The European Commission [EC] has finally turned down the proposal of European Union [EU] member-countries for a price cap on gas imported into Europe, including those from Russia.
At a seminar early this week, the EC suggested a “market correction mechanism” as solution to the Russia challenge. Earlier on Tuesday, it was revealed that after the gas price cap discussions had been dragging on for weeks, with no decision reached – and that whatever agreement was finalized, it would probably not include a price cap on imports, based on the options the EC was currently considering.
But while it was unlikely as of Tuesday morning, it is decided less likely now—impossible, in fact, according to new Reuters sources described as diplomats.
The European Commission reasons that there is no way to cap the price of Russian gas that would not affect existing long-term contracts.
The original idea of a price cap on gas imports into the European Union was originally suggested by several EU members, including Belgium, Greece, Italy, and Poland.
However, for as long as the argument has lasted, the European Commission – the executive arm of the European Union – has never felt favourable to it.
Further talks were put forward in the hope that officials will discuss it with member states’ leadership. Reuters said yesterday in a report that the EC has now concluded from those talks, and decide that that there was no way to implement a gas price cap in a way that would preserve existing long-term contracts.
As an alternative, the EC is proposing a market correction mechanism. More than half of the EU member states supported the gas price cap idea.
The other options for mitigating Russia’s revenues from the sale of natural gas without Europe freezing that were already on the table was a joint gas buying agreement and a reduction in gas demand.