Sánchez trusts that Germany will yield and make way for its energy plan for Spain and Portugal

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  • The Spanish delegation stresses that the “key” is held by Berlin: if it compromises, it would drag down other hard-line countries, such as Holland, Denmark, Sweden or Austria

  • If the formula is approved at the summit, it would remain to articulate the legal framework by legal procedure, which would still take a few weeks to be operational

Pedro Sánchez already knows that his maximum approach, the decoupling of the price of gas from the electricity bill, will not be possible throughout Europe. At least for now. His intense tour of the last ten days, which has taken him to six countries and dispatches with nine of his counterparts, has convinced him that the reticence of some partners was and continues to be very strong. So he has preferred to lower expectations and bet heavily on an exit: that the Twenty-seven allow a kind of ‘Iberian exception’. That they authorize Spain and Portugal, due to their very low interconnection with the European energy market, to set the reference price of gas for combined cycle plants, which would make it possible to lower energy costs with practically immediate effect. But the “wrench” It will have it, insist the team of the President of the Government, Germany. The locomotive of the EU and the one that leads the group of countries opposed to the Spanish proposal.

The head of the Executive has a lot at stake in the European Council that started this Thursday in Brussels, after the extraordinary NATO summit in which the president of the United States, Joe Biden, also participated. He and his government have argued that they did not want to take steps to mitigate the consequences of the war in Ukraine because it was crucial to wait for this week’s leaders’ meeting. The energy market, he has insisted, is “broken” and it is necessary to go to the root of the problem, fix its dysfunctionalities.

The review of the system is on the table, but it is certain that it will not be decided on at this European Council, because the EU wants to wait for the reports from the regulators, which will arrive in May. It will also take time to articulate the joint purchases of gas or the limitation of the benefits that fell from the sky, proposals that Sánchez already made months ago and that did not find an echo and that now, the president told journalists upon his arrival at the summit, he has assumed the Commission itself. That is why all the meat on the grill is now focused on getting the Twenty-seven to take into account the “particular” situation. of Spain and Portugal —the interconnection of our country with France is only 2.8%— and approve a solution “specific” for the two countries, one “energy island“in the whole of the club.

The president formulates a less ambitious proposal than the one of days past to try to save the summit, relying on the low electrical interconnection of the Iberian Peninsula with Europe

The president remarked that the Madrid and Lisbon proposal is “solid & rdquor; and that “Not at all” disrupts the functioning of the European energy market. The most contrary countries, however, do not have it clear. Because the priority, above all for those most dependent on Russian gas, is the guarantee of supply, that the market is not distorted.

emergency route

At night, the Spanish delegation pointed out that they saw “reasonable options” for the Spanish-Portuguese proposal to prosper. “We are trying to convince the Twenty-seven that this will not have an impact on the market, and we are getting quite a few alliances. But Germany has the last word & rdquor ;, they explained. In Sánchez’s team they believe that if Berlin “yield& rdquor ;, the opposition of hard countries like Holland, Denmark, Sweden or Austria would immediately decline. The Government talks with Germany at various levels: the first and third vice presidents, Nadia Calviño and Teresa Ribera, with their counterparts in the German tripartite (the Environment portfolio is managed by the greens), and the team of the socialist leader, with that of the Chancellor, the Social Democrat Olaf Scholz.

Sánchez is willing “to beat the copper and convince & rdquor; to community club members. And will there be a veto? In the Spanish delegation they prefer “not to speculate”

In Moncloa they hope that the Council, which this Friday will begin to debate on energy (the first day focused on the war in Ukraine), will last longer than expected. And Sánchez is willing”to beat the copper and convince”. To pull the rope, therefore. Even to veto the deal? His team prefers not to “speculate.” “We are going to use our best persuasive abilities & rdquor ;. The agreements in the EU require the unanimity of all partners to move forward.

Technically, what Madrid is fighting for, in coordination with Lisbon, is that the conclusions approved by the Council on Friday include a paragraph in which, based on the article 122 of the Treaty on the Functioning of the EUarticulates, through an urgent procedure, the possibility that Spain and Portugal set reference prices for combined cycle plants, those that burn gas to produce energy (and that generated in 2021 17.1% of the total electricity in Spain). This means, in practice, decoupling the price of gas from that of electricity.

How long would it take for the legal framework to be ready? Sources from Sánchez’s team stress that it would be a short time, “maybe 15-20 days going very fast”, although everything would depend on the necessary bodies on whether approval or whether or not it has to go through the European Parliament. In any case, the Government would have the European Commission as an ally, they explain, and that would be a great help for that the procedure would be ready in a few weeks.

Debate “political, not technical”

They add that, however, the agreement in the European Council would already send the message that the Executive is pursuing: a effective lowering of energy prices that would benefit consumers and professionals. What is not clear is what would be the ‘ex post’ compensation mechanism for gas companies, whether through the General State Budgets or on account of the electricity system itself. Nor has the Executive revealed what the reference price of the gas that it is considering would be: it would be “low enough” for the cut to be noticed, but without going over it, so as not to alter the functioning of the market. And how long would the mechanism be in force? In principle, until energy prices “stabilize.”

Sánchez’s team has not revealed what the reference price would be. And the ‘ex post’ compensation mechanism for gas companies is not yet clear

“But at this point, the debate is political, not so much technical“, the same sources abound. Those opposed to the Spanish formula wield their fear of a distortion of the market and the tensions that may exist in the supply, especially in those highly dependent on Russian gas. Madrid will assert the poor interconnection with France to move the water in their favor, an argument that Greece and Italy, with whom Sánchez appeared last Friday in Rome, could not use.

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Optimism, they pointed out in the Spanish delegation, “has not gone down.” “We knew this wasn’t easy. But in October we put forward proposals such as joint gas purchases in which we were alone, and now that is not the case. If there is a president who can speak with authority and credibility about energy, that is Pedro Sánchez,” they stress.

Another issue pending for later is that of the electrical interconnections. What the Executive is asking for is that these infrastructures, which would be not only gas, but also green hydrogen, be paid for by the EU, given that it would be a contribution from Spain to the rest of Europe. The talks, they indicate in Moncloa, are already underway with France and with the Commission, and in fact Sánchez already spoke with Ursula von der Leyen during the visit that this made to Madrid last March 5.



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