The southern European countries, led by Spain, want the European Comission drastically modify your initial proposal to cap the price of gas. Not only to lower the fixed maximum of 275 euros per megawatt hour (MWh) proposed by Brussels last month, but also to make this cap mobile, and adapt efficiently to market conditions. In Alicante, at a summit chaired by Pedro Sánchez, the nine countries of the EU-Med9 Mediterranean group have signed a joint declaration calling for a reform in this regard.
The Mediterranean countries consider it essential to adopt measures to “limit price volatility & rdquor; of gas, as well as “accelerating an in-depth reform & rdquor; of the current design of the electricity market so that it is “decoupled & rdquor; of the price of natural gas. All this, with the aim of minimizing the impact of energy prices “urgently & rdquor ;. Energy prices started rising before the Russian invasion of the Ukraine and have skyrocketed ever since. For it, they ask the European Council to implement a “market-based & rdquor; an effective formwhich guarantees industrial competitiveness and security of supply.
They go further: they request that a system of joint gas purchases is quickly implemented “to use our purchasing power [el de la UE] to lower prices & rdquor;according to the joint declaration signed this Friday by Spain, France, Italy, Greece, Portugal, Croatia, Slovenia, Malta and Cyprus (EU-Med9 countries).
In this sense, the President of the Spanish Government and host of the summit, Pedro Sánchez, trusts that the European Union can agree on this cap on the “dynamic” gas price, because the current proposal “needs adjustments & rdquor ;. The Energy Ministers of the Twenty-seven will meet on December 13 to discuss this issue, and two days later the European Council will do the same, the decision-making body with the heads of state and government of the community states.
The French president, Emmanuel Macron, has highlighted that a “convergence& rdquor; of criteria on issues such as energy to find a gas cap formula that fights against speculation in the energy markets, particularly in the wholesale natural gas markets.
The dynamic cap, according to the Spanish proposal, would be based on an average price of liquefied natural gas and a price plus to be determined. Other countries, like Greece, have suggested that the value is partly dynamic (25%) and partly fixed (75%).
The idea proposed by the European Commission is that of a limit that would be put in place when the market price reached 275 euros per megawatt hour for two weeks, provided that it was 58 euros higher than the reference for liquefied natural gas for 10 days. Spain has pointed out that, with this design, the gas cap would practically never be put into operation. According to Reuters and Bloomberg, the European presidency in turn in the hands of the Czech Republic prepares a proposal to raise a cap of 220 euros per MWh.
Emergency funds for future crises
The nine countries of the EU-Med9 have also conspired to ask Brussels to reform fiscal rules in such a way that they are flexible to deal with future economic crises. Italy, Portugal and Spain have praised the management of the current economic crisis caused by the invasion of Ukraine, and the previous one, after the arrival of the covid, and this in opposition to the failures committed after the collapse of the financial system in 2008, when they imposed austerity measures at any cost.
The Prime Minister of Portugal, the socialist António Costa, has called for the implementation of a common emergency fund, a “permanent investment instrument & rdquor ;, that serves as an element “permanent macroeconomic stabilizer & rdquor; to guarantee the autonomy of the European Union. Strategic investments in energy transition or digitization, as well as defense or artificial intelligence.
The countries of southern Europe, which represent about half of the population and GDP of the European Union, have claimed their voice within the Union. “We, the countries of the south of the EU, aspire to promote European responses to the great challenges that lie ahead,” read the joint statement. Pedro Sánchez has stressed that this group must “build the European agenda”, and this has been conveyed to the president of the Commission, Ursula von der Leyen, present at the meeting.
They have called for fiscal rules in the EU to allow realistic and gradual debt reduction, at a pace tailored to each member state, while maintaining the goal of sound finances. At the end of next year, the Brussels moratorium on deficit limits ends, an exception launched to help weather the covid crisis and the one derived from the invasion of Ukraine.
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France, Spain and Portugal have welcomed the project, which they have presented hours before, to create a green hydrogen corridor. At the end of the decade, the H2Med will connect the Iberian Peninsula with France, through a land pipeline between Portugal and Spain and a submarine pipeline from Barcelona to Marseille.
In this sense, the Italian vice-president, Antonio Tajani (who replaced Giorgia Meloni, sick with flu) wanted to emphasize that his country also wants to be a “hub” to resolve the energy situation. Shortly before, Ursula von der Leyen had blessed the H2Med project, venturing that it will allow the Peninsula to become a global energy center.