Europe Holds Emergency Talks on Energy-Market Intervention

Other measures under discussion include a plan to cut electricity use during peak demand this winter and a temporary cap on the price of natural gas imported from Russia. Some governments want the price cap extended to other sources of gas.

Ministers also want to prevent high prices from upending electricity markets, by extending emergency credit to traders or changing the rules for the collateral that is required in electricity trading.

Friday’s discussion is unlikely to result in immediate action, diplomats said. Instead, officials expect ministers to come up with a mandate for the EU’s executive arm, which hopes to introduce formal proposals next week.

Governments across the EU are tightening their grip on the region’s energy markets, aiming to limit the economic damage inflicted by Moscow’s move to cut gas deliveries to Europe. Friday’s talks come after national governments have imposed price caps and levies on energy producers in response to fears about social unrest and factory shutdowns.

Governments are looking to craft emergency policies that would apply across the 27-nation bloc, from nuclear-energy reliant France to a handful of countries in central Europe that still consume a lot of Russian gas. At the center of the debate is Germany, the EU’s largest economy, which for decades counted on Russian gas to keep its factories humming. Moscow’s decision to shut down indefinitely the Nord Stream pipeline, the main artery for natural-gas deliveries, has the continent idling factories as it faces surging gas and electricity prices.

“Nothing is a nonstarter now,” said

Václav Bartuška,

the special envoy for energy security for the Czech Republic, which holds the EU’s rotating presidency. Mr. Bartuška added that officials’ thinking on how to tackle the energy crisis has evolved rapidly in recent months. The proposal to redistribute companies’ windfall revenue, for example, “was crazy in June, it was fringe in July, and it was mainstream in August,” he said.

Questions remain about where a potential cap should be set, how the revenue would be collected and how it would be redistributed. The European Commission, the EU’s executive arm, has floated a cap of €200 a megawatt hour, equivalent to around $200, well under current prices in western Europe of more than €340 a megawatt hour. Officials said the level of the cap and its details would be part of the discussions on Friday and the following weeks.

A French official said it might be better to have different caps on electricity depending on the technology used to generate it. “The value generated by a French nuclear plant isn’t the same as the value created by a German lignite plant or a Spanish wind turbine,” the official said.

Another concern is who will decide how the money is used. In some cases, it might not be clear which country’s government should be capturing the additional revenue, or which citizens and businesses should benefit from it.

Support for the idea was not universal. Lithuania’s energy minister, Dainius Kreivys, on Friday morning called the idea “absolutely a red line” because of concerns it would disrupt electricity markets and result in uneven subsidies across the continent.

The commission has been careful to avoid referring to the windfall-revenue plan as a tax because a change in tax policy would require unanimous agreement from countries, according to EU officials and diplomats. Officials believe that the way they have framed the plan would allow it to pass with a qualified majority, which requires the support of 15 of the bloc’s 27 member states representing at least 65% of the total EU population.

Another proposal that appears to have general support from many member states is a move to limit demand for electricity, particularly during peak hours of use, when prices are highest. One draft document describing the proposal, which was produced by the commission and seen by The Wall Street Journal, suggested that each country should work to reduce its overall electricity consumption by at least 10%. Governments should also identify a set of peak price hours and reduce electricity use by an average of at least 5% during those hours, the document said.

Earlier this summer, the EU agreed to a plan for member states to cut their overall gas consumption by 15% over an eight-month period, with the possibility of making the target mandatory. Officials said an electricity-savings plan could be modeled on the earlier plan that was focused on gas.

Diplomats said reaching an agreement on a Russian gas-price cap is a more difficult proposition. Although Russia has already sharply reduced the flow of natural gas to Europe, some central European countries continue to depend on Russian gas flows and could be hit hard if the Kremlin decided to turn off the taps entirely.

“We still have questions and worries,” about the idea of putting a cap on Russian gas, Dutch Prime Minister

Mark Rutte

said Thursday. Still, he said his government generally supports the set of proposals that have been put forward, including the idea of a revenue cap for electricity producers.

Write to Kim Mackrael at kim.mackrael@wsj.com and Matthew Dalton at Matthew.Dalton@wsj.com