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EU Commission head backs price cap on Russian pipeline gas

EU Commission chief Ursula von der Leyen backed a price cap on Russian pipeline gas on Friday, saying that Europe needed to impose it to foil what she saw as Russian President Vladimir Putin’s attempts to manipulate the bloc’s energy market.

She also called for measures to cream off some windfall profits that electricity suppliers have made from the gas crisis, using the money to support vulnerable citizens and companies.

I firmly believe that it is now time for a price cap on Russian pipeline gas to Europe,” von der Leyen told reporters in Murnau, where a meeting of German conservative lawmakers took place.

“A gas price cap can be proposed at European level, and there also is a legal foundation at European level to skim profits temporarily as an emergency measure at a time of crisis,” she added.

In the EU’s current electricity market, the price at which generators sell their power is set by the last power plant needed to meet demand. Usually, a gas plant is the last link in the chain, which has meant the recent surge in gas prices has driven up the cost of electricity.

Gas deliveries to Europe were slashed by Russia since its invasion of Ukraine commenced. This bumped gas prices to record-high levels. Countries and their governments have been bending over backwards to find alternative supplies and fill gas storage for winter.

EU energy ministers will meet on September 9 to discuss their response to the price surge. Von der Leyen will then, on September 14, outline the Commission’s ideas for emergency EU measures to address the price spike issue, a senior commission official said on Thursday.

“Over the last weeks and months, we have been working hard at European level to fight back against these [Putin’s] manipulations,” von der Leyen said in Murnau.

At EU level, we diversify sources, save energy and store it. Our gas storage is already filled at 80%.

But to cut our dependence on Russian fossil fuels, we need renewables.

The commitments taken today would already deliver 1/3 of our 2030 target for offshore wind in the EU. pic.twitter.com/4JBZLPbHXU

— Ursula von der Leyen (@vonderleyen) August 30, 2022

“We have agreed on joint [gas] storages and reached a filling level of 80 percent on average by now, two months earlier than expected,” she said, noting Norway was now supplying more gas to the bloc than Russia.

“But all this is not enough: We see that the electricity market does not work anymore because it is massively disrupted due to Putin’s manipulations,” von der Leyen said, adding that Russia was now opting to flare gas rather than deliver contracted volumes to Europe.


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