Greece has proposed a pan-European hedging mechanism against sharp fluctuations in gas prices. Gas prices have skyrocketed this year as the global economy recovers from the coronavirus pandemic and global demand is growing much faster than supply, Reuters reports.

EU leaders will discuss this week whether price increases require a coordinated response.

In a joint letter to the head of eurozone finance ministers, Greece's finance and energy minister Paschal Donohoe urged the European Commission to consider setting up a pan-European fund to hedge against surges in gas prices.

The mechanism could raise funds from advance payments for carbon credits to be allocated to EU countries based on their heat and electricity consumption and their gross domestic product per capita, Greek Finance Minister Christos Staikouras and Energy Minister Kostas Skrekas said in a joint letter.

Greece's proposal also includes an auction of additional carbon credits through the EU emissions trading system, which will bring additional revenues to EU countries to help them finance consumer compensation schemes during the winter season.

“What we see is an unprecedented spike in energy prices,” Spanish Finance Minister Nadia Calvino told reporters on entering euro zone finance ministers’ talks in Luxembourg.

“This is not an issue that we can tackle at national level, we need a European coordinated response,” she said, adding her country had prepared a paper on the possible options.

Greece said European consumers could face additional electricity costs of € 100 billion this coming winter.

Later in October, EU leaders will discuss the idea of ​​creating a strategic gas reserve in the EU and separating electricity prices from gas prices, said the head of the European Commission, Ursula von der Leyen.