In the spirit of uniting contradictory tendencies within Europe around natural gas price ceiling The European Commission comes to tomorrow informal summit of 27 member states. The positions of Greece and the Bloc of 15, united around the Greek proposal to impose a ceiling on import prices for natural gas of any origin, are gaining momentum, at least with what is reflected in yesterday’s letter Chairman of the Commission Ursula von der Leyen heads of member states.

For the first time, the Commission includes them in its proposals, even removing from the discussion the introduction of a ceiling on the price of Russian gas, a measure put forward at the initiative of Germany, with especially negative consequences for Greece, since it would lead to a complete cessation of Russian gas flows, disruption of supplies to the country from the gas pipeline TS.

Greek proposal this is the second of four successive components of the intervention proposed by the Commission to address this issue. energy crisis. He acknowledges that the TTF is no longer a representative price index for imported natural gas and should be replaced by a new European index that will better reflect the levels of supply and demand for gas – according to the President of the Commission, Brussels already started building it. In anticipation of this benchmark, the Commission proposes capping prices associated with TTFs, paving the way for a transitional natural gas import price ceiling. However, the President of the Commission points out in his letter that “we must recognize the risks associated with setting a price ceiling for natural gas and implement it with the necessary precautions”, combining this measure with further energy saving measures.

The EU acknowledges that the TTF is not a representative gas price index and should be replaced by a new European index.

This is a positive development that the Greek government has rightly noted since yesterday, as this proposal, which Greek Prime Minister Kyriakos Mitsotakis submitted to the Commission a few months earlier, is the result of the dynamic negotiations of the last few days and the initiatives of the “Group of 5” (Greece, Belgium, Italy, Spain, Poland), which form the core of the “block 15” pro-cap. The fate of the proposal will be determined by the attitude of other states towards Summittherefore, the relevant staff is working feverishly to present it in a technically complete form, working on some points that will calm worried countries such as Germany.

Three questions

According to the factors involved in the negotiations, there are three points that require processing and responses.: How will you ensure the security of supply, as there is a risk of redirection of LNG cargoes when the price decreases, how will you prevent the increase in natural gas consumption due to price reduction, and how will you prevent the suspension of intra-European gas trade through a single price. Proposal architects are aware of the risks of the proposal and are working on a flexible scheme that will significantly limit them and which can, for example, switch to “K”to assuage countries’ concerns, which are real and do not stem from ideological approaches or other goals.

Justify the prime minister’s initiatives and perseverance Kyriakou Mitsotakis that there must be a European response to the energy crisis, said government spokesman Yannis Oikonomou on the occasion of a letter from the president of the Commission. “The President of the European Commission accepts the position, rhetoric and arguments of Greece, proposed and defended for some time by the Greek Prime Minister, as the most effective solution to the energy crisis. This is an important moment and an absolute personal justification for Prime Minister Kyriakos Mitsotakis,” he said. “Considering capping TTF prices as an emergency response to the energy crisis is a very important step in the right direction,” Prime Minister Kyriakos Mitsotakis tweeted.

Ceiling trap for power generation only

The Commission’s proposal to apply a natural gas price ceiling designed to power generationWith Hellas to express their vertical opposition. The proposal is included in a letter from the President of the Commission to the leaders of 27 countries as an interim measure until the structural reforms that need to be carried out in the electricity market are determined.

In essence, this is the Iberian model, which the Commission did not put forward at the extraordinary meeting of energy ministers on September 9, estimating that it would increase natural gas consumption in Europe by 10%, while the target was set to decrease by 15%, and the total cost will amount to 209 billion euros per year. The proposal, which eventually reached the Council of Ministers through France, which significantly increased the use of natural gas in the energy sector due to the reduction in the capacity of its nuclear reactors, found the support of only three states. Among the supporters is Germany, where the share of natural gas in the electricity generation mix is ​​less than 18%, and only yesterday it won the approval of the State Assistance Commission in the amount of 450 million euros to operate five lignite power plants until March 31. 2023.

For Greece, whose electricity generation is 40% dependent on natural gas, this measure will significantly limit the revenue currently received from the wholesale market and directed to the Energy Transition Fund for subsidies, while at the same time it will subsidize natural gas. electricity producers covering the difference between the ceiling and the price of imports. In general, for Europe, the implementation of this measure creates a financial deficit, which will increase as import prices for natural gas rise, which must be covered by national budgets.

In addition to these two measures, the Commission, according to a letter from its president, proposes to renegotiate with EU suppliers. to reduce natural gas prices through a common procurement platform involving more than just Member States and industries, and to accelerate the transition to energy through increased investment in renewable energy. It even offers additional sources of funding to strengthen the REPowerEU. Finally stressing that there should be no tolerance for the suspension of energy infrastructure due to sabotage that affected the two pipelines Nord Stream 1 and Nord Stream 2, Ms Leyen told the European leaders of the 27 Member States that the European Commission will briefly present measures related to preparedness, testing, response, international cooperation and information sharing to best protect and protect these infrastructures.

Meanwhile, European diplomats reached political agreement yesterday on a new package of sanctions against Russia that would include a cap on Russian oil prices. The final draft is expected to be signed no later than this morning, before European leaders meet in Prague for the European Political Community summit and on Friday for an informal summit.