EU Heads of State and Government managed to agree on a common approach overnight Thursday to Friday aimed at bringing down excessive energy prices, and gas in particular.
European leaders have finally agreed on a common approach to energy prices. There are still quite a few modalities to be finalized, but it is an important step that the Heads of State and Government, meeting at the summit in Brussels, have accomplished.
After 10 hours of talks, they agreed last night on a sort of roadmap for, in particular, capping gas prices.
This is not yet a ceiling, but it looks like it gently. We are going to introduce a kind of price range, to reduce the impact of price increases on the consumer.
Why not talk about a ceiling? Because these price limits are temporary and above all dynamic because we do not set a maximum price once and for all.
To act on the price, there are also plans to reduce the price of gas used to produce electricity, as Spain did a few months ago.
Please note that all of this is the result of an agreement in principle between the 27 Member States. As Germany was reluctant, it obtained safeguards: it wants European countries to commit not to increase their gas consumption, it wants the mechanism to be abandoned, or to be renegotiated very quickly , if you realize that you risk running out of energy.
And then, it’s an agreement in principle, we’ll have to make it concrete and technically applicable. This will be the difficult job of the 27 Energy Ministers, starting on Tuesday.
Finally, as expected, the Member States will henceforth buy part of their gas together, to exert more influence on the price charged by the producers. There is also an agreement on a solidarity mechanism, if a State is in difficulty on the energy plan.
De Croo satisfait
“Decisions”, “urgently” et “price corridor”, these are the terms underlined and welcomed by Alexander De Croo at the end of the long discussions on energy which occupied the first day of the European summit in Brussels. After having pleaded for months for a cap on gas prices, the Prime Minister is particularly satisfied that the principle of a dynamic “price corridor” to regulate gas prices has been validated by the 27 Heads of State and government.
In any case, the leaders gave a signal to the ministers (Council of the EU) and to the Commission to develop this track in practice.
“It hadn’t been said so loudly before”assure Alexander De Croo. “The text is very directive” and gives a clear mandate to the energy ministers, who are meeting in Luxembourg on Tuesday.
“That doesn’t mean we’re there, there’s still a lot of work to do,” he tempers immediately. Above all “that we send the Commission and the Council into largely uncharted territory”. “Until now the message was rather to liberalize the market as much as possible, but here we are moving towards a fairly decisive intervention in the market (…) The exercise will be sporty”.
Ce “price corridor” on transactions on the wholesale gas market, “to immediately limit episodes of excessive prices” according to the words used in the conclusions validated by the 27, still needs to be elaborated. But its principle is in line with what Energy Minister Tinne Van der Straeten has been highlighting for months, in search of a delicate balance between maintaining supply and adjusting the price, for example according to what observed in Asian markets. It is now up to the ministers and the Commission to transform the test on a technical level. Germany and the Netherlands clearly seemed reluctant to any form of price cap.
But according to Alexander De Croo, the 27 made an act of goodwill and it was promised, “eye to eye”, that there was no hidden determination to drag out and ultimately derail the project. The liberal also believes in the “signal effect” to the market, which should be “reinforced” with this direction given by the 27 leaders to the Commission and the Council of the EU.