Kathimerini Greece Newsroom
The European Commission plans to raise more than €140 billion to relieve consumers from soaring energy prices, according to Reuters, by "taking a chunk of the revenue from low-cost electricity producers and forcing fossil fuel companies to share their huge profits. The European Commission published its proposals yesterday at a time when the 27 member states are grappling with the nightmare of an energy crisis that spread after Russia's invasion of Ukraine.
Governments across Europe have already poured hundreds of billions of euros into tax cuts and the provision of subsidies and grants, trying to deal with the crisis caused by galloping inflation. "In these times, profits must be shared and given to those who need them most," Commission President Ursula von der Leyen told the European Parliament, adding that the plans aim to raise 140 billion euros for European member states to redirect and help businesses and consumers alike. EU countries need to negotiate the Commission's proposals and agree on their final aspects. As Reuters reports, the plan did not include the original idea of imposing a cap on Russian gas prices, but the Commission's proposals involve setting a cap of 180 euros/ megawatt-hour on the revenues of companies that generate electricity through wind, solar and nuclear power plants.
On the other hand, several energy companies doubt the funds that the Commission will raise, as several producers, as in the case of wind power, sell at a fixed price, which means that they do not enjoy the huge profits that result from the very high prices on the market. "Proposals to cap the revenues of both renewable energy providers and low-carbon electricity producers risk damaging investor confidence," pointed out Christian Ruby, secretary general of Eurelectric. Under the EU's plans, fossil fuel companies would pay a substantial tax to recover profits from the soaring prices caused by Russia's cut in gas supplies after its invasion of Ukraine. In particular, oil, gas, coal and refining companies will be required to contribute 33% of their additional taxable profit in the 2022 financial year, according to the EU proposals.
The Commission president stressed that Europe is working to establish a more reliable index for gas prices than the TTF, under which prices have risen to unsustainable levels, and suggested a mandatory reduction of electricity consumption by at least 5% during peak hours. Finally, he said that the EU is planning a reform of its energy market to decouple energy prices from the rising cost of gas.