- EU approves tax on energy windfalls
- Countries see gas price caps as the next step
- States are divided over how to contain skyrocketing prices
BRUSSELS, Sept 30 (Reuters) – European Union countries agreed on Friday to impose emergency levies on energy companies’ windfall profits and began talks on their next step to tackle Europe’s energy crisis, possibly a block-wide cap on gas prices.
Ministers from the 27 EU member states met in Brussels on Friday, where they approved measures proposed earlier this month to contain a surge in energy prices that is fueling record inflation and threatening a recession .
The package includes a levy on surplus profits from fossil fuel companies made this year or next, another levy on excess revenue that low-cost power producers get from rising electricity costs and a mandatory 5% cut in electricity use during peak periods.
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After the deal was struck, the countries began talks on Friday morning on the EU’s next measure to contain the price crisis, which many countries want to be a broad cap on gas prices, although others, especially Germany, remain opposed.
“All these temporary measures are very good, but to find the solution to help our citizens in this energy crisis, we have to limit the price of gas,” Croatian Economy Minister Davor Filipovic said upon his arrival at the meeting of Friday
Fifteen countries, including France, Italy and Poland, this week asked Brussels to propose a price cap on all wholesale gas transactions to contain inflation.
The cap should be set at a level “high and flexible enough to allow Europe to attract the necessary resources,” Belgium, Greece, Poland and Italy said in a memo outlining their proposal seen by Reuters on Thursday.
The countries disputed the Commission’s claim that a broad gas price cap would require “significant financial resources” to finance emergency gas purchases if market prices breached the EU cap.
Belgian Energy Minister Tinne Van der Straeten said only 2 billion euros ($1.96 billion) would be needed as most European imports are under long-term contracts or arrive by pipeline without buyers easy alternatives
That would be a fraction of the €140 billion the EU expects to raise from its windfall taxes on energy companies.
Czech Deputy Prime Minister Jozef Sikela and European Energy Commissioner Kadri Simson hold a press conference after a meeting of European Union energy ministers on high energy prices, in Brussels, Belgium on September 30, 2022. REUTERS/Yves Herman
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But Germany, Austria, the Netherlands and others warn that broad caps on gas prices could leave countries scrambling to buy gas if they can’t compete with buyers in price-competitive global markets.
A diplomat from one EU country said the idea posed “security of supply risks” as Europe faces a winter of tight energy supplies after Russia cut gas flows to Europe in retaliation for Western sanctions against Moscow for invading Ukraine.
The European Commission has also raised doubts and suggested that the EU move forward with lower price caps, targeting only Russian gas, or specifically gas used for power generation.
“We must offer a maximum price for all Russian gas,” EU energy policy chief Kadri Simson said.
Brussels suggested the idea earlier this month, but it hit resistance from central and eastern European countries worried Moscow would retaliate by cutting off the remaining gas it still sends them.
By introducing EU-wide measures, Brussels hopes to overcome governments’ uneven national approaches to the energy crisis, which have seen the EU’s richest countries spend far more than the poorest when it comes to delivering cash to businesses and consumers with bill problems.
Germany, Europe’s largest economy, unveiled a 200 billion euro package on Thursday to deal with rising energy costs, including a gas price brake.
Luxembourg’s energy minister, Claude Turmes, urged Brussels to change EU state aid rules to stop the “insane” spending race between countries.
“That’s the next frontier, getting more solidarity and stopping these infighting,” Turmes said.
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Reporting by Kate Abnett and Gabriela Baczynska; Additional reporting by Philip Blenkinsop, Bart Meijer and John Chalmers; Edited by Jan Harvey
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