Poland claims German energy plan will destroy EU’s single market

Poland has accused Germany of “destroying” the EU’s internal market by subsidising its own energy companies while opposing a pan-European cap on gas prices, exposing a bitter division over how to weather the continent’s energy crisis.

The accusation over Berlin’s controversial €200bn support package for its own companies came as EU leaders clashed at an informal summit in Prague over how to lower energy costs and guarantee winter supplies in the wake of Russia’s invasion of Ukraine.

“We are strongly opposed to the destruction of the . . . European single market, a destruction which will take place in the event that the German government is allowed to subsidise only its own enterprises,” Poland’s prime minister Mateusz Morawiecki told reporters as he arrived at a meeting on Friday.

“My message to Germany is to be united, show solidarity with all the others. Because during difficult times, everybody has to agree on a common denominator, not just one denominator that is suitable to one country,” he said, forecasting a “heated discussion about this German egotism”.

German chancellor Olaf Scholz last week announced a “double ka-boom” finance package that would support poorer households and German businesses facing higher energy bills. Speaking to reporters on Thursday in Prague, Scholz defended the measure by saying other countries were also passing measures to offer relief to those struggling with energy bills.

That sparked consternation among other EU members that believed the bloc should instead focus on a collective approach to the crisis — anger exacerbated in many capitals by Berlin’s simultaneous resistance to a mooted gas price cap that supporters say would tackle a root cause of the problem.

While a majority of EU states back some form of cap, Germany and the Netherlands are prominent opponents. But even those in favour are divided over what form it should take.

Belgium’s prime minister Alexander De Croo said: “We need market intervention because we can’t pay these prices anymore,” adding that support for a cap had risen from three countries in March to 24 countries today.

“We can’t solve everything with subsidies,” he said. “Such large [support] packages are not needed anymore.”

But other states have warned that a cap could spook suppliers of shipped liquefied natural gas, such as Qatar, pushing them to take their products elsewhere. Austria’s chancellor Karl Nehammer, whose country still receives piped gas from Russia, said on Friday that Vienna “is in favour of a gas price cap, but we have to make sure it’s not a Russian gas embargo through the backdoor”.

Other leaders called for a collaborative solution, without directly criticising Berlin. Ursula von der Leyen, president of the European Commission, said on Friday that the 27 leaders should “discuss how we can limit the peaks in energy prices and the manipulation in energy prices by [Vladimir]Putin. This will be the discussion on price caps, where to put them and how to put them.”

Citing “the single market and the level playing field”, von der Leyen added: “Companies can compete, through quality, not subsidies.”

Leaders will also seek more details of an agreement struck by von der Leyen and the Norwegian prime minister on Thursday to explore “joint tools” to ease the crisis.

Since the invasion of Ukraine began in February, Norway has replaced Russia as the EU’s biggest external gas provider. But officials said there was no clarity on whether the agreement between Brussels and Oslo would result in lower prices or more gas for the bloc.