Energy crisis: Olena Zelenska, guest of honor as EU boss von der Leyen, presents plans to cap the profits of electricity companies

The European Commission on Wednesday unveiled a series of proposals to stem the energy price hikes that have rocked Europe following Russia’s invasion of Ukraine, stressing that the EU’s solidarity with Kyiv is “unwavering”.

Energy prices and inflation have soared across the 27-nation European Union as Moscow cut gas supplies in response to the sanctions, prompting some, particularly the far-right, to argue that the sanctions hit the EU harder and softened should be.

But with Ukraine’s First Lady Olena Zelenska as the guest of honor as she delivered her annual State of the Union address in the European Parliament, von der Leyen said the sanctions would have a real impact on Russia and remain in place.

“This is the time for us to show determination, not appeasement,” said von der Leyen, who was due to travel to Kyiv later on Wednesday to meet Ukrainian President Volodymyr Zelenskyy. “We’re in it for the long haul.”

“And I stand here convinced that with courage and solidarity, Putin will fail and Europe will win,” she told the gathering in Strasbourg, France, wearing blue and yellow – the colors of both the Ukrainian and EU flags.

Von der Leyen, whose proposals to help European homes and businesses include cutting electricity consumption across the bloc, said the bloc was working to protect homes and businesses.

“Engaging to make ends meet is becoming a source of anxiety for millions of businesses and households,” she said, proposing measures to limit revenues from low-cost electricity generators and force fossil-fuel companies to share the profits they generate they achieve from rising energy prices.

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European Commission President Ursula von der Leyen delivers a State of the European Union address at the European Parliament in Strasbourg, France. Reuters

“In these times it is wrong to have extraordinary record revenues and profits benefiting from war and on the backs of our consumers. In these times, profits need to be shared and channeled to those who need them most,” she said.

At a time when Ukraine is working to secure areas it retook from Russian occupying forces in a swift counteroffensive, von der Leyen said this is not the time for the bloc to soften its stance.

“Russia’s financial sector is alive,” she said, adding that nearly a thousand international companies had left the country. “The Russian military is taking chips out of dishwashers and refrigerators to fix their military hardware because they have run out of semiconductors. Russia’s industry is down.”

She said Europe has diversified away from Russian energy, but Moscow is still “actively” manipulating the market and gas prices have risen more than 10-fold compared to before the Covid-19 pandemic.

Reflecting on the war in Ukraine, von der Leyen said that Moldova, Georgia and the Western Balkan countries are also part of “our family” and the future of the EU.

In memory of Britain’s Queen Elizabeth, who died last week at the age of 96, von der Leyen said the current crisis reminded her of words the Queen once said: “We will be successful – and this success will belong to each of us.”

The European Union will propose measures to cap revenue from low-cost electricity generators and force fossil fuel companies to share the profits they make from rising energy prices, von der Leyen said.

European governments have poured hundreds of billions of euros into tax cuts, handouts and subsidies to stem an energy crisis fueled by Russia’s invasion of Ukraine, which is driving up inflation, forcing industries to shut down production and paying the bills the citizen drives up before the winter .

“In these times it is wrong to have extraordinary record revenues and profits benefiting from war and on the backs of our consumers. In these times, profits need to be shared and channeled to those who need them most,” von der Leyen said in a speech to the European Parliament in Strasbourg.

She said the bloc is also discussing energy price caps and is working to set a “more representative benchmark” price for gas than the Dutch Title Transfer Facility (TTF), where gas prices have skyrocketed.

An earlier draft of the Commission’s proposals would siphon off excess revenue from Europe’s non-gas power plants to raise money for governments to spend to help businesses and citizens with their bills.

Wind and solar farms and nuclear power plants would see a €180-per-megawatt-hour (MWh) cap on the revenue they receive for generating electricity, with governments taking back excess cash and recycling it to support consumers, the draft said. which would be possible to change before publication.

That would limit growers’ earnings to less than half of current market prices. Germany’s front-year electricity price hit a record high of over €1,000/MWh last month and traded at over €400/MWh on Tuesday.

Fossil fuel companies would also face an unexpected profit levy to reclaim what the commission described in the draft as “unexpected profits” related to soaring oil and gas prices, fueled by Russia, which cut its gas supplies after its invasion of the Ukraine cut back.

Oil, gas, coal and refining companies would have to make a “solidarity contribution” equal to 33 percent of their taxable excess profits starting in fiscal 2022, the draft said.

However, the Commission has backed out of an initial plan to cap Russian gas prices, and EU countries are divided over whether broader price caps would help or hurt Europe’s efforts to secure winter energy supplies.

EU countries must negotiate the Commission’s proposals and agree on final laws. With controversial gas price caps off the table – at least for now – diplomats from some states have been optimistic that deals could be reached at a meeting of EU energy ministers on September 30.

Taoiseach Micheál Martin said he prefers direct support to households to price caps or slapping corporate profits and Ireland is likely to use any revenue from the EU schemes for consumer energy credit.

https://www.independent.ie/world-news/europe/energy-crisis-olena-zelenska-the-guest-of-honour-as-eu-chief-von-der-leyen-sets-out-plans-to-cap-power-company-profits-41988072.html Energy crisis: Olena Zelenska, guest of honor as EU boss von der Leyen, presents plans to cap the profits of electricity companies

Fry Electronics Team

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