PRAGUE– European Union leaders struggled on Friday to bridge major differences over a natural gas price cap as winter approaches and Russia’s war in Ukraine fuels a major energy crisis, pushing prices higher for consumers and businesses.
The price cap is one of several measures the 27-nation bloc is preparing to contain an energy crisis in Europe that some say could lead to blackouts, factory closures and a deep recession over the course of of winter in economies already weakened by the coronavirus pandemic.
Russia has reduced or cut off natural gas supplies to 13 EU member countries as European governments step up support for Ukraine in the form of arms, money, aid and sanctions against Moscow. The potential for shortages has led to a spike in gas and electricity prices which could spike as demand peaks during the cold months.
“Russia has fired an energy missile at the European continent and the world,” European Council President Charles Michel said at the leaders’ meeting in Prague.
No breakthrough emerged from the summit, but Michel said the meeting was an important “strategic step” which he hopes could soon lead to an agreement.
The simple fact that each member country depends on different energy sources and different suppliers has stood in the way of a deal and they are struggling to agree on the best way forward.
Latvian Prime Minister Krisjanis Karins summed up the challenge for the EU as it considers a possible gas price cap.
“A gas price cap, if it could be achieved, would be grand – with the caveat that we cannot jeopardize security of supply,” Karins said. “So we can’t set the price so that nobody sells gas in Europe.”
In a choreographed show of unity, French President Emmanuel Macron, Dutch Prime Minister Mark Rutte and German Chancellor Olaf Scholz entered Prague Castle together on foot, past a small but boisterous crowd of pro-Ukraine protesters.
A group of 15 member countries has urged the EU’s executive arm, the European Commission, to propose a gas price cap as soon as possible, but the idea has not won unanimous support, with Germany notably blocking .
Scholz’s government is also annoying some of his fellow EU members. Polish Prime Minister Mateusz Morawiecki has criticized Germany’s plan to spend up to 200 billion euros (dollars) to help keep gas prices low for its own consumers and businesses.
“The richest European state with a strong economy is trying to use the crisis to gain a competitive advantage for its companies. It is not fair. The common market cannot work that way,” Morawiecki said. Many, including France and Italy, believe the move should have been coordinated with them or that EU money should have been used instead.
For now, according to the commission, Europe’s gas storage capacity stands at around 90%, even though Russian gas supplies to the EU fell by 37% between January and August, the States United States and Norway having intervened to supply liquefied natural gas. But these replacement supplies have not come cheap.
Commission President Ursula von der Leyen said talks in the Czech capital focused on reducing high gas and electricity prices, negotiating a corridor for decent prices with more suppliers reliability and the limitation of prices on the gas market as a whole.
“There is widespread support that next spring, at the end of winter when our storages will be exhausted, it is of paramount importance that we have a joint supply of gas, so that we avoid overbidding but that we let’s have collective bargaining power,” von der Leyen said.
For now, a breakthrough on the price cap seems a distant prospect. But EU energy ministers will meet again next week and could make enough progress to strike some sort of deal when leaders meet again in Brussels on October 20-21.
The gasoline cap proposal faces hurdles “because each country has its own version of what the gasoline cap should look like,” said Simone Tagliapietra, an energy policy expert at the Bruegel think tank in Brussels. .
And there are more fundamental issues, including the need to reduce demand: “The main issue is whether we can cap the price of gas without reducing the incentive to reduce gas consumption,” Tagliapietra said.
For all its difficulties, striking a gas deal is another key to resisting what the Europeans see as Russia’s manipulation of energy markets in an effort to weaken their resolve to support ravaged Ukraine. by the conflict.
The EU on Thursday agreed to a new set of sanctions against Russia, hitting trade, including in the technology sector, imposing travel bans and asset freezes on 30 other officials and targeting seven organisations. But the bloc is running out of economic ammunition to punish Russia.
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Mike Corder in The Hague, Samuel Petrequin in Brussels and David McHugh in Frankfurt contributed to this report.
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Follow AP coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine
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