Options for Dealing with the Energy Crisis: A Wholesale Gas Price Cap for the EU?

This webinar will discuss the options for designing a possible mechanism for a wholesale gas price cap. Oliver Koch from the European Commission will give an overview of questions which are being discussed among the European Union (EU) Member States – the state of play, followed by opinions from leading academics and think tanks.

The question of whether and how the EU should install a price cap for natural gas markets is at the top of the EU’s political agenda. Recent prices, around 1000% of the price of gas in 2020, with its knock-on effects on electricity markets, is causing hardship for citizens and business, with energy-intensive industry curtailing production, which threatens supply chains, and employment and is stoking inflation.

The situation is serious. On 30 September 2022, the EU adopted a regulation on an emergency intervention to address high electricity prices requiring Member States to adopt a cap on market revenues of infra-marginal generators and a profit clawback on oil and gas companies.

However, these measures partially treat the symptoms of high gas prices and are not the cause. They will only raise a fraction of the revenues that the Member States would need to properly subsidise citizens and industry over the coming two to three years, and they do not affect the underlying cause of high gas prices.

There is little surprise that many EU Member States are asking the European Commission for a proposal on a gas price cap. Little wonder, however, that other countries, previously reliant on Russian gas, are cautious. Once a price cap is installed, and thus no price competition exists between EU customers, how to ensure that available gas goes to the citizens and industries that need it most?

Programme:

Introduction and moderation

Christopher Jones | Florence School of Regulation (FSR)

Keynote presentation

 Oliver Koch I European Commission

 Discussant:

Alberto Pototschnig | FSR

Ilaria Conti | FSR

Bernd Weber | EPICO

Oscar Arnedillo | NERA Economic Consulting

Conclusions

Andris Piebalgs | FSR