Europe’s petrol price cap has some countries upset | Popgen Tech

Several EU member states are not happy with the bloc’s proposed cap on natural gas prices – at 275 euros per megawatt hour – which aims to prevent sky-high costs for consumers.

The introduction of a cap on gas prices has been one of the more controversial measures for Europe amid an acute energy crisis following Russia’s invasion of Ukraine.

The 27 EU leaders gave political support to the idea at the end of October, after several months of discussions. But a handful of nations are demanding concrete safeguards before greenlighting the proposal, while others say the limit is too high.

“A price cap at the levels proposed by the commission is not really a price cap,” Kostas Skrekas, Greece’s environment and energy minister told CNBC’s Julianna Tatelbaum on Tuesday, hours after the proposed level was set by the European Commission, the executive arm of the EU.

“So [a] Price limit at 275 euros is not a price limit, no one can, can stand for a long time to buy gas at this expensive price. We definitely believe that the price limit below 200 euros, between 150 and 200 euros will be more realistic,” he added.

The EU energy ministers will meet on Thursday to discuss the proposal for a price cap.

Poland, Greece, Belgium and Spain are among the nations that support the cap. The Netherlands and Germany were more skeptical about the benefits of the measure. Presenting a limit that seems difficult to implement in practice could be a way for the European Commission to bring all 27 nations together on the issue.

“It will be a meeting with grumpy people,” an EU official, who works for one of the member states and who chose to remain anonymous because of the sensitive nature of the discussions, told CNBC about the upcoming meeting.

The same official said the commission should provide further assurances on how the measure would not distort markets.

Kadri Simson, the European commissioner for energy, said at a press conference on Tuesday that the proposal was “balanced” and would help the bloc avoid excessively high prices.

A group of energy exchanges in Europe, Europex, also said earlier this week it was “deeply concerned” about a market correction mechanism, as it could affect financial stability – but also security of supply.

Samson said the proposal, known as the market correction mechanism or MCM, took this into account and “the risks are minimal” to supply.

The commission proposed that a limit be set when pricing on the title transfer facility before the month [TTF] – Europe’s main benchmark for natural gas prices – reaches 275 euros per megawatt hour and when prices are 58 euros ($59.53) higher than the LNG reference price for 10 consecutive trading days within the fortnight. Both conditions must be met for the cap to be activated.

Dutch TTF prices reached a historic high of 349.9 euros per megawatt hour in August. According to the proposal, the price cap would not be activated as it was only a short increase.

“It’s not a silver bullet,” Samson said at a press conference on Tuesday. She added that the measure, however, “provides a powerful tool that we can use when we need it.”

“Everyone is aware of the possible risks, but there is a clear expectation. We will send signals that despite the difficult situation, we will not pay for whatever the market platform will bring to market participants – as is happening in August did,” she said.

European natural gas prices closed at 124.5 euros per megawatt hour on Tuesday evening.