The European Union is exploring the idea of reducing the impact of higher gas prices on bloc nations by setting a price cap on all transactions at the Dutch Title Transfer Facility. The news was reported by Bloomberg, which cited a draft proposal by the European Commission.

The report states the EU is seeking to set a maximum “dynamic price” for transactions completed on the hub. The hub’s main index, the TTF, is the European benchmark for all gas trades within the bloc.

It is hoped this mechanism would allow Brussels to intervene in the event a sudden extreme spike in gas prices threatened to make fuel unaffordable to member states, while not hurting supply, according to the draft document. It was projected the emergency cap would not be needed for longer than three months.

The document stated, “This will help avoid extreme volatility and price hikes, as well as speculation which could lead to difficulties in the supply of natural gas to some member states.” The plan also foresees a temporary intra-day price cap, designed to, “ensure sounder price formation” and protect the bloc’s energy companies from sudden large price hikes.

The document is presently scheduled to be adopted Tuesday, October 18th. Reuters has reported that it will be discussed by EU ambassadors at an extraordinary meeting on Monday in Luxembourg.

The adoption will be followed by an EU summit in Brussels on October 21-22, where member states will seek additional solutions to the energy crisis. Europe is facing the prospect of soaring gas prices in the winter, as heating demand peaks.

Most Russian pipeline supplies have stopped, and now China has announced it will begin hoarding its own gas, and will not export any more fuel to Europe this winter. Previously in 2021, 39% of Europe’s fuel supply came from Russian pipeline gas in the winter. Now Europe must make up that supply with LNG imports, primarily from the Mideast and the US, as China too has cut off its supplies.

An EU diplomat told Reuters, “Impatience is growing with member states… So we changed gear and put everything that is being floated… on the table. It is a way of putting pressure on the Commission to come up with the most concrete possible proposals.”