By Kate Abnett
BRUSSELS (Reuters) - The European Union should limit the participation of financial speculators in European natural gas markets, Luxembourg said on Friday, a move it said could help prevent price spikes like those happening across the continent.
European gas and power prices have soared to record highs this year, prompting governments to hand out emergency subsidies and cut taxes to shield consumers from higher bills. Some countries also want deeper reforms to protect energy markets from price shocks.
"We have to eliminate - by regulation, and the gas directive is the right place to start to do this - the extreme speculative behaviour of some traders which now in the market, basically push the prices," Luxembourg Energy Minister Claude Turmes told reporters on Friday.
That could be done by imposing minimum hedging requirements on gas market participants, Turmes said, adding that he would discuss the idea with EU energy chief Kadri Simson on Friday.
"One idea could be that somebody who is allowed to trade in the European gas market needs to have a certain percentage of hedging."
The European Commission will propose a revamp of EU gas market regulation in December, aimed at aligning it with the bloc's climate change targets by pushing more low-carbon gases into the grid, in place of fossil fuels.
Analysts have said Europe's soaring electricity costs are mainly down to gas prices, which have rocketed by more than 300% this year as economies recover from the COVID-19 pandemic. Low wind power output has also contributed.
The Commission has so far resisted calls to limit financial participants' involvement in the EU carbon market, warning that intervening would undermine confidence in the market.
Spain, Greece, Poland and the Czech Republic have all proposed changes to the EU carbon market this month in response to rising energy prices.
With energy prices shooting up the political agenda, the Commission is drawing up guidelines for how countries can respond to the surging prices. EU energy ministers will discuss the price spike on Oct. 6.
(Reporting by Kate Abnett; additional reporting by Stephen Jewkes; Editing by Toby Chopra and Steve Orlofsky)