Page 11 - FSUOGM Week 37 2022

FSUOGM POLICY FSUOGM

EU proposes €140bn windfall tax

on non-gas energy

EUROPE EUROPEAN Commission President Ursula von imports, including those from Norway and LNG
der Leyen announced plans on September 14 for supplies from the likes of the US and Qatar.
Companies will be a sweeping windfall tax on all producers of non-
required to hand over gas-derived power, estimating that the measure The question of Norway
excess profits above would raise some €140bn ($140bn) in funding Norway has stepped up gas supply to Europe in
€180/MWh. to counter the impact of Europe’s energy crisis the wake of Russia’s steep cuts to flow in recent
on consumers. months, with the country on track to produce
In the annual state of the union address, von more than 122bn cubic metres of gas, all for
der Leyen said the Commission was proposing export, this year, up from 113 bcm in 2021. That
a levy on producers of all electricity other than means Norway is now a considerably larger sup-
that generated from burning gas. This includes plier of gas to the continent than Russia. It has
renewable energy producers and coal-fired grown its exports by pumping extra gas from
power stations. fields at the expense of their production life and
“These companies are making revenues they sending supplies that would have normally been
never accounted for, they never even dreamt reinjected into reservoirs to boost oil recovery. It
of,” von der Leyen said. “In our social market has also been adding butane, pentane and ethane
economy, profits are good. But in these times it to its gas to boost its calorific value – or the
is wrong to receive extraordinary record profits amount of energy it represents, in other words.
benefiting from war and on the back of consum- The Norwegian government has repeatedly
ers. In these times, profits must be shared and insisted it does not agree with the gas price cap
channelled to those who need it most.” proposal. However, the country’s prime minis-
Under the windfall tax plan, companies ter, Jonas Gahr Store, has said he will meet with
would be required to hand over their excess prof- gas companies on September 15 to discuss the
its over a cap of €180/MWh. But member states prospect of negotiating longer-length supply
would have the freedom to impose even lower contracts in order to stabilise prices and provide
caps themselves. The states are due to convene greater security to European buyers.
again on September 30 to discuss the matter Norway sells the overwhelming majority of
further. its gas supply at short-term, hub-based prices,
Separately, the Commission wants to impose making it one of the greatest beneficiaries finan-
a separate measure on oil, gas and coal compa- cially of the spike in wholesale gas prices in
nies, with von der Leyen justifying such a move Europe over the past year.
by describing the current situation as a “fossil
fuel crisis.” Brussels is also working on what it What next?
described as a comprehensive reform of energy Whether or not the EU’s proposals will be final-
markets to decouple the link between gas and ised in time to make an impact this winter is an
power prices. important question. There still appears to be a
The Commission shared little details of its lack of consensus among member states on the
thinking on a proposed price cap on Russian, various measures, and it will take time for them
and potentially all gas imports, in order to bring to iron out these differences and reach a compro-
down soaring wholesale prices on the market. mise. But capping prices would help avoid energy
EU energy ministers met last week for emer- utilities from collapsing into bankruptcy – a fate
gency talks on the proposal, but it is understood narrowly avoided by Uniper when the German
that there was disagreement on the scope of the government provided the company with the big-
plan. Some member states want to see it applied gest corporate bailout in the country’s history. It
only to Russian gas, but others have warned that could also tackle inflation, and shield end-users
Moscow would retaliate by cutting off gas flow from some of the impact of higher energy costs,
altogether. Others want it extended to all gas reducing the risk of social unrest this winter. ™

Week 37 15•September•2022 www. NEWSBASE .com P11