By Kate Abnett
BRUSSELS, (Reuters) – The European Commission wants to extend emergency energy measures passed last year to cope with Europe’s gas crisis to guard against future price shocks and quickly build-out renewable energy, a senior EU official said.
Europe’s former top gas supplier Russia slashed deliveries last year, plunging the continent into an energy crisis of record-high prices and soaring inflation.
The European Union passed a raft of measures to cope – including a gas price cap, faster permitting for renewables projects and “solidarity” rules to ensure countries share fuel during a shortage.
With those measures due to expire within months, the Commission is considering a proposal to extend them for a year.
“Our analysis has been that it would be justified to extend these regimes into next year and continue to benefit from the protection they give us from any potential price spikes on the market,” a senior EU official, speaking on condition of anonymity, told Reuters.
The Commission would propose the extension after the EU strikes a deal on new gas market rules. Those negotiations are due to finish this month, but could spill into December if countries and lawmakers struggle to agree.
The gas price cap divided EU member states. Countries including Germany had warned capping prices could leave them struggling to attract supplies from global gas markets, while France, Poland and others demanded the measure to curb inflation.
The cap, which expires in February, is designed to kick in if European gas prices exceed 180 euros per megawatt hour.
The benchmark Dutch TTF front month gas contract has not reached that level since the cap was introduced in February 2023. It currently trades around 45.50 euros/MWh.
Europe’s energy security situation is more comfortable today than during last winter – thanks to countries securing new sources of non-Russian gas, and full gas storage.
While analysts say gas prices are unlikely to approach last year’s record-high levels of above 300 euros/MWh, the price cap would serve as a back-stop against potential shocks that could trigger price spikes – such as Russia cutting off the remaining pipeline gas and LNG it still supplies to Europe.
Given the relatively stable prices, some governments are not keen to prolong the cap. A reinforced majority of EU countries would need to approve the extension.
“I don’t see the price crisis that would justify prolongation of a price cap,” one EU country diplomat said.