EU to make fossil fuel firms to share excess profits to help consumers

By Ayushi Garg  | Date: September 14, 2022

EU to make fossil fuel firms to share excess profits to help consumers

A proposed European Union plan has recently announced that fossil fuel companies will  have to share their extra profits to help European consumers and various marketplace to  cope up with soaring energy bills.

The news came on the heels of Moscow cutting gas supplies in reaction to Western sanctions over its activities in Ukraine, which is why energy costs and inflation have skyrocketed. As a result, France told customers they would have to share some of the pain, while Britain may possibly face a recession.

For those unaware, the 27 EU nations would implement a solidarity payment for the fossil fuel industry. According to the draught, gas, oil, coal, and refining corporations would be required to make a financial contribution on the basis of taxable excess profits made in the 2022 fiscal year.

Further,  the measures are also anticipated to include a lifesaving medium  for electricity companies experiencing a shortage of cash. Diplomats indicated that countries are divided over the specifics and whether to set up a limit  on the price of petrol they pay. Russia has threatened to stop all shipments if a cap is put on its gas transaction.

According to the proposal, these businesses generate erratic excess earnings, the solidarity contributions are justified. It is also mentioned that these earnings don't match any ordinary profits that these entities could have anticipated to make under typical conditions.

It is worth mentioning here that profits for energy businesses have increased this year as a result of a quick recovery in demand after the pandemic  and a spike in oil and gas prices brought on by Russia's invasion of Ukraine.

To make a note profits for significant European energy companies increased in the second quarter. While Shell recorded a quarterly profit of USD 9.8 billion, TotalEnergies claimed a record-high profit of USD 11.5 billion.

 

Source Credit:https://www.reuters.com/business/energy/rocketing-energy-prices-hit-europe-debates-gas-price-cap-2022-09-12/

About Author

Ayushi Garg     ibmag.com

Ayushi Garg

Currently working as an associate content writer, Ayushi pens down insightful articles for several websites. She began her profession by taking classes in digital marketing to broaden her skills. Given her passion for writing, she took up several freelancing projects ...

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