EU leaders avoid open rift, but struggle for solutions, on gas price cap
European Union leaders struggled to find immediate practical solutions on how to deal with the energy crisis but avoided an open rift between Germany and France on Friday that would have exposed a divided bloc as it confronts Russian President Vladimir Putin over his war in Ukraine.
After daylong talks in Brussels dragged well into the night, the 27 EU leaders papered over divisions between some of the biggest member states and at least agreed to continue working on ways to impose a gas price cap in case of big price increases.
French President Emmanuel Macron highlighted his work with German Chancellor Olaf Scholz to create a veneer of unity after talks that started early Thursday. He said that together with close technical advisors, “I will see Chancellor Scholz in Paris next week so that we can move forward, with our teams, on all the issues.”
Scholz said the main issue was curbing “spikes” in gas trading that may last only a few hours but still send prices excessively upward. He said measures to counter that should be further examined.
“How can we avoid these spikes? There is still a lot of concrete work to be done. But we must look at ways to contain it, which certainly makes sense,” Scholz said.
When Paris and Berlin are aligned, usually the rest of the EU follows.
Group of 7 countries’ finance ministers said they would bar insurance and shipping companies from helping Russia sell oil at prices above a set price.
“There is a strong and unanimously shared determination to act together, as Europeans, to achieve three goals: lowering prices, ensuring security of supply and continuing to work to reduce demand,” said summit host Charles Michel, the EU Council president.
Diplomats said the execution of the proposals, including the possibility of a price cap, should be first properly assessed by energy ministers Tuesday and might even need a new summit of leaders in the coming weeks.
“There is a lot of work ahead,” said Belgian Prime Minister Alexander De Croo. “We are pushing ourselves into uncharted territory.”
To make sure the runaway cost of gas doesn’t further sink struggling EU economies, the European Commission has proposed a system to pool the buying of gas and offered a compromise that would allow for a correction mechanism to kick in under exceptional circumstances.
New British Prime Minister Liz Truss says she will cap domestic energy prices for homes and businesses to ease the impact of spiraling energy costs.
Countries like the Netherlands and Germany were loath to start such market intervention, but agreed to study a system that would be foolproof and not allow suppliers to stop delivering and go to more lucrative markets.
“It is incredibly complex, but you see that everyone wants to get the gas price further down but in a way that we continue to get gas deliveries and that it doesn’t move to Asia or Latin America. We need it here, too,” said Dutch Prime Minister Mark Rutte.
In addition, the leaders are also pushing for the creation of a new liquefied natural gas index that better reflects the market following the drastic reduction of imports of pipeline gas from Russia.
Divisions were so big at the start of the summit that simply agreeing on further exploration of the plan proposed by the European Commission was seen as almost an achievement in itself.
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Hungarian Prime Minister Viktor Orban said a price cap would send suppliers away. The “gas price cap is like going to a bar and telling the bartender you want to pay half price for your beer. Not going to happen,” he said on Twitter.
The traditional driving duo of the EU — Germany and France — were in opposing camps, with Germany expressing doubts and holding off plans for the price cap, while most others want to push on.
Scholz said any dispute was on the method, not the goal. “Prices for gas, for oil, for coal, must sink; electricity prices must sink, and this is something that calls for a joint effort by all of us in Europe,” he said.
Natural gas prices spiraled out of control over the summer as EU nations sought to outbid one another to fill up their reserves for winter. The member states have already agreed to cut demand for gas by 15% over the winter. They have also committed to filling gas-storage facilities to at least 80% of capacity by November and — as a way of reducing gas-fired power generation — to reducing peak demand for electricity by at least 5%.
Russia has declared its intention to increase targeting of Ukraine’s power, water and other vital infrastructure in its latest phase of the invasion.
The question of possible EU gas-price caps has moved steadily up the political agenda for months as the energy squeeze tightened, with 15 countries such as France and Italy pushing for such blunt intervention.
At the opening of the summit, the need for rock-solid EU unity in confronting Russia was highlighted by Ukrainian President Volodymyr Zelensky, who addressed the 27 national leaders by videoconference from Kyiv, asking for continued help to get his nation through the winter.
Russia is increasingly relying on drone strikes against Ukraine’s energy grid and civilian infrastructure and sowing panic with hits on Ukrainian cities, tactics that European Commission President Ursula von der Leyen called “war crimes” and “pure terror” on Wednesday.
Diplomats are already assessing more sanctions on Russia. But Orban’s perceived friendliness toward the Kremlin makes life tougher. Even though the previous EU sanctions targeting Russia have been approved unanimously, it has increasingly become difficult to keep Orban on board by agreeing to exemptions.
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