Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

EU to discuss gas-price caps, derivatives halt amid crisis

EU flags.

European ministers will discuss special measures to rein in soaring energy costs, from natural gas price caps to a suspension of power derivatives trading, as the bloc races to respond to the deepening crisis.

Gas prices surged more than 30% Monday after Russia’s decision late Friday by Gazprom PJSC to keep the crucial Nord Stream pipeline shut. The energy crisis is also under intense pressure, dropping below 99 US cents to its weakest level since 2002.

The Czech Republic, which holds the European Union’s rotating presidency, is set to include those tools on a list of emergency intervention options to be discussed at a meeting of energy ministers on Friday, according to a draft document seen by Bloomberg News.

Europe is fighting to stave off an energy catastrophe that’s threatening to become an economic, social, and even financial crisis. Nordic authorities moved this weekend to bolster the liquidity of utilities struggling with collateral requirements, saying there was a risk of a “Lehman” moment.

European leaders have been working for months to try to offset the impact of Russia’s squeeze on gas — a move they describe as the weaponization of energy. But Russia’s move on Nord Stream brought a new sense of urgency.

Russia’s move to halt supply is set to send natural gas prices toward record highs in Europe, as well as Asia, and heap more pressure on power generators. Utilities in Asia were already ratcheting up efforts on Monday to secure shipments of liquefied natural gas, according to traders, intensifying competition with rivals in Europe for a dwindling amount of available fuel that threatens to send prices higher.

Temporary solutions to the current energy crisis

Over the weekend, Germany – the country most affected by the Nord Stream cutoff — unveiled a $65 billion package to protect consumers, with a levy on windfall profits. Thousands of Czechs protesting in the streets this weekend served as a reminder of the social and political risks.

“It is clear that the upcoming heating season will test the resilience of the EU energy market,” the Czech presidency plans to tell member states, according to the draft document for the emergency meeting. “It is critical to take stock of market developments and identify possible measures to address high electricity prices driven by high gas prices.”

The options the Czech presidency is set to suggest would complement measures floated by the European Commission in a policy note seen by Bloomberg last week. They included a power-demand reduction and price caps on renewables, nuclear and coal. The presidency is poised to propose similar solutions in the power sector and float the following additional tools.

Limit the impact of gas prices on power prices

  • Temporarily capping the price of gas used for electricity generation
  • Putting a price ceiling on gas imported from Russia
  • Temporary exclusion of power production from gas from merit order and price setting on the electricity market could also be an option

Increase liquidity on the market

  • An urgent Europe-wide credit line support for market participants faced with very high margin calls
  • Capping the limits for margining or automatic price ceiling adjustment
  • Temporary suspensions of European power derivatives markets.

Emission permits

The Czech presidency is also set to suggest an assessment of how the EU could use its carbon market to address high electricity prices and ensure a quick deal on a commission proposal earlier this year to sell some permits withdrawn from the market and kept in a special reserve. Such sales would boost supply of emission permits, helping lower their prices.

The planned intervention should be designed in a way to avoid an increase in gas consumption or jeopardize the efforts to cut gas demand. It should be simple to implement and coordinate across the bloc and be consistent with the bloc’s climate goals, the presidency said in the draft document.

More from SG Voice

Latest Posts