Ursula von der Leyen, the president of the European Commission, has signalled that there will be a cap on the revenues of companies that produce electricity at a low cost.
Giving her State of the Union Address earlier this week, von der Leyen said that the proposals put forward will raise more than €140bn for Member States in order to cushion the blows from the current energy crisis going on across Europe. The proposed levy will, said von der Leyen, be done in conjunction with measures put forward for member states to reduce their overall electricity consumption.
She said: “Millions of Europeans need support. EU member states have already invested billions of euros to assist vulnerable households. But we know this will not be enough. This is why we are proposing a cap on the revenues of companies that produce electricity at a low cost. These companies are making revenues they never accounted for, they never even dreamt of. In our social market economy, profits are good. But in these times, it is wrong to receive extraordinary record profits benefitting from war and on the back of consumers.”
She added: “In these times, profits must be shared and channelled to those who need it the most. Our proposal will raise more than €140bn for member states to cushion the blow directly. And because we are in a fossil fuel crisis, the fossil fuel industry has a special duty, too. Major oil, gas and coal companies are also making huge profits. So they have to pay a fair share – they have to give a crisis contribution. These are all emergency and temporary measures we are working on, including our discussions on price caps. We need to keep working to lower gas prices. We have to ensure our security of supply and, at the same time, ensure our global competitiveness.”
Von der Leyen also took the opportunity to throw some shade at Russia, calling it an ‘unreliable’ supplier and name dropping ‘reliable friends such as Norway’. Decoupling from gas was another issue raised, saying that the EC will ‘do a deep and comprehensive reform of the electricity market’.
A most-notable feature of von der Leyen’s speech was her castigation of Russia for its invasion of Ukraine and its continued war crimes against the Ukrainian people. This is despite, like many European politicians, having to be reminded which colour went on top of which in the Ukrainian flag that they now wrap themselves in. As Handelsblatt observed, her blue-and-yellow fashion choice seemed deliberate.
She said: “Russia’s financial sector is on life-support. We have cut off three quarters of Russia’s banking sector from international markets. Nearly one thousand international companies have left the country. The production of cars fell by three-quarters compared to last year. Aeroflot is grounding planes because there are no more spare parts. The Russian military is taking chips from dishwashers and refrigerators to fix their military hardware, because they ran out of semiconductors.
“Russia’s industry is in tatters. It is the Kremlin that has put Russia’s economy on the path to oblivion. This is the price for Putin’s trail of death and destruction. And I want to make it very clear, the sanctions are here to stay.”
Despite the rhetoric, the measures still need to be approved by member states, which is not likely to happen until the end of the month.