EU contemplates taxing fossil fuel companies to help consumers survive energy crisis

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BRUSSELS, Sept 12 (Reuters) – Fossil fuel companies may have to share their surplus profits to help European households and industries cope with red-hot energy bills, a draft European Union plan showed on Monday. as the cost of the West’s “energy war.” with Russia came at an ever-increasing cost.

Energy prices and inflation have surged as Moscow cut gas supplies in response to Western sanctions imposed over its actions in Ukraine, prompting France to tell consumers they would have to share some of the pain while Britain Britain is among the countries facing the threat of recession.

The European Commission’s draft proposal, expected to be presented this week, would see the 27 EU countries introduce a ‘solidarity contribution’ for the fossil fuel industry. read more

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

“Those earnings do not correspond to any regular earnings that these entities would expect or could have expected to earn under normal circumstances,” said the draft EU plan, seen by Reuters.

PA (BP.L) and shell (SHELL) He had no immediate comment. Total Energies (TTEF.PA) did not immediately respond to a request for comment.

The proposals are also expected to include a lifeline for power companies facing a liquidity crisis. But countries are divided on the details and whether to cap the price they pay for gasoline, diplomats said. Russia has said it would cut off all supplies if a cap were introduced on its gas. read more

Meanwhile, across Europe, businesses and governments were looking for ways to tackle the crisis.

‘IRRESPONSIBLE’

In France, Finance Minister Bruno Le Maire said consumers would be protected by new caps on energy prices when the current ones run out this winter, although there would be some increases as it would be “completely irresponsible to put the burden on.” .. only in the state.” budget”.

In neighboring Spain, Iberdrola (IBE.MC) it said it would guarantee gas and power supplies for five months to customers deemed vulnerable by the Red Cross, after which all outstanding bills must be paid. read more

Italy’s main business lobby group, Confindustria, said it was in talks with the government over how any potential gas rationing would be carried out. read more

With the EU looking to diversify its energy supply, Finland’s Gasgrid said it aimed to start importing liquefied natural gas (LNG) through a planned floating terminal in January.

Separately, the EU securities regulator said it was “actively considering” possible measures to ease tensions in energy markets, where some participants are struggling to find enough cash to hedge their positions. read more

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

A “disappointingly small rebound in real GDP in July suggests the economy has little momentum and is probably already in a recession,” said Paul Dales of Capital Economics.

‘TOO LITTLE GAS’

As the European Commission drafts the new set of EU measures, Norway warned against fuel price caps.

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

Norway, which is a close ally of the EU, has become the bloc’s biggest gas supplier after Russia curtailed exports in the wake of the Ukraine war, giving it record revenue from its oil industry as it prices skyrocketed.

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

‘UNPREDICTABLE’

Meanwhile, Russia said it was difficult to predict the consequences for the transit of gas to Europe from a new arbitration process initiated by the Ukrainian energy company Naftogaz. read more

Naftogaz said on Friday that Gazprom had not paid for its gas transportation through Ukraine on time or in full.

“There could be a lot of unpredictable things both from our Western colleagues and from the leaders of the Ukrainian gas industry,” Kremlin spokesman Dmitry Peskov said. read more

Natural gas flows from Russia to Europe along key routes were stable on Monday, while the Nord Stream 1 pipeline remained closed. read more

Oil prices surged as Iranian nuclear talks appeared to hit snags and an embargo on Russian oil shipments loomed, with limited supply struggling to meet still-robust demand. read more

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Reuters bureau reports; Written by Ingrid Melander; Edited by Alexander Smith, Kirsten Donovan

Our standards: The Thomson Reuters Trust Principles.

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