EU agrees windfall vitality agency tax — however break up on gas-price cap

“We’re in an vitality struggle with Russia. The winter is coming. We have to act now,” Czech Republic’s business minister Jozef Síkela, whose nation holds the EU council presidency, implored colleagues forward of the assembly.

The greenlighted proposal, which was negotiated in lower than a month, consists of obligatory energy financial savings, a cap on extra revenues from low-cost electrical energy producers resembling renewables and nuclear energy crops and a so-called “solidarity-contribution mechanism” for fossil-fuel extractors.

“It’s now essential that these steps are carried out shortly in order that they will begin having the meant impact,” mentioned vitality commissioner Kadri Simson.

Underneath the brand new guidelines, EU international locations can be obliged to scale back electrical energy consumption by 5 % throughout peak hours — i.e. when energy demand is at its highest.

Power ministers additionally agreed to briefly cap at €180 per megawatt-hour (MWh) the worth at which low-carbon electrical energy firms promote energy.

They argued that renewables and nuclear energy crops have made “unexpectedly massive monetary features over the previous months” due to the position of fuel as a price-setting mechanism for the ultimate value of electrical energy.

Regardless of criticism of the danger of making a patchwork of measures that would hinder funding in renewables, ministers launched some flexibilities for particular person member states. These embody the likelihood to set totally different and better caps for various kinds of electrical energy technology.

Lastly, the settlement additionally features a levy on fossil gasoline firms, protecting 33 % of taxable surplus earnings made in 2022 and/or 2023. Because of this fossil gasoline extractors’ windfall earnings from 2022 may be exempted from the market revenues cap.

The unique EU fee proposal says the solidarity contribution ought to be calculated over a three-year baseline ( 2019-2021), however governments have prolonged this to additionally cowl 2018.

That is seen by inexperienced teams as a “loophole” and a missed alternative to assist Europe’s most susceptible households and companies struggling to pay their hovering vitality payments.

“The EU and governments should tax all of those windfall earnings now, not subsequent 12 months. This cash is urgently wanted to guard probably the most susceptible individuals this winter,” mentioned Thomas Gelin, a campaigner from Greenpeace.

‘All eyes on Germany’

Limiting fuel costs is seen by many because the lacking piece of the puzzle.

“All these short-term measures are excellent, however to be able to discover the answer to assist our residents on this vitality disaster, we have to cap the fuel value,” mentioned Croatian financial system minister Davor Filipovic earlier than the assembly.

A rising refrain of member states is asking on the fee to come back ahead with a proposal to restrict the worth of fuel instantly — protecting all imported fuel, plus fuel traded inside the union. Supporters embody Belgium, France, Poland, Portugal, Romania, Slovakia, Slovenia, Greece, Italy and Spain.

“All eyes are on Germany,” mentioned Belgian vitality minister Tinne Van der Straeten forward of the assembly, hoping Berlin could assist the proposal. “Germany is being constructive,” she additionally mentioned.

The fee has argued {that a} value cap protecting each liquefied pure fuel (LNG) and pipeline provides can be troublesome to implement and will pose dangers to vitality safety.

Germany, Denmark and the Netherlands have voiced related considerations.

The fee is predicted to current an motion plan on value caps for fuel in mid-October.

Three concepts

In an off-the-cuff doc, the EU government has put ahead three concepts: setting a value cap on Russian fuel imports, negotiating a decrease fuel value with different suppliers like these positioned in Norway, and establishing a ceiling on the worth of fuel used to generate electrical energy within the EU market.

“Russia is a particular case. I consider we might impose a value cap on all of Russia’s imported fuel together with LNG. Nonetheless, some member states see this as a sanction, and we do not but have a consensus on this step,” mentioned Simson.

Nonetheless, some international locations should not satisfied by the proposal.

Van der Straeten mentioned {that a} cap on Russian fuel is not going to have a significant impression on shoppers’ payments, declaring {that a} majority of nations are asking for an intervention on the worth to have a direct answer for hovering payments.

The cap ought to be set at a degree that’s “excessive” and “versatile sufficient” to permit Europe to draw the required provides, Belgium, Greece, Poland and Italy argue in a notice explaining their strategy, seen by Reuters.

“A wholesale fuel value hole is a authentic possibility, but it surely requires a radical intervention available in the market, which implies that a number of non-negotiable circumstances must be met earlier than,” mentioned commissioner Simson. Considered one of these circumstances would require EU international locations to decide to saving fuel demand past the present voluntary 15-percent-reduction plan, she added.