EU makes final push for gas price cap deal this year!!! Croatia's Energy Minister Davor Filipovic

National leaders last week urged their ministers to approve the cap on Monday to finalize a policy that has been debated for months without agreement despite two emergency meetings.

They are now considering a new compromise proposed by the Czech Republic, which holds the EU’s rotating presidency.

The draft, seen by Reuters, would trigger a cap if prices on the Dutch Title Transfer Facility (TTF) gas hub’s front-month contract exceed 188 euros per megawatt hour for three days – far lower than the 275 eur/MWh originally proposed by the European Commission last month.

Roughly a dozen countries, including Belgium, Poland and Greece, have demanded a cap below 200 eur/MWh to tackle the high gas prices that have inflated citizens’ energy bills and stoked record-high inflation this year after Russia cut off most of its gas deliveries to Europe.

“This is about our energy future. It’s about energy security. It’s about how we have affordable prices, that we avoid de-industrialization,” said Belgian energy minister Tinne Van der Straeten.

But Germany, the Netherlands and Austria fear the cap could disrupt Europe’s energy markets and divert much-needed gas cargoes away from the EU. They have sought tighter conditions, such as an automatic suspension of the cap if it has unintended negative consequences.

“Nobody in Germany is against low gas prices, but we know we have to be very careful not to wish for the good but to do bad,” said German economy minister Robert Habeck.

Two senior EU diplomats said that pro-cap countries now appear to have enough support to approve the measure without the backing of Germany, Europe’s biggest economy and gas market.

If that happened, “we’d have to live with it,” Habeck said.

Under the latest proposal, once triggered, the EU cap would prevent trades being done on the front-month to front-year TTF contracts at a price more than 35 eur/MWh above a reference level comprising liquefied natural gas (LNG) price assessments.

The EU price cap would not drop below 188 eur/MWh, even if the LNG price fell to far lower levels. If the LNG reference price increased to higher levels, then the EU cap would move with it, while remaining 35 eur/MWh above the LNG price – a system designed to ensure the bloc can bid above market prices to attract scarce fuel.

The fate of other EU energy policies is tied to the cap. Countries have twice delayed approval of faster renewable energy permits, pending a deal on the cap.

Ministers will also attempt to approve their negotiating position on a new EU law to cut planet-warming methane emissions. Documents seen by Reuters show some countries are seeking to weaken the proposed rules.

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The European Parliament voted on Wednesday (14 December) in favour of faster approval deadlines for new renewable energy installations, paving the way for talks with EU member states to finalise the law next year.

The proposal was tabled by the European Commission on 18 May as part of the REpowerEU package, which seeks to end Europe’s reliance on Russian fossil fuel imports following its military aggression in Ukraine.

MEPs approved amendments to the final text, with 407 votes in favour, 34 against, and 181 abstentions.

The aim of the proposed law is to accelerate the permitting procedure for new renewable energy power plants, thus boosting the EU’s domestic production capacity.

EU member states still have to give their approval to the text before it can become law. EU countries are currently examining the Commission’s proposal and are expected to take a stance on Monday, opening the way for talks with Parliament to finalise the law after the new year.