EU considers energy price cap, windfall tax amid Russia risk
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The EU is considering various measures to intervene in the energy market, including price caps, reducing power demand and windfall taxes on energy companies as surging prices threaten the economy and push households toward poverty.
The risk of further disruptions to Russian natural gas supply are increasing as the region prepares for a tough winter, according to Mechthild Woersdoerfer, senior energy official at the European Commission.
Nations are on the brink of recession and inflation is already at the highest in decades, forcing the European Union to devise plans to step in to dampen soaring power costs and overhaul the market’s design.
The EU has already agreed to seek alternative sources of gas, boost the share of renewables, bolster gas storage requirements and set a voluntary demand reduction cut to help survive the winter without blackouts. Thirteen of its members have already been affected by Russia’s gas supply cuts.
“The situation remains very, very critical and from the European Commission side, we’re working at full speed on looking at different aspects of security of supply and energy prices,” Woersdoerfer told members of the European Parliament’s industry committee in Brussels.
“There is a risk of disruption which is very strong, even getting stronger, as already half of our member states are affected totally or partially by disruptions.”
The bloc’s energy ministers are due to discuss how to respond to the crisis at an emergency meeting next week. More and more governments are demanding a tool to limit the spike in electricity prices, though views on how it should be designed vary.
- Bloomberg