BRUSSELS – European Union energy ministers on Friday adopted a package of measures to ease an energy crisis, including a levy on windfall profits of fossil fuel companies, but an agreement on capping natural gas prices that is supported by a majority of countries remained off the table.
With energy prices skyrocketing across Europe since Russia invaded Ukraine, the 27 EU countries reached a deal on proposals from the European Commission, which the bloc’s executive arm said could help raise $140 billion in relief for people and businesses hit by the crunch.
They backed a levy of at least 33% on the surplus profits of companies producing or refining oil, natural gas and coal. The two other main measures are a temporary cap on the revenue of low-cost electricity generators such as wind, solar and nuclear companies, as well as an obligation for EU countries to reduce electricity consumption by at least 5% during peak price hours.
Countries will be able to distribute the surplus money from the temporary revenue cap to households and small and medium businesses that have been hit hard. Rising energy prices are fueling inflation, which hit a record 10% this month in the 19 countries that use the euro, pushing Europe closer to recession and eroding people’s spending power.
The three measures approved Friday should be adopted next week and take effect soon afterward.
Estonian Economic Affairs and Infrastructure Minister Riina Sikkut said that “the most promising measure to actually bring down the average price is still the reduction of peak consumption.”
Sikkut underlined that any hardship this winter will be nothing compared with the price being paid by Ukrainians.
“We can’t forget that we are in a situation of war. Ukrainians are paying with their lives, so we temporarily may pay higher bills or prices in the food store,” she said.
The measures, however, will not have an immediate effect on the natural gas prices that have been running wild as Russia reduced its supplies to Europe in what European officials call blackmail for their support of Ukraine and sanctions against Moscow. Natural gas is used to heat homes, generate electricity and run factories.
“This is an immediate patch,” said Czech Industry and Trade Minister Jozef Sikela, who chaired the meeting in Brussels. “We need to continue our work. We are in an energy war with Russia, which also strongly affects our industry. Further urgent and coordinated EU action is needed."
According to the European Commission, Russian gas supplies to the EU declined by 37% between January and August this year.
Sikela said most of the energy ministers insisted on the urgent need for stabilizing the electricity market, notably by limiting the price of wholesale gas and its impact on electricity prices in the bloc. He also insisted on the need to accelerate common gas purchases.
A group of 15 member countries urged the European Commission to propose a cap on gas prices as soon as possible to help households and businesses struggling to make ends meet. The proposal was discussed during Friday’s meeting but has yet to gather unanimous support, with Germany notably blocking.
“The price cap that has been requested since the beginning by an ever-increasing number of member states is the one measure that will help every member state to mitigate the inflationary pressure, manage expectations and provide a framework in case of potential supply disruptions, and limit the extra profits in the sector," they said.
The commission has warned in an analysis that such a cap could weaken the bloc's ability to secure gas supplies on the global market. But it is open to the idea of introducing a price cap on Russian gas to mitigate the impact of the crisis while negotiating a lower price with other suppliers.
“A wholesale gas price cap is a legitimate option," said Kadri Simson, EU commissioner for energy. “We agreed with the member states that they will provide further input, and I think that it is also worth mentioning that on the commission side, we also expressed our readiness to develop an EU-level price cap for gas that is used for electricity production."
Simson added that the commission would likely make new proposals to deal with high gas prices before next week's informal meeting of EU leaders in Prague.