Tuesday

27th Feb 2024

EU plan to buy gas together is 'not the silver bullet'

  • Joint-procurement is likely the only feasible option on the table at this weeks summit (Photo: Europan Union)
Listen to article

EU heads of state and government are expected to agree on Friday (25 March) on a proposal to jointly buy natural gas, liquified natural gas and hydrogen in an effort to protect citizens from price swings and lessen reliance on Russian imports.

Europe's gas prices have been on a rollercoaster ride since October 2021, at times reaching prices between 10 and 20 times higher than last year during spring. On top of this, Russia's invasion, and the ensuing energy crisis, has prompted EU leaders to speed up efforts to decrease Europe's dependency on Russian gas.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The proposal for joint procurement of gas was spearheaded by Belgium and Spain.

"This will increase bargaining power with gas suppliers, which will result in lower prices," an EU diplomat who asked not to be named told EUobserver. "We expect this to have a moderating effect on prices."

The Belgian prime minister Alexander de Croo, in an interview with the Financial Times, has compared the joint purchasing of gas with the joint purchasing of Covid-19 vaccines by the EU Commission.

"Joint purchasing has a moderating effect," Christian Egenhofer, a senior research fellow at the Brussels-based Centre for European Policy Studies (CEPS) said. "[But] there is no way around the fact that gas prices will remain very high, even if moderated by joint purchasing."

But one EU diplomat, less enthusiastic about the scheme, compared de Croo to Don Quixote's Sancho Panza fighting against windmills.

"If we want to achieve strategic autonomy in our energy mix, we need to accelerate clean energy transformation," the diplomat said, adding: "That is the only solution."

According to Simone Tagliapietra, an energy expert at Brussels-based think tank Bruegel, it is a mistake not to try and tackle the problem of gas prices now.

"Europe is the world's biggest importer of natural gas. If it moves together the EU can use its economic clout to negotiate better prices," Tagliapietra said.

On Friday, member countries are also expected to decide on a commission proposal that will require them to fill up their gas stores at least 80 percent.

According to one EU diplomat, joint-procurement and filled-up storage levels will dampen speculative behaviour on the gas markets, which has caused gas prices to swing double digits from day to day.

But the effect will likely be small. "There is no silver bullet solution," the EU diplomat said.

"To really tackle volatile price swings the EU should implement price caps," Tagliapietra argued.

"Or they could put a tariff on oil and gas and use the proceeds to help compensate households on their gas bills" he added.

But a German-led coalition of countries, that include Denmark and the Netherlands oppose the policy of putting a ceiling on energy prices.

"If you put a cap on gas, suppliers will simply sell it to China," one EU diplomat told EUobserver. "And if the EU compensates the difference, we, in effect, subsidise Gazprom."

Deep differences on price caps are unlikely to be resolved, leaving joint-procurement as the only feasible option on the table for now.

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.

EU braces for Putin's gas-for-roubles clampdown

EU countries are taking precautionary measures to mitigate potential gas supply disruptions as Russia threatens to cut flows if gas purchases are not made in roubles.

Angry farmers block Brussels again, urge fix to 'unfair' prices

Following weeks of demonstrations across Europe, farmers returned to Brussels to protest over unfair competition in prices, as EU agriculture ministers met just a few metres away to discuss a response. The police used water cannon and tear gas.

Latest News

  1. For Ukraine's sake, pass the EU due diligence directive
  2. All of Orbán's MPs back Sweden's Nato entry
  3. India makes first objection to EU carbon levy at WTO summit
  4. Angry farmers block Brussels again, urge fix to 'unfair' prices
  5. Luxembourg denies blind spot on Nato security vetting
  6. Record rate-profits sees EU banks give shareholders €120bn
  7. Why the EU silence on why Orban's €10bn was unblocked?
  8. Far-right MEPs least disciplined in following party line

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us