Energy Price Surge Prompts EU to "Consider Tax Rate Cuts and More"

(Photo by AP)

[Asia Economy Reporter Yujin Cho] European Union (EU) member states are considering measures such as reducing energy tax rates and providing subsidies for low-income households to respond to the sharp rise in energy prices, including gas and electricity.

According to AP News and others on the 6th (local time), Kadri Simson, the EU Commissioner for Energy, said, "Policy measures are necessary," and "We will propose gas market reform measures by the end of this year."

He added, "We are reviewing measures that can be quickly implemented under EU regulations, such as reducing energy tax rates and fully supporting subsidies for low-income households."

In Europe, energy prices surged as demand for natural gas, a major fuel for power generation, increased during the COVID-19 economic recovery while supply decreased. The EU relies on imports for about 90% of its natural gas demand from Russia and other regions.

Regarding the claim that Russia's supply restrictions are the main cause of the surge in European energy prices, Commissioner Simson said, "Russia's gas production restrictions, along with increased demand from China and export restrictions from Norway, can be major causes of this issue."

On this day, Spain's electricity price reached a record high, rising 26% from the previous day to 288 euros per megawatt-hour (MWh).

As a result, consumers have begun to feel the increase in electricity and heating bills, with low-income households particularly affected. There are also concerns that the surge in energy prices could slow economic recovery.

EU member states discussed the issue of rising energy prices as the top agenda item during the Environment Ministers' meeting and the European Parliament debate held on the same day. EU leaders gathered in Slovenia the day before also exchanged views on possible response measures.

The EU Commission plans to present response measures with member state governments next week and will also review whether the EU energy market's plan to shift toward eco-friendly energy is appropriate.

However, there are disagreements among member states about whether this issue should be handled by the EU Commission.

Spain and France are advocating for reforming EU electricity regulations to separate gas and electricity prices. Spain has also proposed that the EU jointly purchase and stockpile gas.

However, Svenja Schulze, Germany's Environment Minister, expressed skepticism, saying, "I am doubtful about attempts to influence the free market."

The Netherlands also holds the position that there should be no intervention in the electricity and carbon dioxide markets. Belgium responded that the idea of joint gas purchasing is difficult to accept.

This surge in energy prices occurred while the EU was preparing various policies to address climate change.

Hungarian Prime Minister Viktor Orban has pointed to the EU's climate change response plan, the "Green Deal," which aims for carbon neutrality by 2050, as a factor in the energy price surge and claims that the EU Commission bears some responsibility.

Germany and Spain's Environment Ministers countered that expanding renewable energy and transitioning to a decarbonized economy are solutions that can reduce dependence on fossil fuel imports and address the surge in energy prices.

This content was produced with the assistance of AI translation services.