EU mulls tax on fossil fuel companies to help consumers survive energy crisis

EU mulls tax on fossil fuel companies to help consumers survive energy crisis

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BRUSSELS, Sept 12 (Reuters) – Fossil fuel companies may have to share excess profits to help European households and industries cope with searing energy bills, a draft European Union plan said on Monday as the cost of the West’s “energy war”. with Russia has taken an increasing toll.

Energy prices and inflation rose as Moscow cut gas supplies in response to Western sanctions imposed over its actions in Ukraine, prompting France to tell consumers they should share some of the pain while Great Britain is among the countries threatened with recession.

The European Commission’s draft proposal, due to be unveiled this week, would see the 27 EU countries introduce a “solidarity contribution” for the fossil fuel industry. Read more

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Oil, gas, coal and refining companies are expected to make a financial contribution based on taxable excess profits made in the 2022 financial year, according to the draft, which could still change and will then have to be approved by EU governments. .

“These profits do not correspond to any regular profit that these entities would have or could have expected to obtain under normal circumstances,” says the draft EU plan, seen by Reuters.

BP (BP.L) and Shell (SHEL.L) had no immediate comment. TotalEnergies (TTEF.PA) did not immediately respond to a request for comment.

The proposals are also expected to include a life raft for power companies facing a cash crunch. But countries are divided on specifics and whether to impose a cap on the price they pay for gas, diplomats said. Russia has said it will cut off all supplies if a cap on its gas is introduced. Read more

Meanwhile, across Europe, businesses and governments have scrambled to find ways to deal with the crisis.

‘IRRESPONSIBLE’

In France, Finance Minister Bruno Le Maire said consumers would be protected by new caps on energy prices when current prices run out this winter, although there would be increases as it would be “completely irresponsible to place the burden…solely on the state”. budget”.

In neighboring Spain, Iberdrola (IBE.MC) said it would guarantee gas and electricity supplies for five months to customers deemed vulnerable by the Red Cross, after which all outstanding bills must be paid. Read more

Italy’s main business lobby group, Confindustria, said it was in talks with the government on how any possible gas rationing would take place. Read more

As the EU seeks to diversify its energy supply, Gasgrid of Finland has announced its intention to start importing liquefied natural gas (LNG) via a floating terminal planned for January.

Separately, the EU securities watchdog said it was “actively considering” potential measures to ease tensions in energy markets where some participants are struggling to find enough cash to cover their positions. Read more

In Britain, where inflation hit a 40-year high of over 10%, the economy grew 0.2% in July from June, less than the 0.4% expected. The sharp rise in energy costs hurt demand for electricity and a jump in the cost of materials affected the construction sector.

A “disappointing rebound in real GDP in July suggests the economy has little momentum and is likely already in recession,” said Paul Dales of Capital Economics.

“TOO LITTLE GAS”

As the European Commission drafts the new set of EU measures, Norway has warned against capping gas prices.

“A maximum price would not solve the fundamental problem, which is that there is too little gas in Europe,” Norwegian Prime Minister Jonas Gahr Stoere said after a call with European Commission President Ursula von der Leyen.

Norway, which is a close EU ally, became the bloc’s biggest gas supplier after Russia cut exports following the war in Ukraine, earning it record revenues from its oil industry as prices soared.

EU ministers have already backed away from a price cap targeting only Russian gas, which accounted for around 40% of the bloc’s gas before its invasion of Ukraine. That share fell to 9% as Moscow cut supplies, blaming technical problems caused by the sanctions.

‘UNPREDICTABLE’

Meanwhile, Russia said it was difficult to predict the consequences for gas transit to Europe of a new arbitration process initiated by Ukrainian energy company Naftogaz. Read more

Naftogaz said on Friday that Gazprom had not paid it on time or in full for transporting gas through Ukraine.

“There could be a lot of unpredictable things from our Western colleagues and leaders of Ukraine’s gas industry,” Kremlin spokesman Dmitry Peskov said. Read more

Natural gas flows from Russia to Europe along key routes were stable on Monday, while the Nord Stream 1 pipeline remained closed. Read more

Oil prices rose as Iranian nuclear talks appeared to hit snags and an embargo on Russian oil shipments loomed, with tight supply struggling to meet still-robust demand. Read more

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Reports from Reuters offices; Written by Ingrid Melander; Editing by Alexander Smith, Kirsten Donovan

Our standards: The Thomson Reuters Trust Principles.

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