EU states extend gas price cap (and other emergency measures) until January 2025

Brussels – Price caps for gas, joint (voluntary) purchases, and accelerated permits for renewables. European energy ministers meeting in Brussels at the latest EU Energy Council under the Spanish presidency gave the green light today (Dec. 19), with some modifications, to the extension of three major emergency measures introduced last year during the peak of the energy crisis with Moscow.

The extension proposal was put forward by the European Commission last November 28 because, although “the situation in the European energy market is more secure than it was 12 months ago,” the extension is necessary to further strengthen the security of gas supply and enhance market resilience.” Under scrutiny by the EU ministers therefore all the emergency legislation introduced during the energy crisis through Article 122, which effectively avoids passage through the European Parliament and provides for an absolute (not even qualified) majority vote in the EU Council.

The measures were extended by twelve months

The so-called gas solidarity package established the legal basis for bringing the EU joint procurement platform to life, and ministers agreed to extend it until December 31, 2024 (it was set to expire next December 30). In the agreement reached in the Council, however, ministers concurred to remove Article 10 on mandatory participation in demand aggregation by governments, which will then remain only on a voluntary basis. In parallel, in recent weeks, negotiators from the EU Parliament and Council reached an agreement on the gas and hydrogen decarbonization package, including joint purchases as a structural, albeit voluntary, element.

Instead, the legal framework of the market correction mechanism, i.e., the gas price cap, which has so far remained unimplemented in the EU, has been extended until January 31, 2025. After being in the news and the center of political debate in Brussels for months as a response measure to gas price spikes driven by Russia’s war in Ukraine, the text of the Market Correction Mechanism regulation entered into force last Feb. 15 with a validity of 12 months and will expire next Feb. 1.

Since the regulation came into effect, the criteria and thresholds to trigger the price cap on gas have never occurred and therefore it has never been activated, but it has contributed to lower gas prices. The price cap should be activated when the monthly price of gas on the Dutch TTF market exceeds 180 euros per megawatt-hour for three working days and when the monthly TTF price is 35 euros higher than the reference LNG price on global markets for the same three working days. The ministers, explains a council note, agreed to extend the period of application of the regulation as proposed by the commission, and retained its substance.

The third extended measure concerns the acceleration of permits to renewables, and the ministers decided to extend the period of application of some amended provisions of the regulation until June 30, 2025. Unlike the other two emergency regulations, the amendments go beyond simply extending the period of application of the regulation.

“The extension of the three emergency measures is necessary to address a still fragile situation in the EU after Russia’s invasion of Ukraine. This will enable us to ensure the stabilization of energy markets, alleviate the effects of the crisis, and protect EU citizens from excessive energy prices,” Spanish Minister of Transition, Teresa Ribera, who chaired the meeting in her capacity as the EU’s rotating president, commented after the agreement. Arriving at the council this morning, EU Energy Commissioner Kadri Simson, had insisted on the need to extend the measures “because despite the relatively good start to the winter, the geopolitical situation remains very fragile and these emergency measures help us defend our consumers against excessive energy prices.” These measures “also help us address energy security issues and speed up the energy transition.”