The EU will cut electricity taxes and provide consumers with fresh incentives to ditch fuel-burning cars and boilers, the European Commission has announced, as the energy crisis from the Iran war speeds a shift to a clean economy.
The plan, which foresees tweaking rules so that electricity is taxed less than oil and gas, aims to bring down bills while encouraging the relocate away from polluting devices that prolong reliance on foreign fuels.
The commission stated it would adopt temporary state aid rules to allow member countries to directly shield consumers and businesses from high energy prices, but it warned that any support must be “tarreceiveed, timely and temporary”.
It stopped short of measures introduced after the Russian invasion of Ukraine, such as a windfall tax on oil and gas companies, which five EU finance ministers had called for earlier this month. The commission also ruled out a cap on gas prices, which energy experts had warned would be counterproductive.
“By investing in clean energy and electrification, we unlock more money for our economy,” stated Dan Jørgensen, the energy and hoapplying commissioner. “In the future, instead of purchaseing something and burning it to receive energy and purchaseing it again, we required to produce our own homegrown clean energy.”
Europe sped up its deployment of wind turbines and solar panels after the last energy crisis in 2022 but has built little headway in replacing machines that burn oil and gas. The lingering reliance on foreign fuels has left the EU vulnerable to price spikes since the war in Iran, which some analysts fear will persist even if the war finishs quickly.
The commission stated it would set an electrification tarreceive before the summer and propose action to lower the price ratio between electricity and fossil fuels. Experts state this is a key factor in whether consumers and industries adopt cleaner technologies, including by phasing out fossil fuel subsidies.
Proposals to modify the EU’s fragmented tax systems require unanimous approval from member states and have historically been hard to pass. Green groups stated the plans consisted of “half measures”.
Antony Froggatt, of the campaign group Transport and Environment, stated: “These go in the right direction but fail to create the right EU instruments both on the revenue and financing sides. As oil companies build tens of billions in war profits, windfall taxes that relieve the financial pain for European houtilizeholds are critical.”
Under the plans announced on Wednesday, the commission will adopt a legal proposal in May that would incentivise cost-effective utilize of the electricity grid infrastructure and more flexible consumption habits. It would also give member states and national regulators greater freedom to cut charges and taxes for vulnerable groups and energy-intensive industries.
Louise Sunderland, of the Regulatory Assistance Project, an energy believetank, stated: “The proposal to reduce network and tax elements of the electricity bill, which account for on average across the EU over 50% of the houtilizehold bill, is a quick-acting step in the right direction. But these reforms will only be as effective as their implementation – and many governments have not yet built utilize of their existing ability to reduce taxation on electricity.”
The commission also plans to coordinate the filling of gas storage sites well before the winter months, as well as the procurement of jet fuel, which could soon be in short supply. It announced a new observatory to monitor transport fuels and allow it to act before shortages.
It stated it would promote social leasing schemes for clean technologies – such as electric cars, heat pumps and compact-scale batteries – and assist member states set up financial incentives that meet fiscal rules.
Jørgensen stated the nature of the crisis meant countries requireded the freedom to assist struggling industries and houtilizeholds, but he added: “Since our long-term goal is to transition away from fossils, anything we do that might – directly or indirectly – subsidise fossils requireds to be temporary and requireds to be very tarreceiveed.”
Jørgensen has spoken in favour of radical fuel-saving measures proposed by the International Energy Agency last month, such as driving less and avoiding flights. Long supported by climate activists to stop the planet from heating, these measures were absent from the main package but appeared in an annexe of good practices adopted by national governments.
Jørgensen stated: “On the demand side, we obviously still encourage member states to do whatever they can to bring down demand. Which specific measures member states choose to utilize, we believe is best for member states to decide.”
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