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EU leaders have failed to agree on prices on gas but vow to continue negotiations

EU leaders have failed to reach an agreement on the continent’s limit on gas prices as Ukraine’s Russian invasion disrupts markets.

Making matters worse, Gazprom, the leading energy supplier in Russia, has cut or severely limited gas flow to 12 member states, increasing the fear of gas rates through the winter.

“The root cause of our problem is our reliance on fossil fuels. We need to get rid of it,” said Ursula van der Leyen, president of the European Commission. A two-day summit in Brussels.

“There is a lot moving to really diversify from Russian gas to other reliable suppliers,” he said, naming the US, Norway and Azerbaijan as alternative partners.

Italian Prime Minister Mario Draghi arrived in Brussels to push his own proposal for an EU-wide cap on gas prices, but was unable to secure the support of his peers.

So far, only Belgium and Greece have expressed support for the project, but Spain and Portugal have already set a temporary limit of € 40 per megawatt Across the Iberian Peninsula.

“The main objection [from other countries] “The fear is that Russia will cut supplies to the limit on gas prices,” Draghi said. “But there is no point in having supplies cut already.”

Draghi said that Germany and the Netherlands, the two countries have vehemently opposed the move, becoming more “open” to the idea.

German Chancellor Olaf Scholz did not approve the proposal while speaking to reporters at the end of the summit. The sudden drop in Russian flow has forced the German government To activate the second level Its three-stage emergency plan warns that winter storage targets are in danger.

As a compromise, EU leaders commissioned the Commission to come up with a new plan “to include the viability of appropriately introducing temporary import price limits” to curb rising energy prices.

27 pledged to coordinate their national measures against rising inflation and to avoid the self-centered and chaotic way of characterizing the early months of the epidemic.

Van der Leyen said his executives are currently reviewing the contingency measures of each member state in the event of a new downturn in Russian flows, and urged capitals to consider what their national instruments might affect their neighbors.

“We are working with the industry on a common European emergency demand reduction plan,” he said. “I will present this project to the leaders in July. There will be no return to cheap fossil fuels.”

Block has ‘enough work’ ahead

During his closing remarks, President van der Leyen acknowledged that the EU is facing “insufficient work” to replace 155 billion cubic meters of gas purchased from Russia last year.

“We hope for the best and prepare for the worst,” he said.

Once again, the head of the commission has opened the door for the reform of the EU’s wholesale electricity market, which today operates on a low-cost basis, also known as a “pay-as-clear market”.

Under this system, all electricity suppliers – from fossil fuels to wind and solar – bid to market and power their production costs, The Commission explains. Bidding starts with cheaper resources – with renewables – and with the most expensive ones – usually ending with natural gas.

Since most EU countries still rely on fossil fuels to meet all their electricity demands, the final cost of electricity is often set by the price of coal or natural gas. If gas is more expensive, electricity bills will inevitably increase, and cleaner, cheaper sources will also contribute to total energy supply.

In recent months, countries such as Spain, Portugal, France, Italy and Belgium have complained that the current system is creating an unfair “epidemic” that could wipe out inflows from renewable and nuclear power.

Van der Leyen said his team will check whether the minimum price rules are still “fit for purpose” and explore the feasibility of separating gas from electricity prices.

Parallel to ongoing efforts to diversify suppliers and Sign new gas contractsHe stressed that homes and companies should try to reduce demand and save energy.

“If some people reduce our heating by two degrees, we can save the entire distribution of Nord Stream 1,” said van der Leyen.

EU leaders have a chance to discuss the new plans to reduce demand and improve the market when the next summit takes place in late October.

“If there is an emergency, we will meet before that,” Draghi said.

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