This week, the European Commission is to propose a “dynamic” price ceiling, as a last resort, for natural gas in the European Union and binding limits on the degree to which trading prices can fluctuate within a day, according to a draft proposal cited by Reuters and news. ro.
The EU has been trying to distance itself from Russian fossil fuels, but in recent months Moscow has largely disconnected the bloc from its gas pipelines, raising prices and creating supply problems.
The European Agency for the Cooperation of Energy Regulators (ACER) would be tasked with creating a price indicator by March 23 for the liquefied natural gas from which the EU buys it, according to a proposal seen by Reuters that must be approved by EU governments.
The Commission recommends possible interventions in the price of the Dutch Securities Transfer Instrument (TTF), which is widely used in Europe for contracts and hedging.
The EU executive will “as a last resort” propose to set a “dynamic” market price at which natural gas transactions can be made on the TTF spot market under certain conditions.
The measures should not affect the security of supply, lead to an increase in gas consumption, and also affect the normal functioning of energy derivatives markets, the project states.
EU governments would have to agree to this, and it would take no more than three months.
Other gas trading centers in the EU will be linked to the TTF spot price, adjusted through the dynamic price corridor.
The proposal is well below the EU gas price cap demanded by 15 EU countries, but is opposed by others such as Germany, Austria and the Netherlands, who say the caps could lead to gas shortages and would not encourage energy conservation.
“With falling gas prices, this proposal shows that the appetite for ambitious reforms such as price caps is fading,” said Georg Zachmann, an energy expert at the Bruegel think tank.
EU leaders are set to discuss options later this week.
The proposals will need the approval of EU governments, which have been wrangling for more than a month since the Commission first proposed capping the price of Russian gas only in early September.
The Commission’s draft proposal also states that EU trading platforms must set by January 31 a limit on how much energy derivatives can rise or fall in one day in the first month. The project also includes the idea of joint gas purchases, a solidarity mechanism to avoid large supply disparities in the bloc and a push to reduce gas demand.
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Source: Hot News RO
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