EU gas price cap: Germany fears supply bottlenecks – and could be overruled

Created: 2022-12-19, 4:38 p.m

By: Lisa Mayerhofer

The EU countries have been arguing about a European gas price cap for months.

Germany risks being outvoted in the vote on this Monday.

Brussels – What is the best way to solve the energy crisis in Europe?

For months, the energy ministers of the EU countries have been arguing about whether there should be a uniform cap on gas prices as a remedy for the high prices.

The 27 representatives will discuss this again in Brussels on Monday.

What is the EU gas price cap about?

The majority of the 27 EU countries are vigorously promoting a common gas price cap.

This includes countries such as Italy and Spain, but also France and Belgium, where there have been protests against the massive price increases.

Such an upper limit for wholesale gas prices is intended to be one of several EU measures to reduce high energy prices for consumers and industry.

European gas price cap: why is Germany concerned?

Germany has strong concerns about a price cap and fears supply bottlenecks if one is introduced.

The "intervention in the market" should be carried out "with care", said Federal Minister of Economics Robert Habeck (Greens) before the meeting with his counterparts in Brussels.

Chancellor Olaf Scholz (SPD) expressed his confidence at the EU summit last week that the energy ministers could achieve a “very good result”.

At the same time, the upper price limit for wholesalers must be so high that it "never becomes relevant" if possible, he emphasized.

What could a compromise look like?

Many member countries had called for a cap based on the model already in place in Spain and Portugal.

The regulation applied there stipulates that the gas costs of electricity suppliers are capped in order to lower electricity prices.

The difference to the market price is compensated by the state.

Habeck had previously spoken out against this.

In mid-November, the EU Commission then presented a proposal under which an upper limit would only apply to European gas wholesalers subject to strict conditions.

Germany was open to this so-called market correction mechanism, while other countries saw it as too lax.

Spanish Energy Minister Teresa Ribera called the Commission's proposal a "bad joke".

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According to several countries, the Czech Council Presidency, which is leading the negotiations, proposes a price cap of 188 euros per megawatt hour as a compromise.

In addition to Germany, the Netherlands and Austria are also demanding strong security guarantees on how to deal with an upper limit if supply problems arise.

EU and energy crisis: What else is planned?

In order to combat the high energy prices, Habeck and his counterparts reached an informal agreement at the end of November on shorter approval procedures for the expansion of solar systems and heat pumps.

In the opinion of the EU, these are still taking too long.

In addition, joint gas purchases by the member countries are to become mandatory in some cases.

The idea is that this gives the EU more market power and enables it to achieve better prices on the world market.

According to the current status, the member countries should use the joint purchasing platform for at least 15 percent of the filling of their gas storage facilities.

However, this has not yet been finally decided: Only when there is also a common line for a gas price cap will countries like Belgium want to give their final approval for these two measures.