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Policy Paper: How to act?

Assessing the EU’s options for emergency measures to reduce gas prices

Gas prices in Europe have reached historic highs in the wake of the Russian invasion of Ukraine, as a result of reduced gas imports from Russia which had previously comprised around 40% of European gas demand. To mitigate the devastating effects of these prices on households and industry, the EU is now considering different emergency options to address the high prices and scarcity of gas.

In the medium term (i.e., post-2025) we expect prices to come down as non-Russian import capacity and global LNG availability will be sufficient to meet demand. The proposed measures are therefore temporary and targeted at reducing prices until the market rebalances.

This paper considers the short-term implications of the main proposals currently being considered by the European Commission and Member States according to the following criteria:

  1. Ensures security of gas supply: the measure ensures that sufficient gas is delivered to Europe and enough gas is saved to ensure security of supply
  2. Reduction in consumer bills: the measure has the intended effect of reducing gas prices in a meaningful way for consumers
  3. Enables efficient allocation of gas: under the measure, scarce gas is allocated to consumers in an economically efficient manner (e.g., gas reaches the consumers that most need it)
  4. Low fiscal burden: the costs of the measure do not excessively burden Member States
  5. Ease of implementation: the measure can be implemented quickly and efficiently

You can find the policy paper here.