• Get the biggest business stories emailed to you every weekday, or go to the Fin24 front page.

The European Commission wants to require fossil fuel companies benefiting from soaring energy prices to make a financial contribution to help citizens and industries grappling with rocketing energy costs, according to a draft document seen by Reuters.

The draft proposal, details of which are expected to be unveiled by Brussels this week, would see European Union countries introduce a ‘solidarity contribution’ for the fossil fuel industry.

Oil, gas, coal and refining companies would have to make a financial contribution based on “taxable surplus profits made in the fiscal year 2022”, according to the draft, which could change before it is published.

The temporary scheme would raise cash for governments to finance measures that can help mitigate Europe’s energy crisis, including by supporting households and businesses facing high energy bills, helping energy-intensive industries, cutting EU energy consumption, and making Europe more self-sufficient in its energy supplies.

READ | Eiffel tower lights to turn off earlier to save electricity

“The solidarity contributions are justified by the fact that such companies make unpredictable surplus profits, which are due to unforeseen circumstances,” the draft proposal said.

“Those profits do not correspond to any regular profit that these entities would or could have expected to obtain in normal circumstances should the unpredictable events in the energy markets … not have taken place,” it said.

The emergency energy situation, which was triggered by Russia’s Feb. 24 invasion of Ukraine, means the measure would be passed by a reinforced majority of member states – meaning it would not require unanimous approval from the 27 member countries.

The Commission will also propose a measure to claw back revenue from non-gas fuelled power plants and use the cash to support energy consumers facing surging bills, alongside a reduction in EU electricity demand, the draft said.

SOURCE:

EU plans to make fossil fuel firms share excess profits, draft shows | Fin24 (news24.com)