EU leaders give political backing to gas price cap — but details yet to be hammered out

BRUSSELS — The European Union connected Friday moved 1 measurement person to establishing a headdress connected state prices aft respective months of discussions, with Germany present conceding that the thought "makes sense."

The EU has been battling against an unprecedented vigor daze stemming from Russia's penetration of Ukraine. However, enactment frankincense acold to curb state prices has travel mostly from nationalist governments alternatively than astatine the EU-wide level.

One of the biggest stumbling blocks had been implicit whether to enforce a headdress connected state prices, with Germany and a fewer others wary of imaginable marketplace repercussions from this policy.

German Chancellor Olaf Scholz said successful Berlin connected Thursday that this "always harbors the hazard that the producers volition past merchantability their state elsewhere."

However, aft negotiations with his European counterparts that dragged into the aboriginal hours of Friday morning, Scholz agreed to spell up with the measurement — albeit with caveats specified arsenic the request to plan it successful a mode that it does not drive-up consumption.

Belgian Prime Minister Alexander de Croo told CNBC connected Friday that Germany had "legitimate concerns."

De Croo said that the heads of authorities listened to 1 different and looked to span each their differences. "This is simply a large measurement forward," helium added.

Before their gathering started, expectations to spot the 27 leaders coming unneurotic connected a terms headdress were precise low.

The premier curate of Luxembourg, Xavier Bettel, noted that determination were "a batch of taboos," but that these were resolved during the summit.

"We didn't determine everything, but we gave homework [to their vigor ministers] and we were capable to hold connected the database of things to bash which is ... a large step," helium told CNBC.

The governmental enactment from each 27 heads of authorities means that, successful the coming weeks, European vigor ministers and the European Commission ꟷ the enforcement limb of the EU ꟷ volition beryllium moving connected the technicalities of however a "temporary dynamic terms corridor" is going to work.

This is expected to found a flexible scope for state prices, but much precise details are expected successful the adjacent 2 to 3 weeks.

After that, Belgium's de Croo said that the implementation could beryllium "quite fast."

Regardless of the details, the headdress is lone a impermanent argumentation that is not expected to beryllium successful spot erstwhile a 2nd benchmark is established.

At the moment, European earthy state prices are reflected via the Dutch Title Transfer Facility. But EU leaders person agreed that this benchmark nary longer reflects the world that astir of them are receiving liquefied earthy state alternatively than pipeline gas, and truthful they program to person a 2nd benchmark successful spot by the extremity of the archetypal 4th of 2023.

European state prices person spiked successful the aftermath of tensions with Russia, which utilized to beryllium Europe's main seller of earthy gas.

At their peak, prices climbed supra 340 euros ($332.6) per megawatt hr successful precocious August. The declaration traded astatine astir 30 euros per megawatt hr successful August 2021.

Markets seemed to person welcomed the result of the EU leaders' gathering with prices falling from astir 127 euros per megawatt hr connected Thursday to 110 euros per megawatt hr successful day commercialized connected Friday.