The EU gives the green light to Spain and Portugal to set limits on energy prices but not until next week

© EFE
Pedro Sánchez together with the Prime Ministers of Greece and Cyprus at the European Council.

The EU has recognized a “special treatment” for Spain and Portugal, which will allow them to exceptionally and temporarily request a limitation on the price of gas. However, this measure that the Spanish government was counting on so that the price of electricity would drop immediately will not be so, because it will still be necessary for the European Commission to give the definitive green light next week.

“We have agreed on a special treatment that is possible for the Iberian Peninsula so that it can deal with this very specific situation in which it finds itself and manage electricity prices”, explained at the end of the meeting the president of the European Commission, Ursula von der Leyen.

Shortly following, the Prime Minister, Pedro Sanchezhas described a “very important” agreement that “the singularity of the Iberian Peninsula is finally recognized in the EU’s energy policy”, the argument that has been used since this Wednesday to convince the Twenty-seven to allow them to limit the price of gas.

“As reflected in the conclusions of the European Council, Spain and Portugal, as of today, we can implement exceptional measures, limited in time, to reduce the price for our consumers, industry and companies,” said Sánchez, at a joint press conference with the Prime Minister of Portugal, Antonio Costa, with whom he has fought for the EU to allow, at least, capping the price of gas for these two countries.

However, the measure will not be a matter of “today”, because the agreement contemplates that first the governments of Spain and Portugal will have to present to the Commission the measures they want to take to lower the price of gas -by means of a at its price -, to confirm that “it complies with European law. Although Brussels undertakes to examine this request urgently, there will not be a definitive green light until next week.

“Next week we will send the proposal to the Commission and from then on it undertakes to respond urgently so that we can act”, said Sánchez.

This is the agreement with which the European Council closed this Friday, which on its second day was focused on energy. Officially, Commission proposal to oblige Member States to build up reserves was to be approved of natural gas, up to 80% of its storage capacity, to avoid problems next winter due to Russia.

The Member States are aware that they have to reduce their dependence on Russian gas, since the purchase of gas from Moscow is causing contribute in a good way to finance your war in Ukraine. The contract that the European Commission and the United States have formalized in these days of the Summit will contribute to this, which will increase exports of liquefied gas to the EU. As planned for 2022, 15 million square meters would represent 36% of the Russian gas that the EU consumed in 2019.

However, the insistence for months from Spain – to which other countries have been joining, up to eight – that “urgent” measures had to be taken to immediately lower the price of gas and, in turn, of electricity, led to converting this second day of the Council in a debate regarding whether or not the EU might allow the price of gas to be limited, or at least Spain and Portugal to do so, as “energy islands”, with interconnections with the rest of Europe that do not reach the 3%. So it has finally been, following being recognized an “Iberian specificity”.

Limiting gas prices by compensating the electricity companies that produce it in combined cycle power plants in charge of national resources is the proposal with which Spain began the European Council this Thursday. By then, the government had eliminated any reference in its approach to the maximum price of 180 euros MW/h that barely a week before he was negotiating with Portugal. Upon his arrival at the Summit, Sánchez seasoned it with the insistence that it be at least possible for Spain and Portugal due to the energy disadvantage of these two countries with respect to the rest of Europe.

Although Thursday was the day to talk regarding supporting Ukraine -following a marathon day that began with a NATO Summit, with Joe Biden in Brussels and with a G-7-, the Spanish negotiators began to contact Ukraine at night. key delegations to try to gain support. The Spanish ‘sherpas’ met with the European Commission and also with Germany and they went so far as to offer assurances that any price caps would be “temporary”perhaps only for the duration of the war in Ukraine.

After these conclusions, the ideal thing for the Spanish Government would have been for the Commission to have presented this Friday a new proposal to the Twenty-seven in which their demands were reflected. But something different happened very far from the Spanish pretensions. Instead of caps on the price of gas, the Community Executive proposed that the Member States might subsidize gas consumption among their citizens, something that Spain rejected, with doubts regarding its fit into the European regulation of State aid and with the certainty that that, in any case, this would encourage the consumption of fossil energies, contrary to the objectives of reducing it and increasing that of renewables.

With this latest proposal on the table, an increasingly tense meeting advanced this Friday followingnoon, in which the Italian Prime Minister, Mario Draghi, threatened to veto the approval of all the conclusions of the Summit, including those related to the EU’s support for Ukraine, if the Twenty-seven did not agree to limit the price of gas.

Sánchez did not want to go so far because of the “fracture” that it would entail in the EU, in the midst of a fight with Vladimir Putin over the war in Ukraine, but he insisted that the European Council should “act now” and that Some measure had to come out of this meeting that supposes “significant relief” in energy pricessomething that finally has not achieved.

To the point that, angry, Sánchez left the Plenary in the early followingnoon. “Now it is OK. I’m going to get some air and clear my head a bit. If you have something new to say, tell me”, he said to the rest of the EU leaders.

His absence was short-lived and on his return the President of the Council, Charles Micheldecreed a recess for all the delegations and their teams to try to reorganize their strategies and proposals.

After the pause is when the text that finally approved by the European Councilwhich will allow Spain and Portugal to exceptionally limit the price of gas.