Leave? Long? EU President Charles Michel and European Commission President Ursula von der Leyen raise their eyebrows in surprise at half past two on Friday morning, after a ten-hour meeting with European heads of government. ‘Given the enormous agenda that was laid out, this is super fast’, says von der Leyen dryly.
However, the conclusions about the high energy prices, for which the leaders sacrificed their night’s sleep, are only A4, 617 words. Not much and afterwards everyone gave it their own interpretation, ranging from ‘impasse, nothing decided’ to ‘breakthrough in principle’. Incidentally, the breakthrough is more in what was discussed without discussion than in the now infamous price ceiling for gas for which Prime Minister Mark Rutte, French President Emmanuel Macron, Italian Prime Minister Mario Draghi and Federal Chancellor Olaf Scholz had to confess to Michel around midnight.
In their final statement, the leaders call on European energy ministers and the Commission to ‘take concrete decisions urgently’ on that price ceiling. Please note: decisions, so don’t tarry about proposals. An assignment from the heads of government – the highest political authority in the EU – to the ministers and the Commission. “That’s a political fact,” said a concerned EU official.
It was Macron and Draghi who pushed this passage into the conclusions. They have been campaigning for a maximum gas price for a year now. This was especially difficult for Scholz, who did not want to see the word price ceiling in the text at all. It was also uncomfortable for Rutte. He did not feel much less ideologically than Scholz for limiting the gas price. He fears that gas producers will soon ignore Europe because they get more money elsewhere.
peaks
Under pressure from Berlin and The Hague, the price ceiling was subsequently capped: bind it to so many conditions that it may never be used. So there will be no hard limit to the gas price, but a dynamic bandwidth to file off the highest peaks only in times of ‘excessive prices’. The EU will only refuse the gas if Europe really pays significantly more for LNG than, for example, Asia. However, energy security must not be compromised.
Under Dutch-German pressure, the same series of conditions was attached to subsidizing the electricity price: it must not lead to extra demand or the unwanted export of electricity sponsored with EU money to countries such as the United Kingdom or Switzerland.
EU officials do not think the dynamic price cap will ever be activated, especially as gas prices have fallen sharply in recent weeks, partly due to EU measures. ‘It’s a bit of a mirage,’ said one of them.
anger
Another issue that took hours of negotiation was Italy’s desire to use EU money to help citizens and businesses pay the higher energy bills. Draghi thus cleverly responded to the anger about the national German support program of two hundred billion euros. Berlin’s financial clout would undermine solidarity in Europe and the internal market.
Scholz felt pressured into a corner, but together with Rutte ensured that extra EU money will only be used ‘where appropriate’. For the Netherlands and Germany, that appropriate moment has not yet arrived. According to Rutte, there are still a thousand billion euros in unused EU subsidies on the shelf.
Next week, the European energy ministers must work out the leaders’ agreement in principle, Macron expects to make a decision within a month. In the event of disagreement, the issue will return to leaders at an additional EU summit. Scholz demanded that for fear that Germany would be outvoted: ministers decide by majority, the leaders by unanimity.
In the midst of all the nightly negotiations about prices and money, two other matters received much less attention. The leaders decided on joint purchasing of gas (large customer, better contracts) and a new price mechanism that makes LNG cheaper. According to experts, these are the measures that will really push the price of gas next spring – when filling the gas storage for the winter ’23-’24. After all, the excruciatingly high gas price this summer was partly due to the German buying frenzy to fill the stocks.