At a conference held on Thursday to address the energy crisis brought on by the conflict in Ukraine and to maintain unity in the face of Russian President Vladimir Putin’s pressure, European Union leaders found it difficult to come up with rapid, workable answers. The 27 leaders of the EU were unable to resolve differences between some of the largest member states after protracted negotiations in Brussels went far into the night. They also were unable to implement a gas price ceiling to thwart Russia’s plan to cut off gas supplies to the bloc at will.
However, they decided to keep trying to reach an understanding on a set of measures based on suggestions made earlier this week by the European Commission, the EU’s executive body, which were thoroughly examined and adjusted at the summit. The meeting’s host, Charles Michel, the president of the EU Council, declared, “There is a strong and unanimous shared desire to act together, as Europeans, to achieve three goals: lowering prices, maintaining security of supply, and continuing to strive to reduce demand.”
Leaders maintained that any deal would need to take into consideration their various energy mixes, and diplomats said the proposals, which might include a price cap, should be properly evaluated by specialists before adoption. There is more work to be done, “Alexander De Croo, the prime minister of Belgium, observed. “We are pushing ourselves into areas where we are inexperienced and into uncharted territory.”
The energy ministers of the bloc will get together the following week to go over the leaders’ benchmarks in more detail. The Commission has suggested a system to pool gas purchases and presented a solution that would allow a correction mechanism to take effect in exceptional cases in order to prevent the out-of-control price of gas from further crippling the already-struggling EU economies. Additionally, it is advocating for the development of a new LNG gas index that more accurately reflects the market in light of the sharp decline in Russian pipeline gas imports.
At the beginning of the summit, disagreements were so significant that deciding to pursue the strategy put forth by the Commission was regarded as almost a success in and of itself. Viktor Orban, the prime minister of Hungary, claimed that a price ceiling would drive away suppliers. The “gas price cap is like going to a bar and asking for your beverage at half price,” as the saying goes. Not happening,” he wrote on Twitter. Germany and France, the EU’s two traditional driving forces, are in conflict, with Germany expressing uncertainty and delaying plans for the price ceiling while the majority of others want to move on.
French President Emmanuel Macron claimed that he and German Chancellor Olaf Scholz put a lot of effort into their bilateral discussions to reach a resolution. Macron stated that it was “France’s job to achieve unity across perspectives” during their meeting, which will take place in Paris the following week. Any disagreement, according to Scholz, centered on the strategy rather than the objective. Gas, oil, coal, and power prices all need to decline, he said, and this requires a concerted effort from everyone in Europe.
The Netherlands worried that supplies might just sail by Europe and move elsewhere if a price cap was set too high. Prime Minister Mark Rutte remarked, “Everyone wants the price of gas to go down, but you want to make sure that gas imports remain arriving.” As EU countries competed to fill their stockpiles for the upcoming winter, natural gas prices skyrocketed over the summer. The member nations have already decided to reduce gas use by 15% in winter.
Additionally, they have agreed to fill gas storage facilities to at least 80% of capacity by November and to reduce peak energy demand by at least 5% in order to reduce the production of gas-fired power. As the energy crunch got worse, the issue of potential EU gas price ceilings progressively rose up the political agenda, with 15 nations like France and Italy asking for such direct intervention. And where Angela Merkel, the 16-year German chancellor, was frequently the reassuring voice mediating a deal, Scholz, her replacement, is now at the center of a rift in the union.
The supply of natural gas and the incentives for governments and consumers to conserve it could be negatively impacted by market interventions like high price ceilings, according to Germany and the Netherlands. Volodymyr Zelensky, the president of Ukraine, addressed the 27 national leaders via video conference from Kyiv at the outset of the summit and emphasized the necessity for unwavering EU solidarity in confronting Russia. Zelensky was pleading for continuous assistance to get his country survive the winter.
Ursula von der Leyen, president of the European Commission, referred to Russia’s use of drone strikes against Ukraine’s electricity grid and civilian infrastructure as “war crimes” and “pure terror” on Wednesday. Russia is also using strikes on Ukrainian cities to instill fear. More measures are already being evaluated by diplomats. However, Orban’s perceived cordialness with the Kremlin makes life more difficult. Even if the previous EU sanctions against Russia were unanimously adopted, it has becoming harder to keep Orban on board by approving exemptions.