EU leaders call for final gas price cap and new sanctions on Russia

The European Union leaders have asked their energy ministers to negotiate an agreement Monday 19 December that should protect citizens and companies against excessive gas prices. This is one of the final conclusions of the EU summit in Brussels this Thursday 15 December.

The energy ministers are called to "finalize" months-long negotiations on several measures against the energy crisis. One of the highlights of that package is a market correction mechanism that caps high price peaks on the gas markets. The intention is that a price cap will automatically come into effect when the gas price exceeds a certain level during a determined period.

On Tuesday, the energy ministers did not agree on that ceiling. Skeptical member states such as the Netherlands and Germany fear that gas suppliers will ignore Europe if the ceiling is too low. Proponents such as Belgium, Italy, Greece and Poland argue that the mechanism becomes useless if the ceiling is too high.

That group strongly criticized the Commission's proposal, which had proposed a price of €275 per megawatt hour for two weeks. The mechanism would also only come into effect if the difference with the reference price for liquefied gas on the world market would amount to EUR 58 or more. With those parameters, the mechanism would not have kicked in even during the August peak period. Currently, a ceiling between 180 and 220 euros is doing the rounds.

The correction mechanism is part of a broader package to contain the energy crisis. This also includes joint gas purchases, cross-border solidarity in the event of supply shortages and the accelerated roll-out of renewable energy.

New package on Russia

According to diplomatic sources, the EU leaders also agreed on a new package of sanctions against Russia over its invasion of Ukraine.

European Commission President Ursula von der Leyen presented the new battery of sanctions last week, but it took some time for member states to agree due to a discussion about the exceptions that should safeguard Russian exports of agricultural products and fertilizers to third countries.

The agreement was signed at diplomatic level this Thursday. A written procedure will be launched at midnight to formalize the approval of the sanctions. The procedure should be completed by Friday afternoon, 16 December.

With this package, the ninth in the meantime, the EU is once again targeting Russian banks. In addition, it is further expanding the sanctions list of individuals and entities and there will be additional export restrictions for goods that can also be used for military purposes.


Belgian Prime Minister Alexander De Croo arrives at the European council summit, in Brussels, Thursday 15 December 2022. ©BELGA PHOTO (BENOIT DOPPAGNE)


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