All the background to the U15 clash with Germany

All the background to the U15 clash with Germany

Bold background “hides” the transfer of decisions on the new measures to deal with the energy crisis on December 13, in yet another (the sixth for this year) extraordinary Council of Energy Ministers of the EU. And this is because the countries that are in favor of a “realistic and applicable” ceiling – in the wording of the Greek Kostas Skrekas, Minister of State– used as a negotiating weapon to achieve substantial improvements to the Commission’s proposal for a ceiling of 275 euros/MWh (and with conditions that make it practically unenforceable) their refusal to approve the rest of the proposals for which there is a broad consensus: The reason for the Regulation for fast-track licensing in RES and the one that contained all the other measures for the natural gas market (solidarity mechanisms, joint supplies, etc.).

The passing of these two Regulations is conditional on reaching an agreement on the third and most controversial one: The one that will specify the ceiling in natural gas in a way that would bridge the deep rift between EU countries, which the Commission’s proposal certainly did not achieve.

How were the 15 coordinated

It is reported that the 15 countries in favor of the ceiling coordinated with each other in a meeting before the start of the Synod (with Greece playing a leading role in the fermentations). They also decided to jointly request significant improvements to the Commission’s proposal for the ceiling, so that the simultaneous approval of all three Regulations together at the next session of the Ministry of Foreign Affairs in December becomes possible.

Photo source Min. Environment and Energy

The Czech presidency of the EU accepted the proposal, while their opposition was reportedly expressed by the Netherlands, Austria, Finland, Denmark, Estonia, Ireland and Luxembourg, who sought the immediate adoption of the two “mature” Regulations. If they achieved their goal, the cap would most likely be driven to….the calendars of Brussels. Of particular interest is the “balanced” stance taken by Germany, which reportedly accepted the simultaneous adoption of the three regulations, on the condition that the safeguards adopted by the European Council on the ceiling are respected, pledging to approach the new one in good faith round of negotiations.

At the press conference following the Summit, the Czech President’s Energy and Industry Minister Jozef Šikela admitted that talks on the cap had been “intense” and opinions “divergent”. However, he expressed modest optimism for a comprehensive agreement to be reached in December. “Not having a consensus is not an option, because the stakes are very high,” he said characteristically, without however clarifying how the divergent opinions will be reconciled.

Energy Commissioner Kadri Simpson, visibly embarrassed, defended the proposal she brought down, reiterating that it was a “balancing exercise” that had to meet the conditions set by European leaders for a mechanism to prevent episodes of extreme gas prices – such as those of last August – without jeopardizing the EU’s security of supply, financial stability and efforts to reduce fuel consumption and without disrupting flows within the Union. He declined to answer how the proposal would prevent extremes like those in August when as structured….it would not be triggered then. She noted how the ceiling is not just a number, but a “set of interconnected parameters” and stated that her services are ready to assist member states to achieve the coveted golden ratio, which however is not currently on the horizon…

The attitude of Greece

On its placement in the Council, Mr. Skrekas stated that “The ceiling at 275 euros/MWh is not actually an upper limit. We need a realistic mechanism that is implemented in practice. With a cap of between 150 and 200 euros/MWh, Europe can secure the natural gas it needs and cause significant reductions in demand.” He stressed the need to apply the mechanism when the market is operating in calm conditions and not in extraordinary periods, when prices have exceeded the ceiling for several days: “If we wait a long time to impose a price reduction, it is not easy to limit the price at the cap level. This will be destabilizing.” Regarding the procedure for activating the mechanism, Mr. Skrekas proposed that the cap be imposed automatically but abolished by a political decision. In closing, he emphasized that the proposal can be improved and become an effective mechanism, which the markets will take seriously.

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