International Finance: Europe faces pressure to cap price of gas for power generation

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The European Union is moving closer to proposing a temporary overhaul of the electricity market by limiting prices of gas used for power generation even as pressure mounts for the bloc to impose a broader cap.

EU energy ministers gathering in Prague on Wednesday will consider that model, which has already been adopted by Spain and Portugal, allowing consumers to avoid the worst of the price surges. However, some nations including Germany remain sceptical, fearing a cap could spur demand at a time when the EU needs to curb its thirst for Russian gas.

“There’s a short-term race to build up a larger consensus,” said Maximo Miccinilli, head of energy and climate at the consultant firm FleishmanHillard EU. “They can agree on the principle of decoupling gas from electricity, but they need time to understand how to do it.”measures Fresh issuance of joint debt to help accelerate the transition from Russian fossil fuels is becoming a possibility amid signs of German Chancellor Olaf Scholz reversing the country’s steadfast opposition. The Commission is also working on a proposal to set up a complementary benchmark to the continent’s key Dutch Title Transfer Facility to ensure a less volatile market.

 

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