Belgium, (Brussels Morning) MEPs called on “emergency measures” to protect the most vulnerable from soaring energy prices during a plenary session in Strasburg today. Lawmakers asked for an appropriate price cap for imports of pipeline gas and measures to tackle speculation. On top of that, MEPs also pushed for more steps to introduce a tax on windfall profits while noting that all measures must remain consistent with the EU’s 2050 climate neutrality goal.
Emergency measures
The proxy war between Russian and Ukraine has dramatically exacerbated already-existing instability in the energy market and led to increasing energy prices and a cost of living crisis.
To address this crisis, MEPs want to ensure those who cannot afford their energy bills will not have their supply cut off and underlined the need to avoid home evictions for vulnerable households that are unable to pay their bills and rental costs.
“Consumers should be better protected from their fixed-rate contracts being suspended or withdrawn by suppliers, as well as from exorbitant pre-payments for gas and electricity,” reads the Parliament’s statement.
MEPs further argue that “exceptional times require exceptional emergency measures”, with EU countries acting as jointly and as united as ever, and they insist that all initiatives adopted at the EU level must be fully compatible with the EU’s climate goals in the long term.
“Unprecedented solidarity among member states is needed, as well as a common response, instead of divisive unilateral actions,” urged MEPs, observing the “Germany First” move, which is about to pour 200 billion euros into the German economy to help weather the impact of the skyrocketing energy prices.
Commission’s President Von der Leyen said in Strasbourg that the EU had to ensure individual members did not outbid each other for gas on world markets and drive prices up.
“As a Portuguese MEP, I was also very pleased to see the reference to the interconnection between the Iberian Peninsula and France. This is something we are not ready to give up on, in spite of France’s opposition, and not just because of our national interest. Europe needs these gas interconnections if it seriously wants to be independent from Russia’s energy,” MEP Maria da Graça Carvalho told Brussels Morning.
Tax on windfall products
Moreover, Parliament defends that companies that have benefited from windfall profits must contribute to mitigating the negative consequences of the crisis.
They said a Council agreement would be welcome in order to establish a cap on revenues from so-called inframarginal technologies used to produce electricity, such as renewables, nuclear, and lignite.
However, the renewables industry warned that a cap on wind and solar power revenues in EU countries could do more harm than good, prompting investors to seek other shores.
Concerning the solidarity contributions proposed for the profits of oil, gas, coal and refinery companies, MEPs warned that some of the largest energy companies may not have to pay the contribution and call for the contribution to be designed to prevent tax avoidance.
In that sense, they asked the EU executive to assess what an adequate profit margin should be and to take further steps towards introducing a tax on windfall profits for companies that have excessively benefitted from the energy crisis.
“The EU and governments must tax all of these windfall profits now, not next year. This money is urgently needed to protect the most vulnerable people this winter, and to pay for renewables and energy-saving measures, like ramping up public transport and home insulation, which can help avoid crises like this in the future,” stated Thomas Gelin, Greenpeace EU campaigner.
Sharing windfall profits
MEPs insisted that those revenues from windfall profits should benefit consumers and businesses, in particular vulnerable households and SMEs. Such redistribution of wealth should go hand in hand with massive innovation and investments in renewable energies and energy efficiency and infrastructure, rather than incentivising households and companies to consume more subsidised energy.
Following von der Leyen’s announcement of a “deep and comprehensive reform” of the electricity market, to decouple electricity prices from gas prices, Parliament expressed readiness to analyze such a proposal making sure it has the right price signal to invest in decarbonisation, allowing citizens and industries to benefit from secure, affordable and clean energy while addressing disproportionate profits.
MEPs also called on the Commission to closely look into the activities of financial players who contributed to the carbon price volatility and act to eliminate the influence of speculative capital on the EU Emissions Trade Scheme (ETS) allowances market.
On 30 September, the Council agreed to impose an EU-wide windfall profits tax on fossil fuel companies to fund relief for households and businesses facing high energy prices.“It is great news that European countries have, for the first time ever, agreed to capture some of the extreme excess profits of companies. But now they need to be far more ambitious. This means taxing all sectors profiteering off the global crises at a higher tax rate of between 50% and 90% and go beyond 2022,” said Chiara Putaturo, Oxfam EU Tax expert.