European energy ministers failed to agree yesterday on a market correction mechanism to limit prices on the main gas trading exchange. Those in power are trying to reach a new agreement next Monday.
During the meeting in Brussels, “different views” continued to be registered around the proposal presented by the European Commission two weeks ago, according to which a temporary safety limit would be introduced to prevent an exaggerated price increase on the Securities Transfer Market of natural gas (TTF). .
The Secretary of State for Energy, João Galamba, says that during this meeting it was already possible to register “some progress”, even with “consensus on a large part of the proposal”, in particular on “some safeguards intended by some countries “. However, there was no agreement “regarding the central issue, which is price levels”.
In the proposal of the European Commission, the mechanism would work according to a price cap, for a certain period. The market correction mechanism would come into effect if the cost price exceeded the threshold of EUR 275 per MegaWatt-hour (MWh) for two weeks.
Now the simultaneous coincidence of the two criteria makes their activation very difficult – so the criticism was not mild. The main one has to do with the fact that if these rules had been in place in August, when prices were abnormally high – with purchases peaking at more than €300 MWh over several days – the mechanism would not have been triggered.
Countries such as Germany, Austria, Denmark, Hungary and the Netherlands, which oppose the introduction of caps, are generally in favor of this proposal – which has been ironically criticized in Brussels for being a “limit that sets no limit”.
Another group of countries, including Portugal, but also Belgium, Bulgaria, Slovenia, Spain, Italy, Greece, Latvia, Malta and Poland, advocate the introduction of criteria that would allow the mechanism to be activated more frequently. The ministers believe this is the only way to curb speculation and minimize price volatility. In the decade prior to the current energy crisis, gas was traded on the TTF at values between 5 and 35 euros.
During the meeting, which lasted more than ten hours, a compromise proposal was tabled according to which the mechanism would come into effect if the price of natural gas on the TTF market remained above 200 euros per MWh for three consecutive days. “Portugal would be willing to accept this proposal, in a compromise logic,” revealed Portugal’s Secretary of State for Energy, who regretted that it was not possible to reach an agreement, with some countries considering the limit “too high and others that it is too low”. “We hope that these days until Monday will make it possible to reach an agreement and make progress on matters where it has not been possible so far,” he concluded.
A word to finance
This is what Energy Commissioner Kadri Simson will now be working on, together with the European Union’s team presidency in charge of the Czech Republic, to try and bring more consensus to the proposal. “Some ministers needed extra time to return to the capitals and discuss the changes with their colleagues, especially from finance,” explained the commissioner, admitting that there will be “implications for financial markets” due to the price correction mechanism”. . Kadri Simson believes it “makes sense even from a legal point of view to discuss all these implications”, hoping that the Council of the European Union can now support “a consensus or at least a broad compromise”.
Since the start of the war in Ukraine, turmoil in energy markets has only worsened, adding to the turmoil already sparked by the pandemic. Russian gas imports have fallen dramatically, with an 80% drop compared to last year.
On Monday, the president of the European Commission said the EU has enough gas for this winter, but admitted it could face shortages in the coming year. , to reduce dependence on Russian fossil fuels.
In Brussels
Source: DN
