4th Mar 2024

EU leaders aim to break impasse on energy crisis talks

  • EU leaders are also expected to discuss the war in Ukraine and how to provide further financial assistance to Kyiv (Photo: Council of the European Union)
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EU leaders will meet on Thursday (20 October) for the second time this month to discuss emergency measures to tackle the energy crisis — although divisions are likely to prove challenging.

On Tuesday, the European Commission put forward a package of proposals, including a temporary "dynamic" price cap for gas transactions on the Dutch TTF exchange, joint purchases and solidarity requirements in case of an emergency.

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The 27 are expected to reach a political agreement to purchase gas through a joint platform before next winter — as EU countries have been outbidding each other when buying gas to fulfil gas storage during the summer, driving prices up.

Hungarian prime minister Viktor Orbán is the only leader who has publicly voiced opposition to joint purchases ahead of the meeting, announcing difficult talks during the summit.

"Brussels' latest plan on joint gas procurement reminds me of the time we bought vaccines together. Slow and expensive," Orbán said on Twitter.

As global shipments of LNG to Europe have significantly grown since March, EU leaders are also expected to back the creation of a complementary benchmark for LNG.

But they remain split over whether and how to limit the gas to reduce soaring bills, given the role of gas as a price-setting mechanism for the final price of electricity.

A group of at least 15 countries have been pushing for an EU-wide wholesale gas price cap for both imports and intra-EU gas transactions.

But the move is opposed by Germany and the Netherlands, fearing that such intervention would undermine the security of supply or inadvertently increase consumption. Hungary is also reluctant to impose any type of price cap.

It is still unclear whether today's negotiation will break the impasse over gas price caps since this is seen as a controversial issue with still many pending questions.

The latest draft conclusions could exclude references to any type of price caps, according to an EU official.

Trust shortages?

EU member states will also discuss the impact of the energy crisis on the bloc's economy and the possible funds available at the EU level.

"Our economic outlook will depend to a large extent on how we manage our energy crisis," the president of the EU Council, Charles Michel, wrote to EU capitals.

However, several leaders think there is enough money in already existing EU funds for now, and they argue that there is no need for another joint pool of resources.

As Europe faces the war's economic and financial consequences, the meeting in Brussels might also be crucial to restoring trust among EU countries, according to experts.

"Trust is already in short supply," said Pawel Zerka, from the European Council on Foreign Relations think tank.

While Germany has put forward a controversial €200bn programme to help households and businesses facing difficulties to pay their energy bills, France and Italy, the bloc's next biggest economies, have only distributed a fraction of that amount.

Yet, neither Germany nor the Netherlands is expected to back the creation of a new joint EU loan mechanism, despite calls from some member states to take common action.

"Berlin now bears a particular responsibility for rebuilding trust among the EU27, not least because of its earlier cosy energy relationship with Russia," Zerka said.

Technical details will be discussed later this month (25 October) among energy ministers, who are expected to adopt emergency measures in early November during an extraordinary meeting.

EU leaders are also expected to discuss the war in Ukraine and how to provide further financial assistance to Kyiv, better protecting critical infrastructure, and external relations with China most likely on Friday (21 October).

"The European Council condemns in the strongest possible terms the recent indiscriminate Russian missile and drone attacks targeting civilians and civilian objects and infrastructure in Kyiv and across Ukraine," EU leaders would say, according to the latest draft conclusions.

Leaders are also expected to back sanctions on Iran, for its role in the war in Ukraine with drone supplies to Russia.

"We need to reply with what is happening with Iran, this has been the fastest sanctions procedure," an EU official said.

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