EU energy windfall tax

The EU plans to raise €140bn from energy companies’ profits to soften the blow of record high prices this winter, which would amount to a levy in response to the crisis over Ukraine. A proposed windfall tax on power companies that do not burn gas, which has soared in price, would be accompanied by measures on fossil fuel groups. «In these times, it is wrong to receive extraordinary record profits benefiting from war and on the back of consumers,» said Ursula von der Leyen, European Commission president, as she outlined plans to funnel windfall profits back to households and businesses. «Profits must be shared and channelled to those who need it the most. »

The proposal would set a mandatory threshold for prices charged by companies that produce low-cost, non-gas energy, such as nuclear and renewables. Companies would have to give EU states the «excess profits» generated beyond this level, which the commission seeks to set at €180/MWh. Kadri Simson, the energy commissioner, said the commission’s class would cover the operating costs of lignite, a type of coal that is the costliest non-gas fuel. Von der Leyen said the EU also sought a «crisis contribution» levy from «major oil, gas and coal companies are also making huge profits».

The president said that energy ministers discussed a gas price cap last week and that Brussels would now start talks with specific suppliers.

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