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Politico (19 December 2022)

BY CHARLIE COOPER, AMERICA HERNANDEZ AND VICTOR JACK

EU countries finally struck a gas price cap deal Monday after months of fraught divisions over a key aspect of the bloc’s response to the energy crisis — but the final settlement may end up pleasing no one.

Energy ministers meeting in Brussels for their final summit of the year reached political agreement on a so-called “market correction mechanism.” Under the plan, which is set to come into force on February 15 and last for one year, trades on Europe’s gas exchanges will be capped at €180 per megawatt-hour, if that price level is reached for three working days and European wholesale gas prices are, for the same length of time, €35 above the global price of liquefied natural gas (LNG). 

The complex policy tool — which is set well below the €275 trigger price originally proposed by the European Commission, and applies to month-ahead, three-month and one-year contracts — was approved by EU countries with a qualified majority; Hungary opposed, while Austria and the Netherlands abstained.

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