Dear energy and gas price ceiling, now it’s up to Meloni

After what Draghi has achieved, the ball passes to the new executive

Mario Draghi did not give advice to Giorgia Meloni, he said himself, preferring to leave her what he “did” as an inheritance. The one obtained, not without difficulty, by the former president of the ECB, a great connoisseur of the corridors of Brussels, is an important result, brought home also thanks to the ministers, in particular Roberto Cingolani and Vincenzo Amendola, and to the incessant work of the Italian Representation in Brussels, all expressly thanked by Draghi at the press conference.

Draghi left Palazzo Chigi immediately after obtaining a result that was anything but obvious. After a battle, which lasted many months and never conducted alone, but in alliance with France and other countries, he succeeded in having a direct reference to a “dynamic and temporary corridor” for prices included in the conclusions of the European Council. natural gas, the need to find a new European benchmark for methane to replace the Ttf, European forms of financing for the response to the energy crisis and a reform of the electricity market that ‘decouples’ the price of gas from that of electricity ( this long-term reform, which for French President Emmanuel Macron could be implemented in the second half of 2023). There is also a reference to the possible extension of the Iberian model to the EU, which Italy does not like, however, because it would weigh on national budgets.

But it’s not the end of the battle, it’s just a stage. And now the ball goes to Giorgia Meloni’s government.

Achieving a mechanism that limits the price increases of natural gas is not taken for granted, even if yesterday’s conclusions give a clear political direction. The road is by no means clear of obstacles, starting with the biggest one, Germany. Yesterday, German Chancellor Olaf Scholz said he was aiming to “limit the episodes of excessive increases in gas prices. We are talking about peaks, not a ceiling”, peaks that occur “when there is too much intraday speculation” and “on this. an agreement is possible “. However, he added, “we don’t think that in a global market we can unilaterally say where the prices are: the only thing we can do is fight market speculation. We can’t do as we did in the 19th century.”

And again: “It is important – said Scholz – cooperation with third countries. The agreement on the fact that private companies that import gas can cooperate” in purchasing it, in practice they will be able to sign up, helps a lot. it was not possible for competition rules “, rules that are clearly unsuitable for facing a crisis such as the one aggravated by the war in Ukraine. The agreement on the ‘dynamic’ gas price ceiling will be found in the EU Council, at the level of ministers, given that the European Council, an institution other than the EU Council, is not a legislative body, unlike the latter. And here the devil is in the details, which will have to be addressed on a “technical level”, as Macron said. There are very specific stakes, which are part of the compromise which inevitably results in the conclusions, approved unanimously by the 27.

In fact, the European Council invites the Commission and the Council to present “urgently” “concrete” decisions to reach, among other things, a “dynamic price corridor on natural gas transactions to immediately limit excessive gas price episodes” . With a footnote, in perfect Euroburocratese: “Taking into account the safeguards outlined in Article 23, paragraph 2 of the draft regulation proposed last October 18” by the Commission.

The paragraph provides eight ‘caveats’ for the mechanism: it will have to apply to transactions on the Ttf, the virtual marketplace based in Holland managed by Gasunie which is the current benchmark for the price of methane, a price that for Macron “is imperfect, because it is mainly based on gas pipelines and the situation in Norway and the Netherlands “other European hubs” could be linked to the correct TTF spot price through a dynamic price corridor “must not” affect gas exchanges over the counter “, ie outside regulated markets; must not “jeopardize the security of Union gas supplies” depends on “progress made in implementing gas saving targets” must not produce “an overall increase in gas consumption” must be designed in such a way as to ” not to prevent “intra-EU gas flows; it must not “jeopardize the orderly functioning of the derivatives markets” it must take into account gas prices “in the various EU markets”.

These conditions reflect the concerns of the different EU countries, each of which has different mixes and needs, and in particular the fears of Germany, the Netherlands and others, whose main cause for concern is not gas prices, given that it is about states with deep pockets, but the possibility that gas will no longer arrive. This basic fear remains and the German position has not changed much: it was Draghi, with a very harsh speech in the European Council behind closed doors last Thursday, who led Berlin and The Hague to milder advice. The former president of the ECB, accustomed for years to dealing with the Germans, pointed out that the package as it entered the Council was all unbalanced on solidarity in terms of stocks and gas sharing, responding to the concerns of the Northern countries , without there being anything precise on solidarity in terms of prices, which instead serves the countries of the South. Italy has so far spent 66 billion euros, all in debt, to stem the consequences of expensive gas on families and businesses : all money poured into a bottomless pit, since the causes of the price increases remain unresolved. As if that were not enough, the Commission with Executive Vice-President Valdis Dombrovskis never misses an opportunity to remind that Member States must be prudent and act as if the Stability Pact were in place.

The harshness of Draghi’s intervention, even towards the Commission, rather reluctant to make unwelcome moves in Berlin, is understandable if this context is taken into account. The former president of the ECB simply pointed out that Italy, “with a little effort”, can become completely “independent” from both Russian gas and that coming from Northern Europe. Draghi explained that his problem is not the shortage of gas, “which we export”, but the price at which it is imported.

This being the case, concluded the now former Prime Minister, a one-way solidarity mechanism did not interest Italy. Faced with the prospect of running out of Russian gas and no solidarity on gas from other EU countries, Scholz understood that it was time to negotiate. And so we arrived at the shared conclusions of the night between Thursday and Friday.

Conclusions that, in fact, are an important stage in the battle to contain gas prices, but do not end the game. Now the ball goes to the Council of Energy Ministers, who will meet next Tuesday in Luxembourg. Although in theory the EU Council (which is not the European Council) could decide by qualified majority, the agreement between the leaders is to proceed unanimously: “We have decided that no country must be defeated with a vote – he explained. Scholz – it was difficult to reach an agreement: the matter could be brought before the European Council, if needed “. For some mischievous observers in Brussels, the SPD chancellor would like to take the dossier to himself in the European Council so as not to leave it to the EU Council, where in the Energy formation sits the Minister Robert Habeck, of the Greens, with whom the agreement would not be perfect .

To a reporter who pointed out to Scholz that he had repeatedly called for greater recourse to qualified majority voting in the EU, while now asking for unanimity, the chancellor objected that “there is no contradiction”, because “We have made progress, but we are not at a point where we can say that there is crystal clarity. There are issues that need to be clarified in detail, and ministers will. Many at the summit said they could not have imagined that on a similar matter should not be decided unanimously “. Scholz said he was “confident that there will be no problems” and that “we will not be forced to talk about it again in the European Council. Being sure of the future is difficult, but I am confident”.

The Council on Tuesday in Luxembourg should not be decisive, but it should give a first idea of ​​how the negotiations are developing. Macron spoke of a mechanism whereby “when intraday prices take flight, eve prices are taken to set a ceiling. It is a mechanism to combat intraday volatility in the markets”, which should have “an immediate impact on the markets. prices “. The French president also stressed that the signs of unity coming from the European Council had a bearish effect on gas prices, which yesterday stood at 113 euros per megawatt hour.

According to an expert such as Alberto Clo, the decline in prices observed in recent times is however essentially due to the filling of stocks in the EU, the lack of demand generated by the push to fill the tanks at all costs, the mild climate and the Franco-German agreement for the reciprocal export of gas and electricity, as explained in RivistaEnergia.

Citing a mechanism to correct gas prices in the Euco conclusions “seemed impossible”, recalled Draghi, yet after months of battles “we succeeded”. Draghi is the former president of the ECB, Mister Whatever it takes, greeted yesterday by his colleagues at the summit with a dedicated video clip: he too took months to convince his partners and he succeeded only with very hard interventions, both at the informal in Prague than in the Council in Brussels. Now it will be up to Giorgia Meloni to carry on the battle, with Gilberto Pichetto Fratin in Energy and Raffaele Fitto in European Affairs.

Fitto knows European dynamics well and was the architect of the entry of Fratelli d’Italia into the Ecr, a farsighted political move that led Meloni to preside over the Ecr and to find himself today on the side of Ukraine, having entered his time in a party dominated, after the exit of the Tories due to Brexit, by the Poles of the Pis, who see Vladimir Putin as smoke and mirrors. It will not be easy. But putting a stop to short-term gas price increases is essential, regardless of the means, to avoid serious consequences for Italian businesses and families. And to play the European game with results, as Draghi did, it will be essential to weave alliances.