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‘It’s a joke’: Spain slams EU gas price cap

The Spanish government on Wednesday lambasted the European Commission's proposed price cap on wholesale natural gas, set so high that critics have questioned if it would ever be used.

TERESA-RIBERA-SPAIN-EU-GAS-PRICE-CAP
Spanish ecological transition minister Teresa Ribera called the commission's proposal a "joke", saying it would cause steeper price hikes and hamper efforts to tame decades-high inflation. (Photo by JOHN THYS / AFP)

The EU executive on Tuesday unveiled a gas “safety ceiling” of €275 per megawatt hour as the bloc grapples with high energy prices spurred by Moscow’s war in Ukraine and supply cuts.

But the conditions meant the cap would only kick in when EU gas prices breach that threshold for two weeks running, calculated on advance purchases through the bloc’s main gas price benchmark, TTF.

The cap was also contingent on the TTF price for liquefied natural gas – an easily transportable form of gas that can be shipped worldwide — exceeding €58 for 10 days within that same two-week period.

The only time the TTF gas price has gone above the €275 limit was between August 22nd and 29th this year.

It was running at around €120 in trading on Tuesday.

Spanish ecological transition minister Teresa Ribera called the commission’s proposal a “joke”, saying it would cause steeper price hikes and hamper efforts to tame decades-high inflation.

The French energy transition ministry criticised an “insufficient” scheme that “does not respond to the reality of the market”.

“The commission must propose an operational text, not simply a text that is political grandstanding and may have negative or no effects,” it said.

Spanish Prime Minister Pedro Sánchez has also expressed his opposition to the plan, with Ribera saying most EU members were against it as the bloc’s energy ministers prepare to meet on Thursday.

Spain could stop supporting other proposals on matters important to the commission if another “serious” text is not forthcoming, Ribera added.

A commission spokeswoman said the mechanism was designed “to anticipate and prevent this situation happening in the future”, but admitted even August’s price spike would not have triggered it.

The cap, if adopted, would come into force in January and came after months of wrangling between EU countries.

It runs alongside a plan by member states to voluntarily cut natural gas use by 15 percent over the northern hemisphere winter.

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ENERGY CRISIS

Barcelona-Marseille pipeline: an ambitious but risky project

A planned underwater hydrogen pipeline connecting Barcelona and Marseille is a risky project, but one that is key for the European Union's energy independence.

Barcelona-Marseille pipeline: an ambitious but risky project

Here’s what we know about the joint initiative by Madrid, Lisbon and Paris, which will be discussed on Friday December 9th on the sidelines of a summit of southern European Union nations in Spain.

What is it?

Dubbed “H2Med” or “BarMar” (from Barcelona and Marseille), the pipeline will connect the two ports that both have large oil and gas terminals, initially as a conduit for natural gas and later for green hydrogen, between Spain, France and the rest of Europe.

Announced at an EU summit in October, it offers an alternative to the defunct MidCat pipeline project launched in 2003 to carry gas across the Pyrenees from Spain to France that was eventually abandoned over profitability issues and objections from Paris and environmentalists.

What are its goals?

The pipeline aims to reduce Europe’s dependence on Russian energy by improving gas interconnections between the Iberian Peninsula and its neighbours.

Spain and Portugal account for 40 percent of Europe’s capacity to turn liquefied natural gas (LNG) that arrives in tankers back into gas form, but they are poorly connected to the rest of Europe.

The pipeline will also boost the decarbonisation of European industry, giving it access to clean energy on a large scale which Spain and Portugal hope to produce.

The two nations aim to become world leaders in green hydrogen thanks to their numerous wind and solar power farms.

Why Barcelona and Marseille?

According to the project’s backers, it is “the most direct and efficient way of linking the peninsula with central Europe”.

Barcelona “has one of the largest re-gasification plants in Europe” and occupies “a central place in Spain’s gas network,” said José Ignacio Linares, a professor at Madrid’s Pontificia Comillas University.

Marseille is also a key point in the French network and a gateway to the Rhone Valley, northern Italy and Germany – industrial regions that could become big consumers of green hydrogen.

What route will it take?

The route has not yet been decided, but “the most logical” option would be to run close to the shore to avoid deep waters, Linares told AFP. If that’s the case, H2Med would extend some 450 kilometres (280 miles).

When will it be ready?

French Energy Minister Agnès Pannier-Runacher told Spain’s El País daily the pipeline could come online in 2030, while her Spanish counterpart Teresa Ribera said it could enter service in “five, six or seven years”.

How much will it cost?

The cost of the project has not been revealed. But the European Hydrogen Backbone (EHB), that groups European energy pipeline operators, estimates a two-billion-euro price tag.

Madrid, Paris and Lisbon hope much of the project will be covered by EU funds.

What are the obstacles?

“An offshore hydrogen pipeline at this depth and distance has never been done before,” said Gonzalo Escribano, an energy expert at Madrid’s Real Instituto Elcano think tank.

The innovative project faces certain technical challenges. One of the main problems is that hydrogen is made up of small molecules which can escape through the joints and cause corrosion, said Linares, an
engineer by training.

But such problems could be overcome by “installing a membrane inside (the pipeline), a kind of plastic that prevents the hydrogen from escaping,” he said.

What’s the outlook?

The biggest risk is its economic viability, experts say.

“It is not clear when the green hydrogen market is going to take off and whether Spain will be in a position to produce enough to export it,” said Escribano.

But Linares said its construction would take so long “that we can’t afford to wait”. “If we do, we’ll end up with a huge volume of hydrogen that we won’t be able to export.”

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