Plan to cap gas price in EU slammed as ‘joke’ by ministers

The European Union kicked the can down the road at tense ministers' talks on Thursday, which were dominated by the divisive issue of imposing a price cap on natural gas to shelter citizens and business from hugely elevated energy bills.

EU energy ministers meeting in Brussels widely panned a cap proposal cooked up by the European Commission, with several slamming it as a "joke" because the foreseen criteria are so high that it might never be activated. Other states, skeptical about the introduction of any such ceiling, warned of a risk to supply stability.

But the 27 member states did agree in principle on a joint gas purchasing platform for next year and the acceleration of permits for renewables — two much less controversial measures, Czech Energy Minister Jozef Sikela, whose country currently holds the rotating EU presidency, announced after the meeting.

However, formal adoption of these two policies would have to wait until the price cap question is settled, hopefully at a newly scheduled meeting set tentatively for December 13, he told journalists.

Spain, France, Poland and Greece reject proposal

Spain, France, Poland, and Greece were among the many with harsh words for the Commission's plan on Thursday.

"The gas cap proposal appears to be designed to never be used, which seems like a bad joke to us," Spain's Minister for Ecological Transition Teresa Ribera said on her way into the meeting. French Energy Minister Agnes Pannier-Runacher stressed that "structural reform" was needed, while Polish Environment Minister Anna Moskwa said the proposal was "a kind of joke" that didn't satisfy any country.

After months of work and jostling from the member states, the EU executive branch proposed a mechanism on Tuesday that would be triggered if the TTF index (the most common EU gas price benchmark) price went above €275 ($286) per megawatt hour for two consecutive weeks, among other conditions.

Critics point out that this criteria wasn't even met during the record spike in August, around when Russia halted supplies via the Nord Stream 1 pipeline, a major supply route linking Russia with Germany.

"The market is not functioning," said Greek Energy Minister Konstantinos Skrekas on Thursday, adding that a ceiling of €150 - 200 would be realistic to reduce gas and electricity prices. It was a good to time to test the mechanism ahead of next winter because EU gas storage was currently full, he noted.

Around half the bloc's 27 member states want a price cap, saying intervention is necessary to protect households and businesses facinguntenable bill increases in the wake of the war in Ukraine. Russia, previously Europe's largest supplier of natural gas, slashed deliveries to the bloc in response to EU sanctions of unprecedented scale, which were imposed on Moscow in support of Kyiv.

Germany and the Netherlands not in favor of a price cap

On the other side of the debate is a camp led by the likes ofGermany and the Netherlands, which warn that even a weak cap could scare gas sellers away from the EU or discourage necessary reduction in use of the climate-harmful fossil fuel.

"There is a lot of risk for damaging the energy security of supply and also for the stability of the financial market," Dutch Minister Rob Jetten said. 

European Energy Commissioner Kadri Simson pointed out that EU officials faced a "balancing act" when drawing up the proposal and said they had acted according to the mandate handed to them by the member states.

The price of gas and electricity has soared in much of the European Union in the past year. According to the European Council, gas prices in the bloc rose by more than 150% between July 2021 and July 2022.

All of this is a huge burden for industry and private households. Much of the bloc is now braced for recession in the coming months.

Edited by: Anne Thomas