Italy points to 'urgent' need for EU gas price cap to ease burden on consumers

Italy believes there is an "urgent" need for a cap on the price of natural gas to ease the burden on consumers, Manlio Di Stefano, Undersecretary of State for Foreign Affairs, said Sept. 5.

Speaking at the Gastech conference in Milan, Di Stefano said the price cap would be a logical response to the high prices driven up by Russia's supply curtailments.

A cap on the wholesale price of gas was mentioned as a possible mechanism to lessen the European energy crisis in the EU's REPowerEU initiative, while a cap on the price of gas for power generation is already in place in Spain and Portugal.

EU energy ministers are due to meet for an extraordinary summit on Sept. 9 to discuss the high gas and power prices, with a proposal to decouple the gas price from the power price expected to be discussed.

"Concerns over gas supplies are weighing on European energy markets as Moscow is arbitrarily reducing gas flows to drive up prices," Di Stefano said.

"The most recent [Russian] gas cuts across Europe and the rise in prices reiterate the urgent need to accelerate the proposal for a price cap on gas," he said.

Platts assessed the Dutch TTF month-ahead gas price at an all-time high of Eur319.98/MWh Aug. 26, according to data from S&P Global Commodity Insights. It was last assessed at Eur206.90/MWh Sept. 2.

Di Stefano said Italy had been proposing a gas price cap for months, adding that he hoped to see progress at the EU council on Sept. 9.

"At the beginning we were almost alone. Now, we are confident that some concrete measures will be taken in this regard to reduce high energy prices," he said.

Di Stefano added that a temporary measure such as a price cap would not affect EU energy market integration.

Supply diversification

As well as regulatory measures, Di Stefano also said the EU needed to continue to prioritize gas supply diversification.

"Today's priority is to be prepared for the coming winter by accelerating diversification of gas supply, coupled with efforts towards placing a ceiling on gas prices to ease the burden on households and industries, as well as curbing the sky-rocketing income of Russia," he said.

Italy, he said, also supported the EU's resolve to end its dependence on Russian gas, oil and coal "as soon as possible."

"On Feb. 24, the illusion that economy and energy interdependence could be the cement of peaceful and reliable relations in Europe collapsed," he said.

Di Stefano also said Italy had moved swiftly to identify alternative gas supplies through the strengthening of collaboration with traditional and new partners such as Algeria, Azerbaijan, the US, Qatar, Congo, Angola, and Mozambique.

Also speaking at Gastech, Portugal's state secretary for energy Joao Galamba said European unity was key to combatting the energy crisis, while at the same time saying all member states had their own energy approaches.

"Countries come from very different perspectives -- Portugal's perspective is different from Germany's because we made different choices," he said.

Nevertheless, he said, there is a "common understanding that some choices in the last 20 years were disastrous for Europe."

"They were not made by all the European countries, but by some, but we are all in the same boat so it has implications for the whole EU," he said.

"For energy security to be in place in Europe we need to diversify our suppliers -- something that Spain and Portugal already did -- and accelerate the energy transition."

Gas savings

Galamba said the easiest way to save gas was to speed up renewables developments.

"For every 500 MW of installed solar we will save 1.5 TWh of gas. This is by far the quickest and easiest way for a country like Portugal to save gas. Other countries will have other options," he said.

Europe has shown unity over the past few months, he said, but said through the winter it was necessary to address "asymmetries" in Europe.

"It is much easier for richer countries in Europe to support their economies, their families and industry regarding high prices than heavily indebted countries in the south," he said.

"We need European solidarity all the way through -- not only in the resolve to take actions, but also in sustaining the financial burdens associated with them."