The European Commission is to propose a windfall tax on energy firms across the EU to help shield citizens from surging energy prices.
“In these times it is wrong to receive extraordinary record revenues and profits benefitting from war and on the back of our consumers,” Commission president Ursula von der Leyen said in a speech at the European Parliament in Strasbourg.
“In these times, profits must be shared and channelled to those who need it most.”
The proposal will overlay a patchwork of national measures taken by the EU’s 27 member states with a more coherent bloc-wide response.
A draft of the plans would see oil, gas, coal and refining firms required to make a “solidarity contribution” of 33 per cent of their taxable surplus profits from fiscal year 2022.
Non-fossil fuels electricity generation would also be subject to an excess revenue cap. Under this element of the draft proposal, wind, solar, and nuclear plants would have a revenue cap of 180 euros ($180) per megawatt hour (MWh), with any excess skimmed off by national governments.
The cash raised by the measures would go to fund support for consumers to deal with high energy bills, which have soared after Russia slashed gas deliveries in the wake of its invasion of Ukraine.
The Commission’s proposals would also impose a mandatory target for member states to cut electricity consumption by 5 per cent during the hours with the 10 per cent highest electricity demand each month.
The plans have to be discussed and agreed by EU member states, with a summit of EU energy ministers on 30 September the likely venue for any agreement.
But Ms von der Leyen’s plan steps back from earlier plans to cap the price of Russian gas imports.
Instead the Commission proposes to set up a new task force with EU member state representatives that will attempt to negotiate deals with other key suppliers such as Norway.
Member states have taken individual action at a national level in response to the crisis, with countries like France capping prices and taking state producer EDF into public ownership.
It comes as the German government weighs up nationalising the country’s biggest gas importer Uniper SE to prevent a collapse of the energy system.
The UK’s new prime minister Liz Truss has ruled out a windfall tax, claiming would reduce investment and that it is a “Labour idea”, referring to the opposition party that has proposed one.