Pedro Sánchez heads off on holiday tomorrow. | Chema Moya

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Spain will send a proposal to the European Union on limiting carbon emission permit prices in a bid to curb energy price increases and their effects on inflation, Prime Minister Pedro Sanchez told a news conference today.

Spain will propose "a new intervention on the energy market with a price cap to the CO2 emission price," Sanchez said, adding his government will also send the EU a proposal to "reform the electricity market".

"These are measures that are going to help bend the inflation curve and benefit Spain and Europe," Sanchez said.

The prime minister also said his government will present a new energy saving plan on Monday but declined to give further details.

The pricing of carbon permits is designed to make polluters bear a cost proportional to their CO2 emissions as an incentive to reduce emissions. The more expensive the permits, the heftier the incentive.

Following the war in Ukraine, Europe has struggled to manage rising gas and power prices as it navigates a new energy situation amid fears of further gas flow cuts from Russia.

Earlier this week, EU's energy ministers agreed on emergency gas curbs as the 27 members braced themselves for further supply cuts from Russia.

The decision established a voluntary cut in gas use of 15% in the August-March period with exceptions for countries who either has a limited ability to export gas or who can show it has sent on most of the gas it can to other EU members.

Following the decision, Spain urged its citizens to be mindful of their energy consumption but said it was not planning to enforce energy cuts.

In May, the government approved a temporary cap on the reference price of natural gas and coal to alleviate the economic effects of the war on its population.