EU wants to cut electricity prices: Brussels responds to costly war with Iran

The European Union plans to cut taxes on electricity. Member states could even abolish the tax entirely for energy-intensive sectors. Brussels also wants to accelerate the rollout of renewable energy technologies. According to Bloomberg, this is set out in a document the European Commission (EC) plans to present on 22 April. The AccelerateEU plan is intended to protect European consumers from the sharp rise in oil and gas prices triggered by the war in the Middle East, as well as from future energy shocks.

Under the proposal, electricity would be taxed at a lower rate than fossil fuels. Member states would also have more options to reduce the electricity tax to zero for energy-intensive sectors.

European gas prices nearly doubled in the first three weeks of the US-Israeli war with Iran. On Tuesday, despite a slight decline, they were still around 35 percent above pre-war levels.

The draft document says Europe cannot afford to remain exposed to increasingly frequent shocks in energy markets. Any delay in investment in the energy transition risks higher costs for society, the authors of the draft say.

To prevent price increases driven by current purchases at high prices, the EU plans to coordinate the filling of natural gas storage facilities from this month, according to the report. A target for electrification, intended to encourage industry to switch from fossil fuels to electricity, is also due to be proposed before the summer. Next month, investment catalogues for energy-efficient and low-carbon technologies are to be presented to the energy ministers of the member states, along with guidance on financing so-called smart grids.

The EU’s costs for importing fossil fuels have risen by more than 22 billion euros (535 billion Kč) since the start of the war with Iran, EC President Ursula von der Leyen said at a press conference in Brussels on Monday. She added that EU leaders would discuss the plan, due to be presented next week, at an informal meeting in Cyprus the following day.

“We are lagging behind the United States and China in electrification,” von der Leyen said.

“Electrifying Europe means making Europe more independent,” she added.