Council Regulation (EU) 2022/2578 establishing a market correction mechanism to protect Union citizens and the economy against excessively high prices

Summary:

Regulation (EU) 2022/2578 - adopted by the Council of the European Union on 22 December 2022 - establishing a Market Correction Mechanism seeking to protect businesses and households from episodes of excessively high gas prices in the European Union (EU).

Further information:

Russia's invasion of Ukraine and subsequent weaponisation of energy supplies added further pressure on prices of natural gas across the EU, and it led to periods of unprecedented price spikes. This Regulation establishes a temporary Market Correction Mechanism (MCM) for orders placed for trading TTF derivatives and derivatives linked to other virtual trading points, to limit episodes of excessively high gas prices in the EU which do not reflect world market prices.

The instrument is automatically activated should the month-ahead price on the Title Transfer Facility (TTF) exceeds €180/MWh for three working days, and the month-ahead TTF price is €35 higher than a reference price for LNG on global markets for the same three working days.

The draft law proposing a cap on gas price was adopted by the European Commission on 22 November 2022. It sought to complement other measures to reduce gas demands and ensure energy security through supply diversification. In particular, it buildt on elements of a draft Council Regulation aimed at addressing high energy prices and security of supply. Considerable disagreement remained when the Council of the European Union discussed this file on 24 November. A political agreement eventually emerged on 19 December 2022, and full adoption took place on 22 December 2022. The Act was published in the Official Journal on 29 December 2022.

• Primary Source

Commentary and Analysis

Centre for Economic Policy Research (CEPR): VoxEU Columns, 16/11/2022: European economists for an EU-level gas price cap and gas saving targets https://cepr.org/voxeu/columns/european-economists-eu-level-gas-price-cap-and-gas-saving-targets

European Trade Union Confederation (ETUC): Press Release, 20/12/2022: EU gas price cap too little too late for workers https://etuc.org/en/pressrelease/eu-gas-price-cap-too-little-too-late-workers

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News

France24, 08/11/2022: EU Commission says gas price cap 'impossible' https://www.france24.com/en/europe/20221108-eu-commission-says-gas-price-cap-impossible

Politico, 11/11/2022: Commission pledges to move on gas price cap proposal https://www.politico.eu/article/commission-pledges-to-move-on-gas-price-cap-proposal/

EurActiv, 17/11/2022: Brussels kicks gas price cap proposal down the road amid growing frustration in EU capitals https://www.euractiv.com/section/energy/news/brussels-kicks-gas-price-cap-proposal-down-the-road-amid-growing-frustration-in-eu-capitals/

The Irish Times, 17/11/2022: Planned EU gas cap would not apply to Irish purchases https://www.irishtimes.com/business/2022/11/17/planned-eu-gas-cap-would-not-apply-to-irish-purchases/

The Irish Times, 21/11/2022: EU’s energy exchanges warn gas price cap will backfire https://www.irishtimes.com/business/2022/11/21/eus-energy-exchanges-warn-gas-price-cap-will-backfire/

Kathimerini, 21/11/2022: Rift over gas cap looms over EU energy crisis plans https://www.ekathimerini.com/news/1198398/rift-over-gas-cap-looms-over-eu-energy-crisis-plans/

EurActiv, 22/11/2022: EU proposes long-awaited gas price cap https://www.euractiv.com/section/energy/news/eu-proposes-price-cap-for-gas-to-limit-spikes-eu-proposes-long-awaited-gas-price-cap/

Reuters, 22/11/2022: EU executive proposes gas price cap at 275 euros/MWh https://www.reuters.com/world/europe/eu-gas-cap-seen-place-one-year-countries-spar-over-price-level-2022-11-22/

Euronews, 22/11/2022: Energy crisis: Brussels unveils first-ever EU cap on gas prices but only as 'last resort' https://www.euronews.com/my-europe/2022/11/22/energy-crisis-brussels-unveils-first-ever-eu-cap-on-gas-prices-but-only-as-a-last-resort

Bloomberg, 22/11/2022: EU Proposes Brake on Gas Prices as Russia Squeezes Again https://www.bloomberg.com/news/articles/2022-11-22/eu-eyes-gas-price-cap-to-avoid-abnormal-spikes-seen-in-august

Bloomberg, 24/11/2022: EU Struggles to Pass Energy Package Amid Divisions on Gas Cap https://www.bloomberg.com/news/articles/2022-11-24/eu-seeks-deal-on-energy-package-as-gas-price-cap-divides-nations?leadSource=uverify%20wall

France24, 24/11/2022: EU fails to agree gas price cap amid deep divisions https://www.france24.com/en/live-news/20221124-eu-fails-to-agree-gas-price-cap-amid-deep-divisions

Reuters, 24/11/2022: EU countries unhappy with 275 euro gas cap proposal https://www.reuters.com/business/energy/greece-poland-malta-belgium-unhappy-with-275-euromwh-gas-cap-proposal-2022-11-24/

Euronews, 24/11/2022: 'It's a bad joke': Energy ministers blast proposed EU cap on gas prices https://www.euronews.com/my-europe/2022/11/24/its-a-bad-joke-energy-ministers-blast-proposed-eu-cap-on-gas-prices

Reuters, 08/12/2022: EU's gas price cap scheme could backfire, raise volatility -ECB https://www.reuters.com/business/energy/eus-gas-price-cap-scheme-could-backfire-raise-volatility-ecb-2022-12-08/

Politico, 13/12/2022: EU energy ministers fail to reach gas price cap deal https://www.politico.eu/article/eu-energy-ministers-fail-to-reach-gas-price-cap-deal/

Le Monde, 13/12/2022: EU fails again to agree on gas price cap https://www.lemonde.fr/en/energies/article/2022/12/13/eu-delays-decision-on-gas-price-cap_6007693_98.html

EurActiv, 15/12/2022: Czech EU presidency ready to outvote Germany on gas price cap https://www.euractiv.com/section/politics/news/czech-eu-presidency-ready-to-outvote-germany-on-gas-price-caps/

The Guardian, 19/12/2022: EU energy ministers reach agreement on gas price cap https://www.theguardian.com/world/2022/dec/19/eu-energy-ministers-agreement-deal-gas-price-cap

BBC News, 19/12/2022: EU nations agree gas price cap to shield consumers https://www.bbc.co.uk/news/business-64032130

Politico, 19/12/2022: EU agrees on gas price cap, skeptics denounce it as an ‘illusion’ https://www.politico.eu/article/russia-ukraine-war-eu-robert-habeck-energy-ministersagrees-on-gas-price-cap-skeptics-denounce-energy/

EurActiv, 20/12/2022: EU seals deal on gas price cap after months of wrangling https://www.euractiv.com/section/energy-environment/news/eu-seals-deal-on-gas-price-cap-after-months-of-wrangling/

Deutsche Welle, 19/12/2022: EU agrees to gas price cap https://p.dw.com/p/4LBS4

Bloomberg, 19/12/2022: EU Gas Price Cap Would Have Been Triggered Over 40 Days This Year https://www.bloomberg.com/news/articles/2022-12-19/eu-gas-price-cap-would-have-been-triggered-on-more-than-40-days

RTÉ News, 19/12/2022: EU agrees gas price cap deal, but Irish consumers unlikely to see immediate effects https://www.rte.ie/news/business/2022/1219/1342671-eu-gas-prices-cap/

The Irish Times, 19/12/2022: EU energy ministers seal deal on gas price cap https://www.irishtimes.com/business/2022/12/19/eu-energy-ministers-near-deal-on-gas-price-cap/

Associated Press (AP News), 20/12/2022: EU member countries reach compromise on gas price cap https://apnews.com/article/russia-ukraine-politics-europe-business-macron-7ef5d1639c222a728524905e028142b3

The Sofia Globe, 20/12/2022: EU energy ministers agree price cap on natural gas https://sofiaglobe.com/2022/12/20/eu-energy-ministers-agree-price-cap-on-natural-gas/

EurActiv, 21/12/2022: Gas giant Algeria slams EU gas price cap https://www.euractiv.com/section/energy/news/gas-giant-algeria-slams-eu-gas-price-cap/

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Official

EUR-LEX: COM(2022)668: Proposal for a Council Regulation establishing a market correction mechanism to protect citizens and the economy against excessively high prices https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2022:668:FIN

European Commission: Priorities 2019-2024: EU action to address the energy crisis https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/eu-action-address-energy-crisis_en

General Secretariat of the Council: Policies: Energy prices and security of supply https://www.consilium.europa.eu/en/policies/energy-prices-and-security-of-supply/

European Commission: Press Release, 22/11/2022: Commission proposes a new EU instrument to limit excessive gas price spikes https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7065

European Commission: Questions and Answers on the gas market correction mechanism (22 November 2022) https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_7066

European Commission: Opening remarks by Commissioner Simson at the press conference on a Market Correction Mechanism to limit excessive gas price spikes (22 November 2022) https://ec.europa.eu/commission/presscorner/detail/en/speech_22_7088

Council of the European Union: Press Release, 19/12/2022: Council agrees on temporary mechanism to limit excessive gas prices https://www.consilium.europa.eu/en/press/press-releases/2022/12/19/council-agrees-on-temporary-mechanism-to-limit-excessive-gas-prices/

Council of the European Union: Press Release, 22/12/2022: Council formally adopts temporary mechanism to limit excessive gas prices https://www.consilium.europa.eu/en/press/press-releases/2022/12/22/council-formally-adopts-temporary-mechanism-to-limit-excessive-gas-prices/

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