The EU member states have been arguing for months about introducing a gas price cap, and now it is in place.

The EU energy ministers decided on the cap on Monday in Brussels, as requested by the EU heads of state and government last week.

It should take effect as soon as the threshold of 180 euros per megawatt hour is exceeded for three days.

Henrik Kafsack

Business correspondent in Brussels.

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In addition, the price must be more than 35 euros higher than the world market price for liquefied natural gas (LNG).

That is many lower than proposed by the European Commission.

She had spoken out in favor of a cover of 275 euros.

The agreement does not provide for a fixed cap, but a breathing cap that should always be 35 euros above the LNG world market price.

However, the price must not fall below the threshold of 180 euros.

"It was our duty"

The EU has once again proven that it can deliver, said the incumbent Council President, Czech Minister Jozef Síkela.

"It was our duty to the people and the companies" who had been waiting for a solution to the high prices for months.

Economics Minister Robert Habeck said: "Germany and I personally viewed the price cap with great skepticism".

However, most of the other member states did not share this.

"Just as the other countries showed solidarity with Germany in the past, we have shown solidarity with this instrument today," Habeck continued.

In the end, Germany voted in favor of the compromise.

Austria and the Netherlands abstained, Hungary voted against.

Germany had blocked the price cap with these countries for a long time.

It had argued that a price cap could jeopardize the gas supply, since the gas would then simply flow to other countries at lower prices.

The EU Commission also argued similarly for a long time, but finally bowed to the growing pressure of a clear majority of states in November and presented a proposal for a price cap, albeit a very high one.

The dispute recently revolved around the level of the trigger for the price cap.

Chancellor Olaf Scholz emphasized again at the summit at the end of last week that the cap must be "so high that it is never relevant".

He did not achieve this goal.

At 180 euros, however, it is now well below German expectations and relatively close to the demands of the most vehement supporters Greece, Belgium, Italy and Poland, who had demanded 160 euros.

The price cap would have been activated this summer when prices rose to as much as 350 euros in August.

Most recently it was consistently below 150 euros.

But that could change if the EU has to fill up the gas storage facilities again in the spring.

The price cap is valid until November

However, Berlin was able to enforce the fact that the lid can be deactivated quickly if it has undesirable effects.

This happens automatically when there is a gas shortage in the EU or parts of the EU.

This is also the case as soon as the dynamic price cap falls below the EUR 180 threshold for three days.

After activation, however, at least 20 days apply.

The price cap is to be suspended if it leads to an increase in gas consumption, LNG imports fall or cross-border trade within the EU is restricted.

In addition, until the price cap comes into force in mid-February, the EU financial and gas market supervisors are to review the consequences of the decision by the energy ministers for the gas markets and the financial markets.

If the negative effects outweigh the negative effects, the Commission can still stop the price cap.

The American stock exchange operator “Intercontinental Exchange” (ICE) recently threatened to withdraw from the EU if the price cap came.

This could have noticeable negative consequences for gas trading in the EU.

ICE announced on Monday that it would first examine the ministers' decision intensively and then make a decision.

The price cap will initially only apply until November.

But it can be extended.

In addition, it is limited to pure stock exchange trading.

This applies to the entire range of transactions from the following month ("Month Ahead") to the following year ("Year Ahead").

Direct trading between suppliers and buyers (“Over the Counter” or OTC) is excluded, but can be included later if the business shifts from the exchanges to this trading level.

The agreement still has to be formally adopted by the member states.

But that is considered a formality.

The decision also clears the way for two other EU laws that a group of states had blocked in order to enforce the gas price cap.

On the one hand, there is the law for joint gas purchasing.

It pools states' purchases of some of the gas needed to refill storage facilities after this winter.

In this way, the EU wants to prevent the states from outbidding each other, as they did this summer, and thus driving up the price.

On the other hand, it is about the law for the noticeable acceleration of the approval process for the expansion of wind and solar power.

This law was particularly important to the federal government in order to reduce dependence on Russian gas.

In return for the German approval of the gas price cap, Habeck received a concession under this law.

The double environmental assessment for important projects is now to be eliminated.