The EU executive plans to raise about \u20ac140bn (\u00a3121bn) by imposing windfall taxes on energy companies\u2019 \u201cabnormally high profits\u201d and redirecting proceeds to households and businesses struggling with soaring bills.<\/p>\n
Announcing long-awaited emergency measures to tackle the rising price of electricity, the EU official in charge of the green transition, Frans Timmermans, said the plans were a necessary response to energy supply shortages and high prices.<\/p>\n
\u201cThe era of cheap fossil fuels is over. And the faster we move to cheap, clean and homegrown renewables, the sooner we will be immune to Russia\u2019s energy blackmail,\u201d he said.<\/p>\n
Fossil fuel extractors will be asked by the EU to give back 33% of taxable surplus profits for the 2022 fiscal year, in a move that could pile pressure on Liz Truss to reverse her decision not to extend the UK\u2019s windfall tax on oil and gas companies, which is set at 25%. Truss has ruled out extending the \u00a35bn windfall tax on energy companies introduced by the former chancellor Rishi Sunak.<\/p>\n
In a further sign of the UK\u2019s post-Brexit divergence, the new prime minister has also stopped short of asking consumers and businesses to reduce their energy use over the winter.<\/p>\n
In contrast, 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.<\/p>\n
The plan mirrors an already agreed voluntary target of cutting gas consumption by 15% until the end of spring 2023. \u201cDemand reduction helps rebalance the energy market, lower energy bills, reduce emissions and makes us immune to Russia\u2019s gas games. Without demand reduction, it is not going to work,\u201d Timmermans said.<\/p>\n
Announcing further details of its long-trailed energy plan, the commission wants oil and gas companies to pay the 33% \u201csolidarity contribution\u201d on their profits, although EU member states would be free to set higher levies. Low-carbon electricity generators, such as wind, solar and nuclear firms, would have their revenues capped at \u20ac180 per kilowatt hour, which is less than half current market prices.<\/p>\n
These firms have enjoyed a profits bonanza as their revenues are linked to the price of expensive oil and gas. \u201cA cap on outsize revenues will bring solidarity from energy companies with abnormally high profits towards their struggling customers,\u201d Timmermans said.<\/p>\n
EU officials expect to raise \u20ac25bn from the tax on fossil fuel producers, while the cap on low-carbon firms is expected to raise \u20ac117bn. The revenues could be recycled to consumers as direct rebates, to fund insulation and other efficiency measures or the switch to low-carbon technologies.<\/p>\n
Both measures are in effect windfall taxes, although the commission avoids this term because of political sensitivities. The plans are to be discussed by the bloc\u2019s 27 energy ministers at the end of the month, with pressure for a quick approval of the law before winter.<\/p>\n
Campaigners at Oxfam urged member states to set windfall taxes at \u201cat least 50% and up to 90%\u201d to spare \u201cordinary people from skyrocketing energy bills, which are only set to get worse this winter\u201d.<\/p>\n