The European Union has set out plans to raise more than £120bn with a windfall tax and revenue cap on energy suppliers, as its commissioner reiterated the bloc’s backing for Ukraine.
The body announced it would cap revenues for non-gas energy suppliers in a bid to reverse the fuel problem in Europe, sparked in part by the Russian invasion of Ukraine.
The EU will cap revenues for producers of low-cost power including renewables, while it also considers a windfall tax on fossil fuel companies.
European Commission President Ursula von der Leyen spoke about the announcement in Brussels today during her annual state of the union speech.
She said: “In these times it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of our consumers.”
“In these times, profits must be shared and channelled to those who need it most.”
This comes as the continent faces the prospect of a winter with blackouts as Moscow threatens to turn off the taps, in response for widespread support for Ukraine in the war.
The European Union initially tried to cap Russian gas prices but this was abandoned over concerns it would damage energy supply security.
Russia has turned off supplies from the Nord Stream 1 pipeline.
Von der Leyen also committed to a “more representative benchmark” for energy, working to untie power prices from the cost of gas, which is soaring.
During von der Leyen’s speech, se also reiterated the bloc’s support for Ukraine, announcing she would visit the capital Kyiv today.
Speaking in Brussels, she said sanctions against Russia are “here to stay”, and that it was “the time for us to show resolve, not appeasement” against the Kremlin.
This comes as Ukrainian forces have made major gains in the east of the country, driving Russia back and retaking the region of Kharkiv.
She called the single market a “success story”, adding that it is “now time to make it a success story for Ukrainians too.”
“That’s why today, I’m going to Kyiv to discuss all this with President Zelensky, and to show him what the single market is, as a potential for Ukraine’s future too.
Earlier this week, Goldman Sachs warned UK and European governments that freezing energy prices risks blanketing the continent in power blackouts.
It said keeping energy bills artificially low is likely to stimulate energy demand, possibly causing supplies to run dry.
In the UK, Prime Minister Liz Truss intentions for a £150bn energy package to assist with the soaring cost of energy, amid an 80 per cent rise in the price cap last month.