The EU has proposed a windfall tax on the profits of energy companies. Its executive estimates the move could bring in more than 140billion euros (£121bn) to shield consumers from soaring energy prices.
The plan to skim off revenues was published by the European Commission on Wednesday. EU countries will now have to negotiate the Commission's proposals and agree on final laws.
Frans Timmermans, the EU official in charge of the green transition, denounced what he called "Russia's energy blackmail", the Guardian reported. The scheme would see fossil fuel extractors asked to give back 33% of taxable surplus profits for the 2022 financial year.
Mr Timmermans said: "The era of cheap fossil fuels is over. And the faster we move to cheap, clean and homegrown renewables, the sooner we will be immune to Russia’s energy blackmail,” he said.
The proposals are for a cap of 180 euros ($180) per megawatt hour (MWh) until March on the revenue energy companies receive for generating electricity.
EU officials reportedly expect to raise €25bn from the tax on fossil fuel producers, with a cap on low-carbon firms bringing in €117bn. The revenues could be given to consumers as direct rebates or to fund insulation and other efficiency measures or switches to green technologies.
The commission also wants EU member states to sign up to a legally binding target to cut electricity use by 10% overall and by 5% during peak hours. This would be achieved via efficiency campaigns and incentives.
New UK Prime Minister Liz Truss has stopped short of asking consumers and businesses to reduce their energy use over the winter, while monetary support during the cost-of-living crisis is being paid for by Government loads rather than windfall taxes.
