According to a leaked draft document of recommendations it had seen, the European Commission is abandoning the concept of suggesting a price cap on Russian gas as a part of efforts to address the energy crisis, the Guardian reported on Tuesday. The draft document, which is anticipated to be released on Wednesday, makes no mention of any gas price cap, whether it applies to Russian gas or not.
Last week, the European Commission announced that, as an immediate measure to save the European gas and electricity markets and assist vulnerable consumers, it would propose a mandatory target for the EU to reduce power consumption during peak hours, a revenue cap on electricity producers and fossil fuel companies, and a price cap on Russian gas.
“We will propose a cap on Russian gas. The objective here is very clear. We must cut Russia’s revenues which Putin uses to finance this atrocious war against Ukraine,” European Commission President Ursula von der Leyen said last Wednesday.
The EU’s 27 member states are still sharply divided on a cap on the price of Russian gas, with at least 10 of them allegedly rejecting the idea out of fear that Putin may react by shutting off the continent’s entire gas supply. Germany, the largest economy in Europe and the EU member most impacted by the Nord Stream pipeline’s closure, is also opposed to the proposal.
France and Poland are among a different group of EU nations that advocated for a price cap on all imported gas. The European Commission is leery of this notion, though, as a cap would make it more difficult for Europe to import significant amounts of LNG if costs elsewhere are higher.
According to the Guardian, the Commission’s proposal for Wednesday is not likely to include a cap on gas prices. However, the EU executive arm is reportedly pushing forward with a cap on payments to nuclear and renewable energy producers as well as a tax on the additional profits of fossil fuel companies, including those in the refining industry, sources with knowledge of the discussions told Bloomberg on Tuesday.