European Commission is considering ways to counteract reliance on Russian fuel supplies
Ireland could bring in a Spanish-style cap on gas and coal prices due to the isolation of energy supplies here from pipelines and infrastructure, the EU has said.
However caps, which would be expected to reduce bills to households, would bring their own risks.
In a paper published on Wednesday, the European Commission approved in principle the introduction of limited price caps for power plants that use gas and coal to generate electricity - but only in “regions with very limited interconnection capacity”.
Caps now in place in Spain put a limit on how much power utilities there pay their suppliers for gas and coal with the intention that will lead to lower bills for consumers.
The Commission warned on Wednesday that price caps – if they entail subsidies to energy providers – can lead to higher demand, more pollution and “significant costs” for the state.
An EU official name checked Ireland and Cyprus as the only two countries in the bloc with no connections to the mainland European electricity grid, hinting that a gas price cap could be given the all-clear here.
The EU is looking at ways to cut dependence on Russian gas and at the same time insulate consumers as far as possible from soaring prices. It is advising consumers to turn down their heating and air conditioning and cut back on car journeys to help “take money out of Putin’s pocket”.
The move comes as part of a wide-ranging package of measures designed to protect the bloc as it weans itself off Russian energy.
It includes a €300bn investment package for renewable energy, a higher 2030 renewables target, mandatory solar panels for industrial buildings by 2025 and a bid to cut down on the time it takes to get permits for green projects.
“It is more urgent than ever that Europe become master of its own destiny,” said EU vice-president Frans Timmermans.
“Yearly, €100bn goes into the pockets of Putin for the fossil fuel we’re buying there.
"If we can really speed up the transition away from that, that money can stay in Europe, can help bring down the energy bills of European families, and will not be used to finance this barbaric war in Ukraine.”
Brussels is set to give its final sign-off to a move by Spain and Portugal to limit the cost of natural gas and coal for power plants to €40-€50 per megawatt hour for 12 months.
Although any such moves come with conditions.
“Member States deciding to introduce such measures are invited to, inter alia, consult affected neighbours and stakeholders and determine and monitor the additional gas consumption and increased CO2 emissions resulting from the intervention,” the Commission said in a paper.
Many consumer contracts in Spain are tied to wholesale gas prices, or what energy producers charge utility companies. Those prices have risen more than six-fold in the last year.
Spain has the bloc’s largest resources of liquefied natural gas (LNG) that it can tap in the event of a gas and coal supply crunch.
The Commission has also touted an EU-wide gas price cap in the event of a complete shut down of Russian gas supplies.
The move is largely intended to shield eastern European countries, most of whom are entirely dependent on Russian energy.
Last month Russian energy giant Gazprom stopped exports to Poland and Bulgaria over their refusal to pay in roubles.