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Vitality market reforms embrace the taxation of power corporations and decoupling gasoline costs from general electrical energy payments.
Ursula von der Leyen, the president of the European Fee, has unveiled a legislative proposal to impose windfall levies price $140bn on power corporations, in a bid to reduce the consequences of surging gasoline and electrical energy costs that threaten economies and households this winter.
In her State of the European Union speech addressing the plenary session of the European Parliament in Strasbourg, von der Leyen outlined a structural reform of the European power market that has been beneath severe pressure following Russia’s invasion of Ukraine.
“In these instances, income have to be shared and channelled to those that want it probably the most,” von der Leyen mentioned, explaining that paying payments has turn into “a supply of tension for thousands and thousands of companies and households” after gasoline costs have risen 10 instances previously two years.
Her speech got here after Russia mentioned earlier this month it could not reopen its important Nord Stream 1 pipeline to provide Europe – the most recent in a string of provide cuts, which Moscow blames on Western sanctions imposed over its invasion of Ukraine.
The European Fee proposes to cap the revenues of corporations that produce electrical energy at low prices, which can “increase greater than €140bn ($140bn) for member states to cushion the blow instantly”, von der Leyen asserted.
Fossil gas corporations may also have to provide a “disaster contribution” due to their “big income”, she added from the French metropolis.
EU power ministers are as a consequence of meet on September 30 to debate the fee’s proposals.
A draft regulation seen by dpa information company would impose a income cap of 180 euros ($180) per megawatt hour (MWh) on corporations that generate electrical energy from cheaper sources than gasoline, together with renewables, nuclear or coal.
As an essential distinction from her earlier proposals, von der Leyen dropped the concept of limiting the value of pure gasoline, however she promised to “hold engaged on decrease gasoline costs”.
“We now have to decouple the dominant affect of gasoline on the value of electrical energy,” she mentioned, suggesting as an alternative a “deep and complete reform of the electrical energy market”.
Electrical energy costs within the EU have risen sharply as a consequence of excessive gasoline costs, as electrical energy costs are decided by the costliest power supply wanted for its manufacturing.
Thomas O’Donnell, a lecturer on the Hertie College of Governance, described von der Leyen’s proposal as making “good sense” as “a wartime measure”.
“In case you want extra electrical energy, you purchase the very best value gas, and proper now that’s pure gasoline,” he advised Al Jazeera. “It’s astronomically excessive, in order that pushes up the value of all the electrical energy, and all the corporations get that top value”.
The European Fee needs to “take that away, particularly from nuclear and renewable corporations, and distribute it to shoppers who must pay these excessive costs – and likewise to sure corporations who’re beneath the specter of going bankrupt”, O’Donnell mentioned.
The draft EU proposal additionally referred to as for a compulsory goal for nations to chop electrical energy consumption this winter, in a transfer aimed toward making certain Europe has sufficient gas to final the colder months.
In her speech, von der Leyen additionally mentioned the European Fee would authorise short-term state help for European companies to stability the consequences of risky power markets.
Addressing the broader context of challenges for the European financial system, she careworn the bloc needed to safe its personal provide of lithium and different uncommon earth components as a result of “quickly they’ll turn into extra essential than oil and gasoline.”
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