European Commission President Ursula von der Leyen proposed that the bloc should step into the gas market to limit the price in relation to a key Dutch benchmark, which she said is no longer representative of the true cost.
She added that such a cap would still require a broad reduction in energy usage in the bloc.
“As the EU imports almost all the gas it consumes, the deeper the public intervention on gas prices we envisage, the more demand reduction and supply solidarity we need,” she wrote Wednesday to E.U. leaders ahead of a summit later this week in Prague. “We therefore need to acknowledge the risks that a cap on gas prices entails and put in place the necessary safeguards.”
Von der Leyen described her proposed intervention as a transitional move as the bloc moves away from the current benchmark, the Title Transfer Facility, and works to establish an E.U. price index that better reflects Europe’s energy market.
“Pending the introduction of such a complementary benchmark, we should consider a price limitation in relation to the TTF in a way that continues to secure the supply of gas to Europe and to all member states and that would demonstrate that the E.U. is not ready to pay whatever price for gas,” she wrote.
A group of countries, including Spain, Italy, Belgium, Poland, Greece and France has been urging a limit on all wholesale gas market transactions. Germany, the region’s biggest economy, has been against such a move.
E.U. nations are struggling to cope with record energy prices and the risk of shortages this winter after Russia drastically reduced imports of gas in retaliation for sanctions over its invasion of Ukraine. There have been widespread calls for the bloc to limit the price spikes, including in the electricity market, even as Europe is under intense pressure to cut its energy use.
The kinds of steps von der Leyen is proposing would be expensive. In the letter, she acknowledged that the bloc’s current budget may not be sufficient and said the European Commission will explore other sources of funding. Earlier this week, two EU commissioners suggested that countries need to consider issuing new joint debt to fund Europe’s energy needs.
Von der Leyen also said the E.U. should also boost efforts to negotiate lower gas prices with key supplies like Norway and the US. “A negotiated corridor that lowers costs of supplies from these partners would be in our mutual interest,” she wrote.
Noting the recent explosions on the Nord Stream pipeline, said she would present leaders with measures that would help prevent sabotage, including stress testing, preparedness, cooperation and information exchange.
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