After burning midnight oil, the 27 leaders of the European Union have yet to reach a final agreement on the imposition of a European cap on gas prices.
Instead, they have offered a “roadmap” – which energy ministers will have to haggle over in the coming days – for a unified pricing strategy.
“We now have a very good and solid roadmap to continue working on the subject of energy prices,|” European Commission President Ursula von der Leyen told reporters after their meeting in Brussels, where the bloc’s leaders had gathered for a two-day summit.
Belgian Prime Minister Alexander De Croo said some countries had “legitimate concerns” over the gas price cap and that a joint decision to tackle high prices would likely be ready within two to three weeks.
Jacob Funk Kirkegaard, senior fellow at the German Marshall Fund of the United States in Brussels, told DW that the distinct national circumstances of each member state make it difficult for a single EU position to emerge.
“The French have nuclear energy, so they are less dependent on gas,” Kirkegaard said. “Germany needs a lot of liquefied natural gas and will therefore be affected by a cap that will send LNG cargoes elsewhere in the world. Meanwhile, countries like Italy have obtained gas from Africa and would therefore benefit of a ceiling.”
The The German parliament backed the government’s proposal a 200 billion euro ($195 billion) fund to combat soaring energy prices. However, other EU member states criticized the measure as one that would mainly help Germany.
Pawel Zerka, policy officer at the European Council on Foreign Relations, told DW in an email that trust between EU countries “is rare”.
“Berlin now bears a particular responsibility for restoring trust between the EU27, not least because of its comfortable energy relationship with Russia,” Zerka wrote.
However, EU leaders reached an agreement on the joint purchase of gas for a volume equivalent to 15% of their national storage needs. They also instructed the European Commission to submit “concrete decisions” on imposing measures on gas transactions to the Title Transfer Facility, the Netherlands-based virtual hub for gas trading in Europe.
“This thing the Commission calls a temporary dynamic price corridor is just a fancy way of saying ‘circuit breaker’ and is a standard procedure that suspends trading, if prices fall too much too fast. All exchanges have it already in place, so it’s really nothing more than a smokescreen in my opinion,” Kirkegaard said.
EU gas prices have gone up to a record level of €335 per megawatt hour (MWh) in the spring. Prices have since fallen, but are still up 300% since the start of 2022.
Simone Tagliapietra, senior researcher at Brussels think tank Bruegel, told DW the European Union could learn from the energy crisis of the 1970s, when oil and gas prices also rose dramatically.
“What happened in the 1970s was a major increase in energy efficiency as a result of the crisis,” Tagliapietra said. “There has also been a shift to alternative energy sources. So ultimately to deal with this crisis that we are facing right now, people will try to diversify their energy sources.”
“For example, if you look at imports of solar panels into Europe from China, at the start of the war, they skyrocketed,” Tagliapietra said. “But they’ve really skyrocketed because people and families and businesses have imported more to produce electricity more cheaply. So I think, just like in the 70s, we’ll come out of this crisis with a greener energy efficiency.”
China ‘fiercely competitive’
According to a 2021 report according to Eurostat, the statistics agency of the European Union, China was the main source of extra-EU imports of wind turbines, solar panels and liquid biofuels in 2020.
“On some issues like climate change, China is our partner,” de Croo told reporters ahead of the second day of the summit, which focused on the European Union’s future strategy on China.
“But in some areas there’s hostile behavior and in others it’s fiercely competitive,” he said.
De Croo said EU countries have been complacent in the past about Beijing’s geostrategic approach to economic relations.
The Baltic countries, Estonia and Latvia, which recently left the 16+1 economic forum with Chinastressed the importance of developing a united approach towards Beijing.
“China is like Russia,” Estonian Prime Minister Kaja Kallas told reporters. “Considering their interest in dividing us. It should be in our interest to stay united,” she added.
After a strictly “phone-free” three-hour meeting on China, European Council President Charles Michel said there was “great consensus and convergence on the importance of truly developing strategic autonomy”.
Although the European Union has not yet fully converged on its China strategy, said Mathieu Duchatel, director of the Asia program at the Institut Montaigne in Paris, the bloc remains united on its defensive program when it comes to China.
“More and more, China is being treated as a geopolitical risk that needs to be managed, and patient diplomacy to seek results, despite all our differences, is part of that game,” he said.
Support for Ukraine
Towards the end of the summit, EU leaders also stepped up their financial support for Ukraine. In the years to come, Von der Leyen said, it will be important for Ukraine to have stable incomes.
“Three to four billion euros per month for Ukraine will be funded by the EU, the United States and other financial institutions,” von der Leyen told a press conference after the summit.
Von der Leyen said it was important to show support for Ukraine as the war continues.
The European Council also instructed the Commission to find options “in accordance with European and international law, aimed at using the frozen assets to support the reconstruction of Ukraine”.
“We have more than 300 billion euros in frozen Russian assets,” Estonian Prime Minister Kallas told reporters. “Using this amount to support Ukraine can be beneficial and we should discuss it.”
Edited by Milan Gagnon