Brussels remains cautious about deciding on a gas price cap as EU imports from outside the bloc continue through both pipelines and ships. Despite clear demand and pressure from many member states, the European Commission pulls back, calling the move radical, highly complex and risky for supply. Alternatives being discussed include extending the Iberian exemption to other European partners to cap Russian gas imports, securing better prices from dependable suppliers, and capping the price of gas used for electricity generation.
These options will be on the agenda this Friday at an extraordinary ministers of energy meeting, the second such gathering this month. The aim is to approve initial steps in electricity market intervention: a 10 percent average reduction in consumption on an advisory basis, with a 5 percent mandatory reduction during peak hours; a cap of 180 euros per megawatt hour for revenue from marginal technologies like renewables; and a temporary solidarity charge on oil and gas company extraordinary profits amounting to 33 percent. Negotiated in just two weeks, the framework gives member states leeway to implement the savings as they see fit and permits governments to keep national measures if their effects are equivalent. The Spanish Iberian exemption remains in place until the end of May.
Immediate intervention in the electricity market does not address the larger problem of high gas prices and market volatility. A debate opened in Brussels this Friday left ministers with hints but little clarity, and a lack of concrete proposals in many capitals has disappointed observers. Diplomats describe the situation as lacking viable suggestions and warn of rising tensions among governments due to uncertain action. Some officials hope the Commission will listen to ministers and the proposals in hand before rushing to a conclusion.
gas price cap
The idea of limiting the price of imported gas is not listed as an option in the current European Commission document, despite a request from 15 of 27 countries including Spain, Portugal and Italy. The briefing circulated by Brussels stresses that this option is seen as fraught with difficulty because restricting wholesale prices across intra-community exchanges would require replacing the market with a centralized gas allocation and rationing system and financing the gap between the maximum price and the global market. European sources note growing nervousness over the Commission’s pace, especially after a prior extraordinary council which drew resistance from northern states. Germany and the Netherlands have suggested that if demand is squeezed, security of supply could be threatened and consumption could rise. Critics warn that Europe relies on gas imports from outside the union and a global LNG market means supply problems are possible. They caution against unilateral price ceilings as a business approach and advocate a broader strategy instead, emphasizing reliability and mutual benefit in negotiations with partners outside Europe.
Russian gas price cap
Brussels reiterates the view that Russia cannot be a dependable partner, pointing to changes in contract terms, halted supplies to multiple countries, and the Nord Stream 1 disruptions. There is a belief that a price cap on all Russian gas imports could reduce Moscow’s leverage, help lower European prices, and limit revenue used to fund the Kremlin’s war in Ukraine. European energy officials emphasize that curbing Russian influence remains a strategic priority even as the global gas market remains tied to external suppliers.
Negotiate prices with trusted suppliers
Brussels favors negotiation before considering price caps, seeking better terms for gas imports via pipelines and liquefied natural gas with reliable partners such as Norway and Algeria. The goal is to secure lower prices for EU consumers this winter, while keeping options ready to curb prices if needed. Officials frame a mutually beneficial approach as the preferred route and stress that it could address much of the supply challenge while remaining adaptable to changing market conditions.
LNG market intervention
The Commission also suggests intervening in the LNG market by negotiating better prices and creating a new pricing index for LNG transactions. The current reference index, often used in European markets, is criticized for volatility and for not fully capturing LNG market dynamics. The idea is to bring more stability to pricing and reflect what actually happens in LNG trading and delivery.
Iberian exception for Europe
Building on recent experience, Brussels puts forward for the first time a mechanism akin to the Iberian exception on a European scale. The proposal outlines a provisional framework to limit the impact of high gas prices on electricity price formation. Some partners such as Spain, Portugal, and Greece appear willing to participate without increasing overall gas consumption. One option would cap the gas price used in electricity generation to ease citizens’ electricity bills. The Commission notes that the cost difference between the capped price and market price could be absorbed by the electricity system in member states. While Europeanization of this concept has been resisted due to market differences, the current proposal argues for a simple, temporary mechanism with immediate impact that can be implemented quickly and deliver tangible price relief.
Sources within Brussels stress that any adopted measures should be practical, politically feasible, and capable of delivering timely results for households and industry across the EU. The discussion continues with a focus on securing stable energy supplies, lowering costs for consumers, and maintaining unity among member states as the market evolves in a volatile global environment.