European Union Divided Over Energy Price Cap

An emergency meeting of energy ministers only showed how the energy crisis tied to Russia’s war in Ukraine has divided the 27-nation bloc into almost irreconcilable blocs.

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.

The Commission came up with a plan to avoid exceptionally high gas prices in the future, but the proposed price ceiling is strikingly high: €275/Megawatt-hour (MWh).

European Union nations failed to bridge bitter disagreements over natural gas price cap as they struggle to effectively shield 450 million citizens from massive increases in their utility bills.

An emergency meeting of energy ministers only showed how the energy crisis tied to Russia’s war in Ukraine has divided the 27-nation bloc into almost irreconcilable blocs.

Czech industry minister Jozef Síkela, who chaired the meeting where ministers could not agree on when and how a price cap on gas purchases should kick in says there are very divergent views.

A massive August spike in natural gas prices stunned all but the wealthiest in Europe, forcing the bloc to look for a cap to contain volatile prices that are fueling inflation.

But the EU is deadlocked between nations demanding cheaper gas to ease household bills — including Greece, Spain, Belgium, France and Poland — and those like Germany and the Netherlands insisting supplies are at risk if a cap stops EU countries from buying gas above a certain price.

Germany and the Netherlands not in favor of a price cap

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; However, formal adoption of these two policies would have to wait until the price cap question is settled.

Spain, France, Poland, and Greece were among the many with harsh words for the Commission’s plan , rejecting the proposal

Around half the bloc’s 27 member states want a price cap, saying intervention is necessary to protect households and businesses facing untenable 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.