HomeBusinessEU countries approve energy windfall levies, turn to gas price cap

EU countries approve energy windfall levies, turn to gas price cap

  • EU approves levies on windfall profit energy
  • Countries are looking to gas price caps as their next step
  • States divided on controlling skyrocketing prices

BRUSSELS, Sept. 30 (Reuters) – European Union countries agreed on Friday to impose emergency tariffs on the snap profits of energy companies, and began talks about their next step to tackle Europe’s energy crisis – possibly a block-wide gas price cap.

Ministers from the 27 EU member states met in Brussels on Friday, where they approved proposed measures earlier this month to stem a rise in energy prices that is fueling record high inflation and threatening a recession.

The package includes a tax on the excess profits of fossil fuel companies made this year or next, another tax on excess revenue generated by low-cost electricity producers from rising electricity costs, and a mandatory 5% reduction in electricity consumption during peak price periods.

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Once the deal was finalized, countries began talks Friday morning about the EU’s next step to contain the price crisis. Many countries want a broad price cap for petrol, although others – especially Germany – are against it.

“All these temporary measures are very good, but in order to find the solution to help our citizens in this energy crisis, we must lower the gas price,” said Croatian Economy Minister Davor Filipovic, arriving at Friday’s meeting. .

Fifteen countries, including France, Italy and Poland, have this week asked Brussels to propose a price cap on all wholesale gas transactions in order to contain inflation.

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The cap should be set at a level “high and flexible enough to allow Europe to attract the resources it needs,” Belgium, Greece, Poland and Italy said in a note explaining their proposal released by Reuters on Thursday. seen.

The countries contested 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 via pipeline with no easy alternative buyers.

That would be a fraction of the 140 billion euros that the EU expects to increase with taxes on the windfall profit of energy companies.

But Germany, Austria, the Netherlands and others warn that broad gas price caps could cause countries to struggle to buy gas if they cannot compete with buyers in price-competitive global markets.

A diplomat from an EU country said the idea poses “risks to security of supply” as Europe faces a winter of tight energy supplies after Russia cut gas flows to Europe in retaliation for Western sanctions against Moscow for its invasion of Ukraine.

The European Commission has also expressed doubts, suggesting that the EU instead proceed with tighter price caps, targeting only Russian gas, or specifically gas used for electricity generation.

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“We have to offer a price cap for all Russian gas,” said Kadri Simson, the EU’s head of energy policy.

Brussels suggested that idea earlier this month, but it met resistance from central and eastern European countries, fearing Moscow would retaliate by cutting off the remaining gas it still sends to them.

By introducing EU-wide measures, Brussels hopes to overlap governments’ disparate national approaches to the energy crisis, which have left richer EU countries spending far more than poorer ones handing out cash to ailing businesses and consumers struggling with bills.

Germany, the largest economy in Europe, on Thursday prepared a package of 200 billion euros to tackle rising energy costs, including a brake on the gas price.

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, to get more solidarity and stop this infighting,” Turmes said.

($1 = 1,0182 euros)

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Reporting by Kate Abnett and Gabriela Baczynska; Additional reporting by Philip Blenkinsop, Bart Meijer and John Chalmers; Editing by Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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