Germany yields and the 27 caress the long-awaited intervention of the gas market

The EU is also heading towards the Europeanization of the “Iberian exception” Another measure that is here to stay will be to make joint purchases of gas Germany had been left practically alone in its refusal The modus operandi in the political practice of the European institutions may imply that circulates in a loop, which does not advance, but the ship goes. Political pressure and fear of a winter of social unrest, union protests and industrial closures led the German government and the European Commission to abandon the trenches and go out into the open. This week’s European summit, focused on energy, took steps that bring the European Union closer to an energy market intervention that a few months ago seemed politically impossible if not legally dubious. There is no closed agreement but the first German assignments made it possible for the European Commission to commission several impact studies of the measures that are on the table. The German government finally gave in in its opposition to a gas price limit that should serve to “immediately limit episodes of excessive gas prices.” The conditions for doing so will prevent, at the request of Berlin, the security of supply from being compromised. The Financial Times newspaper assured this Friday that the great political winners of the German cession are France, Italy, Spain and Belgium, which are the countries that have asked for that cap on gas for the longest time. Germany had been practically alone in its refusal until the point that the Frenchman Emmanuel Macron went so far as to say, arriving at the summit on Thursday, that “it is not good, neither for Germany nor for Europe, that Germany isolates itself.” The pressure had gone too far for Scholz to keep up. Gas price cap The European Commission will now get to work. These studies should be known in weeks and their conclusion would open the door to the approval of two temporary measures: The first would be a cap on the price of imported gas. It will not be a fixed amount but will move in a price range or corridor “that immediately limits the episodes of excessive prices.” In other words, Europe will pay a maximum for gas that may be slightly higher than what China pays. It is based on a proposal presented at the beginning of the month by Belgium, Greece, Italy and Poland. The EU is also moving towards the Europeanization of the “Iberian exception”. The president of the European Commission, Úrsula Von der Leyen, already said on Tuesday that she was studying it. She will now have as a sine qua non condition that she does not modify the design of the European electricity market. It would serve to “limit the price of gas in the generation of electricity”. Brussels must seek formulas so that the “financial impact” is not an excessive burden for countries that use a lot of gas to produce electricity (this is not the case in Spain) and so that it is not subsidizing third countries to which electricity is exported (United Kingdom , Switzerland or the Balkan countries). In addition to these two temporary measures, which would not have the vocation to subsist beyond this crisis, the 27 commissioned the European Commission to design a new reference index for gas prices to leave to use the current one, the Dutch TTF. Its main flaw is that it is made for a world in which the vast majority of the gas that arrived in Europe did so by gas pipeline and does not take into account the price of gas that arrives by methane tankers, which is going to rise. Another measure that will arrive for stay will be to make joint purchases of gas. Participation in this purchasing center will be voluntary “except for a mandatory aggregate demand with a volume equivalent to 15% of the needs to fill the deposits.” From there, each one will be able to buy on their own what they consider appropriate. The conclusions of the summit also leave a slap on the wrist to the German Government. They read that the 27 will mobilize “the relevant tools at national and European level” to help companies and households cope with rising energy prices while maintaining “the EU’s global competitiveness, level playing field and integrity of the single market”. This “equality of conditions” is an unveiled reproach to the German government for its 200,000 million euro subsidy plan that may end up being a massive state aid program for industries that alter competition in the single market.