The Netherlands has proposed a new idea to prevent gas price spikes in the EU in a document circulated to EU capitals and seen by EURACTIV.
EU countries are currently trying to find common ground on a gas price cap before EU energy ministers meet on 13 December, where it is hoped they will reach an agreement on the measure.
Ahead of this, the Netherlands has proposed its own idea for a cap in a paper sent to EU capitals on 2 December. The idea is to limit the cost of gas purchases made by so-called “price insensitive” buyers, like those supported by governments or legally obliged to buy supplies to fill up storage ahead of the winter.
Demand from these players pushed up the gas price in August 2022, causing prices on the EU’s main gas trading hub to soar, according to the paper.
Buying up gas for storage usually occurs in a relatively short time frame and is “of such magnitude” that it can influence or even set the price, particularly when some have “almost unlimited resources to buy”, the paper explains.
To avoid this demand causing price spikes again, the Dutch paper proposes a cap that can be applied to these buyers year-round that would be broader in scope and lower than the Commission’s current proposal for a cap. It will also be reviewed every month to prevent jeopardising EU energy security.
It would also avoid hampering financial markets and bring prices down, the paper argues.
The Netherlands has always been cautious about introducing a price cap on gas and the Hague has been highly critical of the EU executive’s proposal for a cap.
The Commission’s measure is “flawed”, according to Dutch Energy Minister Rob Jetten. There is “a lot of risk for damaging the energy security of supply and also for the stability of the financial markets”, he told journalists at a meeting to discuss the measure last month.
(Kira Taylor | EURACTIV.com)
Source: euractiv.com
