EU gets 'wake-up' call on need to blunt impact of energy crunch

EU leaders are discussing possible gas-price cap and other steps to cope with Russia's move to cut off much of its gas exports. PHOTO: AFP

BRUSSELS - Austrian Chancellor Karl Nehammer said that Germany's €200 billion (S$280 billion) plan to shield consumers and businesses from gas price spikes was a warning sign for the European Union, which must act quickly as a bloc to address the crisis.

"It's a wake-up call to the European Commission," he told reporters on Friday in Prague, referring to the EU's executive arm. "If the commission doesn't get on with things, the member states take national actions, as we can see right now."

EU leaders are holding preliminary conversations on a possible gas-price cap and other steps to cope with Russia's move to cut off much of its gas exports to Europe.

"Now we are well-prepared, we have a first line of protection for our market," European Commission President Ursula von der Leyen said as she arrived for the leaders' meeting. "Now it is time to discuss how we can limit the peaks in the energy prices, and the manipulation of energy prices" by Russian President Vladimir Putin.

Von der Leyen has said the EU needs to consider a price cap for gas.

But EU leaders have yet to coalesce around any specific proposal, and many remain worried that any such step could threaten supplies to the region.

The bloc will be discussing possible ways to design a price cap over the next two weeks, Slovenian Prime Minister Robert Golob said, with leaders scheduled to meet again for a summit in Brussels on Oct 20-21.

"Negotiations will be intense, because if we agree on a gas-price cap, and our intention is to support the energy-producing industries, our goal is that that the supply of gas won't diminish," Nehammer said.

Romanian President Klaus Iohannis said experts need to weigh in on how a price cap would affect the market, adding that "we need to make sure this measure doesn't impact suppliers important for us such as Norway".

The EU and Norway agreed earlier this week to discuss ways to limit price volatility, but gas-producing nations have been leery about countries pushing for a more formal price-cap mechanism.

"We have to know we're not the only customers in the world," Xavier Bettel, Luxembourg's prime minister, said. "So we have to be very careful about decisions that we take that sound good on paper but where consequences can be problematic." BLOOMBERG

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