The European Union was left red-faced after a leaked document revealed the bloc is no longer planning to impose a price cap on Russian gas imports. The EU Commission had introduced plans to do so, in a bid to curb the soaring prices of wholesale gas, while also delivering a major blow to Vladimir Putin’s war efforts by ending Russia’s cash cow. Over the past year, Moscow has enjoyed record profits thanks to the soaring energy prices.
According to a leaked document, the bloc is turning back on Commission President Ursula von der Leyen’s plans to issue a price cap on Russian gas imports.
Instead, the bloc is focussing its efforts on tackling the massive profits made by oil and gas companies, by issuing a windfall tax on “surplus profits” made.
The draft regulation on the “electricity emergency tool”, which was seen by the Guardian, does not contain plans for a price cap, after member states failed to come to an agreement over the proposal.
The draft revealed that aside from levying a windfall tax on fossil fuel energy companies, the EU also issued a separate cap on the revenues earned by low carbon electricity producers like renewables and nuclear power.
According to EU diplomats, the plan to impose a price cap on Russian gas was a very contentious measure when Ms von der Leyen first announced the measure, which is primarily aimed at punishing Putin financially for the war in Ukraine.
The member states reportedly have “very contradictory views”, one EU diplomat noted, with Germany noting that it is “sceptical” about the idea.
Meanwhile, Hungary, which is Russia’s closest ally in the EU, is against the plan and is supported by Slovakia and at least two other countries.
Many of the EU countries that are heavily dependent on Russian gas were against this move, fearing that Vladimir Putin could retaliate by completely cutting off gas flows to Europe, plunging them into a cold winter.
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Cutting off all energy supplies to the fuel-starved continent would be devastating, and could result in rationing of supplies and even higher prices.
Following the G7’s decision to impose a price cap on Russian oil, Russia’s state-backed energy giant Gazprom “indefinitely” suspended gas supplied through the Nord Stream 1 pipeline to Germany.
While some countries outright rejected plans for a price cap on Russian gas, about a dozen countries, which included France and Poland, called for a price cap on all gas imporst, which they considered to be a better way to curb the energy costs.
However, the Commission disagreed with this suggestion, fearing that the bloc would lose out to countries that were prepared to pay for more for gas.