EU backs new windfall tax on energy companies

Sept. 30 (UPI) -- Members of the European Union on Friday agreed to impose a new windfall tax on energy companies reaping hefty profits from the high price of oil and natural gas.

Both crude oil and natural gas prices are trading well above year-ago levels, supported in no small part by the risk premium emanating from the war in Ukraine. That's not only supported the Kremlin's war chest, but brought in substantial profits for global energy companies.


Ministers for the European Union said Friday they could likely bring in as much as $136 billion from taxes on companies that are reporting bloated profits, money that would be returned to constituents and businesses. The new measure follows European Commission Vice President Frans Timmermans' call for energy companies working in the extraction of oil and gas from to return 33% of their profits this year.

"A cap on outsize revenues will bring solidarity from energy companies with abnormally high profits towards their struggling customers," he said, according to the BBC.

British supermajor BP reported a $9.3 billion profit for the second quarter, compared with a first-quarter loss of $20.4 billion.

The tax plan would kick in for electricity producers as well given that most European markets power and heat their homes with natural gas. Natural gas prices in particular are skyrocketing in the European market and EU ministers said a voluntary reduction in usage should accompany the new levy. Renewable and nuclear-power companies would be exempt.


EU members agreed to a voluntary 10% reduction in gross electricity consumption on top of a mandatory 5% reduction during peak hours to curb demand, The Washington Post reported.

To address soaring costs, several EU members have called on the bloc's governing body to impose a cap on the price of natural gas, though that remains far off.

Speaking Friday, EU Energy Commissioner Kadri Simson said she was personally in favor of a price cap on gas and liquefied natural gas coming into the region from Russia.

"However, some member states see this as a sanction and we do not yet have a consensus on this step," she said.

Latest Headlines