EU leaders set for summit squabble over energy crunch solutions

European Union leaders went into their second summit in two weeks on Thursday to find solutions to the energy crunch they all face, but a rift over whether to put a ceiling on gas prices set the stage for a long night of testy talks.

The EU parliament's chief said as the meeting got under way in Brussels that Europe's citizens were looking for direction as they grapple with the "spill-over effects of Russia's assault on the way of life we have long taken for granted".

"Our unity must be real ... We need to move faster and deeper," European Parliament President Roberta Metsola said in remarks prepared for delivery at a news conference.

Russia has cut gas flows to Europe following its Feb. 24 invasion of Ukraine, which has pushed energy prices higher, fanned inflation and raised the prospect of recession across the continent.

The EU 27 are expected to agree on an alternative price benchmark for liquefied natural gas and joint gas buying, after earlier agreeing to fill gas storage and claw back revenues from energy firms to spend on helping consumers with crippling bills.

But there is tension over spending plans by countries with the deepest pockets to protect their companies and households from soaring energy prices, which some complain are unfair and undermine solidarity.

"Unity among member states is dangerously under pressure, with unilateral national decisions being announced without an EU framework to keep them together," said climate change think tank E3G.

Chancellor Olaf Scholz, defending his country's 200 billion euro support package, said Germany had acted in solidarity with other EU members during the COVID-19 pandemic and pointed to other countries that were supporting energy consumers.

"But of course we have to look closely at what we decide to ensure that it works," he said as he arrived for the summit. "We need to carry this off together."

POSITIONS FAR APART

The most contentious issue facing the leaders is whether and how to cap gas prices.

"I think we could be in for a long night," Dutch Prime Minister Mark Rutte said as he arrived for a pre-summit meeting.

While 15 countries including France and Poland are pushing for some form of a cap, they face strong opposition from Germany and the Netherlands - respectively Europe's biggest economy and gas buyer, and a major European gas trading hub, which warn a gas price cap could compromise stability of supplies.

"An agreement is extremely unlikely... Opinions seem to be really far apart," a senior EU diplomat said.

A draft of the summit conclusions, seen by Reuters, would ask the EU's executive to "take work forward" on both a "temporary dynamic price corridor on natural gas transactions" and a price cap on gas used to generate electricity.

That weakened the wording from a previous draft, which had explicitly tasked the European Commission to "propose" a gas price cap in the power sector - a scheme favoured by France and already used in Spain and Portugal.

Diplomats said it was not clear if leaders would approve the latest draft. Ahead of the meeting Germany had asked that all mentions of price caps be removed from the text, according to a document seen by Reuters.

The leaders will also discuss emergency spending to cushion their economies and 450 million citizens from the energy crunch.

While some have called for new joint debt to finance that, more fiscally conservative countries say hundreds of billions of euros unused from previous programmes should be spent first.

Given EU countries' diverse energy mix and interests, the meeting risks falling short on short-term action to tackle high energy prices ahead of winter.

EU energy ministers meet again next week and aim to agree on joint crisis measures in November.