The European Union has advanced its response to the energy crisis with a new wave of talks and preparations among the twenty-seven member states. The goal is clear: implement measures to curb rising gas prices. Energy officials, including Kadri Simson, anticipate presenting a fresh package next Tuesday, October 18. The plan features a temporary gas price cap, a review of the Dutch TTF price index, and a joint purchasing framework intended to pool buying power and reduce costs while seeking ways to lower overall demand.
From the outset of the conflict in Ukraine, the EU has pursued energy diversification and independence from Russian supplies. A storage strategy was launched in the spring, and a broad voluntary reduction in gas use was agreed in July. The Council followed up with electricity demand cuts last week. Yet despite these steps, prices remain stubbornly high and further action is deemed necessary. Simson noted that gas flow via the Russian pipeline has fallen below 10 percent, and ongoing attacks on infrastructure add to market uncertainty.
During the Prague meeting, Simson pressed the Twenty-Seven for a new set of measures to be unveiled two days before the upcoming summit on October 20 and 21. He signaled that concrete and clear proposals were in the works and noted that the Commission intends to submit a legislative package to reform the gas price index. The aim is to replace the existing Dutch TTF with a more accurate EU market benchmark that reflects current conditions and stops inflating prices. Simson promised to provide more details next week.
Because the proposed changes will not take effect before the next gas storage cycle, Brussels hopes to achieve meaningful price reductions and improved negotiating conditions with reliable partners. Norway’s energy minister attended the Prague meetings, and discussions with Algeria were also highlighted as a potential option. Brussels remains open to progress with these suppliers, but it also considers a temporary price mechanism to manage risk if negotiations do not wrap up quickly. The Commission will show how such a mechanism could operate and what risks it might entail.
More gas savings
The plan also includes additional measures to curb demand for gas. One possibility is activating an EU alert that would enforce a 15 percent reduction target. Brussels, however, does not rule out alternate approaches or further steps to ensure savings reach the desired level. Any action to lower prices will be judged against the risk of sending false signals that spur higher consumption.
The Commission aims to incorporate solid battery solidarity provisions so all member states would be covered in case of supply disruption, and to explore joint gas purchases run in 2023 as a way to stabilize markets. According to the Czech energy minister, a broad consensus exists on the general approach. A proposal to assist vulnerable groups is also on the table, with the goal of using collective purchasing power to keep prices in check and prevent member states from bidding against each other and driving up costs.
What remains uncertain is the feasibility of an upper limit on gas prices used to generate electricity, mirroring the Iberian mechanism seen in Spain and Portugal. The European Commission has signaled that elements with wide support will be included, and the aim is to determine how gas used for electricity could be limited if a majority agrees. Some countries, notably the Netherlands and Germany, have voiced concerns. There is caution that measures might raise gas demand in the electricity sector or create cross-border rents, so these issues will be handled with care and equitable burden sharing.
At the same time, the Commission is pursuing electricity market reform. Officials intend to start a broader discussion with the Twenty-Seven and to present initial results and the principal elements of reform by year’s end, paving the way for a legislative proposal in early 2023.