Agreement in extremis to the EU Council on the energy, price cap for gas and electricity and new Sure to ensure equity between EU countries in the energy field. But it is an agreement that leaves the markets cold and does not convince operators: the European stock exchanges open in the red but the gas price on the Dutch TTF, on November 2022 futures, it is down by 8,37% to 117 euros on the 127 closing on Thursday evening. How can this paradox be explained? In truth, the agreement between the Twenty-seven arrived around two o'clock on Friday morning after hours of confrontation, even tough. With Prime Minister Draghi, at his last EU appointment, and French President Macron determined to specify the "concrete objectives" to effectively limit gas prices with a price cap, keeping all the doors open for using European instruments in order to maintain “the level playing field and the integrity of the single market”.
EU Energy Council: Draghi is losing his temper
Above all, EU sources report, Mario Draghi put his foot down: “I am not signing these conclusions, we have wasted too much time, you have not understood that they are in a recession and that if we do not take these countermeasures immediately we will destroy Europe and the single market. We are all playing Putin's game. I'm not in”, the Italian prime minister allegedly said, with lots of papers and his fist slammed on the table, leaving the 27 astounded. A strong and shared pull on the ears of Germany and Holland. A sensational rift was therefore close but in the end the call of Draghi and Macron brought the discussion back to a more shared track. And the final conclusions make some progress.
EU Energy Council: after the clash, some calm returns
At the conclusion of the summit, there were those who wanted to see the glass half full. "Unity and solidarity prevailed", indicated the EU president, Charles Michel. The President of the Commission Ursula von der Leyen pointed out that there is now a precise mandateor to define the proposals that will then be the subject of negotiation between governments. The next two-three weeks "will allow the European Commission to express itself very clearly on the mechanism of a ceiling on the price of gas and in late October, early November we will have this mechanism that can be made explicit and therefore made to work”, he added. "On the gas price corridor and financial solidarity, I think we can go very quickly", indicated the French president Emanuel Macron. Da Mario Draghi a simple joke: “It went well”: Italy is satisfied. On the other hand, both Germany and the Netherlands underline the half-empty glass. The German Chancellor Olaf Scholz indicates for the common financial instruments, the focus will be on existing resources and that on the new debt we will see”. Same line of the Dutch premier Marc Rutte. The story is not over, but the doors remain open to ambitious EU solutions.
EU Energy Council: what the agreement says
The track to follow remains the one proposed by the Commission on 18 October last. The measures, in practice, do not change: they range from the aggregate platform for gas - voluntary but mandatory for a share of 15% of the total volume of storage in Europe - to the incentives for renewable up to a gas price cap in the production of electricity. And, on the application of the Iberian model – supported by France but not by Germany – which could pave the way for a new Sure on energy. In the conclusions, the Commission is asked to carry out "an analysis of the costs and benefits of the measure" which, in order to compensate for the difference between the administered price and the market price, would entail an excessive burden on the public finances of various member countries. But the other novelty that makes the Italian premier smile is precisely the openness – still very cautious – that emerges on a possible new common debt. Among the measures, in fact, there is "the mobilization of relevant instruments at national and EU level" with the aim of "preserving Europe's global competitiveness and maintaining the level playing field and the integrity of the single market". A sentence which, according to Palazzo Chigi, demonstrates that the Italian proposals have been accepted.
"We will also proceed quickly on financial solidarity", explained Emmanuel Macron according to whom, on this last point, Brussels has two options: a Sure 2 or use the loans still available today (about 200 billion) under the RePowerEu , “giving some flexibility”. The impression is that the hawks of the North are opting for the second option but, after months of the wall, some concessions have arrived from Germany. And, as expected, the other 'frugal' chains have also aligned themselves. “The focus is on the funds we already have but on the new debt we see what can be done…”, opened Olaf Scholz leaving the top. And so the EU avoided a break and remained united vis-à-vis Russia.
LNG gas: Spain, France and Portugal agree on the green corridor
Alongside the EU Energy Council Spain, Portugal and France have reached an important agreement on LNG (liquefied natural gas). The three countries have given the green light to the construction of one alternative infrastructure to the MidCat which should have passed through the Pyrenees and which the French had been opposing for some time. The new pipeline will initially transport processed natural gas from Spanish and Portuguese regasification terminals to Europe and will subsequently transport green hydrogen. The new "green" corridor, however, threatens to cancel permanently the B hypothesis to get the gas to Europe, passing from Barcelona to Livorno in Italy.
The agreement was initialed before the European Council by the French President Emmanuel Macronby the Spanish Prime Minister Pedro Sanchez and by the Portuguese Premier Antonio Costa.
Spain has a significant residual regasification capacity of 30-35% and the agreement opens the doors for LNG to arrive in Central Europe, arriving by ship in Spain and regasified there. A project strongly supported by Germany, dependent on imports from Russia, also because the gas thus produced and transported to Europe would be equal to more than half of that supplied by Russia and it could increase the gas available in the EU by about a quarter.
Furthermore, the new gas pipeline would be perfectly in line with the energy transition, since in the future it would allow green hydrogen to pass through.
