E.U. leaders met at a summit in Prague on October 7th to discuss capping gas prices, which have increased since Russia invaded Ukraine, cutting supplies to the latter’s allies. Ursula von der Leyen, the President of the European Commission, proposed a price cap which might create an upper and lower price limit on gas imported from other countries, which could include the U.S. and Norway. 15 out of 27 E.U. members support the gas price cap. A price cap has not been created, but leaders might agree to institute one at another meeting in Brussels this Thursday.
Sanctions have caused Russia to export less gas to Europe. Capping prices would intensify this effect, incentivizing the E.U. to import more of its gas from countries besides Russia. According to the New York Times, Russia has tried to compensate for the loss of business by increasing its gas exports to Asia, including to China and India. However, the lack of pipelines going to either country has prevented Russia from making up the deficit. The decrease in Russian gas exports – in addition to sanctions, which, according to C.N.N., could cause Russia’s economy to shrink by up to 10% – will leave Russia with less funds to continue its offensives in Ukraine.
But capping prices shouldn’t be necessary to drive down demand for Russian gas, Greek prime minister Kyriakos Mitsotakis argued. “With high enough prices, suppliers will still send their gas to Europe, and consumers will still have reason to reduce demand.”
Germany is another country concerned about whether suppliers will still send gas to Europe if a limit on prices is set. A price cap “would be counterproductive if there wasn’t enough gas available,” a spokesperson for Germany’s Economy Ministry explained, “because then our security of supply would no longer be guaranteed.”
If a price cap is created, Europe will probably import more gas from Norway. However, the Washington Post reported, the E.U. previously wanted to step down its Norwegian gas imports in order to increase focus on renewable energy and fight climate change. An article from The Guardian reported that the E.U. planned to make 45% of its energy from renewable sources by 2030, with wind and solar power being the largest sources of renewable energy. Substituting other fossil fuels for Russian gas may be cheaper and easier in some respects, but it will increase carbon emissions and contribute to global climate change.
German chancellor Olaf Scholz made plans before the Prague summit to spend 200 billion Euros to keep gas prices low, but countries without enough money to lower gas prices opposed this idea. “We cannot divide ourselves according to the space in our national budgets,” Italian prime minister Mario Draghi, who supports a price cap, argued. “We need solidarity.”
Countries which receive more gas from Russia also oppose the cap. According to Al Jazeera, most Hungarian gas imports come from Russia, and the country has opposed both a cap and some sanctions on Russia.
Still, support for the price cap plan could increase thanks to the leaks created in the Nord Stream 1 pipeline. Because Russia is believed to have caused the explosions which damaged the pipeline in September, the leaks are evidence that Russia is already an unreliable source of gas products and that it cannot be trusted to keep Europe well supplied. If the E.U. continues to rely on Russian gas, there will be more energy shortages.
The E.U. must create a price cap that will ensure all countries receive affordable gas in order to stop funding Russia’s war on Ukraine. Although capping prices could induce energy shortages, fewer shortages will occur in the future if more of Europe’s energy needs are met through renewable sources.
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