The European Union has this week agreed to impose a windfall tax on energy firms’ surplus profits and excess revenues made from higher electricity bills, akin to the UK’s Energy Profits Levy.
The taxes are part of a package of emergency measures to go toward supporting businesses and households with soaring bills, with the EU estimating it can generate €140 billion (£123 billion) in revenue from the taxes.
Meanwhile, the bloc is also introducing mandatory reductions in electricity usage as it seeks to transition away from relying on Russian energy sources.
The impact of Russia’s military incursion on Ukraine has made ripples throughout the global energy market as supplies have been stretched.
European Commission vice-president, Frans Timmermans, said: “The 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's energy blackmail.
“A cap on outsize revenues will bring solidarity from energy companies with abnormally high profits towards their struggling customers.”
However, a major sticking point for European politicians remains in how it plans to cap wholesale gas prices, with many EU member states divided on what approach Brussels should take.
15 EU members have this week asked Brussels to impose a price cap on gas bills, but a decision has not yet been taken.
Anna Moskwa, Poland’s climate minister, has said that the lack of consideration of gas prices in the windfall tax package came as a “major disappointment” and the threat of high gas costs “cannot be ignored.”
Photo by Anthony Indraus on Unsplash
