Il gas price cap jumps again, we talk about it again in October. The matter will not be discussed at the meeting of the EU energy ministers today, Friday 9 September, still ongoing, but will be referred to the meeting of the heads of state and government, during their informal summit on 6 and 7 October, in Prague, or even during the formal European Council in Brussels on 20 and 21 October. It is not only the ceiling on the price of Russian gas that is blowing up but also the tax on the extra profits of energy companies, the so-called "solidarity levy".
The draft conclusions of the summit also speak of the necessary use of "emergency liquidity tools" for utilities grappling with market volatility. The ministers also invite "the Commission to examine the options on how to use the EU emissions market - ETS - to deal with the current high price of electricity, while reiterating its commitments to achieve the objectives in a cost-effective way of agreed greenhouse gas emission cuts”.
Meanwhile the gas price still falls as we look at the moves of EU energy ministers. In Amsterdam, prices fell by 4% to 209 euros per megawatt hour.
Gas price ceiling jumps, which proposals could pass?
At the moment consensus has been found on only three of the five proposals formulated by the European Commission in its informal document (non paper), even if doubts still persist on the mandatory nature of some measures. There are three measures that have found consensus:
- the imposition of a profit cap (remunerative) on renewable energy sources which allows excess revenues to be used for support measures in favor of the most fragile families and businesses;
- the 5% reduction of the energy consumption during peak hours of the day;
- the possibility of support the liquidity of energy companies affected by extreme price volatility.
Why is the gas price cap still going up?
The background explains that the measure proposed by the Draghi government has received the support of Greece, Belgium, Slovakia, Slovenia, Romania, Luxembourg e Poland who would rather like a generalized "price cap" for all imported gas, including liquefied gas (LNG) given that all countries have been moving for months to diversify supplies and if the Putin's threats become reality then it would be useless to apply a price ceiling only to Russian gas. Instead the Netherlands - so far one of the countries that have most strongly opposed given that the stock exchange that hosts European gas trading is based - is now "open" to discussion according to the latest statements by Prime Minister Mark Rutte. But – he specified – the proposal "must be improved" and it is necessary "to ensure that there is enough flexibility in implementation". There are vetoes Hungary, Austria e Czech Republic, but above all the Germany, which had previously opened at the price cap, but now seems to have retraced its steps more in favor of the decoupling of electricity prices from gas prices, another Commission proposal. Reason for opposition: Alternative sellers to Russia may decide to look elsewhere for higher prices. But at the moment Asia and the United States pay significantly lower market prices than the European one: respectively half, in the case of Asia and 10 times less in the case of the United States.
Mattarella on the price cap: "Italy proposed it 4 months ago"
The President of the Republic also spoke on the meeting in Brussels Sergio Mattarella in Macedonia, which does not revolve around it: "Italy proposed a price cap 4 months ago" and that it is necessary to proceed immediately with "the insertion of a ceiling on the price of gas and to overcome the resistance that still exists due to some member countries ”. Only in this way, continues the Head of State, “will we have the guarantee of securing millions of families and businesses from the risk of political and financial speculation. A similar and reckless increase in energy prices was unthinkable, for several months we have been in favor and inclined to introduce the price cap even before the expensive energy hits our continent. Every day that passes is a further suffering for the whole of Europe”.
Gentiloni: "Inflation down only with effective energy measures"
Therefore, today's meeting is not decisive and, on the basis of the debate that will take place between the European energy ministers, the Commission will make its proposals Tuesday September 13 on the occasion of the meeting of the College of Commissioners in Strasbourg which "will be very important", said the EU Commissioner for the Economy, Paolo Gentiloni, before the informal meetings of the Eurogroup and Ecofin, in Prague.
"On the one hand, we are maintaining growth and unemployment is low" but on the other, "due to high inflation, there are risks of a recession", continued the EU Commissioner for the Economy, adding that "in this uncertainty it is crucial to cooperate with fiscal and monetary policies to bring down inflation. But what can really bring inflation down is a really effective energy package. It is very important that next Tuesday the Commission will propose measures” to tackle the energy crisis. We will discuss the economic situation, and we know that we are entering the autumn in a framework of unprecedented uncertainty”, concluded Gentiloni.
Revision of budget rules in October
The EU Commission will present the proposals for the revision of the budget rules and economic governance in October. The announcement by Commissioner Gentiloni, according to which "an agreement will be a very strong signal for the markets in a phase of new great uncertainty". The proposal will be presented in the second half of October. "The objective of the review is to have financial stability, debt sustainability - which has obviously grown after these crises, we are 97% in the Eurozone - but at the same time maintain strong support for investments", concluded the EU commissioner at the Economy.
