Southern European voices push for rapid energy reform and adaptable price caps
Southern European countries, with Spain taking a lead, urged a drastic revision of the initial gas price cap to be more flexible and responsive to market dynamics. The aim is not only to lower the proposed fixed maximum of 275 euros per megawatt hour but to make the cap portable, adjusting to real conditions on the ground. At a summit held in Alicante and chaired by Pedro Sanchez, nine EU-Mediterranean nations backed a call for reforms in the electricity market.
Mediterranean partners stress the need to accelerate a deep reform of the electricity market design and to adopt measures that limit gas price volatility, thereby severing some dependence on natural gas prices. The goal is to cushion consumers and industry from sharp price swings. Energy prices had begun climbing before the invasion of Ukraine and have surged since. The coalition is pressing the Council of Europe to implement a market-based cap that protects industrial competitiveness and guarantees supply security.
They advocate expanding joint gas purchases to maximize buying power and help lower prices. A joint statement, signed by Spain, France, Italy, Greece, Portugal, Croatia, Slovenia, Malta, and Cyprus, calls for swift action under the EU-Mediterranean nine-country banner.
Pedro Sanchez, Spain’s prime minister and host of the summit, argued that the Union could reach consensus on a solution. The idea of a dynamic gas price cap is tied to the belief that the current framework requires adjustment. Energy ministers from the 27 member states were set to meet on December 13 to discuss the issue, followed by the European Council with heads of state and government two days later.
Emmanuel Macron, the French president, underscored a sense of convergence on criteria for energy pricing during a meeting focused on a cap formula that curbs speculation in energy markets, especially wholesale natural gas markets.
Spain proposed a dynamic cap based on the average price of liquefied natural gas with an adjustable threshold. Greece argued for a blended approach—partly dynamic (about 25%) and partly stable (around 75%). The European Commission’s proposed cap would trigger when market prices reach 275 euros per MWh for two consecutive weeks, provided the level is at least 58 euros above a 10-day LNG reference. Spain noted that under this design the cap might remain dormant most of the time. Reports from Reuters and Bloomberg indicate the Czech Presidency is drafting a proposal to raise the cap to 220 euros per MWh.
Contingency funds for future crises
All nine EU-Mediterranean countries asked Brussels to reform fiscal rules to allow flexibility in facing future shocks. Italy, Portugal, and Spain praised how the current economic crisis—sparked by the Ukraine conflict and the COVID-19 disruption—has been managed, while also acknowledging the flaws seen after the 2008 financial crisis when austerity measures were widespread.
Portuguese Prime Minister António Costa called for a joint emergency fund, envisioned as a permanent investment vehicle to stabilize macroeconomic conditions and strengthen EU autonomy. The fund would support strategic investments in areas such as defense, artificial intelligence, energy transition, and digitization.
Southern European partners, who account for a substantial share of the EU’s population and GDP, affirmed their determination to shape Europe’s response to major challenges. The group urged the Commission to set a clear European agenda for these issues. The idea was echoed by Pedro Sanchez in discussions with Ursula von der Leyen regarding ways to advance the plan.
While advocating for responsible public finances, the group called for EU fiscal rules that enable steady debt reduction at a pace suited to each member state. With the Brussels budget deficit moratorium expiring at the end of next year, the nine nations pressed for a targeted and pragmatic approach rather than broad, one-size-fits-all constraints.
Energy corridors
France, Spain, and Portugal welcomed the green hydrogen corridor initiative announced recently. By the end of the decade, the H2Med project intends to link the Iberian Peninsula to France via an onshore pipeline between Portugal and Spain and a submarine line connecting Barcelona to Marseille.
Italian Vice President Antonio Tajani highlighted his country’s desire to become a central node for resolving its energy security concerns. Not long ago, Ursula von der Leyen endorsed the H2Med corridor, signaling a potential transformation of the Iberian Peninsula into a global energy hub.
Overall, the discussions reflect a shared goal: stabilizing energy prices, reinforcing supply resilience, and accelerating strategic investments that support a modern, secure European energy framework. [citation: European leadership and press statements]