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France has come out in favor of imposing an EU-wide price cap on gas supply from Russia and a windfall tax on excess energy profits as Europe looks to reign in sky-high energy costs and respond to provocations from Moscow.
European leaders are fighting to contain an energy crisis that is driving economic turmoil across the bloc, and piling huge cost pressures onto millions of consumers and businesses.
Brussels is gaming out radical measures to lower energy prices which will be discussed by EU country representatives on Wednesday ahead of an emergency meeting of energy ministers on Friday.
The proposals include a price cap on Russian gas, new benchmarks for EU-wide gas price setting and a command-and-control allocation of gas to needy countries in an emergency, according to documents obtained by POLITICO.
“If the Commission were to decide to implement a price cap on natural gas purchased via pipelines from Russia, France would support such a measure,” French President Emmanuel Macron said Monday after a call with German Chancellor Olaf Scholz.
The proposed policy responses — many of which the European Commission had previously dismissed as risky, ineffective, or having too many negative unintended consequences — follow fresh provocations from Moscow that once again sent European energy markets soaring on Monday.
Flows through the Russia-to-Germany Nord Stream pipeline were stopped indefinitely on Friday, officially due a malfunctioning gas turbine. On Monday, the Kremlin warned that Russian gas deliveries to Europe will continue to be severely limited as long as Western sanctions over the invasion of Ukraine remain in place.
Laurence Boone, France’s junior Europe minister, told POLITICO the measures were needed to respond to Russian aggression.
“As a counter-offensive, we Europeans need to halt Russia’s market manipulation. It’s the same when you see the price of a share collapsing following bad news, you have to suspend trading,” Boone said. “France has already made these proposals in the past, others have, and they will probably be at Friday’s Council meeting.”
Fears of market interference are misplaced, she added. “There is no liquidity in the gas market anyway. I don’t think we have said it enough, the Russians are manipulating the market.”
Boone stressed that any new measures should be “temporary.” They could be imposed “for six months” and “possibly renewed for another six months.”
Pressure is mounting on EU ministers to settle on a course of action by Friday’s Energy Council — though many are skeptical any concrete decision can be reached so soon.
“My impression is that there will be a broad support for the adoption of concrete measures” at Friday’s meeting, Spanish Minister for the Ecological Transition Teresa Ribera told POLITICO in an interview last week.
But Ribera predicted “it will be a little bit more difficult” to decide how to “frame this common set of methods” set out so far and determine the technical details. “It is not easy to identify where the common ground may be because … the starting point for each country [with their differing energy mixes] is different,” she said.
Spain has not fully come out in favor of a price cap on Russian gas deliveries. Speaking to POLITICO, Ribera said: “I think that is something we certainly need to take into consideration … The question is, to what extent we consider this something that we can afford to do.”
Germany has also struck a more cautious note, publicly agreeing only to a windfall tax on nuclear, renewable power and coal producers, which are currently earning record profits.
According to a German Economy Ministry spokesperson, Berlin wants to set up a national “expert commission” to examine “what’s the wisest approach” to capping gas prices — essentially putting the brakes on any quick EU-wide measure.
France’s Boone warned that emergency measures would only be effective if all countries are on board, rather than “everyone doing something in their corner.”
The Commission document warns that measures aimed at hitting Russia’s gas revenues aren’t without risk.
The proposed price ceiling on gas — €50 per megawatt-hour is floated, which is less than a fifth of the current spot price — would take the form of emergency legislation used earlier this year to pass gas rationing measures by qualified majority vote, or by creating a single European gas buyer to negotiate a specific volume of gas to purchase from Russia.
Such a move would be a gamble, the document warns: “The EU would have to be ready to give up immediately Russian gas” if Moscow retaliated by cutting all supply, although ongoing cuts make that risk lower by the day, it adds.
Louise Guillot, Hans Joachim von der Burchard, Julie Tomiche and Victor Jack contributed reporting.