European Union heads for December agreement on gas price cap

Any agreement on the European Commission's proposal to cap the price of imported gas will be postponed until the middle of December, said Jozef Sikela, the Czech minister of industry and trade, and chair of the extraordinary meeting of EU energy ministers.

Energy ministers of European Union (EU) member states will reconvene to seek a common ground on the currently controversial draft measures, Xinhua news agency quoted the Minister as saying on Thursday.

EU member states reached a political agreement on a package of measures that will allow households and businesses to buy enough energy at affordable prices, Sikela said.

The package of measures agreed includes new rules for joint gas purchases, solidarity in case of disruptions in gas supplies, and speeding up the authorization of new renewable energy projects.

These measures, designed to lessen the EU's energy dependence and protect vulnerable households and businesses from the effects of sky-high energy prices, were proposed in mid-October by the Commission, the executive arm of the EU.

By pooling most of the EU's gas demand into a joint gas purchasing scheme, the member states hope to achieve better prices for imported gas.

Default energy solidarity rules between EU member states will apply in case of supply disruption when there is no bilateral agreement in place.

There are currently only six such bilateral agreements between EU member states under the security of supply rules.

Energy ministers also agreed on a temporary framework, which will allow the acceleration of the deployment of renewable energy by simplifying the permitting procedures for renewable energy projects.

The new measures also include a new benchmark for liquified natural gas (LNG), which will better reflect the reality of the current gas market than the existing Title Transfer Facility (TTF) price index.

The next step will be to forge an agreement on the proposed gas price cap, Sikela said.

"Tomorrow we will all get back to work and start negotiating an agreement on measures to cap gas prices," he tweeted.

On Tuesday, the European Commission proposed a price cap of 275 euros per megawatt hour (MWh).

"Beyond that price, transactions will not be able to take place," EU Energy Commissioner Kadri Simson said.

The EU is currently battling record-high energy prices, which are a consequence of the Covid-19 crisis and the Russia-Ukraine war.