The EU executive is unlikely to impose a price cap on Russian gas, according to a leaked document seen by the Guardian.
However, the EU is currently seeking to introduce windfall taxes on energy company “surplus” profits.
The Guardian published a report on the EU’s draft regulation on the “electricity emergency tool”, which contained no Russian gas price cap after member states failed to agree on restrictions last week.
The EU is expected to levy windfall taxes on the record profits of fossil fuel companies, with a separate cap on the revenues of low-carbon electricity producers.
European Commission president Ursula von der Leyen is expected to publish the Union’s plan to tackle spiking electricity costs in her annual state of the union speech this Wednesday.
The present text of the draft revealed the Commission’s doubts over getting sufficient support for the preferred option of capping Russian gas in response to the country’s “weaponisation of supply.”
Vladimir Putin has threatened to turn off the tap to countries reliant on Russian gas should the cap be passed, with nations including Hungary, Austria and Slovakia all at risk of a recession if Moscow halts supplies.
Around a dozen countries support the price cap on imported gas, including France and Poland. However, the Commission is reportedly not on board with the concept, due to concerns the EU would lose out to states willing to pay more in the competitive market for liquified natural gas.
Despite the division, EU governments generally back capping the price of electricity from low carbon sources, such as renewables or nuclear, and using the funds to support vulnerable households and businesses.
Meanwhile, oil and gas companies would be introduced to a separate windfall tax, labelled a “solidarity contribution.”
The leaked document estimates there will be a fivefold climb in oil, gas and coal firm profits in 2022, with the “surplus” and “unexpected” profits not linked to economic or investment choices, but to “unpredictable developments in the energy markets following the ongoing illegal war in Ukraine.”
The proposal did not set a target level of windfall tax in the document.
EU member states are also requested to agree on a binding target to lower electricity use over peak hours, however no figure has been suggested.
