EU looks to levy tariffs on fossil fuel companies to help consumers survive the energy crisis

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A draft EU plan showed on Monday that fossil fuel companies may have to share their excess profits to help European households and industries deal with soaring energy bills. With Russia caused increasing losses.

Energy prices and inflation have soared as Moscow cuts gas supplies in response to Western sanctions for its actions in Ukraine, prompting France to tell consumers they will have to put up with some pain while Britain is among the countries at risk of recession.

The European Commission’s draft proposal, which is expected to be unveiled this week, will see the 27 EU countries make a “solidarity contribution” to the fossil fuel industry. Read more

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Oil, gas, coal and refining companies will have to make a financial contribution based on taxable surplus profits made in the 2022 fiscal year, according to the draft, which could change and would then need to be approved by EU governments.

“These profits do not correspond to any regular profit these entities would or could have expected to obtain in normal circumstances,” said a draft of the EU’s plan, seen by Reuters.

BP (BP.L) paralyze (coincidence) He has no immediate comment. total energy (TTEF.PA) He did not immediately respond to a request for comment.

The proposals are also expected to include a life raft for energy companies facing a liquidity crunch. But diplomats said countries are divided over the details and whether to cap the price they pay for gas. Russia said it would cut off all supplies if a cap on gas was imposed. Read more

Meanwhile, businesses and governments across Europe scrambled to find ways to tackle the crisis.

‘Irresponsible’

In France, Finance Minister Bruno Le Maire said consumers will be protected by new energy price caps when current prices run out this winter although there will be some increases because it would be “totally irresponsible to put the burden … on the state only.” income”.

In neighboring Spain, Iberdrola (IBE.MC) It said it would guarantee a five-month supply of gas and power to customers deemed at risk by the Red Cross, after which all outstanding bills must be paid. Read more

Italy’s main commercial lobby group, Confindustria, said it was in talks with the government on how to conduct any potential gas rationing. Read more

As the European Union seeks to diversify energy supplies, Finland’s Gasgrid said it aims to start importing liquefied natural gas via a planned floating terminal in January.

Separately, the European Union’s securities watchdog said it was “actively studying” potential measures to ease pressures in energy markets as some participants struggle to find enough cash to cover positions. Read more

In Britain, where inflation hit a 40-year high of more than 10%, the economy expanded 0.2% in July compared to June, less than the expected 0.4%. The sharp rise in energy costs has hurt demand for electricity and a jump in the cost of materials has hurt the construction sector.

“A disappointingly small rebound in real GDP in July suggests that the economy has little momentum and may already be in a recession,” said Paul Dills of Capital Economics.

‘too little gas’

While the European Commission is drafting a new series of EU measures, Norway has warned against setting a cap on gas prices.

“The maximum price will not solve the basic problem, which is that there is little gas in Europe,” Norwegian Prime Minister Jonas Gahr Stoere said after a phone call with European Commission President Ursula von der Leyen.

Norway, a close ally of the European Union, became the bloc’s largest supplier of gas after Russia cut exports in the wake of the Ukraine war, giving it record income from the petroleum industry with soaring prices.

EU ministers have already backed away from setting a price cap targeting only Russian gas, which accounted for about 40% of EU gas before the invasion of Ukraine. That share fell to 9%, as Moscow cut supplies, blaming technical problems caused by sanctions.

‘Unpredictable’

On the other hand, Russia said that it is difficult to predict the consequences of the new arbitration process launched by the Ukrainian energy company Naftogaz, for the transit of gas to Europe. Read more

On Friday, Naftogaz said Gazprom had not paid it for gas transit through Ukraine on time or in full.

“There may be a lot of unpredictable things from our Western colleagues and leaders of the gas industry in Ukraine,” Kremlin spokesman Dmitry Peskov said. Read more

Natural gas flows from Russia to Europe along major routes were flat on Monday, while the Nord Stream 1 pipeline remained shut down. Read more

Oil prices soared as Iran’s nuclear talks hit snags and an imminent embargo on Russian oil shipments, with tight supplies struggling to meet still-strong demand. Read more

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Reporting by Reuters offices. Writing by Ingrid Melander; Editing by Alexander Smith, Kirsten Donovan

Our criteria: Thomson Reuters Trust Principles.

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