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Europe’s Plans To Ease Energy Shock

The European Union plans to raise €140 billion by slapping a windfall tax on excess revenues of low-cost electricity producers and making fossil fuel firms share their lavish profits.

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Infographic depicting how Europe plans to solve energy crisis
Graphic by Duncan Mil

“In these times, it is wrong to receive extraordinary record profits benefiting from war and on the back of consumers,” said Ursula von der Leyen, European Commission president, in a State of the Union address yesterday (September 14, 2022).

Von der Leyen proposed a mandatory threshold of €180 per megawatt-hour (MWh) for companies that produce low-cost, non-gas energy, such as nuclear and renewables. However, member states will be free to put lower thresholds of their own.

The EU also seeks a “crisis contribution” levy from “major oil, gas and coal companies that are also making huge profits,” von der Leyen said. She said that such payments and the windfall tax would be “emergency and temporary measures,” and the bloc needed to cut electricity demand, lower gas prices, and ensure the security of supply.

The proposals need member states’ approval. Energy ministers will discuss the plan on September 30.