The EU executive plans to raise around €140bn (£121bn) by imposing windfall taxes on energy companies’ “abnormally high profits” and redirecting proceeds to households and businesses struggling with soaring bills, the Guardian reports. Under the European Commission’s proposals, oil, coal, gas and refining companies would be required to contribute 33% of their taxable surplus profit for the 2022-23 fiscal year, the Guardian explains. In addition, “the commission wants EU member states to sign up to a legally binding target to cut electricity use by 10% overall and by 5% during peak hours, via efficiency campaigns and incentives”. In her annual state of the union speech in the EU parliament, Commission president Ursula von der Leyen said: “In these times it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of our consumers. In these times, profits must be shared and channelled to those who need it most,” reports Reuters
. EU countries will have to negotiate the Commission’s proposals and agree on final laws, notes another Reuters
article. The plan did not include an earlier idea to cap Russian gas prices, which had divided countries, the newswire says: “With gas price caps off the table, at least for now, some diplomats were optimistic that deals could be struck at a meeting of EU energy ministers on 30 September”.
reports that “British and Dutch gas prices rose” on the news of the omitted price cap. Bloomberg
reports that “the fever in European gas markets has eased in recent weeks, with prices falling about 40% as storage levels look healthy, painful industry shutdowns destroy demand and policymakers draw up emergency measures to help with the crisis”. In parallel, von der Leyen announced the creation of a new gas market benchmark to reflect the EU’s rapid shift from imported pipeline gas to liquified natural gas (LNG), reports Climate Home News
. “We have to diversify away from Russia,” von der Leyen is quoted saying, noting that pipeline gas supplies from Moscow have now fallen to 9% of EU gas consumption from around 40% last year. BusinessGreen
also has the story, while Politico
has five charts about von der Leyen’s speech. The Financial Times
reports that the US shale industry has warned it cannot rescue Europe with increased oil and gas supplies this winter. And the Daily Telegraph
reports that the head of the International Monetary Fund (IMF) has warned that Europe could face “some social unrest” if there is a cold winter.
The Financial Times
says the Commission is also proposing “a mandatory threshold for prices charged by companies that produce low-cost, non-gas energy, such as nuclear and renewables groups”. It explains: “Companies would have to give EU states the ‘excess profits’ generated beyond this level, which the commission seeks to set at €180 per megawatt hour. But member states would be free to put in place lower thresholds of their own. Energy commissioner Kadri Simson said the commission’s level would cover the operating costs of lignite, a type of coal that is the most expensive non-gas fuel.” Politico
describes the proposals for “deep reforms” of the EU electricity market as a “startling shift for the Commission”. It notes that “as recently as May, the Commission called the bloc’s electricity market “well-functioning”. It explains: “Countries like Spain and France, though, had long been calling for changes, slamming the current system’s so-called merit order, under which the electricity price is set by the last and most expensive input – usually natural gas. That means if gas becomes expensive, it raises all electricity prices, even those generated by much cheaper renewables. The worry in Brussels was that tinkering with the structure could undermine future investments in renewables and endanger the EU’s Green Deal goals.” At the same time, “the crisis created by the brinkmanship with Russia is having a serious impact on the EU”, say the Financial Times
Disrupted Times newsletter. It points to reporting elsewhere in the FT
that “industrial groups in the euro area suffered their biggest monthly fall in production for more than two years in July, underlining the impact of surging energy prices and supply chain bottlenecks on the region’s growth prospects”. The FT
‘s Lex column suggests what the EU “should do to ease the financial pain of a cold winter”. It picks out three measures: reducing demand for energy, better integrating Europe’s gas pipelines better and “delink[ing] renewable electricity prices from expensive gas”.
reports that the EU parliament voted yesterday “to raise the bloc’s targets to expand renewable power and save energy, backing proposals that had been made more ambitious in a bid to quickly end Europe’s reliance on Russian gas”. The newswire adds: “[The Commission proposals] will apply for a few months but over the longer term, Brussels is betting on a massive rollout of wind and solar capacity to provide cheap, locally generated power – improving Europe’s energy security and curbing greenhouse gas emissions. The Parliament backed a target to get 45% of EU energy from renewable sources by 2030, compared with 22% in 2020.” In France, president Emmanuel Macron’s government said it would spend a further €16bn to cap energy prices next year, on top of the €29bn it has already paid out, says the Times
. However, the cap will be lifted partially, leading to a 15% rise in electricity and gas prices next year, the paper adds. Politico
reports that the Eiffel Tower will turn off its flashing lights one hour earlier than usual as a “symbolic measure [that] is part of a broader energy-saving plan” for Paris. In the UK, the Independent
reports that prime minister Liz Truss “has come under renewed pressure to extend the government’s windfall tax on oil and gas giants” after the European Commission set out its plans. In Slovakia, Reuters
reports that loading of fuel has been completed for the long-delayed Mochovce 3 nuclear power plant, “making it one of the few new nuclear units to come online as Europe struggles with a power supply crunch”. And in Ukraine, prime minister Denys Shmyhal said the country has reached an agreement with the US on the supply of 2bn cubic metres of gas over the fourth quarter of 2022 and the first three months of 2023 to ensure “sufficient reserves” for the winter, reports Reuters