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EU leaders to ask Commission for gas price cap proposal -draft statement
Global Banking & Finance Review®
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By Jan Strupczewski and Kate Abnett
BRUSSELS (Reuters) -European Union country leaders are set to ask the European Commission to propose a cap on gas prices, when they meet on Friday, according to a draft of their joint meeting statement.
The EU leaders will ask the EU executive to work urgently on actions including “proposing workable solutions to reduce prices through gas prices cap”, according to the draft statement, seen by Reuters.
EU countries on Friday approved a set of bloc-wide measures including windfall profit taxes, to attempt to raise cash to cushion consumers from soaring energy bills. But states are split over their next move, which leaders will debate at their meeting in Prague.
A majority of the 27 countries want an EU-wide cap on gas prices. Fifteen countries last week urged the Commission to propose one, and some – including Poland and Italy – are now drafting their own proposal.
Other countries are opposed, notably Germany, Europe’s biggest gas consumer. Berlin fears capping prices could mean states struggle to attract fuel from price-competitive global markets this winter.
The Commission, which drafts EU policies, has not yet proposed a cap, and raised concerns over the idea – suggesting countries instead consider narrower price caps, such as one targeting Russian gas only.
But while the EU searches for more bloc-wide measures to contain the energy crunch, countries are ploughing ahead with national measures that have seen rich countries far outspend poorer ones.
Speaking at an event in Sofia on Saturday, Commission President Ursula von der Leyen stressed the need to avoid distorting the EU’s single market.
“Without a common European solution, we seriously risk fragmentation. So it’s paramount that we preserve a level playing field for all in the European Union in the single market,” she said.
Germany last week unveiled a 200 billion euro plan to protect companies and households – which EU industry chief Thierry Breton said Brussels would “carefully review”.
Gas prices have rocketed this year in Europe, driven largely by Russia cutting supply – which Moscow has blamed on Western sanctions following its invasion of Ukraine in February.
EU country leaders will also ask the Commission to work on negotiating lower prices with non-Russian gas suppliers, and developing a new price benchmark for liquefied natural gas, said the draft statement, which could change before it is adopted on Friday.
(Reporting by Jan Strupczewski, Kate Abnett, editing by Marine Strauss and David Evans)
Windfall profit taxes are levies imposed on companies that experience sudden and significant increases in profits, often due to external factors, to redistribute wealth and support public services.
The European Commission is the executive branch of the European Union responsible for proposing legislation, implementing decisions, and managing the day-to-day operations of the EU.
LNG benchmarks are reference prices used to determine the cost of liquefied natural gas in the market, helping buyers and sellers negotiate contracts.
A windfall profit refers to an unexpected and unplanned gain in profit, often resulting from favorable market conditions or external events, rather than normal business operations.
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