EU countries fight over gas price caps

  • EU approves energy windfall profit taxes
  • Gas price caps are the next step for countries
  • States are divided on how to control skyrocketing prices

BRUSSELS, Sept 30 (Reuters) – European Union nations disagreed on Friday over how to cap volatile gas prices, with Germany among the nations opposing a move that 15 other states say is needed to tackle Europe’s energy crisis.

Meeting in Brussels on Friday, ministers from 27 EU member states approved taxes on energy companies’ windfall profits in a bid to curb soaring energy prices exacerbated by Russia’s war on Ukraine.

The deal includes a levy on fossil fuel companies’ surplus profits earned this year or next, another tax on low-cost power producers’ high earnings.

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However, the Czech Republic said that was not enough and many EU countries expected the European Commission to implement a plan to control gas prices.

Speaking after the meeting, EU Energy Commissioner Kadri Simpson said there was no agreement on what such a cap would look like.

“We will … try to negotiate a price corridor, not a fixed ceiling, that allows us to lower costs for our consumers,” he told a news conference.

“A wholesale gas price is a legitimate option, but it requires serious intervention in the market,” he said, adding that several “non-negotiable conditions” would need to be placed on such a cap for it to work.

Italy’s energy minister said a group of countries will discuss ideas for a cap or “smart indexing” next week to help the commission prepare a legal proposal that all countries can support.

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“Now the priority is to reduce gas prices. But there is a second priority: this kind of action can lead to gas shortages,” said Roberto Cingolani.

Fifteen countries, including France, Italy and Poland, asked Brussels this week to propose a price cap on all wholesale gas transactions to curb inflation.

German Economy Minister Robert Habeck said he hoped EU ministers could find a “better solution” to a wider price range ahead of their next meeting on October 11.

“A fixed price cap on gas can only work if we answer the question of what happens if Europe doesn’t get enough gas. The only answer I would ask is that the amount will be divided. I don’t think it’s political. It’s possible,” he said.

‘Stop this fight’

The commission warned countries this week that “significant financial resources” would be needed to fund emergency gas purchases if market prices exceed the EU’s cap.

Denmark, Austria and the Netherlands sided with Germany in opposing the idea, saying countries would struggle to buy gas if they could not compete with buyers on price-competitive global markets.

Brussels suggested the EU could push ahead with a narrower price cap, for example by cutting off Russian gas supplies, but countries including Belgium and Hungary were against it. Another idea, similar to what Spain was already doing at home, was to specifically target gas used for power generation.

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By introducing EU-wide measures, Brussels hopes to overcome governments’ uneven national approaches to the energy crisis, which has seen richer EU countries do more than poorer countries to provide money to ailing companies and consumers struggling with bills.

Germany, Europe’s biggest economy, set out a 200 billion euro package on Thursday to deal with rising energy costs, including a gas price brake.

Claude Durms, Luxembourg’s energy minister, has urged countries to join the EU and end the “insane” spending competition between countries.

“This is the next frontier, to get more unity and stop these infighting,” Durmes said. ($1 = 1.0182 euros)

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Reporting by Kate Abnett and Gabriela Pacinska, Philip Blenkinsop, Bart Meijer, Marine Strauss, Alvis Armelini, and John Chalmers; Editing by Alex Richardson

Our Standards: Thomson Reuters Trust Principles.

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