The EU Commission is in favor of a European gas price cap



Brussels Before the meeting of the 27 EU energy ministers on Friday, the EU Commission surprisingly came out in favor of a European gas price cap. This should not apply to all gas imports, as requested by several EU countries, but only to Russian gas.

“I believe very strongly that we need a price cap on all Russian gas imports,” Energy Commissioner Kadri Simson said in Brussels on Thursday. The cap must be so high that it is attractive enough for Russia to continue to deliver to Europe. Most recently, however, the Kremlin had severely restricted its deliveries. Simson also spoke out in favor of a price cap on gas, which is used to produce electricity. The commissioner explained that one is prepared to introduce such a price cap at EU level. The model already exists in Spain. As a result, gas consumption increased there. Simson therefore emphasized that the cap must be set so high that consumption does not increase.

Simson’s intervention before the meeting of energy ministers is apparently intended to calm things down in the member states. The Commission was sharply criticized this week by several EU ambassadors for not taking its own position in the debate on gas price caps. In an idea paper, the authority had only listed various options and given the pros and cons of each.

15 states call for price caps on all gas imports

15 countries, including the big countries France, Italy, Spain and Poland, had written to the Commission on Tuesday demanding a price cap for all wholesale gas transactions. However, the federal government categorically rejects such a cap because it fears supply problems and complicated distribution discussions within the EU. The Netherlands and Denmark are also against it.

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A number of energy ministers are expected to address the issue on Friday. The excitement is great, says an EU official. Ministers are asking the Commission to come up with a legislative proposal for them to vote on. However, no result is expected on Friday. The discussion in Brussels is still far too chaotic for that. Everyone understands something different under a gas price cap.

>> Read here: Netzagentur sounds the alarm – private households and businesses use more gas instead of less

On the other hand, the Commission’s electricity market package is to be decided. Among other things, this provides for a solidarity tax for oil and gas companies and a revenue cap for electricity providers. The member states are also obliged to save electricity.

EU excess profit tax illegal according to expert opinion

However, the planned EU regulation is controversial. According to a legal opinion by the law firm Raue on behalf of the Hamburg green electricity provider Lichtblick, it even violates European law.

The main accusation from the lawyers is that the Commission has exceeded its powers. The intervention in the electricity market violates the principle of subsidiarity. This stipulates that the EU can only act if there is no solution at national level. Since individual member states have already taken measures, it has been proven that a regulation from Brussels is not absolutely necessary.

The planned financial redistribution is also not a precautionary measure in the sense of the EU treaties, the report goes on to say. Rather, it is a fiscal measure.

The EU Commission presented the draft law two weeks ago. According to the President of the Commission Ursula von der Leyen skimming off so-called excess profits should bring in a total of 140 billion euros for the member states, which can then be used to relieve households and companies.

The original design has been modified since it was first introduced. Several objections from member states have been taken up, an EU official said on Thursday. But the cornerstones are all still there.

This also includes the controversial revenue cap of 180 euros per megawatt hour of electricity. It is not profits that are skimmed off here, but sales, criticizes Markus Adam, chief lawyer at Lichtblick. “The intervention in the electricity market, which primarily affects the renewables, will set us back years.”

Green electricity provider warns of “Habeck gap”

There will be a slump in investments in renewable energies, operators could drop every second project, he warns. So far, there has been talk in the industry of an “Altmaier gap” in investments, in future this will be called – according to the current Economics Minister – “Habeck gap”.

Sharp criticism of the energy package also came from the Bavarian Ministry of Finance. With the Europe-wide excess profit tax, Brussels is taking another step towards a planned economy, said Finance Minister Albert Füracker (CSU). Such market interventions did not solve the basic problem: the lack of energy. Instead, all available generation capacity must be connected to the grid, including nuclear power plants.

Füracker also referred to the principle of subsidiarity. “The member states can already take appropriate measures without the EU – as is clearly evident from the electricity price cap in France. The EU is creating a bureaucracy monster out of sheer activism.” The CSU minister called for targeted tax cuts in Germany, including lowering electricity and energy taxes to the European minimum, as well as a reduction in sales tax on natural gas, district heating and electricity.

More: Commission presents plan for excess profit tax – “140 billion euros”



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