The European Commission President has unveiled a plan to cap the revenues of electricity-producing companies that are making extraordinary profits thanks to the war in Ukraine and climate change.
Ursula von der Leyen told the European Parliament in Strasbourg that the proposal could raise 140 billion euro (£121 billion) to help people hit by spiralling energy prices.
During her State of the European Union address, Ms von der Leyen said: “These companies are making revenues they never accounted for, they never even dreamt of.
“In our social market economy, profits are OK, they are good. But in these times it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of consumers.
“In these times, profits must be shared and channelled to those who need it the most.
“Our proposal will raise more than 140 billion euro for member states to cushion the blow directly.”
With winter approaching, the 27 EU member countries are struggling to contain an energy crisis that could lead to rolling blackouts, shuttered factories and a deep recession. Russia has already cut gas supplies partially or entirely to 13 member countries.
Europe has also been hit by a drought said by experts to be the worst in 500 years.
Ms von der Leyen, dressed in a blue top and yellow jacket – Ukraine’s national colours – also said that the 27-nation bloc’s electricity market must be reformed to properly tackle the energy-price hike crisis that is hurting European businesses and households.
We have brought Europe’s inner strength back to the surface.
With unity, solidarity and determination.
My address #SOTEU ↓
https://t.co/P2TQ6IpudK— Ursula von der Leyen (@vonderleyen) September 14, 2022
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She said that a “deep and comprehensive reform of the electricity market” is required to reduce the influence of natural gas on the way that prices are set. Natural gas is used to power industry, heat homes and offices, and generate electricity.
Even before Russia started its war against Ukraine, many EU member states had been calling for a thorough and structural reform of the bloc’s energy market because they believe that the influence of gas in setting wholesale electricity prices is disproportionate.
“The current electricity market design … is not doing justice to consumers any more,” Ms von der Leyen added.
She also announced that she would be travelling to Kyiv later on Wednesday.
Ms von der Leyen said the EU would come to the aid of Ukraine by opening its seamless single market more to Ukrainian products.
She said she would “discuss all this with President (Volodymyr) Zelensky”.
The EU has already committed billions in aid to Ukraine since the February 24 invasion by Russia.
Ms von der Leyen also announced that the bloc will provide 100 million euro (£86 million) to rebuild Ukrainian schools destroyed during the invasion.
