EU leaders say they are moving towards a common approach on energy

EU leaders have said they are making headway with joint plans to cut electricity bills across the bloc, despite signs that disagreements persist over how to tackle the region’s energy crisis.

At the end of a two-day informal summit in Prague, Italy’s outgoing Prime Minister Mario Draghi, an early supporter of a regional cap on gas prices, told reporters that “things are moving in the energy sector”.

Czech Prime Minister Petr Fiala said energy ministers would hold “as many councils as necessary” to fill the gaps left by sweeping proposals that include ideas such as joint talks with suppliers and a decoupling of gas prices from electricity prices. The European Commission is expected to come up with detailed measures within weeks.

However, the summit also highlighted disagreements among leaders on how to counteract the impact of the Russian invasion of Ukraine on the region’s energy markets.

Since the invasion began in late February, gas prices have skyrocketed across the region. But instead of pursuing a common approach to lessen the burden of higher energy bills on European businesses and households, some member states, including Germany, the region’s largest economy, have opted to go it alone.

Several politicians, including Draghi and Hungarian Prime Minister Viktor Orbán, accused Berlin of undermining unity with its controversial €200 billion aid package unveiled last week.

Poland’s Prime Minister Mateusz Morawiecki said on Friday that Germany had destroyed the internal market by subsidizing its own companies and households, while opposing a Europe-wide cap on gas prices.

However, Germany’s Chancellor Olaf Scholz said the meeting had been constructive and insisted his government’s package is in line with what France, Italy and other countries are doing to help households and businesses struggling with energy bills.

In a change of position, Scholz signaled that he would advocate joint talks with suppliers such as Norway and the USA. “It’s important to also talk to other buyers like Japan and South Korea,” he said. Proponents believe EU talks will help lower wholesale energy prices through collective bargaining.

However, Scholz maintained his earlier opposition to gas price caps, saying they “raise security of supply issues”.

Several states have warned that a cap could scare suppliers of shipped liquefied natural gas like Qatar, urging them to get their products to importers willing to pay more. Austria’s Chancellor Karl Nehammer, whose country is one of the few that still receives long-distance gas from Russia, said on Friday that Vienna was “in favor of a gas price cap, but we have to be careful that it’s not a Russian gas embargo through the back door”.

OECD Secretary General Mathias Cormann said on Friday: “A price cap is one of those distorting decisions that sends the wrong signal”. Speaking at the Globsec conference in Slovakia, the head of the Paris-based organization of advanced economies also warned against using large fiscal stimulus packages at a time when the ECB and other central banks’ priority is to contain inflation.

“To the extent that governments continue to add fiscal stimulus. . . they complicate the job of central bankers,” he said.

European Commission President Ursula von der Leyen said leaders have also expressed support for joint gas purchases starting next spring when storage facilities will be exhausted after the winter months. Joint procurement would mean that Member States would not “outbid” each other.

Von der Leyen also wants member states to build “corridors” with trusted suppliers, possibly at fixed prices. On Thursday, she and Norwegian Prime Minister Jonas Gahr Støre pledged to create “common tools” to help ease the energy crisis.

Since the invasion of Ukraine began in February, Norway has overtaken Russia as the EU’s largest external supplier of gas. However, officials said it was not clear whether the agreement would result in lower prices or more gas from the Nordic country for the block.

Additional reporting by Raphael Minder in Bratislava

Video: How Putin held Europe hostage over energy | FT power source EU leaders say they are moving towards a common approach on energy

Adam Bradshaw

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