Let us know about free updates
Simply sign up for EU Energy Myft Digest and it will be delivered directly to your inbox.
Brussels is weighing new authority to temporarily limit EU gas prices, which have recently reached record levels compared to the US.
Natural gas prices in Europe traded the highest in over two years this week. This is due to the lack of wind that is hindering the production of cold temperatures and renewable energy. They are three to four times more expensive than the US, offering a significant handicap for European companies.
The European Commission is considering caps as part of the discussion on the “clean industry transaction” policy document to be released next month, the three with knowledge of the discussions said.
The strategic paper addresses multiple challenges, including President Donald Trump’s aggressive trade measures and the EU’s own ambitious green transition, so it should outline ways to strengthen the EU’s heavy industries.
Discussions on the mechanism for cap prices, although still in their early stages, have elicited a backlash from industry groups warning that it would undermine “trust” in the European market.
Eleven groups, including the European Energy Exchange Association and financial market lobby group AFME, sent a letter to the Ursula von der Reyen committee on Tuesday. A letter seen by the Financial Times said, “We believe that if this measure is announced, it could have negative consequences for the stability of the European energy market and the safety of supply across the continent.”
The gas price cap is “harmful to trust” at European benchmark title transfer facilities, the main center for trading and solving gas prices, the letter added. It also “urges the global gas community to shift to other, uncontrollable and therefore more representative reference prices, primarily outside the EU.”
The EU first proposed a similar cap in 2022 at the height of the bloc’s energy crisis after Russia steadily slammed gas supply on its European neighbours following a full-scale invasion of Ukraine. The cap was never enacted as prices remained below 180 euros per megawatt-hour benchmark.
Based on that experience, last year, former European Central Bank President Mario Draghi called on the committee to bring the authority to bring “dynamic caps” to situations where EU gas prices differ from global energy prices. I did.
“We are studying Draghi’s recommendations on this particular issue in detail,” said an EU official.
Two bloc officials said the plan also includes measures to prevent traders from pushing gas prices in the summer as European countries refill fuel ahead of next winter.
One EU diplomat said some member states are likely to be “reluctant” to set price caps. Germany and the Netherlands were among the countries that opposed the previous cap.
The committee declined to comment.
It could also hinder the Bullock’s efforts to stem Trump’s tariff attacks unless the EU buys more liquefied natural gas from the US.
“The Eurasian Group’s senior advisor and former Energy Secretary of State for Norway,” said Amund Vick, the Eurasian Group’s senior advisor and former Energy Secretary of State.
“Revising the wholesale market price cap will not solve the underlying problem if the underlying problem is lack of energy.”
