EU Energy Ministers agree on levy on energy producers’ excess profits

An emergency meeting of EU energy ministers in Brussels has resulted in an agreement being reached on a legal framework to place a levy on electricity producers excessive profits. The money raised from the levy will be used to finance measures to help reduce domestic energy bills in the 27 EU member states. Negotiations an upper price limit for gas are still ongoing.

The excess profits energy producers make from the sale of electricity from their non-gas-fired powered stations will be subject to an additional levy for 6 months from 1 December. As electricity prices are linked to gas prices, the price of electricity, including that produced by nuclear power stations and renewables, is currently very high. This means that companies that produce electricity from wind farms or in nuclear reactors are currently making extremely large profits. These excess profits will now be subject to a levy, the money raised from which will be used to help reduced domestic consumers’ bills. 

Speaking, in the Federal Parliament on Thursday the Federal Energy Minister Tinne Van der Straeten (Flemish green) said that new European rules will provide her with the legal framework for skim off energy producers’ excess profits and that she certainly intends to do so.  In Belgium there is already a tax on nuclear energy. Ms Van der Straeten says that this will bring in around 700 million euros in 2022.  However, the energy crisis and the huge increase in electricity prices that it has brought with it means that “there is an extra surplus of profits” in azddition to this, the Federal Energy Minister says.

Europe’s Energy Ministers also agreed on binding measures to reduce energy consumption. They agreed to a 5% reduction in peak time electricity consumption between 1 December 2022 and 31 March 2023.

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