It also poses problems for any gas re-exported outside the EU: Without clear rules at the border, subsidized EU-based companies could make huge profits re-selling gas at higher prices to neighboring third countries - or if it's exported at the same low cost, the EU would be partially footing the bill for outside countries to guzzle more gas. Last year the bloc consumed 375 billion cubic meters of gas, which at today's prices would cost more than €640 billion - subsidizing even a slice of that could leave the bloc drowning in debt. It also ensures that global gas sellers, notably those sailing LNG tankers around the world, don't abandon the EU in search of higher prices elsewhere.Ĭons: It's expensive. Buyers would still acquire gas at sky-high prices, but receive a check for the amount they paid above the agreed symbolic price - either from national governments or via a potential EU financing solution. Pros: It doesn't involve tinkering with the bloc's trading exchanges or energy market rules. ![]() It could also be narrowly applied to only gas used to produce electricity, meaning heating would remain expensive but the cost of keeping the lights on would be manageable. In its broadest version, the subsidy could be applied to all natural gas purchased inside the bloc - whether drilled domestically, imported via pipeline or arriving via ship at liquefied natural gas (LNG) import terminals. The agreed number could be based on historical EU prices, tied to the global oil price or linked to lower gas prices in other parts of the world. How it works: EU countries would select a common "symbolic price" for natural gas that utilities and industry can afford to pay on the wholesale market and then foot the rest of the bill. Paul McLeary Partly subsidizing gas purchases That's nearly four times higher than a year ago - and more than 11 times the price in 2020. There's precious little time left to figure it out before temperatures drop: Heating season began on October 1, and gas in Europe is still trading at an eye-watering €175 per megawatt-hour (MWh). ![]() That's creating confusion over what exactly, national energy ministers asked for when they urged Brussels to come up with possible options ahead of Friday's leaders' meeting - and what European Commission President Ursula von der Leyen meant when she said earlier this week that the EU executive had " started work" on a "cap on the price of gas." EU leaders meeting Friday in Prague want to lower natural gas prices before winter sets in, but political discussions on how to go about it are getting snarled in a tangle of terms, each more confusing than the last.Ī plethora of proposals for an EU-wide measure, some of which contradict one another, have been jumbled together in the catchall phrase "gas price cap." But those various proposals - whether fixed, flexible or "forked" - don't work the same in practice and come at different costs.
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