BRUSSELS: The European Union recommended on Wednesday that EU countries jointly buy gas to shore up supply, but warned that seeking to cap wholesale prices would cause problems and undermine efforts to shift to green energy.
The European Commission will unveil a detailed plan in May to quit Russian fossil fuels by 2027, in response to the invasion of Ukraine by Russia, which supplies 40 per cent of EU gas.
Meanwhile, countries are scrambling for ways to quickly limit soaring energy bills and find alternative supplies in case Russian flows are disrupted.
Brussels on Wednesday proposed a range of options to do this, which EU leaders will discuss at a summit on March 24-25.
The Commission recommended EU countries jointly purchase gas from suppliers, following a similar model to how the bloc bought Covid-19 vaccines, with a Commission-led task force of negotiators pooling demand and seeking gas ahead of next winter.
The Commission assessed other options – such as price caps, which Spain and Belgium have called for ahead of the EU leaders’ summit.
One option would be for a government-controlled entity to buy electricity and sell to certain consumers below market prices. Another would be to cap power prices and compensate generators for the difference between the cap and the market price.
However, if countries did this individually, it could push power into countries without the cap and cause supply concerns elsewhere, the Commission said.
A power price cap could also undermine the case for investments in new renewable energy generation, while capping fuel prices would make fossil fuel generators more competitive, the Commission said. Compensating such measures would also require large government funding.
EU countries have already poured billions into national tax cuts and subsidies to lower consumer bills, after electricity prices soared to record levels in recent months.
Separately, the Commission proposed legislation requiring EU countries to fill their gas storage to at least 90 per cent by November 1 each year from 2023, and 80 per cent this year. That will need approval from EU countries and European Parliament. — Reuters