Energy: No Decision From the 27 EU Countries

Brussels, 21 October 2022

“EU leaders reach a deal on energy” is the title chosen by the European Council website to hide a new stalemate of Europe on energy, yesterday in Brussels.

The Commission lead by Ursula von der Leyen had proposed a new Council Regulation to tackle high gas prices in the EU and ensure security of supply this winter.

Let’s see von der Leyen’s proposals and what the 27 heads of state and government have decided:

1. Aggregating EU demand and joint purchasing of gas to negotiate better prices and reduce the risk of member states outdoing each other on the global market while ensuring security of supply across the EU.
   Decision: None. with Orban in the lead, the countries said aggregate purchases can only be voluntary. In practice, the Commission is not authorized to negotiate suppliers and prices and some countries may have limited joint initiatives.
2. Price correction mechanism to establish a dynamic price limit for transactions on the TTF gas exchange and a temporary collar or band to prevent extreme price spikes in the derivatives markets.
   Decision: None. Countries rejected such an initiative, until a detailed study on the costs and benefits of such an initiative is carried out. Germany, the Netherlands and other countries fear that gas flows decrease rapidly, putting the European economies, already in great pain, in greater difficulty.
3. Solidarity between Member States in case of supply shortages, extending the obligation of solidarity to Member States without direct connection of gas pipelines to also involve those with LNG plants; and a proposal to create a gas allocation mechanism for Member States affected by a regional or Union gas supply emergency.
   Decision: None. Some EU countries have said that the lack of adequate and balanced energy infrastructures makes it impossible to launch a solidarity plan. New gas pipelines need to be built to connect EU countries (as requested by Germany), or electricity and hydrogen networks (France).
   There should be a new summit between the two countries in Fontainbleau next week to resolve the dispute.

Conclusions

No decision. There should be a new extraordinary meeting of energy ministers and 27 heads of state and government.

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