EU leaders disagree on gas but vow to continue talks

EU leaders have failed to reach an agreement on a continent-wide cap on gas prices, which continue to be alarmingly high as Russia’s invasion of Ukraine disrupts the markets.

Making matters worse, Gazprom, Russia’s leading energy supplier, has cut or severely limited gas flows to 12 member states, raising the spectre of gas rationing by wintertime.

“The root cause of our problem is our dependence on fossil fuels, which we must get rid of,” said Ursula von der Leyen, the president of the European Commission, at the end of the two-day summit in Brussels.

“There is a lot on the move to really diversify away from the Russian gas to other trustworthy suppliers,” she added, naming the US, Norway and Azerbaijan as alternative partners.

Italian Prime Minister Mario Draghi arrived in Brussels with the intention of pushing forward his own proposal for an EU-wide limit on gas prices but didn’t manage to get the backing of his peers.

So far, only Belgium and Greece have expressed support for the project, while Spain and Portugal have already established a temporary cap of €40 per megawatt across the Iberian Peninsula.

“The major objection [from other countries] to a cap on gas prices is the fear that Russia will cut supplies,” Draghi said. “But there is no point since supplies are already being cut.”

Draghi said Germany and the Netherlands, which have been staunchly opposed to the move, have become more “open” to the idea.

German Chancellor Olaf Scholz, however, didn’t endorse the proposal while he spoke to reporters at the end of the summit. 

The sudden drop in Russian flows has forced the German government to activate the second phase of its three-stage emergency plan, warning that storage targets for winter are at risk.

As a compromise, EU leaders tasked the Commission to devise a new plan to curb rising energy prices, “including the feasibility of introducing temporary import price caps where appropriate.”

The 27 also vowed to coordinate their national measures against soaring inflation and avoid the self-centred and chaotic approach that characterised the initial months of the pandemic.

Von der Leyen said her executive is currently reviewing the contingency measures of each member state in case of a new drop-in Russian flows and urged capitals to consider what impact their national instruments might have on their neighbours.

“We are working on a common European emergency demand reduction plan with industry,” she said. “I will present this plan in July to the leaders. There will not be a return to cheap fossil fuels.”