EU to Recommend Lower Energy Taxes to Offset Surging Oil and Gas

Article content(Bloomberg) — The European Commission is set to recommend lowering energy taxes and power grid charges to boost the uptake of clean technologies while softening the blow from surging oil and gas prices. Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentOn April 22, the EU’s executive arm is due to adopt a policy paper outlining actions to alleviate the impact of increasingly expensive fuels on businesses and consumers, according to people with knowledge of the matter. The effective closure of the Strait of Hormuz during the Iran war has deepened concerns about stubbornly high energy prices.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentThe EU’s dependence on Middle East energy supplies is limited, but its heavy reliance on fossil fuel imports makes it susceptible to global price shocks. Benchmark European gas jumped 8.5% on Monday — taking its gains above pre-conflict levels to 48% — after President Donald Trump announced the US will begin a full naval blockade of Hormuz. Brent crude has soared 41% since the war started.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentEnergy prices have shot to the top of the EU’s political agenda on fears over the region’s declining competitiveness compared with China and the US. The commission’s plan will come one day before an informal meeting of EU leaders, who earlier this year called on the bloc’s executive arm to come up with measures to ease the burden of energy prices for industries. Article contentThe commission has limited room for maneuver, especially as most member states are pursuing national solutions adapted to their political and economic needs. Rather than introducing aggressive changes, the commission’s toolbox will aim to ensure a coordinated approach that avoids boosting inflation and fiscal deficits, while ensuring the region keeps cutting its dependence on fossil fuels. Article contentArticle contentSince the Iran war started, 22 EU states have introduced more than 120 uncoordinated measures costing over €9 billion ($10.5 billion) to ease the impact of higher energy prices, according to a report by the Jacques Delors Institute. That comes on top of €13 billion in additional costs due to more expensive fossil-fuel imports.Article contentCommission President Ursula von der Leyen signaled last month that any short-term measures must be temporary and targeted, and the EU needs to quickly address the structural drivers of high energy prices, focusing on electricity. Next week, the commission will float steps to improve the productivity of grid infrastructure and reduce grid charges, said the people familiar, who asked not to be identified discussing a confidential matter.Article contentIt will also flag measures to cut electricity taxation, removing some levies and ensuring that power is taxed more favorably than fossil fuels.Article contentThe commission has a long-standing policy of not commenting on draft documents. Article contentThe recommendations on energy savings and support for clean technologies in the document next week are set to build on a plan the EU’s executive proposed in 2022, when a cut in Russian supplies sent gas prices to record highs. The commission will stop short of floating any demand-reduction targets similar to those discussed four years ago, according to the people. Article contentA price cap on gas is not on the cards either. During the 2022 crisis, the bloc introduced a cap of 180 euros per megawatt hour on benchmark prices but it was never activated. Article contentThe plan next week may include some guidelines on windfall taxes, but is set to stop short of recommending them as an EU-wide tool amid diverging views among member states, the people said. Last week, finance ministers from Germany, Italy, Spain, Austria and Portugal called on the EU to tax windfall profits that energy companies are reaping as the result of the war.Article content—With assistance from Alberto Nardelli and Jorge Valero.Article contentTrending Three Tankers Attempt Hormuz Transit After US Flags Blockade PMN Business GFL Said to Near Deal to Buy Secure Waste for Over $4.3 Billion PMN Business Posthaste: More Canadians desperate for tax refund to plug holes in their finances News Ships with Iran Oil Anchor off India as Trump Announces Blockade PMN Business Trump Blockade of Iran Ports Risks Widening War to High Seas PMN Business Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. 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Three Tankers Attempt Hormuz Transit After US Flags Blockade PMN Business GFL Said to Near Deal to Buy Secure Waste for Over $4.3 Billion PMN Business Posthaste: More Canadians desperate for tax refund to plug holes in their finances News Ships with Iran Oil Anchor off India as Trump Announces Blockade PMN Business Trump Blockade of Iran Ports Risks Widening War to High Seas PMN Business