BRUSSELS — The European Union is not planning to include a gas price cap in its upcoming strategy to slash energy prices, a European Commission official said, pushing back on chatter that the EU executive was eyeing the measure.
A proposal to limit the price of gas imports is “not on the cards” for the EU’s upcoming green industrial plans later this month, said the official, who like others in this story was granted anonymity to speak freely.
The denial came after Europe’s energy traders and fossil fuel firms sounded alarm bells over talk that Brussels might return to the emergency gas price measure. On Tuesday, 11 industry groups — including Energy Traders Europe, Eurogas and the International Association of Oil and Gas Producers — sent a letter to Commission chief Ursula von der Leyen expressing their “strong concerns” around the move.
Doing so would have “far-reaching negative consequences for the stability of European energy markets and the security of supply across the Continent,” they said, arguing it would undermine Europe’s credibility as a gas customer and shift trading outside the bloc.
EU capitals first agreed to the cap, which theoretically set a ceiling on gas imports, as energy prices soared to record highs following Russia’s full-scale invasion of Ukraine in 2022. But the measure, which expired earlier this month, was never activated, as prices never met the required threshold.
The discussion on reviving the cap comes as Brussels gears up to unveil a grand strategy to save the bloc’s struggling carbon-heavy industries on Feb. 26, dubbed the Clean Industrial Deal. Part of that will include a new “action plan on affordable energy” setting out measures to slash power prices.
Energy firms are fearful the gas price cap will be among those measures. Two industry figures familiar with the matter said the cabinet of EU green chief Teresa Ribera wanted to include it in the plan. Ribera, a former energy minister in Spain, was a vocal proponent of the price cap proposal in 2022. A spokesperson for Ribera declined to comment.
With gas prices spiking again, that conversation is taking on fresh urgency. Demand is up amid a cold snap, while Europe also recently lost Russian gas coming through Ukraine. This week, EU gas benchmark futures rose to €58 per megawatt hour — their highest level in two years.
But reviving the measure would reopen a politically toxic debate. Previous talks featured months of infighting between largely free-market countries like the Netherlands, Germany and Denmark — which lobbied hard against the proposal — and the more state-interventionist countries of Greece, Spain and Poland.
It “would be smarter for the Commission to look at the prospects of the gas market instead of holding on to the crisis measures of 2022,” said one EU diplomat in a preview of the political pushback the move would likely get.
The debate is also causing concern from countries previously supportive of the measure. “If the mechanism was a bit recalibrated, there might be a benefit — but with a huge risk that [liquefied natural gas] shippers would just ship LNG to Asia,” said a second EU diplomat.
A new price cap would also raise thorny legal questions.
The previous measure was passed as time-limited, emergency legislation when wholesale gas prices soared to over €340 per MWh in August 2022. Taking a similar approach now would be legally difficult, said one EU official, since “We’re not in a crisis anymore,” meaning “We would need to analyze options” carefully.
Instead, the Commission would likely have to propose the price cap as a standard piece of legislation, the official added.
Zia Weise contributed reporting.
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