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EU countries work out differences on gas price cap as winter sets in

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BRUSSELS (AP) — On the threshold of winter, the countries of the European Union have failed to overcome bitter disagreements as they effectively shield 450 million citizens from a sharp rise in their natural gas bills when the cold weather sets in.

An emergency meeting of energy ministers on Thursday revealed how an energy crisis linked to Russia’s war in Ukraine has split the bloc of 27 countries into nearly irreconcilable blocs.

A massive hike in natural gas prices in August stunned all but the EU’s wealthiest, forcing the bloc to curb volatile prices that fueled inflation. After several delays, energy ministers are trying to break the deadlock between countries seeking cheaper gas to lower household bills – including Greece, Spain, Belgium, France and Poland – and Germany and the Netherlands. Such as pushing for a price cap to reduce supply.

A solution was still nowhere in sight – much to the dismay of many.

“The temperature in Poland is already minus 10 (C),” said Anna Moskva, the country’s energy minister. “It’s winter now.”

Natural gas and electricity prices have soared as Moscow cut off gas supplies to Europe for heating, energy and industrial processes. European officials have accused Russia of waging an energy war to punish EU countries for supporting Ukraine.

So striking a deal is not just about warming up the citizens, but also about showing a united front to Russian President Vladimir Putin.

Talks dragged on for months and while a summit of EU leaders last month announced some kind of breakthrough, nothing has materialized on the ground. Nations had been waiting for a proposal from the European Commission, the EU’s executive arm, to set a cap on the price cap, and when it arrived on Tuesday there were disappointments and accusations that it might never work.

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The Commission has set a threshold for a “protective price cap” if prices exceed EUR 275 per MWh for two weeks and if they are EUR 58 above the price of liquefied natural gas on the world market.

In political parlance, this means that such a system could not have avoided such a high surge in August.

“Setting a limit of €275 is not really a limit,” said Greek Energy Minister Konstantinos Skrakas, who called for a limit that could go as low as €150.

“We lose precious time without results,” he said.

For comparison: on Thursday the price on the European TTF benchmark was 125 euros per megawatt hour. Since the price has fallen since the summer peaks, diplomats have said the urgency has eased somewhat, although it could rise sharply again if the weather is cooler than normal and supplies tighten.

About 15 countries agree on these views, but Germany and the Netherlands lead another group that wants to make sure gas supply ships don’t bypass Europe because they can get better prices elsewhere.

“Security of supply is paramount. Europe has yet to become an attractive gas market,” said Estonian Economy Minister Rina Sikkut.

No decisive breakthrough was expected at Thursday’s meeting.

Czech Industry Minister Józef Sikelá, who chaired the emergency meeting, said he was well aware of the “emotional reactions” the Commission’s proposal had provoked and predicted that the talks would be “rather acrimonious”.

Due to trade blockades related to the Russian war in Ukraine, EU countries have reduced the total share of Russian natural gas imports into the EU from 40% before the invasion to around 7%. And gas storage has already exceeded targets and is close to capacity.

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The European Union is counting on rising imports of liquefied natural gas or LNG, including from the United States, to help offset the fall in Russian supply.

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