Wednesday

6th Jul 2022

EU-led team could be tasked with securing affordable gas

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The European Union is ready to buy gas and hydrogen in order to cut its dependence on Russia and reduce energy prices, the European Commission announced on Wednesday (23 March).

An EU commission-led negotiation team is set to hold talks with gas suppliers to try to secure better prices and enough supplies for all EU member states ahead of next winter.

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  • A cap on gas prices should be considered a 'last resort,' said the commission (Photo: Wikipedia)

The proposal also includes stepping up LNG imports from countries such as the US, Qatar and Egypt to diversify supplies and to help reach a mandatory gas storage target.

EU member states currently need to ensure storage facilities reach a minimum of 80 percent of their capacity before 1 November — but that target would be ratcheted upwards in the following years.

EU storage is currently running at 26-percent-capacity.

Those in need of gas could syphon it off from storage tanks located in other member states via a network of pipelines.

Earlier this month, EU leaders committed to phasing out dependency on Russian gas, oil and coal imports but unlike the US and UK, they fell short of imposing sanctions on Russian energy imports.

Gas and electricity prices have risen by 65 percent and 30 percent respectively over the past year and that has contributed to driving up global commodities prices. But the uncertainty related to the Russian invasion of Ukraine has exacerbated price volatility and concerns over potential supply disruptions.

This situation had already prompted most member states to take action in the months before the invasion in the form of tax breaks and subsidies to shield citizens from higher costs.

Those measures have already been hugely costly but the commission suggested member states still could do more by reducing energy tax rates and offering exemptions to vulnerable households.

The energy crisis has divided EU countries over the best way to cushion the impact of high prices.

Spain, Belgium, Portugal, Italy and Greece have called for intervention in Europe's energy markets and for capping prices, while countries such as Germany, Austria, the Netherlands and Denmark oppose the move.

A cap on gas prices should be considered a "last resort" since it could make it harder for Europe to access gas supplies in global markets, the commission said.

Other options to mitigate high energy prices include the use of public funds to support businesses struggling with excessive energy prices that could be introduced without breaking the bloc's anti-subsidy rules.

Russia said on Wednesday that the West should pay for Russian gas in rubles — the Russian currency. The ruble, which has slumped since the invasion of Ukraine, gained in value on Wednesday.

Green label for gas may be coming unstuck

The European Commission on Tuesday defended labelling natural gas as a sustainable investment during a session at the European Parliament. Sceptical lawmakers said demand for gas is strong enough.

It's not easy being green — and cutting Russian gas

There are growing concerns that the EU's push for alternative gas sources will simply lead to burning the most-polluting sources as Russian gas gets phased out. But the EU climate chief says there should be no taboos.

More US gas may explode prices in Europe, experts warn

Washington will increase supply of liquefied natural gas before the end of the year, US president Joe Biden and EU Commission president Ursula von der Leyen announced on Friday, amid warnings that such a move could push prices even higher.

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