Times are “ripe” and the price cap, albeit in a very soft version, can see the light of day. After months of uncertainty, Ursula von der Leyen seals the Commission’s new energy plan and changes Brussels’ gas strategy: more restrictions for member states and price fluctuations, more solidarity in the event of supply shortages and the prospect of an acting reference index as a counterpoint to the much-criticized Ttf. But the game is not over yet, the “hawks” of the north are not giving in to the dynamic upper price limit. And the prospect of another clash at the October 20-21 European summit is looming. It was the President of the Commission who, at the press conference organized after the approval of the College of Commissioners, sowed caution: the Berlaymont building, she declared, would wait until the European Council reached an agreement in principle on the ceiling and then enter the measure in detail.
Generally speaking the dynamic corridor only applies under certain conditions to prevent extreme spikes in TTF spot markets. It can be activated for up to three months. Then, by next spring, the EU will try to dismiss the problem with a new benchmark that sits alongside Amsterdam’s. But the “cap” is just one of the measures launched by the Commission, which makes joint gas purchases mandatory for at least 15% of the total volume and puts predefined rules on the table for solidarity between member countries in the event of gas shortages.
The theme, as von der Leyen pointed out, is that we see “broad support” across the 27 on the common platform and overall demand for gas, as well as for further consumption cuts – this time mandatorily the emergency. With the price cap in Brussels, we confine ourselves to hoping for a stock among the top performers. In fact, at the same time as the meeting of the representatives of the 27 and the General Affairs Council in Luxembourg, the Commission’s plan was already showing its cracks. In doing so, one encounters “reservations” and “skepticism” from Germany and Holland, but also – according to European sources – from Austria, Denmark, Hungary and Ireland. At the moment, the invitation to consider a dynamic cap is written in the European Council’s draft conclusions, but the ‘hawks’ would aim to scrap it. On the other hand, the countries that support a price cap (the 15 in the letter where they requested it in writing, including France and Italy, possibly with the addition of Cyprus) would like a clearer reference in the text. From now until Thursday, the game is open and the President of the EU Council, Charles Michel, in his letter of invitation, made a new appeal to governments to protect “the collective interest”.
What’s new on the price cap front is that this time the Commission is on its side, albeit cautiously. To those who alerted him to the danger of Moscow shutting off the taps, von der Leyen replied clearly: “Russia has already shown that it is completely unreliable and has deliberately blocked deliveries to the EU. We cannot count on that. ” Not only. The Commission President explained that gas stocks in the EU are currently at 92%. “Flows from Moscow are reduced by 2/3, we are prepared for the winter,” he assured, then countered those who – like Mario Draghi at the Prague summit – accused the Commission of reacting too slowly. “We had proposed a tank cap in March, but there has been reluctance between states. And we weren’t ready in the spring,” he recalled. Italy, with Secretary of State for EU Affairs Enzo Amendola, judges the Commission’s plan “in the right direction”. And he can also smile about the proposal to divert the 40 billion cohesion funds that are left over from the 2014-2020 period to measures against expensive energy. We have to be content with that for the time being: When setting up a sura 2, the German wall has to be overcome again.
Gas price decline continues updating the day’s lows to slide as low as $120 and then rally to 113. The drop in ttf in Amsterdam is around 11 percent.