EU countries approve energy revenue levies, linked to gas price caps

  • EU approves energy windfall levies
  • Countries are reviewing the gas price cap as the next step
  • States disagreed on how to maintain high prices

BRUSSELS, Sept 30 (Reuters) – European Union countries agreed on Friday to impose emergency levies on energy company windfalls and began talks on Europe’s next move to tackle the energy crisis – possibly capping gas prices across the bloc.

Ministers from the 27 EU member states met in Brussels on Friday to approve measures to contain a recession-threatening energy price hike that fueled record inflation earlier this month.

The package includes a tax on excess profits made by fossil fuel companies this year or next, another levy on excess revenue from rising electricity costs for low-cost power producers, and a mandatory 5% reduction in electricity use during peak price periods.

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With the deal in place, countries began talks Friday morning on the EU’s next step to contain the price crisis, with many wanting a broad gas price cap, though others, notably Germany, oppose it.

“All these temporary measures are very good, but in order to find a solution to help our citizens in this energy crisis, we need to limit the price of gas,” Croatian Economy Minister Davor Filipovic told a meeting on Friday.

Fifteen countries, including France, Italy and Poland, this week asked Brussels to propose a price cap on all wholesale gas transactions to prevent inflation.

Belgium, Greece, Poland and Italy said in a note outlining their proposal seen by Reuters on Thursday that the cap should be set at a level “high and flexible enough to attract the resources Europe needs”.

The countries disputed the Commission’s claim that a broad gas price cap would require “significant financial resources” to fund emergency gas purchases if market prices breach the EU cap.

Belgian Energy Minister Tinne Van der Straeten said only 2 billion euros ($1.96 billion) would be needed because most European imports are under long-term contracts or come by pipeline without easy alternative buyers.

This will be part of the 140 billion euros the EU expects to raise in income taxes from energy firms.

But Germany, Austria, the Netherlands and others warn that broad caps on gas prices could leave countries struggling to buy gas if they can’t compete with buyers in price-competitive global markets.

A diplomat from one EU country said the idea poses “security of supply risks” as Europe heads into a tight energy supply winter after Russia cut off gas flows to Europe in response to Western sanctions against Moscow for its intervention in Ukraine.

The European Commission has also raised doubts and suggested the EU move forward with narrower price caps, targeting only Russian gas or gas used specifically for electricity generation.

EU energy policy chief Kadri Simson said: “We should offer a price cap for all Russian gas.”

Brussels floated the idea earlier this month, but it faced resistance from central and eastern European countries, which worried Moscow would retaliate by cutting off the rest of its gas it still sends to them.

By introducing EU-wide measures, Brussels hopes to cover up governments’ uneven national approaches to the energy crisis, which has seen richer EU countries far outpace poorer ones in handing out cash to ailing companies and consumers struggling with bills.

Germany, Europe’s biggest economy, unveiled a 200 billion euro package on Thursday to tackle rising energy costs, including a cut in gas prices.

Luxembourg’s energy minister, Claude Turmes, has called on Brussels to change EU state aid rules to stop a “crazy” spending race between countries.

“This is the next frontier to get more solidarity and stop these infighting,” Turmes said.

($1 = 1.0182 euros)

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Reporting by Kate Abnett and Gabriela Baczynska; Additional reporting by Philip Blenkinsop, Bart Meijer, and John Chalmers; Edited by Jan Harvey

Our standards: Thomson Reuters Trust Principles.

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