India-First-Global-Insights-Analysis -Sharing-PlatformIndia-First-Global-Insights-Analysis -Sharing-Platform

Windfall levies on energy firms approved

, October 3, 2022, 0 Comments

euro-eu-marketexpress-inAs energy prices continue to soar, EU member states are holding emergency negotiations on how to soften the blow for businesses and consumers.

European Union energy ministers on Friday agreed on a package of measures to help consumers and businesses amid soaring energy prices.

The ministers from the bloc’s 27 member states met to discuss measures proposed by the European Commission last week in an emergency meeting in Brussels.

The agreement was reached on “mandatory electricity demand reduction, cap on market revenues from inframarginal electricity producers and solidarity contribution from fossil fuels producers,” the presidency said in a tweet.

Czech Industry Minister Jozef Sikela, chair of the talks, said the EU is in an “energy war with Russia,” upon arrival at the emergency session. “The decisive battle will be this winter,” he said.

What was agreed?

Among the measures ministers agreed on was a windfall levy on profits of fossil fuel companies’ surplus profits made in 2022 or 2023.

Another temporary levy on excess revenues that low-cost power producers make from soaring electricity costs, and a mandatory 5% cut in electricity use during peak price period were approved.

The emergency measures could help raise $140 billion (€142 billion) that would be available to EU member states to help finance relief packages for consumers.

The text should be adopted next week and enter into force soon after.

Estonian Economic Affairs and Infrastructure Minister Riina Sikkut said “the most promising measure to actually bring down the average price is still the reduction of peak consumption.”

Sikkut said the hardship that may be faced by some European households this winter faded in significance when compared with the suffering of Ukrainians during the Russian invasion of their country.
“We can’t forget that we are in a situation of war. Ukrainians are paying with their lives, so we temporarily may pay higher bills or prices in the food store,” she said.

Gas price cap a sticking point

This week 15 countries, including France, Italy and Poland, asked Brussels to propose a price cap on wholesale gas transactions to contain inflation, but there is no consensus so far on the measure.

The European Commission has warned that such a cap could weaken the bloc’s ability to secure gas supplies on the global market as the region enters winter.

Those opposing a gas price cap include Germany and the Netherlands.