EU to claw back energy firms’ profits rather than cap Russian gas price

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BRUSSELS — European Union energy ministers on Friday tasked Brussels with drafting proposals within a few days to cap the revenues of non-gas energy producers and help power firms stay afloat.

But as they sought to protect citizens from soaring energy prices that have driven inflation across the continent to record highs, the ministers backed away from more divisive proposals to cap Russian gas prices.

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At an emergency meeting in Brussels, the ministers instead asked the European Commission to propose broader gas price caps, even as the EU executive itself swiftly poured cold water on the feasibility of such an idea.

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EU countries also supported the executive’s proposal to offer emergency funds to power firms facing soaring collateral requirements, and charged the Commission with designing such measures.

“Everybody is in a hurry to find a solution,” Sweden’s Energy Minister Khashayar Farmanbar said, as ministers worried over the impact of sky-high energy prices on households and businesses.

The EU’s windfall plan, yet to be fleshed out, would see governments skim off excess revenues from wind, nuclear and coal-fired power plants that can currently sell their power at record prices determined by the cost of gas, and use the money to curb consumer bills.

Fossil fuel companies would also have to pay a “solidarity contribution,” a summary of the meeting said.

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“Taking some of those excess profits and recycling them back into the households makes sense,” Irish Environment Minister Eamon Ryan said on Friday about the Commission’s recommendations.

It is set to unveil the proposals on Tuesday. Energy ministers might well hold another emergency meeting later this month to negotiate and approve the final plans, Czech Industry Minister Jozef Sikela said.

NO RUSSIAN GAS PRICE CAP FOR NOW

President Vladimir Putin said this week that Moscow would cut all supply to Europe if a price cap was applied on Russian gas. Some countries that still receive Russian gas said they were unwilling to risk losing that supply.

“If price restrictions were to be imposed exclusively on Russian gas, that would evidently lead to an immediate cut-off in Russian gas supplies,” Hungarian Foreign Minister Peter Szijjarto said.

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Italy’s Ecological Transition Minister Roberto Cingolani said 15 EU states spoke in favor of a generalized price cap on all imports of gas. But countries including the Netherlands expressed doubts.

“I would not say there was broad support for a broad (gas price) cap,” Dutch State Secretary for the Extractive Industries Hans Vijlbrief told reporters.

The European Commission warned that capping liquefied natural gas prices in Europe could risk diverting it to other regions instead, depriving Europe of much-needed fuel.

“We have to take care that we will not jeopardize our security of supply situation,” EU energy commissioner Kadri Simson said.

The EU executive had not included a general gas price cap in a list of measures it suggested to countries ahead of Friday’s meeting.

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Russian gas pipeline deliveries via the three main routes to Europe have fallen by almost 90% in the last 12 months, Refinitiv data show. Moscow has blamed supply cuts on technical issues caused by Western sanctions over its invasion of Ukraine.

VNG, one of Germany’s biggest importers of Russian natural gas, on Friday became the latest European energy firm to seek state support because of Moscow’s supply cuts.

As EU countries backed the idea of EU-wide “emergency liquidity instruments” to help companies facing soaring collateral requirements, European Central Bank chief Christine Lagarde said on Friday that governments, not central banks, should help energy firms under stress from market volatility.

($1 = 0.9914 euros) (Reporting by Kate Abnett; Additional reporting by Jan Loptaka, Sabine Siebold, Bart Meijer, Marine Strauss; Writing by Ingrid Melander and Kate Abnett; Editing by Edmund Blair, Elaine Hardcastle and Tomasz Janowski)