Home Business in the European Union, the noose is tightening on energy companies

in the European Union, the noose is tightening on energy companies

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Slowly but surely, the noose is tightening around French energy companies. On the occasion of a preparatory meeting for the European summit on Friday, the European Commission announced on Wednesday 7 September that it would propose to the Member States the establishment of a dual mechanism aimed at involving energy companies in the resolution of the current energy crisis.

Energy: Europe tries to rhyme “electricity” and “solidarity”

Among the measures proposed, that of a ceiling on the income of companies producing electricity, as well as the creation of a “solidarity contribution” which would weigh this time on the oil and gas giants which have also largely benefited of the surge in prices in recent months. Thanks to the financial windfalls thus collected, “States could help consumers get through the energy crisis”, but also “invest in clean energy sources”says the Commission.

France urged to act

Finally, the opportunity for France to get out of the tax trap on superprofits? For months, the subject has divided the political class, even in the ranks of the majority. Bruno Le Maire, in Bercy, has always strongly opposed it, on the grounds that it would contravene the presidential promise not to increase taxes, while in Matignon, Élisabeth Borne was more open to it.

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But in recent days, with the German reversal, the French position had become more and more untenable. After Italy, Great Britain, or even Spain, German Chancellor Olaf Scholz announced last weekend the introduction of a contribution weighing on electricity producers, taking unfair advantage of the increase gas prices. Cornered, the French president therefore ended up giving in too, however referring the file to the European Commission, which has therefore just made its proposals…

Terms yet to be determined

So concretely, what could this contribution look like? And how would it be different from a tax on superprofits? For the moment, it is still a little early to say, the Commission has not specified all the technical details of these two devices, which will no doubt be revealed on Friday.

With regard to electricians, Brussels is proposing to cap their income above a certain threshold, which according to leaks, could be set at €200 per megawatt hour (electricity is currently bought on the markets at €440 per MWh in France). A figure that has not yet been confirmed.

In any case, all electricity generation capacities would be concerned: wind farms, solar, nuclear and coal-fired power stations. Gas-fired power stations, which pay a very high price for their supply and which are therefore at the origin of the rise in electricity market prices, would be excluded.

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As for the contribution of fossil fuel producers, the Commission’s proposal is even more vague. In particular, it did not specify what the target base could be (turnover, profits?), nor whether it was thinking of involving companies operating and producing gas and oil in the territory of the European Union, or whether a larger contribution could be claimed from all the European companies having their headquarters in Europe. In this last case only, the French TotalEnergies (which does not extract oil in France), could be concerned.

The other profiteers of the crisis excluded

What is certain is that at this stage the measures devised by Brussels do not include the other “winners” or “profiteers” of the crisis, such as the shipowner CMA CGM, or even the banks, which have yet seen their results explode in recent months.

In France, many opposition MPs continue to plead for a much broader mechanism. A parliamentary fact-finding mission led by a Renaissance deputy and an LFI deputy has just started, and must deliver its conclusions in October, just before the examination of the finance bill for 2023.

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