EU Fails to Agree on Price Cap for Russian Gas... Hungary Opposes

[Photo by Reuters-Yonhap News]

[Asia Economy Reporter Park Byung-hee] The European Union (EU) failed to reach an agreement on the introduction of a price cap on Russian gas at an emergency energy ministers' meeting held in Brussels, Belgium, on the 9th (local time).

EU energy ministers discussed the introduction of a price cap on Russian gas proposed by the European Commission, the EU's executive body, but Hungary rejected the agreement, stating that it goes against its national interests related to energy supply. Other member states expressed differing opinions depending on whether the gas price cap would apply only to Russian gas or also to other producers. If this system is introduced, EU member states will not purchase Russian gas at prices exceeding a certain threshold.

With rising gas prices pushing up electricity prices, the introduction of a windfall tax on excess profits earned by power producers was also discussed. According to a draft EU bill obtained by DPA news agency, the EU is considering limiting the revenue of power producers generating electricity from energy sources other than gas to 200 euros per 1MWh. This is about half of the German wholesale electricity market price of 440 euros per 1MWh.

The ministers requested the European Commission to present specific measures regarding the windfall tax by mid-September. Their plan is to finalize the energy crisis response measures by the end of September.

Robert Habeck, Germany’s Vice Chancellor and Minister for Economic Affairs and Climate Protection, expressed support for the European Commission’s plan if all countries, including Hungary, agree. Speaking to reporters in Brussels that day, he said, "If countries still receiving gas from Russia are prepared to take the risk of a complete supply cut from Russia, we will gladly participate." Habeck added, "If countries do not want this, that must be respected," and said, "Germany is already in a position to endure without Russian gas." He explained that Russia is still supplying gas to Southeastern Europe via the TurkStream pipeline and through Ukraine.

Russian President Vladimir Putin previously stated regarding the EU’s plan, "If a political decision that violates contracts is made, we will not implement it," and added, "If it goes against our interests, we will supply nothing?be it gas, oil, or coal."

The proportion of Russian gas in the EU’s imports has dropped from 40% before the Ukraine war to 9% currently.