assaults towards Ukraine’s important infrastructure.

The escalation has accelerated new rafts of EU sanctions towards Iran and laid the groundwork for a ninth package deal of penalties towards the Kremlin.

At one level throughout the summit, EU leaders will bid farewell to Italy’s Prime Minister Mario Draghi, a extremely revered technocrat who is predicted to be quickly changed by far-right chief Giorgia Meloni.