Price cap for Russian gas: Energy ministers want to further increase pressure on the Kremlin

Created: 09/10/2022 05:38

Europe is looking forward to a meeting of EU energy ministers with excitement.

There are no simple solutions for the high prices - but one option is popular.

• Robert

  Habeck

  is in

  favor of a price cap for Russian gas

  : but only if countries like Hungary agree.

• This is how the EU

  wants to get the energy crisis under control

  : At a meeting of the energy ministers, further action is to be clarified.

• This news ticker for the

  meeting of EU energy ministers

  is constantly updated.

Update from September 9th, 3:46 p.m .:

 In the fight against the increased electricity prices, the Member States want to commission the EU Commission to present ways of skimming off excess profits from electricity producers.

The EU energy ministers agree that emergency measures are temporarily necessary.

These would have to preserve the fundamentals of the market and relieve consumers.

"I am very glad that ministers agreed that we need an urgent and robust EU solution," said Czech Industry Minister Jozef Sikela, who chaired a crisis meeting of EU energy ministers on Friday.

Energy Commissioner Kadri Simson said: "We will propose unprecedented measures for an unprecedented situation next week."

In addition, the ministers spoke out in favor of an emergency intervention – among other things, this could therefore be a price cap for gas.

Incentives to save electricity should also be created, as the document shows.

As a further point, the Czech Council Presidency named an emergency instrument for energy suppliers who are experiencing payment difficulties due to the uncertain situation on the markets.

Robert Habeck advocates price caps for Russian gas

Update from September 9, 12:43 p.m .:

Federal Minister of Economics Robert Habeck wants to support a push by the EU Commission to limit Russian income from gas transactions – but only if states like Hungary agree.

If countries that are currently still getting gas from Russia are willing to take the risk of a complete supply stop by Russia, he would be happy to do that, said the Green politician on Friday at the sidelines of an EU meeting in Brussels.

If countries do not want this, that should be respected.

"How presumptuous would it be to say: Germany always asks for leniency, but the other countries don't get any?" he said.

According to Habeck, Germany can now manage without Russian gas.

This is "gigantic".

This is how the EU wants to get the energy crisis under control

First report from September 9th, 11.16 a.m .:

Brussels – price cap, skimming off profits and compulsion to save electricity – these are the buzzwords that the energy ministers of the EU countries have to deal with in the current emergency.

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This Friday, Federal Economics Minister Robert Habeck (Greens) and his colleagues will discuss five proposals from the EU Commission on how consumers and companies can be relieved of the high energy costs against the background of the Ukraine war.

The proposal, supported by Germany, to limit the excessive profits of electricity producers and redistribute the money to consumers will also be discussed.

According to diplomats, the measure has met with approval in several EU countries - also because some have already implemented their own version of an excess profit tax.

But, as always, there is still much to be clarified at European level, especially on a sensitive issue like energy.

Electricity from gas-fired power plants drives up prices – and profits

Since the price of gas has risen sharply against the background of the war in Ukraine, electricity has also become more expensive.

This is because the price of electricity is determined by the most expensive switched-on power plant required for production.

If demand is low, cheaper electricity, for example from wind power, is sufficient.

Currently, however, expensive gas-fired power plants have to be used to meet demand - and the price depends on them.

Other energy producers who generate electricity more cheaply - for example from wind, solar or nuclear power - make big profits because they can also sell their electricity at the higher price.

EU Proposal: Distribute excess energy gains to consumers

A part of these "chance profits" could now be skimmed off and used to relieve the burden on consumers.

The EU Commission has proposed introducing a cap on the revenue of companies that produce electricity from cheaper sources than gas - such as wind, solar, nuclear power or coal.

What goes beyond this maximum price is to be skimmed off by the state and redistributed to consumers - similar to an excess profit tax.

The proposals are similar to the federal government's plans.

According to a first draft of a European law, which is available to the German Press Agency, the revenue limit could be set at 200 euros per megawatt hour.

That would be about half of the current electricity price on the German wholesale market, which was recently around 440 euros per megawatt hour.

Von der Leyen wants a solidarity levy for oil and gas companies

In addition, Commission President Ursula von der Leyen also wants oil and gas companies with excessively large profits on the balance sheet.

These could be obliged to pay a solidarity contribution.

"All energy sources must contribute to overcoming this crisis," says von der Leyen, without giving details.

EU-wide electricity savings target planned

As a further measure, von der Leyen proposes a binding target for reducing electricity consumption at peak times.

During these times, electricity is particularly expensive because the expensive gas is used for production on the market during peak demand.

According to the draft, the binding target could be set at five percent.

According to diplomats, there is a lot of encouragement for energy-saving measures.

Uniper & Co.: save energy suppliers from bankruptcy

Due to the large jumps in prices and uncertainty in the markets, energy companies, some of which do business far in advance, can run into payment difficulties.

The EU Commission therefore wants to support energy suppliers and adapt the EU state aid rules so that state aid can be provided quickly in an emergency.

This is also a measure that meets with few objections, diplomats said.

Price cap for Russian gas - but Putin threatens the consequences

In order to reduce Russia's revenues, the EU Commission is proposing to only buy Russian gas if it does not exceed a certain price.

However, diplomatic sources said that many countries had concerns.

Russian President Vladimir Putin has threatened to stop supplying gas to the EU in the event of a gas price cap.

Countries like Hungary are still heavily dependent on Russian supplies.

Overall, Russian gas still accounts for 9 percent of gas imports into the EU, according to EU figures, compared to 40 percent at the start of the war.