BRUSSELS, Sept 30 (Reuters) – European Union countries agreed on Friday to impose emergency levies on the windfall profits of energy companies and began talks on their next move to tackle the energy crisis in Europe – maybe a block-wide gas price cap.
Ministers from the 27 EU member countries met in Brussels on Friday, where they endorsed measures proposed earlier this month to contain a spike in energy prices that is fueling record inflation and threatening recession.
The package includes a levy on the excess profits of fossil fuel companies made this year or next, another levy on the excess revenues that low-cost electricity producers make from soaring electricity costs and a mandatory 5% reduction in electricity consumption during peak periods.
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Once the agreement is reached, the countries began talks on Friday morning on the EU’s next measure to contain the price crisis, which many countries want to be a wide cap on gas prices, although others – especially Germany – remain opposed.
“All these temporary measures are fine, but in order to find the solution to help our citizens in this energy crisis, we have to cap the price of gas,” Croatian Economy Minister Davor Filipovic said upon arriving at the meeting. of Friday.
Fifteen countries, including France, Italy and Poland, asked Brussels this week to propose a price cap on all wholesale gas transactions to contain inflation.
The cap should be set at a level “sufficiently high and flexible to allow Europe to attract the necessary resources”, Belgium, Greece, Poland and Italy said in a note explaining their proposal seen by Reuters Thursday.
The countries disputed the Commission’s assertion that a wide gas price cap would require “significant financial resources” to finance emergency gas purchases if market prices were to rise above 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 arrive by pipeline without other easy buyers.
That would be just a fraction of the €140 billion the EU expects its levies on windfall profits from energy companies to rise.
But Germany, Austria, the Netherlands and others warn that wide gas price caps could prevent countries from buying gas if they cannot compete with buyers in global markets at competitive prices.
A diplomat from an EU country said the idea posed ‘risks to security of supply’ as Europe heads into a winter of tight energy supplies after Russia cut supplies. gas flows to Europe in retaliation for Western sanctions against Moscow for invading Ukraine.
The European Commission has also expressed doubts and suggested the EU should go ahead with tighter price caps, targeting only Russian gas, or specifically gas used for electricity generation.
“We need to come up with a price cap for all Russian gas,” said EU energy policy chief Kadri Simson.
Brussels suggested the idea earlier this month, but it was met with resistance from countries in central and eastern Europe, fearing Moscow would retaliate by cutting off the remaining gas it is still sending them.
By introducing EU-wide measures, Brussels hopes to overlay governments’ uneven national approaches to the energy crisis, which have seen richer European countries spend far more than poorer ones to hand out cash struggling businesses and consumers struggling with bills.
Germany, Europe’s biggest economy, on Thursday presented a 200 billion euro package to tackle soaring energy costs, including a curb on gas prices.
Luxembourg’s energy minister Claude Turmes has urged Brussels to change EU state aid rules to end the “crazy” spending race between countries.
“This is the next frontier, to get more solidarity and end these infighting,” Turmes said.
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Reporting by Kate Abnett and Gabriela Baczynska; Additional reporting by Philip Blenkinsop, Bart Meijer and John Chalmers; Editing by Jan Harvey
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