EU Windfall Tax Introduction Plan... Discussed at Energy Ministers' Meeting
Ursula von der Leyen, President of the European Commission (EU)
Photo by Reuters-Yonhap News
[Asia Economy Reporter Park Byung-hee] Major foreign media reported on the 6th (local time) that the European Union (EU) plans to impose a windfall tax on energy companies making huge profits due to the rise in crude oil and natural gas prices caused by the Ukraine war.
According to officials, a plan to tax the excess profits enjoyed by fossil fuel producers and carbon-emitting power companies due to rising electricity prices will be discussed at the EU Energy Ministers' meeting on the 9th. Energy ministers are also expected to discuss ways to support consumers and households with the revenue collected from the windfall tax.
As Russia has cut off natural gas supplies to Europe, the current natural gas price in Europe has risen more than 12 times compared to a year ago. Europe's electricity prices have also surged, linked to natural gas prices.
Ursula von der Leyen, President of the EU Commission, pointed out that electricity bills are astronomical. President von der Leyen stated that the Commission will propose a windfall tax separately from measures to reduce electricity consumption. She also said that the Commission is cooperating with member states to support power producers in securing sufficient liquidity.
The EU Commission plans to revise related regulations to quickly process member states' requests to support power companies. Previously, the EU relaxed related regulations to allow member states to quickly support companies affected by the COVID-19 pandemic and the Ukraine war.
The Commission is also expected to revise energy market trading regulations. Measures under consideration include recognizing assets other than cash as collateral for electricity futures trading and expanding companies' credit limits in crisis situations.
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President von der Leyen argued that the bad war triggered by Russian President Vladimir Putin is testing the unity and cohesion of the EU, and if the EU strives to reduce dependence on Russian energy as it has this year, it will be able to confront Russia more firmly. She also claimed that it is almost impossible for Russia to find new gas import sources in the short term.
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