Vitality market reforms embrace the taxation of vitality firms and decoupling fuel costs from total electrical energy payments.
Ursula von der Leyen, the president of the European Fee, has unveiled a legislative proposal to impose windfall levies price $140bn on vitality firms, in a bid to minimize the consequences of surging fuel and electrical energy costs that threaten economies and households this winter.
In her State of the European Union speech addressing the plenary session of the European Parliament in Strasbourg, von der Leyen outlined a structural reform of the European vitality market that has been below critical pressure following Russia’s invasion of Ukraine.
“In these occasions, earnings should be shared and channelled to those that want it probably the most,” von der Leyen stated, explaining that paying payments has change into “a supply of hysteria for hundreds of thousands of companies and households” after fuel costs have risen 10 occasions prior to now two years.
Her speech got here after Russia stated earlier this month it will not reopen its predominant Nord Stream 1 pipeline to provide Europe – the most recent in a string of provide cuts, which Moscow blames on Western sanctions imposed over its invasion of Ukraine.
The European Fee proposes to cap the revenues of firms that produce electrical energy at low prices, which is able to “elevate greater than €140bn ($140bn) for member states to cushion the blow instantly”, von der Leyen asserted.
Fossil gasoline firms can even have to provide a “disaster contribution” due to their “enormous earnings”, she added from the French metropolis.
EU vitality ministers are because of meet on September 30 to debate the fee’s proposals.
A draft legislation seen by dpa information company would impose a income cap of 180 euros ($180) per megawatt hour (MWh) on firms that generate electrical energy from cheaper sources than fuel, together with renewables, nuclear or coal.
As an necessary distinction from her earlier proposals, von der Leyen dropped the concept of limiting the worth of pure fuel, however she promised to “preserve engaged on decrease fuel costs”.
“We’ve to decouple the dominant affect of fuel on the worth of electrical energy,” she stated, suggesting as a substitute a “deep and complete reform of the electrical energy market”.
Electrical energy costs within the EU have risen sharply because of excessive fuel costs, as electrical energy costs are decided by the most costly vitality supply wanted for its manufacturing.
Thomas O’Donnell, a lecturer on the Hertie Faculty of Governance, described von der Leyen’s proposal as making “excellent sense” as “a wartime measure”.
“Should you want extra electrical energy, you purchase the best worth gasoline, and proper now that’s pure fuel,” he instructed Al Jazeera. “It’s astronomically excessive, in order that pushes up the worth of all the electrical energy, and all the firms get that prime worth”.
The European Fee desires to “take that away, particularly from nuclear and renewable firms, and distribute it to shoppers who should pay these excessive costs – and in addition to sure firms who’re below the specter of going bankrupt”, O’Donnell stated.
The draft EU proposal additionally referred to as for a compulsory goal for nations to chop electrical energy consumption this winter, in a transfer geared toward making certain Europe has sufficient gasoline to final the colder months.
In her speech, von der Leyen additionally stated the European Fee would authorise momentary state support for European companies to steadiness the consequences of risky vitality markets.
Addressing the broader context of challenges for the European financial system, she pressured the bloc needed to safe its personal provide of lithium and different uncommon earth parts as a result of “quickly they may change into extra necessary than oil and fuel.”