a tax on the “super profits” of energy companies

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Winter is coming, and it will be a predictably harsh one. The crazy rise in the price of electricity and gas as a result of the Ukraine War is causing various measures in Spain —which are working and have made our country an example to follow— and in the European Union, which previously I considered them taboo. Now the European leaders have had a strong idea: if the energy companies are earning a fortune, we want our share.

€140 billion. That is what Brussels wants to collect, which wants to approve a regulation according to which a tax will be imposed on oil and gas companies of (at least!) 33% on their level of extra profits. The draft they have had access to media such as El País This is indicated, and reflects the extraordinary nature of the situation: the conservative Ursula Von der Layden, president of the European Commission, would probably have denied that something like this was possible a year ago.

energy war. Von der Leyden’s speech today in Brussels focused on Ukraine —a country that he will visit again soon— and on the energy war that Russia has proposed to Europe. “We are being put to the test,” declared the head of the European Commission.

Energetics, it’s enough to earn so much money. With this measure, Brussels aspires to cut the extra benefits of energy companies. The Russian supply crisis —it has fallen to 9% from 41% last year in the case of gas— has triggered its income, and with this new measure it will be possible to minimize the problem that has been created because, in his words “millions of Europeans need help.

Measures. The proposals, as indicated in somewhat more detail on Bloombergthere are several:

  1. Limit income from energy generation of renewable and nuclear companies to 180 euros per megawatt hour.
  2. Establish a temporary levy on companies in the oil, gas, coal and refinery sectors of at least 33% of their extra profits. Based on pre-tax profits in fiscal year 2022 that are more than 20% higher than the average of the three years starting in 2019. It is exceptional and temporary and it is up to Member States to apply it.
  3. Achieve a reduction in global consumption by 10% and a mandatory target of reducing demand during certain peak hours by 5%.

Immediate approval. These measures must be applied urgently, and the energy ministers of the member states already met urgently last week to refine the proposal. They are now expected to debate the final draft on September 30, whose approval could be approved soon after.

Burn coal, buy from Algeria, methane tankers: how Europe can reduce its dependence on Russia

The cap on gas works, but not for everyone. Although in Spain the measure of the cap on gas is being effective —in fine print— and several EU countries have also implemented it, others do not see it so clearly or want to implement it not only for Russian gas, but for any other gas. It seems that the maximum gas price has been dropped from the proposal in the draft proposal, and now the idea is to focus on getting prices down, helping the most vulnerable consumers and reducing consumption. In this last scope Spain has also been one of the first to act.

Image | parliament

Winter is coming, and it will be a predictably harsh one. The crazy rise in the price of electricity and…

Winter is coming, and it will be a predictably harsh one. The crazy rise in the price of electricity and…

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