By Sergio Goncalves and Aislinn Laing
LISBON, Nov 15 (Reuters) – EU states must “work quicker and with stronger determination” to reach agreement to intervene in energy markets and support consumers and businesses impacted by shrinking Russian gas supplies, Portugal’s finance minister said.
Fernando Medina told Reuters on Tuesday that the intervention could take the form of subsidies or price caps but had to be implemented soon because domestic policies could only go so far in mitigating the impact of the energy crisis.
He rejected suggestions that a scheme dubbed the Iberian Mechanism, which imposed a cap on the price of gas used in power generation in Spain and Portugal and which the European Union discussed rolling out more broadly, had increased fuel use.
He called it a “good model” and said a short-term increase in gas use was caused only by a local shortage of hydropower because of a drought.
“I can understand the different positions but without a compromise on energy markets and a faster or deeper agreement at a European level, it will be very difficult if not impossible to more strongly contain or even reduce prices,” he said in an interview in Lisbon.
The EU is grappling with high energy prices driving inflation and raising recession risks, aggravated by Russia slashing gas flows following its invasion of Ukraine.
European energy ministers will meet again on Nov 24 for another round of deliberations about energy market interventions that are likely to include an alternative price benchmark for liquefied natural gas (LNG) and voluntary joint gas buying.
EU countries including France, Spain and Italy want a gas cap similar to the Iberian Mechanism, which EU officials have proposed could be funded by joint borrowing similar to the bloc’s SURE scheme that protected jobs during the COVID-19 pandemic.
Germany, Denmark and the Netherlands however oppose a price cap, citing security of supply fears, as well as joint borrowing.
Medina said progress was being made on funding. “On common borrowing the level of disagreement is not so high, on (a) gas cap it is,” he said.
He welcomed a proposal from Spain, France and Portugal to, in the longer-term, build an undersea pipeline between Barcelona and Marseilles.
“Obviously it’s not going to be used for this crisis but.. for the future,” he said. “We need to diversify the sources of supply in Europe. No one would forgive this generation if we don’t make the investments … to make the system integrated.”
(Reporting by Sergio Goncalves and Aislinn Laing; editing by John Stonestreet)
Photo: Portugal’s finance minister Fernando Medina (C)
