But the commission plan capped the price at €275 per megawatt-hour and would only activate if prices exceeded that level for two consecutive weeks. This cap is so high that many quickly deemed the proposal unnecessary.

“We asked the commission for a proposal, and it came up with this: a joke,” Teresa Ribera, Spain’s energy transition minister, said Wednesday, according to Europa Press, a Spanish news agency.

“A joke? Yes, I agree with that description,” Dutch energy expert Jilles van den Breukel of The Hague Center for Strategic Studies (HCSS) told EUobserver. “That cap doesn’t have a lot of substance. I think it’s highly unlikely that the limit will ever be tested.”

Even in August, when wholesale gas prices were above €300 per MWh, the price cap would not have been triggered because prices only stayed above €275 per MWh for a week. And with gas futures now trading at €113 per MWh, the proposed price cap seems far off.

The group of 15 member states led by Spain will likely try to lower the cap to a lower level. “The committee is going to hear very harsh things tomorrow from the vast majority of ministers,” Ribera said.

This likely means another round of intense debate, as Germany, the Netherlands and Denmark have so far been unwilling to accept a price limit – even a high one – fearing that Lower Prices will stimulate demand, which, in turn, would further exacerbate the gas. bite.

Not a “non-politics”

Experts tend to agree. The gas price cap does not solve the fundamental problem, which is “a lack of liquefied natural gas”, van den Breugel said.

And Lion Hirth, professor of energy policy at Berlin’s Hertie School, told EUobserver: “You can’t lower prices without increasing demand”.

“I see people scoffing at the proposal, collectively calling it ‘no cap,’ but I’m a bit more cautious,” Hirth said.

“What seems like a very high price today may not be so tomorrow. In fact, what we now consider reasonably cheap was extremely high just a year ago,” he said. . “It’s not a non-policy. It could go into effect, and then it could do some real damage,” he said.

Protect consumers directly

Instead, Hirth says governments should focus their attention and resources on measures that directly protect households and businesses.

As part of an expert advisory group to the German Government, Hirth co-drafted a plan that limits the price that households and small and medium-sized businesses pay for gas.

It only covers 80% of their previous consumption. Market prices apply to the remaining 20%. This leaves incentives to consume less, while protecting people against excessive prices.

The German government has since adopted the plan, which is expected to come into action on March 1, 2023.

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However, such measures are costly and may not be affordable for less wealthy EU countries.

In October, Italy, France, Portugal and others called on the EU to step in with a new pandemic-style loan fund to help countries finance their national support programs. But such a fund has been blocked by Germany and the Netherlands.

And so the talks of a wholesale gas price cap, which lowers prices for everyone, continue.