We’re signing off for tonight and will be back for more coverage from the summit on Friday. 

We’re signing off for tonight and will be back with more live coverage on Friday. 

EU leaders discussing amended draft conclusions

EU leaders are still discussing the draft conclusions, while adding some amendments, an EU official said.

They're hopeful that they will reach a conclusion tonight and are focusing on conclusions related to the energy crisis and economic situation.

17D, the conclusion leaders are likely to debate the most

The most scrutinised documents at summits are conclusions, which are first drafted by ambassadors and sherpas in the days ahead of the gathering.

They outline specific issues of concern or goals that leaders have agreed on. 

Multiple EU diplomats have said that 17D will be the most difficult for leaders to reach consensus on. It pertains to the possible extension of the so-called Iberian model to the rest of the bloc.

In the last draft of the conclusions, the article reads that the Council agrees to task the Commission to urgently work on assessing the impact of "a temporary EU framework to cap the price of gas in electricity generation at a level that helps bring down electricity prices without modifying the merit order, prevents increasing gas consumption, addresses the financing and distributional impacts and manages flows beyond the EU’s borders."

Leaders have each spoken about energy

Each of the 27 leaders have now voiced their opinions and concerns over the energy proposals outlined by the Commission, Euronews understands.

They will now take a break for dinner with discussions on energy to resume afterward.

The topic is so technical that leaders are not expected to take any decisions on any of the proposals at this summit. Instead, they are expected to reach a consensus on what measures they favour and ask the Commission to do some further work on it.

It will then be up to ministers to hammer out the finer details during Energy Council. 

Ministers have met three times since the beginning of September and are scheduled to gather again on Tuesday (September 25). 

Scholz under scrutiny over €200-billion aid programme

This is the first EU summit for German Chancellor Olaf Scholz since his government announced a massive €200-billion financial scheme to help German citizens and businesses cushion the pain from soaring gas bills.

The plan, described by Scholz as a "defensive shield," is meant to introduce emergency price brakes for gas and electricity consumption. It will run for three years.

Although other countries have expressed sympathy towards Germany, a country that was highly dependent on Russian gas and is now scrambling to find alternative suppliers, the €200-billion plan ruffled feathers and raised concerns over possible distortions across the single market. Inevitably, it exposed the gap between wealthy and debt-ridden countries.

European Commission Ursula von der Leyen has not openly criticised Berlin but has insisted that without a common European solution, the bloc risks fragmentation. “It’s important that all member states are able and have the fiscal space to invest in this [green] transition,” von der Leyen said on Thursday.

As a result, some voices have begun calling for a new issuance of EU debt, following the example of the €750-billion recovery fund agreed in 2020 to fight the pandemic. Another possible model is SURE, the €100-billion programme of cheap loans that helped preserve jobs during the lockdowns.

But some member states, like Germany and the Netherlands, are resisting the issuance of more EU debt and think the bloc should instead focus on the cash that is still available.

“A good part of the funds in the recovery fund have not yet been used and they are also designated for what is necessary now, investing in infrastructure, fighting climate change, investing in renewable energies and so on,” Scholz said on Thursday.

Russia creating 'large-scale disaster' in southern Ukraine: Zelenskyy

In his address, which was described as emotional by an EU source, Zelenskyy also warned EU leaders that "Russia is deliberately creating the basis for a large-scale disaster in the south of Ukraine."

"We have information that Russian terrorists mined the dam and units of the Kakhovka hydroelectric plant. This is one of the large power facilities. The dam of this hydropower plant holds about 18 million cubic meters of water. If Russian terrorists blow up this dam, more than 80 settlements, including Kherson, will be in the zone of rapid flooding. Hundreds of thousands of people could be affected," he said.

This would also deprive the Zaporizhzhya nuclear power plant of cooling water, Zelenskyy said. 

Third of Ukraine's energy infrastructure destroyed: Zelenskyy

The Ukrainian leader told EU leaders virtually that "attacks by Russian cruise missiles and Iranian strike drones have destroyed more than a third of our energy infrastructure."

"Russian terror against our energy facilities is aimed at creating as many electricity and heat problems as possible for Ukraine this fall and winter and for as many Ukrainians as possible to go to your countries," he went on. 

He called on Western allies to send more "anti-aircraft and anti-missile defence" systems to Ukraine so that it can defend its critical infrastructure.

He also renewed calls for more sanctions on Russia, Iran and Belarus. 

The EU has so far rolled out eight different packages of restrictive measures against Russia for its illegal and unprovoked war against Ukraine and on Thursday slapped sanctions on three Iranian individuals and one entity responsible for drone deliveries to Russia. 

"It is good that there is already a first step: new individual sanctions against Iranian figures and companies have been approved. But a few individuals and companies are not only responsible. We need more systematic steps," he told leaders. 

EU leaders debate first-ever cap on gas prices

Among the energy proposals currently on the table, one stands out: an EU-wide cap on gas prices. But this is not the ambitious price cap on all gas imports, as some member states have demanded, and instead resembles an emergency backstop.

The measure, as suggested by the European Commission, would apply to transactions taking place at the Dutch Title Transfer Facility (TTF), Europe’s leading hub, and other similar venues.

Prices at the TTF reached a record-breaking high of €349 per megawatt-hour in August and then began a steady downward trend. Trading on Wednesday closed at €112.

The proposed cap would act as a ceiling and effectively limit the maximum gas price at which the TTF is allowed to trade. The ceiling is expected to be wide and would be triggered only in cases of extreme speculation and volatility, as the ones we saw in August. Think of it as a “pricing correction mechanism.”

The measure, which is under development, would be in place until the EU sets up a new trading hub only for liquefied natural gas (LNG). The Commission thinks that the TTF is overly influenced by pipeline gas and therefore vulnerable to the Kremlin’s energy manipulation.

What exactly is the Iberian model?

Another topic of conversation this evening will be the so-called Iberian model, or Iberian exception. This system was introduced by Spain and Portugal to lower electricity prices for consumers. So how does it work?

In short, Spain and Portugal have launched an €8.4 billion subsidy programme to partially finance the price that power plants pay for gas. The difference between the real market price of gas (which has been very high since Russia launched the invasion of Ukraine) and the capped price of gas is paid by the government.

The cap is a direct grant to power producers to help them pay for the expensive fuel they need to run their plants. This allows plants to offer electricity at more affordable prices for households and companies. The system was approved in early June and will run until May 2023.

The European Commission has said it is studying a possible extension of this Iberian model to the entire EU territory. But the idea carries high risks. How costly will an EU-wide state-aid programme be? How can the EU prevent cheap electricity from leaking outside its borders? How can the Iberian model apply to countries with different energy mixes? How much will gas consumption increase if customers see that prices are artificially capped?

Countries like Germany, Belgium and the Netherlands have indicated that, for various reasons, this model will not be appropriate to tackle their energy problems.

Joint gas purchases and price cap not in Hungary's interests: Orban

The Hungarian Prime Minister has said that "it is not in our interest to impose common energy procurement, nor is it to use a common EU price cap."

In comments relayed by his spokesman, Zoltan Kovacs, Viktor Orban said his objection is "because in this case the contracts on which the gas supplies to Hungary are to be delivered would be invalid and Hungary would remain without energy supply."

Budapest announced in late August that it had signed a new contract with Russia's Gazprom for gas deliveries. This was despite the bloc's attempts to drastically cut its dependence on Russian gas to deprive the Kremlin of funds to wage its war in Ukraine.  

Green Energy Corridor: What we know so far

More detail is emerging from this new deal between France, Spain and Portugal.

The underwater pipeline between Barcelona and Marseille should measure about 360 kilometres. 

It would likely carry both gas and hydrogen, with a maximum 15% of gas, according to a European diplomat. 

The deal also plans for work on electricity interconnections between the Iberian peninsula and France to be accelerated. Work on the Bay of Biscay electricity interconnection is under way while another, in the Gulf of Lion, is now being discussed. 

A working group is being set up to work on feasibility studies with leaders to meet again in Alicante on December 9 to finalise the agreement.

The aim is to put in a bid for EU funds with the Commission as a Project of Common Interest before the end of the year. 

Scholz and Macron to meet in Paris next week

German Chancellor Olaf Scholz will travel to Paris on Wednesday to meet with Emmanuel Macron, the Elysée has announced. 

The bilateral meeting is to be held on the day the two governments were first scheduled to meet before being postponed to January. 

No date has yet been confirmed for the ministerial council but it is likely to be held around the 60th anniversary of the Élysée Treaty signed by West German Federal Chancellor Konrad Adenauer and French President Charles de Gaulle and which established a new relationship between the two countries. 

What is the new project decided by France, Spain and Portugal?

Spain and France have struck a new deal to build an underwater gas pipeline from Barcelona to Marseille, cancelling a long-stalled pipeline project that would have connected the countries through the Pyrenees.

The pipeline will allow Spain and Portugal, two leading importers of liquefied natural gas (LNG), to bring their excess supplies to France and other European countries.

LNG has become the go-to commodity to replace the vast volumes of Russian gas that the Kremlin has cut off since launching the invasion of Ukraine.

The European Union is trying to secure as much LNG as commercially possible in order to make it through the winter without major power blackouts or gas rationing.

The deal was announced on Thursday by Spanish Prime Minister Pedro Sánchez, French President Emmanuel Macron and Portuguese Prime Minister António Costa, ahead of an EU summit in Brussels, where the energy crisis will be the top topic.

Read more about the project from Euronews reporters Jorge Liboreiro and Aida Sanchez Alonso.

Metsola says it is 'time for action' on energy crisis

Roberta Metsola, president of the European Parliament, called for action on the energy crisis, saying that EU countries needed to come together as they did in the COVID-19 pandemic and in reaction to the war in Ukraine.

Speaking at a press conference at the EU Council summit, Metsola said EU countries needed to be coordinated and act with solidarity.

She added that the EU budget is not flexible enough to respond to crises, saying it is "simply out of date". She said that the 7-year budget had been overtaken by events.

Metsola also said that Ukraine needed to be at "full centre of what we do", saying Europe needed to act with speed and unity.

"We need to increase sanctions. We need to provide heavy weaponry and air defence systems and we need to plan for continued financial support," she said.

Macron and Scholz meet as rumours of rift swirl

The Elysée said in a statement that "this meeting was part of the two leaders' constant desire to maintain close coordination between France and Germany on the European stage, as well as in bilateral and foreign policy matters."

They discussed the energy situation, the need to bring energy prices down and retain European unity.

On the bilateral relationship, often described as the motor of Europe, and which is believed to have cooled since Scholz's arrival at the chancellery, over divergences in defence and security as well as energy policies. 

The French and German governments were scheduled to meet next week for their annual ministerial council but this was postponed again to January. 

According to the French presidential palace, the two leaders "agreed to encourage the continuation of discussions between French and German ministers so that the next Franco-German Council of Ministers is as substantial and ambitious as possible, and that a new date can be set quickly."

"They reaffirmed their common ambition on several strategic aspects of the bilateral relationship, and expressed their confidence that the ongoing discussions will lead to a profound strengthening of the partnership," the statement read. 

What's the EU's economic situation? 

The euro area's economy is now expected to grow by just 0.5% in 2023 as factors including the war in Ukraine, record inflation and the continued impact of the COVID-19 pandemic weigh on the outlook, the International Monetary Fund said earlier this month. 

Germany, the European Union's economic powerhouse, is now expected to post negative annual growth (-0.3%) as is Italy (-0.2%). The outlook for France and Spain remains positive although lower than the July forecast with annual GDP now seen at 0.7% and 1.2% respectively. 

READ MORE HERE. 

Why are gas prices so important to electricity prices?

Currently, the EU's wholesale market is a system of marginal pricing. That means that all electricity generators get the same price for the power they are selling at a given moment.

But the price of electricity varies widely depending on the energy source used to generate it: the cheapest being renewable energy sources while fossil fuels are much more expensive.

National electricity producers make their bids on the market and the bidding goes from the cheapest to the most expensive energy source with everybody obtaining the price of the last producer from which electricity was bought, according to the European Commission.

Proponents say this model is the fairest and is cheaper for consumers in the long run.

WATCH OUR REPORT ON THIS HERE. 

Irish Taoiseach says 'stability is important' in reaction to Truss' resignation

Irish Taoiseach Micheál Martin said it had been "very difficult time for the British PM given all that’s happened."

"We would like to see the UK system within its capacity to be in a position to have a successor selected as quickly as possible," he added.

He added that "stability is important during these times when a major war is underway on the continent of Europe."

More work needed on Iberian model and flexible cap on gas price: Rutte

Dutch Prime Minister Mark Rutter told our reporter, Meabh McMahon, that the 27 member states agree on "a lot of practical solutions" to curb gas prices.

They should agree, he said, on proposals for joint purchases and the creation of a new benchmark that would take imports of LNG rather than pipeline gas.

But he said that other proposals need to be "studied further" such as the extension of the so-called Iberian model -- under which the price of gas used in the production of electricity is capped -- to the rest of the bloc and the dynamic price limit. 

"We have to really assess and we can do that quickly," he assured. 

Macron on Liz Truss: 'I'm always sad to see a colleague leave'

Emmanuel Macron said that he was personally always "sad to see a colleague leave" in response to UK PM Liz Truss' resignation but that he hoped that Britain would find "political stability".

He added that in the context of the war and energy crisis, it is important that "Great Britain quickly regains political stability."

Meanwhile, European Commission President Ursula von der Leyen refused to comment.

“Today is the European Council and that’s everything I’m commenting on,” von der Leyen said after the first question she received upon arriving at the summit was about Truss.

The Commission chief then left without taking any more questions from reporters. 

EU must boost investments in SMEs: VDL

Ursula von der Leyen said that to support the economy, it is important to boost "European investment in SMEs and in businesses in order to give every country the possibility to manage the transition that we have ahead."

One way, she said, would be to boost RePowerEU, the €210 billion fund to accelerate the energy transition in the bloc. 

She emphasised investments in energy infrastructure, arguing that it will enable member states "to get into an economy that is future-proof and that is more independent".

"It's important that all member states are able and have the fiscal space to invest in this transition," she went on. 

Meanwhile in the UK...Liz Truss has resigned

UK Prime Minister Liz Truss has resigned after being in office for just 45 days.

She said there will be another leadership election for the ruling Conservative Party, which will decide who succeeds her in Downing Street.

Follow our latest coverage on what's happening in the UK.

Important to send 'a very strong signal', says EU Council President Charles Michel

EU Council President Charles Michel said that the proposals on the table for energy and conclusions provide "a good balance" in order for EU countries to reach an agreement today.

He said that it was important to send "a very strong signal that we are determined to work together in order to have a possible impact" on families, households and businesses struggling during the crisis.

Michel added that EU countries will speak about the war in Ukraine and continue to find ways to support the country.

An exceptional situation needs and exceptional response, he added.

New Green Energy Corridor is 'very good news' for Europe: Sanchez

The new project to replace the Midcat initiative will enable Spain, a leading importer of liquefied natural gas (LNG), to share its vast supplies with France and the rest of Europe, the Spanish Prime Minister explained.

The three countries expect the pipeline to carry green hydrogen sometime in the future. 

“This is very good news for Europe,” Sánchez told reporters in Brussels.

Asked about the EU summit’s packed agenda, the Spanish leader said he was willing to spend a long night discussing the energy crisis with his fellow leaders, including with his “good friend” Mark Rutte, the Dutch PM.

“I’d be delighted to have breakfast with him [tomorrow],” Sánchez quipped.

MidCat project formally abandoned: Macron

The French president announced that following meetings with his Spanish, Portuguese, and German counterparts, the MidCat project has been dropped.

Spain and Germany had both lobbied for the construction of a gas pipeline between their two countries through France which Paris had been firmly against.

Instead, the three leaders agreed on a new project, a "green energy corridor" between Barcelona and Marseille, which he said would fulfill the wish from Spain and Portugal to be better interconnected with the rest of the continent and the bloc's overall objective to transition away from fossil fuels. 

Macron announced that he will travel to Spain in December to "finalise this project which is intended to benefit from European funds". 

Lithuania in support of new sanctions against Russia: President

Gitanas Nausėda told reporters that "our sanctions, unfortunately, did not bring so far the results we expected."

"This is the reason why we have to discuss, consider the next sanction package and we are clearly in support of this," he added. 

He also voiced support for the creation of a special tribunal for war crimes committed in Ukraine that would target Russia but also Belarus. 

On energy, he stressed "the importance of a level playing field and fair competition".

"I am cautiously optimistic," that an agreement can be found on how to curb gas prices, he went on.

"Fifteen countries already expressed willingness very clearly but, of course, we have to find the common denominator," he said. 

'Large majority' agree with Commission proposals: Belgium

According to Belgian Prime Minister Alexander De Cross, "today all the pieces of the puzzle are in the table".

"A very large majority of countries" agreed with the proposals unveiled earlier this week by the Commission, he added, pointing out however that some countries remain concerned about the impact these could have on the security of supply. 

"If we want to show that as European countries we are capable of acting as a union, now is the time to do so," he stressed. 

'No magical solutions' to high gas price: Latvian PM

Arturs Kariņš told reporters upon arrival at the summit that there is "no magical solution" to high energy prices, stressing the bloc's dependence on imports from abroad. 

"The answer is to work together," he added, highlighting that "right now we’re at the stage where every member state is fending for itself."

"That’s not enough. The next level is to see what the Union can do as a whole," he went on, describing the Commission's proposal to curb gas prices as "the best on the table right now". 

"Maybe the (leaders') positions won’t all gel today and tomorrow, maybe it will take a few more weeks," he warned. 

EU ambassadors agree to impose sanctions on entities supplying Iranian drones to Russia

Ambassadors agreed on Thursday morning to freeze the assets of three individuals and one entity responsible for drone deliveries to Russia.

Russia has used the Iranian-made Shahed-136 so-called suicide drones in recent weeks to target Ukrainian infrastructure, including power stations.

Kyiv has called for more sanctions against Tehran.

Hello and welcome to Euronews' EU Council live blog. Follow here for updates throughout the day on the leaders' summit.