(Bloomberg) -- The European Union is racing to come up with ideas to keep its energy crisis from turning into an economic meltdown, as energy ministers prepare for an emergency meeting in Brussels on Friday.

Germany wants power-price caps within weeks. Poland is seeking to limit prices on all natural gas imports. Spain says the bloc to needs to make sure utilities have adequate financing. Liquidity is set to be a focus of the talks. 

Meanwhile, energy-intensive industries, which have been forced to shutter plants due to soaring natural gas and power costs, have a singular message for officials:  Do something -- fast.

Key Developments:

• Europe’s Lehman warning on energy prompts a flurry of cash aid
• Equinor says $1.5 trillion of margin calls risk energy trading
• Hundreds of local utilities in Germany are under strain, and bailed-out energy giant Uniper may need even more funds
• In the UK, new Prime Minister Liz Truss unveils an aid plan that risks running out of control; or it may halt inflation

(Timestamps are London.)

European Gas Prices Fall, Remain Volatile (5:05 p.m.)

Benchmark gas futures traded in Amsterdam settled 2.5% lower after falling as much as 13% earlier Tuesday. Retreating price are a relief for the market, with Europe’s higher gas stockpiles countering supply risks from Russia. But trading ranges are still very wide “reflecting the high level of uncertainty and volatility,” according to EnergyScan, the market analysis platform of Engie SA.

Germany Expects Power-Price Cap Within Weeks (4:15 p.m.)

German Chancellor Olaf Scholz sees a good chance the European Union will quickly agree on a mechanism to cap power prices.

“If we have our way, it will take weeks rather than months,” Scholz said in an interview with the Frankfurter Allgemeine Zeitung newspaper. The aim is to skim off additional profits that many electricity producers are making due to the design of the EU power market, Scholz said. He added that the money will be used to finance a brake on power prices, benefiting citizens and small and medium-sized companies.

“It’s about many, many billions of euros,” Scholz told the paper. “Now let’s start the implementation quickly. There is much to suggest that we will see decisions here at European level in a very short time.”

Also See: Can Europe’s $375 Billion in Relief Keep People Warm Enough?

Spain May Target Energy-Saving Measures (3:37 p.m.)

Spain plans to expand its energy-saving policies, and may specifically target measures at certain industries, according to Prime Minister Pedro Sanchez.

The government has “been analyzing additional energy-saving and efficiency measures for several weeks,” Sanchez said in the Senate in Madrid. “If measures applied on homes, shops and public spaces aren’t enough, additional measures will be applied on certain industries, which will be compensated,” he said.

Poland to Seek Price Cap on Gas Imports (3:35 p.m.) 

The Polish government is planning to propose that the European Union cap prices on all natural gas brought into the region -- including LNG -- according to a diplomat from the bloc. The European Commission has floated the idea of capping the price of imports from Russia as part of an emergency intervention to limit soaring energy prices.

Poland will put forward its proposal at an extraordinary meeting of EU energy ministers in Brussels on Friday. According to the government in Warsaw, a price cap on Russian gas alone wouldn’t be enough to lower prices in Europe after Moscow limited supplies to the bloc, said the diplomat, who asked not to be identified due to policy.

German Local Utilities Cry for Help (3:10 p.m.)

Several hundred local utilities in Germany are coming under strain and need support, according to the head of the country’s largest energy lobby group. The companies, generally owned by municipalities, supply households and small businesses directly, and some big gas importers are reluctant to sell them more supplies amid fears they could default on payments.

“The next step from the government and federal states must be to secure liquidity for these municipal companies,” Kerstin Andreae, chairwoman of the German Association of Energy and Water Industries, told Bloomberg in Berlin. “What is critical is that the solution comes fast.”

EU Industrial Groups Push for Swift Action (2:47 p.m.)

European industries that are heavy energy users -- think chemicals, paper and cement producers -- are calling on the EU to take urgent action to avoid a further shutdown of plants due to soaring bills.

“Immediate and impactful action is needed at European level,” groups including the European Chemical Industry Council and the European Cement Association said in a letter to Czech industry minister Jozef Sikela. The Czech Republic currently holds the EU’s rotating presidency. 

The bloc should “urgently introduce EU-wide measures aimed at limiting the price of natural gas and also measures designed to disconnect electricity prices from gas prices,” they said.

French Grid, Business to Work on Power Saving (2:37 p.m.)

France’s power-grid operator will bring together some of the country’s biggest energy users on Sept. 22 to detail how they can cut demand during peak hours to avoid blackouts this winter. The government is pushing businesses, administrations and local authorities to reduce consumption by about 10% over two years to avoid rationing and shortages during the coldest months.

Also see: French Supermarkets to Cut Electricity Use After Govt Appeal

Truss’s Energy Relief Is Uncapped Liability for UK (2:28 p.m.)

The cost of Prime Minister Liz Truss’s proposed energy price freeze for UK households risks running out of control, topping the £197 billion ($228 billion) estimated in leaked government documents for the next 18 months.

Ministers plan mechanisms that will fix energy costs for households and businesses, linked to the price of natural gas and electricity in wholesale markets, according to documents seen by Bloomberg

EU Should Ease Utilities’ Liquidity Woes, Says Ribera (2:10 p.m.)

The European Union should consider changing collateral requirements on trades to help utilities struggling with dwindling liquidity, Spain’s top energy official told reporters.

Environmental Transition Minister Teresa Ribera -- who is in charge of energy policy -- said the bloc could lower collateral requirements or set a limit for each company to free up funds that could be used instead for investment in the sector. EU energy ministers will discuss the options to reduce the liquidity crunch threatening the continent’s financial system in an emergency meeting on Friday. Earlier, Ribera told Onda Cero radio that the officials may decide to set a limit on the price of Russian natural gas when they meet.

China to Pay Gazprom in Rubles, Yuan (12:37 p.m.)

Gazprom PJSC said it will shift its contract to supply gas to China to rubles and yuan from euros, as the Kremlin steps up efforts to move trade out of currencies it considers “unfriendly” amid US and European sanctions. A person familiar with the plans said separately that payment will be made 50% in rubles and 50% in yuan, effective immediately. 

President Vladimir Putin earlier this year demanded Gazprom’s main customers in Europe pay for their gas in rubles after the US and its allies froze more than $300 billion in Russia’s central bank reserves held in dollars and euros over his invasion of Ukraine.

Liquidity to Be Focus of EU Talks (12:28 p.m.)  

Liquidity measures will be at the center of talks at the emergency meeting of EU energy ministers on Friday, according to Czech Industry and Trade Minister Jozef Sikela. The bloc’s member states agree that markets and traders need more liquidity to function, Sikela told the Czech state news agency CTK on Tuesday. Individual EU members have been taking steps, but a pan-European solution may also be on the table, the minister said.

The Czech Republic currently holds the EU’s rotating presidency. 

Italy to Cut Gas Demand, Boost Coal Power (11:45 a.m.)

Italy aims to reduce gas consumption by as much as 8.2 billion cubic meters between August and March next year, according to a plan published by the ministry for ecological transition. It involves increasing output from coal and other power stations, and shortening winter heating in houses and offices by two weeks. Indoor temperatures will be capped near 19 degree Celsius and heating hours will be reduced.

The government will also encourage shorter showers, turning off stoves once water for pasta starts boiling and switching off televisions and other electrical appliances. Italy was forecast to consume 54.8 billion cubic meters of gas between August and March.

Germany’s FDP Unhappy With Nuclear Decision (11:30 p.m.)

The junior member of Germany’s three-party ruling coalition urged the government to extend the operating life of all three of the country’s remaining nuclear power plants until 2024 instead of keeping only two on standby until mid-April.

“It would also be a sign of a lack of solidarity with our European neighbors if Germany did not make full use of available capacity to secure shared power supply,” Lukas Koehler, a deputy leader of the FDP party’s parliamentary group, said in an emailed statement. Economy Minister Robert Habeck, a member of the Greens and the vice chancellor, said Monday two nuclear plants would be kept in reserve until April, while a third will be shut down as planned at the end of the year.

Russian Gas-Price Cap on the Agenda (10:42 a.m.)

EU energy ministers this week may decide to set a limit on the price of Russian natural gas, according to Spanish Environmental Transition Minister Teresa Ribera. It’s one option the bloc’s officials are expected to consider when they meet Friday to discuss extraordinary measures to curb surging energy prices. 

Introducing a Europe-wide price cap “is possible, and I believe we’re going to have significant debate to set an orientation to the European Commission,” Ribera, who is in charge of Spain’s energy policy, said in an interview with Onda Cero radio.

$1.5 Trillion Margins Calls Risk Energy Trade (10:25 a.m.)

European energy trading risks grinding to a halt unless governments extend liquidity to cover margin calls of at least $1.5 trillion, according to Norway’s Equinor ASA. The biggest energy crisis in decades is sucking up capital to guarantee trades amid wild price swings.  

“Liquidity support is going to be needed although the physical market is working,” Helge Haugane, Equinor’s senior vice president for gas and power, said. The company’s estimate for $1.5 trillion in capital to prop up derivatives trading is “conservative,” he said.

Europe Recession Likely This Year, Fitch Says (9:50 a.m.)

If the Nord Stream pipeline stays halted, it would reduce the eurozone GDP in 2023 by 1.5-2 percentage points compared to estimates in June, according to Fitch Ratings. The reduction for Germany would be about 3 percentage points and 2.5 percentage points for Italy. A eurozone recession in the second half of this year is therefore increasingly likely.

German Companies are Seeking Help (9:15 a.m.)

The German government is receiving a growing number of calls from companies with liquidity problems, according to an official, and it is working on a plan to help.

Also read: Europe’s Lehman Warning on Energy Prompts Flurry of Cash Help

Truss Plans £40 Billion Aid for UK Businesses (9:05 a.m.)

Incoming UK Prime Minister Liz Truss is finalizing plans for a £40 billion ($46 billion) support package to lower energy bills for businesses. She is considering two options, either setting a guaranteed unit price that businesses will pay, or a percentage or unit price reduction that all energy suppliers must offer firms, according to documents seen by Bloomberg. 

Europe Gas, Power Prices Drop (9 a.m.)

Benchmark energy futures fell after jumping on Monday, with Dutch front-month gas losing as much as 13% and German year-ahead power falling 11%. Traders are weighing governments’ efforts to fix the crisis following the immediate panic over Russia’s move to halt the key Nord Stream gas pipeline. Also, gas demand is as yet still relatively low ahead of the heating season. 

“Maybe Russia has played the potential hand too soon as we are still not in the colder winter months,” said Nick Campbell, a director at Inspired Plc.

Centrica Seeks Liquidity Buffer (8:53 a.m.)

Centrica Plc is in talks with banks on the potential extension of credit lines, according to a person familiar with the matter. The move is a pre-emptive one as volatile energy prices increase collateral requirements, the person said. 

German Nuclear Decision ‘Useful’ (8:45 a.m.)

Germany’s decision to keep two nuclear power plants available this winter can make only a limited contribution to the country’s energy security but any means of saving gas is useful “in the current extremely uncertain situation,” according to an environmental economist at the IfW research institute in Kiel.

“The current crisis has not changed the medium to long-term usefulness of nuclear power,” Sonja Peterson from the Kiel, Germany-based institute said in an emailed statement. It “remains an expensive, risky and conflict-prone technology that does not fit into a power system based on renewable energies.”

Fortum Gets Help (8:20 a.m.)

Finnish utility Fortum Oyj got 2.35 billion euros ($2.3 billion) of bridge funding from the Finnish state to ensure adequate liquidity amid a continued increase in power prices and collateral requirements.

The liquidity facility is provided by Solidium Oy, the state’s holding company. Currently, Fortum has sufficient liquid funds to meet the collateral needs, it said. The arrangement cannot be used to cover collateral needs of its German subsidiary Uniper SE.

Goldman Sees 2 Trillion Euros Surge in Bills (8 a.m.)

The market continues to underestimate the depth and the structural repercussions of the unfolding energy crisis in Europe, Goldman Sachs analysts wrote in a note dated Sept. 4, saying they expect a EU2 trillion surge in energy bills for the bloc.

Read more: Can Europe’s $375 Billion in Relief Keep Households Warm Enough?

LNG Offers Rise After Price Spike (7:54 a.m.)

Liquefied natural gas suppliers are accelerating efforts to sell spot shipments in a bid to take advantage of a price spike after Russia shut a key pipeline. Australian, Malaysian and Egyptian exporters released LNG sale tenders this week for cargoes to be delivered in September and October, according to traders with knowledge of the matter. More shipments are being offered by majors including Shell Plc, they said.

German Toilet-Paper Maker Goes Insolvent (7:45 a.m.)

Hakle GmbH, a maker of toilet paper with a history dating back nearly a century, filed for insolvency because of higher energy and raw-material costs. The privately held company becomes one of the first consumer goods manufacturers to run into trouble because of the fallout from the crisis.

The restructuring, filed this month, will be overseen by the Dusseldorf-based company’s current management, Hakle said in a statement on its website.

German Factory Orders Fall for Sixth Month (7 a.m.)

German factory orders fell for a sixth month and by more than economists expected as inflation and uncertainty about energy supplies undermine Europe’s largest economy. Demand slipped 1.1% from June, driven by a slump in consumer goods, particularly pharmaceutical products, government data showed. Germany is reeling from a sudden increase in energy costs that’s weighing on manufacturing and derailing the services sector’s rebound from pandemic restrictions.

Swiss Government Grants Axpo Credit Line (7 a.m.)

The Swiss government has granted energy company Axpo a credit line of up to CHF 4 billion ($4.1 billion). The company, which produces and trades renewable energy, asked for the credit line but hasn’t used it yet.

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