If the EU Commission has its way, not only the prices for Russian gas will soon be capped. Those energy companies that are currently making particularly high profits should also pay a solidarity levy. However, it is uncertain whether the member states will participate.
The EU Commission is pushing for a price cap for Russian gas. “We will propose a price cap for Russian gas,” said Commission President Ursula von der Leyen in Brussels. “The goal here is very clear,” said von der Leyen. “We must reduce Russia’s revenues, which (Head of State Vladimir) Putin is using to fund his savage war against Ukraine.” Since Russia halted supplies via Nord Stream 1, very little Russian gas has flowed to Europe via Ukraine and Turkey.
In addition, the EU Commission wants to relieve consumers with income from excessive profits from energy companies. “Low-carbon energy sources are currently making windfall profits that do not even begin to reflect their production costs,” von der Leyen said. “We want to divert these windfall gains to help particularly affected households and businesses adapt.” The same applies to “windfall profits” from companies that do their business with fossil fuels.
At present, the price of electricity in Europe is mainly determined by expensive gas-fired power plants, which are switched on to produce electricity due to the high demand. Since the price of gas has risen sharply against the background of the war in Ukraine, electricity has also become more expensive. Other energy companies that produce electricity more cheaply – for example from wind, solar or nuclear power – make big profits because they can also sell their electricity at the higher price. Part of these “chance profits” are to be skimmed off and used to relieve consumers.
As a further measure against the high electricity prices, von der Leyen suggested reducing electricity consumption during times of high demand. “We will propose a binding target for reducing peak-time electricity consumption.”
At the same time, one must support the energy supply companies, which are currently struggling with the enormous volatility of the markets, said von der Leyen. “We will update our state aid frameworks so that state guarantees can be provided swiftly in an emergency.” EU energy ministers will meet on Friday to discuss the various options.
