EU assessing various types of gas price cap

The European Commission is considering versions of a gas price cap including one targeting gas used in power generation and a temporary “flexible” limit on prices, the EU’s head of energy policy said on Tuesday.

European Union countries are at odds over whether to cap gas prices in an attempt to pull down soaring inflation, with their government leaders set to spar over the idea at a meeting on Friday.

EU energy commissioner Kadri Simson said Brussels’ next move would be guided by the outcome of this meeting, but that the Commission was looking at multiple options to contain gas prices, which have surged as a result of plummeting supply from Russia.

Flexible Pricing Limitation

“One way forward would be to consider a flexible pricing limitation in relation to the TTF in a way that continues to secure the supply of gas, notably LNG, to Europe,” Simson told a European Parliament committee meeting, referring to the Dutch Title Transfer Facility gas price.

Such a measure would be temporary, while the EU works on an alternative benchmark price to the TTF, Simson said.

Another option could be to launch an EU “framework” for a price cap on gas used to generate electricity, alongside measures to ensure gas demand does not rise as a result, she said.

France, Italy, Poland and 12 other EU countries urged the Commission to propose a broader price cap targeting all wholesale gas trade last week. Germany, Europe’s biggest gas buyer, and the Netherlands are among those opposed.

Risk to Energy Security

Brussels has warned that such a measure would pose risks to Europe’s energy security and disrupt gas flows between EU countries.

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.

Emergency Measures

Since then, the EU has agreed emergency laws to fill gas storage, gas demand cuts that would become mandatory in a supply crunch, and windfall profit levies to raise money to help consumers with bills. But with gas prices still sky-high, many EU countries say those measures do not go far enough.

Draft conclusions for Friday’s EU leaders’ summit, seen by Reuters, would ask the Commission to propose “workable solutions” to reduce gas prices through a cap.

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