Poland’s prime minister Mateusz Morawiecki
Speaking in Prague on Friday, Poland’s prime minister Mateusz Morawiecki called on Germany to show solidarity with other EU nations © Michal Cizek/AFP/Getty Images

EU leaders have said they are making progress with joint plans to lower power costs across the bloc, despite signs that divisions remain over how to tackle the region’s energy crisis.

At the end of a two-day informal summit in Prague, Italy’s outgoing prime minister, Mario Draghi, an early advocate of a region-wide cap on gas prices, told reporters that “on energy, things are moving”.

Czech prime minister Petr Fiala said energy ministers would hold “as many councils as it takes” to fill in the gaps left by wide-ranging proposals that include ideas such as joint talks with suppliers and a delinking of gas prices from electricity prices. The European Commission is expected to come up with detailed measures within weeks.

However, the summit also highlighted discord among leaders over how to counteract the impact of Russia’s invasion of Ukraine on the region’s energy markets.

Gas prices have soared across the region since the invasion began in late February. But rather than take a common approach to lowering the burden of higher energy bills of Europe’s businesses and households, some member states, including the region’s biggest economy — Germany, have opted to go it alone.

Several leaders, including Draghi and Hungary’s prime minister Viktor Orbán, accused Berlin of undermining unity with its controversial €200bn support package, unveiled last week.

Poland’s prime minister Mateusz Morawiecki on Friday said Germany had destroyed the single market by subsidising its own businesses and households while opposing a pan-European cap on gas prices.

Germany’s chancellor Olaf Scholz said the meeting was constructive, however, and insisted his government’s package was in line with what France, Italy and other countries are doing to help households and companies struggling with energy bills.

In a shift in position, Scholz signalled he would back the holding of joint talks with suppliers, such as Norway and the US. “It’s important to talk as well to other buyers, like Japan and South Korea,” he said. Advocates believe pan-EU talks will help bring wholesale energy prices down through collective bargaining.

However, Scholz maintained his earlier opposition to price caps on gas, saying they “raise questions about the security of supply”.

Several states have warned a cap could spook suppliers of shipped liquefied natural gas, such as Qatar, pushing them to take their products to importers prepared to pay more. Austria’s chancellor Karl Nehammer, whose country is one of the few to still receive piped gas from Russia, said on Friday that Vienna “is in favour of a gas price cap, but we have to make sure it’s not a Russian gas embargo through the backdoor”.

OECD secretary-general Mathias Cormann on Friday said “a price cap is one of those distorting decisions that send the wrong signal”. Speaking at the Globsec conference in Slovakia, the head of the Paris-based organisation of advanced economies also warned against using large fiscal stimulus packages at a time when the priority for the ECB and other central banks was to contain inflation.

“To the extent that governments continue to add fiscal stimulus . . . they make the job of central bankers harder,” he said.

EU commission president Ursula von der Leyen said leaders also expressed support for buying gas jointly from spring next year, when storage facilities will have been depleted following the winter months. Joint procurement would mean member states did not “outbid each other”.

Von der Leyen also wants member states to build “corridors” with trusted suppliers, possibly at fixed prices. On Thursday, she and the Norway’s prime minister, Jonas Gahr Støre, pledged to create “joint tools” to ease the energy crisis.

Since the invasion of Ukraine began in February, Norway has replaced Russia as the EU’s biggest external gas provider. But officials said there was no clarity on whether the agreement would result in lower prices or more gas from the Nordic country for the bloc.

Additional reporting by Raphael Minder in Štrbské Pleso, Slovakia

Copyright The Financial Times Limited 2022. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article

Comments