EU energy ministers meeting in Prague today are under pressure to find common ground over what to do next to protect citizens and businesses from soaring costs this winter. The aim is to show enough agreement to allow the Commission to present a set of new proposals before EU leaders gather in Brussels next week. The easiest way forward may be to expand the “Iberian model” (capping gas prices used in electricity generation) to the rest of the bloc. But there is lingering opposition from the likes of Germany who see it as spurring demand for energy when the EU should be trying to curb its thirst. Progress may also be made over joint gas purchases before storage refilling season next year, but a broader price cap on gas imports is further off.
According to a document we’ve seen, Germany and the Netherlands will put forward a 10-point plan that focuses on the joint purchase of gas to stop individual countries from outbidding each other on the markets. A price cap on Russian gas imports could be considered, if it is acceptable to countries that would be most affected. Some sort of consensus will have to be found if there is any hope of getting those policies in place before the cold sets in. - John Ainger and Natalia Drozdiak
What’s Happening
Sanctions Prosecutor | The EU is weighing handing new powers to its fledgling public prosecutor’s office amid concerns the bloc’s system is failing to rein in rich Russians trying to evade sanctions. Sharper teeth for the European Public Prosecutor’s Office would be conditional on separate plans to make sanctions evasion a crime under EU law, people tell us.
Oil Trade | EU sanctions on Russian oil might be eight weeks away, but they’re already hitting trade in the nation’s crude. If a price cap is not agreed in time, some trades will fall foul of European sanctions by the time cargoes reach their destinations.
No Talks | President Volodymyr Zelenskiy ruled out talks with Vladimir Putin a day after Russia hit Ukraine with the most intense barrage of air strikes since the first days of Moscow’s invasion. There can be no dialog with a leader who “has no future,” Zelenskiy said. Read our rolling Ukraine coverage here.
NATO Defense | Alliance defense chiefs will gather in Brussels today to discuss how to better protect critical infrastructure, ramp up weapons production and maintain support for Ukraine as it calls for more advanced air-defense systems. The US-led Ukraine Defense Contact Group, which coordinates allies’ arms deliveries, will also meet on the sidelines.
Rome’s Recession | Giorgia Meloni’s euphoria at winning the Italian election is running into reality as the far-right leader struggles to forge a coalition government. Italy risks entering a recession in the coming quarters as the gas-dependent country struggles with the energy crisis, the IMF said. The Washington-based Fund forecast yesterday that the Italian economy will contract by 0.2% next year, one of only two euro members seen shrinking, alongside Germany.
In Case You Missed It
French Reactors | EDF needs to restart as many nuclear reactors as possible by early next year to reduce the risk of winter power shortages, Finance Minister Bruno Le Maire said. Europe’s energy crisis is being exacerbated by maintenance and repairs at French reactors that are curbing electricity supplies.
Rate Hikes | The European Central Bank should get interest rates to near 2% by year end with sharp increases before taking a more flexible approach and potentially embarking on a cautious shrinking of its balance sheet at a later stage, Bank of France Governor Francois Villeroy de Galhau said in a speech at Columbia University in New York.
Bonds for Ukraine | The EU raised €11 billion in a bond sale yesterday to support Ukraine under the bloc’s macro-financial assistance program and Europe’s recovery under its NextGenerationEU program. Of this, €2 billion will be released swiftly to help Ukraine, Budget Commissioner Johannes Hahn said.
Fewer Cars | European carmakers could see output drop by more than 1 million vehicles per quarter starting late this year and continuing through 2023, as soaring energy costs weigh on the supply chain, S&P Global Mobility said. Parts shortages and supply bottlenecks are likely to weigh most heavily on automakers from November through spring, particularly if energy is cut this winter.
EU Solidarity | The EU must again apply the “unity and solidarity” it adopted to tackle the Covid-19 crisis, Spanish Economy Minister Nadia Calvino told Bloomberg Television. Germany is aware steps are needed to make Europe stronger in the face of the energy crisis, and the question of joint debt issuance remains open, she said.
Polish Spat | A public dispute among Poland’s top central bankers escalated after allies of Governor Adam Glapinski hit back against dissenters challenging the bank’s practices. One member of Poland’s Monetary Council had questioned the central bank’s commitment to reining in rising prices and another went public with complaints about access to data.
Chart of the Day
Liquefied natural gas vessel rates hit a record high, with Europe’s dash to lock-in winter energy supplies sparking a scramble for ships and raising fears some buyers may find themselves without means to transport the fuel. The cost to charter an LNG ship in the Atlantic jumped to $397,500 per day yesterday, surpassing an all-time high set in the Pacific last year, according to Spark Commodities, which assesses prices from shipbrokers.
Today’s Agenda (All times CET)
- 11:00 a.m. NATO Secretary General Jens Stoltenberg speaks to reporters ahead of a meeting of the alliance’s defense ministers
- 1 p.m. Ukraine Defense Contact Group meets at NATO HQ
- 2 p.m. Commission President Ursula von der Leyen speaks at EU Ambassadors Conference
- 2:15 p.m. German Economy Minister Robert Habeck presents updated government forecasts
- 8:15 p.m. Financial Services commissioner Mairead McGuinness speaks at DC FinTech Week event in Washington
- EU energy ministers meet in Prague
- Commission Vice-President Valdis Dombrovskis, Economy Commissioner Paolo Gentiloni and International Partnerships Commissioner Jutta Urpilainen participate in IMF/World Bank annual meetings in Washington
- Health Commissioner Stella Kyriakides meets US medical adviser Anthony Fauci and Pfizer CEO Albert Bourla in Washington