EU nations to again power windfall levies, lock horns over fuel value cap By Reuters

By Kate Abnett and Gabriela Baczynska

BRUSSELS (Reuters) – European Union nations meet on Friday to approve emergency levies on power companies’ windfall income and launch talks on their subsequent transfer to sort out Europe’s power crunch – presumably, a fuel value cap.

Vitality ministers from the 27 EU member nations are negotiating measures proposed by Brussels final week to aim to comprise an power value surge that’s stoking record-high inflation and threatening a recession.

They embrace a levy on fossil gasoline corporations’ surplus income made in 2022 or 2023, one other levy on extra revenues that low-cost energy producers make from hovering electrical energy prices, and a compulsory 5% lower in electrical energy use throughout peak value durations.

Diplomats from a number of nations have been assured ministers would approve the bundle on Friday.

Then, the ministers will flip their consideration to the EU’s subsequent transfer to comprise the worth crunch – which many nations have mentioned ought to be a broad fuel value cap, whereas others – most notably, Germany – stay opposed.

“On the worth cap, there may be nothing close to a consensus,” a diplomat from one EU nation mentioned.

Fifteen nations, together with France, Italy and Poland, this week requested Brussels to suggest a value cap on all wholesale fuel transactions, to comprise inflation.

Europe ought to cap fuel costs at a stage that’s “excessive and versatile sufficient to permit Europe to draw the required assets”, Belgium, Greece, Poland and Italy mentioned in a be aware explaining their proposal, seen by Reuters late on Thursday.

Opponents embrace Germany and the Netherlands, who say capping fuel costs might go away nations struggling to draw provides, if they can’t compete with consumers in price-competitive world markets for fuel cargoes this winter.

A diplomat from one EU nation mentioned the concept had “vital weaknesses and dangers to safety of provide” as Europe heads right into a winter with scarce power to spare, after Russia has slashed fuel flows to Europe in retaliation for Western sanctions in opposition to Moscow for invading Ukraine.

The European Fee has additionally raised doubts, and recommended the EU as a substitute transfer forward with extra restricted variations of a value cap.

A wholesale fuel value cap would require “vital monetary assets” and will work provided that a brand new entity was launched to allocate and ship scarce gasoline provides between states, the Fee mentioned in a paper revealed on Thursday.

Reasonably, EU nations ought to think about capping the worth of Russian fuel, or launching an EU value cap particularly on fuel used for energy era, it mentioned.

The Fee recommended a Russian fuel value cap earlier this month, however shelved the concept after resistance from central and jap European nations frightened Moscow would retaliate by reducing off the remaining fuel it nonetheless sends to them.

Belgian power minister Tinne Van der Straeten mentioned nations in favour of value caps would step up their efforts to discover a proposal extra EU nations might assist.

“We’ll take additional steps with Germany, with Austria, with all these nations that immediately nonetheless have reservations,” she mentioned on Thursday.

She added solely as much as 2 billion euros could be wanted to finance emergency fuel purchases ought to costs break the EU’s cap as most European imports fall beneath long-term contracts and/or arrive by pipelines with no simple various consumers.

That, she mentioned, fades in comparison with sums being spent by EU nations individually now on serving to their shoppers climate runaway costs.

Berlin on Thursday set out a 200 billion euro ($194 billion) “defensive protect”, together with a fuel value brake and a lower in gross sales tax for the gasoline, to guard corporations and households in Germany from the influence of hovering power costs.