EU agrees to tackle energy prices, but without gas cap

EU leaders on Friday agreed on a strategy to reduce energy prices for citizens and businesses. The introduction of a price cap on the wholesale price of gas, a measure called for by Belgium and other countries, will be considered in consultation with the industry. 

After more than nine hours of negotiations, the 27 leaders at Friday's EU summit agreed on the Commission's proposal to examine, together with the energy sector, a range of possible short-term measures to give vulnerable consumers breathing space and support companies. These include income support, state aid, tax measures and the ​
​introduction of a price cap. The measures to be examined should help bring down the price of gas and stop the 'contagion' of the electricity market, where the wholesale price is determined by the price of electricity. ​

In the run-up to the European summit, Belgium was one of the countries that argued hardest for the introduction of a price cap in the gas market, as was Italy on Friday afternoon. The fact that the option of such a 'price cap' was resisted, according to Prime Minister De Croo, has to do with the fact that its introduction will be done in consultation with the industry. "This was necessary to win Germany and the Netherlands over," he said at his closing press conference.

Energy Minister Tinne Van der Straeten (Green) reacted enthusiastically to the agreement. "Thanks to the joint purchase, we are setting a ceiling for the European gas price and taking away a weapon from Putin. In this way we protect our families and businesses from rising prices," she said. "The gas market has been totally derailed. Thanks to the joint purchase we are providing peace and security." ​

PS chairman Paul Magnette also spoke out again on Friday, in favour of a ceiling on European energy prices. According to Prime Minister De Croo, the 'ceiling' as agreed isonly temporary. "This is not a measure that will still be needed in five years' time."

The price ceiling cannot be separated from another important measure on which the 27 leaders have reached an agreement: the joint purchase of gas, albeit on a voluntary basis. "The price mechanism has to be seen together with the group purchases. The Commission will simply be able to conduct good negotiations because it has that price ceiling as a driving force," De Croo explained. ​ ​

The introduction of a solidarity mechanism to enable all Member States to build up their gas reserves to a sufficient level has also been secured. Belgium is well connected and therefore has few problems in replenishing its reserves, but the same is less true for other countries. "We need to align our reserves," De Croo said.

PHOTO: European Commission president Ursula Von der Leyen and Prime Minister Alexander De Croo pictured at the round table at the start of a meeting of European council, in Brussels, Thursday 24 March 2022, at the European Union headquarters in Brussels. ​ © BELGA