Against the backdrop of record gas prices, Brussels may temporarily introduce a price cap. According to a report in the Financial Times, the fortification of the raw material this week is partly due to the low temperatures and windless weather, which has made it more difficult to generate renewable energy. At present, gas in Europe is three or four times more expensive than in the US, which poses a significant disadvantage for European companies.
A cap would be part of the discussions on the “Clean Industrial Deal” strategy paper, the FT noted, citing sources. The document, to be presented next month, aims to clarify how the EU industry can be protected in the face of numerous challenges, including the aggressive trade policy of US President Donald Trump and the ambitious energy transition.
Discussions on the price cap have only just begun, but are already sparking criticism from industry associations. According to the FT, they warn of the potential trust damage for the European market.
Eleven trade associations, including Europex, the association of European energy exchanges and the Association for Financial Markets in Europe (AFME), sent a letter to Commission President Ursula von der Leyen on Tuesday. The FT, which had access to the text, quoted the letter:
“We believe that this measure, if announced, could have far-reaching negative consequences for the stability of European energy markets and the supply security on the entire continent.”
Furthermore, a gas price cap would undermine the trust in the Dutch Title Transfer Facility, the most important trading point for gas in Europe, the letter continued. Ultimately, the global gas community would be prompted to orient itself towards other markets, mainly outside the EU.
The EU had previously proposed a similar cap in 2022, but it was never implemented. At the time, Germany and the Netherlands opposed the initiative. The FT sources are certain that not all EU countries will agree to the price cap this time around.