EU leaders have said they are making progress on joint plans to cut energy costs across the bloc, despite signs of division over how to tackle the energy crisis in the region.
At the end of a two-day informal summit in Prague, Italy’s outgoing Prime Minister Mario Draghi, an early proponent of a regional cap on gas prices, told reporters that “things are in flux on energy”.
Czech Prime Minister Petr Fiala said energy ministers will hold “as many councils as necessary” to fill the gaps left by elaborate proposals, including ideas such as joint talks with suppliers and a decoupling of gas prices from electricity prices. The European Commission is expected to provide detailed measures within a few weeks.
However, the summit also revealed disagreements among leaders on how to counter the impact of Russia’s invasion of Ukraine on the region’s energy markets.
Gas prices have risen across the region since the invasion began in late February. But rather than take a common approach to reduce the burden of higher energy bills for European businesses and households, some member states, including Germany, the region’s largest economy, have chosen to go it alone.
Several leaders, including Draghi and Hungarian Prime Minister Viktor Orbán, accused Berlin of undermining unity with its controversial €200 billion bailout package, unveiled last week.
Polish Prime Minister Mateusz Morawiecki said on Friday that Germany has destroyed the single market by subsidizing its own businesses and households, while resisting a pan-European cap on gas prices.
However, German Chancellor Olaf Scholz said the meeting was constructive and emphasized that his government’s package was in line with what France, Italy and other countries are doing to help households and businesses struggling with energy bills.
In a shift in position, Scholz indicated that he would support holding joint talks with suppliers such as Norway and the US. “It’s important to talk to other buyers as well, such as Japan and South Korea,” he said. Proponents believe that pan-EU talks will help lower wholesale energy prices through collective bargaining.
However, Scholz maintained his previous opposition to gas price caps, saying they are “questioning security of supply”.
Several states have warned that a limit could deter suppliers of shipped liquefied natural gas, such as Qatar, forcing them to take their products to importers willing to pay more. Austrian Chancellor Karl Nehammer, whose country is one of the few that still receives pipeline gas from Russia, said on Friday that Vienna is “for a gas price cap, but we need to make sure it doesn’t become a Russian gas embargo through the back door.” ”.
OECD Secretary-General Mathias Cormann said Friday that “a price cap is one of those disruptive decisions that send the wrong signal”. At the Globsec conference in Slovakia, the head of the Paris-based organization of advanced economies also warned against using large fiscal stimulus packages at a time when the priority for the ECB and other central banks was to contain inflation.
“To the extent that governments continue to provide fiscal stimulus . . . they make the job of central bankers more difficult,” he said.
EU commission chair Ursula von der Leyen said leaders also expressed support for joint gas buying from spring next year, when storage facilities will be exhausted after the winter months. Joint procurement would mean that Member States do not “outbid” each other.
Von der Leyen also wants member states to build ‘corridors’ with trusted suppliers, possibly at fixed prices. On Thursday, she and the Norwegian Prime Minister, Jonas Gahr Støre, pledged to create “joint tools” to alleviate the energy crisis.
Since the invasion of Ukraine began in February, Norway has replaced Russia as the EU’s largest external gas supplier. But officials said there was no clarity on whether the agreement would result in lower prices or more gas from the Nordic country for the bloc.
Additional reporting by Raphael Minder in Bratislava