How can we reduce #Russia's energy revenue while keeping the #EU energy market stable? EU politicians are torn between popular outrage over high prices and calls to increase pressure on Russia. But there is a solution: Import price caps on Russian energy. [1/6]
#Italy has already started this discussion with regards to gas, and it is gaining momentum. Basically, a price cap makes it illegal to pay more than a price X for importing Russian gas, oil or coal. [2/6] bloomberg.com/news/articles/…
With a price cap on Russian energy, Europe ideally gets to have its cake and eat it too: #Russia's energy revenues would shrink, similar to a partial energy #embargo. At the same time, supply of energy to the #EU - and also to the rest of the world - would remain intact. [3/6]
How would #Russia react? With regards to #gas, it can either sell for a lower price, or stop selling, and lose the remaining revenue. There is a risk for economically irrational behavior, but the more urgently Russia needs dollars, the more likely it is to continue supply. [4/6]
For #oil, the same is true to a lesser degree: Russia could stop supplying oil through its Druzhba pipeline (in the process cutting off Russian-owned refinery in Schwedt) and ship the oil somewhere else. But especially under EU&US sanctions, this is a logistical nightmare. [5/6]
Much would depend on the specifics of the price cap and there are complicated legal questions to resolve. But given the dilemma EU (especially German) policy-makers are in right now, it needs to be seriously considered. [6/6]
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