Europe’s energy taxes are worsening industry woes, power CEO says

By Kate Abnett and Julia Payne

BRUSSELS (Reuters) – Governments hunting for ways to aid Europe’s struggling industries should take aim at the continent’s high energy taxes, which are eroding competitiveness, the head of Europe’s electricity lobby told Reuters.

The European Union is drafting a package of measures to support flagging industries, due early next year, as manufacturing giants from automakers to steel firms warn of plant closures and thousands of job losses.

Leonhard Birnbaum, President of industry group Eurelectric, said the woes of Europe’s energy-intensive industries are many, including a more fragmented market than China and difficult access to credit – but that policymakers seeking to offer fast relief should “rip out” from energy prices any costs unrelated to the industry’s structure.

“We appreciate that states always need more money, but if you really want to electrify then you can’t have, for example, an over-proportional tax burden on electricity compared to the tax burden on gas,” Birnbaum, who is also the CEO of German utility E.ON, told Reuters in an interview.

“If we are serious about cost competitiveness, if we’re serious about electrifying, if we’re serious about decarbonising, I think we need to act on this,” he said.

EU industries pay power prices 2-3 times higher than those in the U.S. Taxes made up, on average, 23% of the retail electricity price paid by Europe’s energy-intensive firms in 2023, analysis by the think-tank Bruegel showed.

But many of these levies are imposed by national governments, and outside of the EU’s control. Negotiations among EU countries on a proposal to rejig EU tax rules in favour of cleaner energy sources have been stuck since 2021.

The EU will publish a plan on affordable energy prices early next year. But with the tax changes stuck, and a recent EU power market reform still being introduced by national governments, some diplomats questioned what else Brussels can offer.

A senior official from one EU country said cutting taxes would provide only “limited” help, and broader measures were needed to help European industries compete with China – for example, EU rules requiring public procurement to buy locally-made, greener products.

“We have trade policy tools, we have competition policy tools… We need to see a larger context,” the senior official said.

Wholesale power prices in Europe last month climbed to their highest levels in over a year, although they remain far below their peak in 2022, after Russia invaded Ukraine and slashed gas deliveries to the EU.

This post is originally published on INVESTING.

  • Related Posts

    European gas prices surge on Putin’s comments

    Investing.com — European natural gas prices rose on Friday after Russian President Vladimir Putin downplayed the chances of securing a deal to continue gas flows to Europe through Ukraine. Benchmark…

    Oil heads for weekly gain on China stimulus hopes

    By Alex Lawler LONDON (Reuters) -Oil rose slightly on Friday and was on track for a weekly gain, spurred by expectations of a stimulus-driven economic recovery in China, the world’s…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    EUR/USD: Elliott Wave Analysis and Forecast for 27.12.24 – 03.01.25

    • December 27, 2024
    EUR/USD: Elliott Wave Analysis and Forecast for 27.12.24 – 03.01.25

    European gas prices surge on Putin’s comments

    • December 27, 2024
    European gas prices surge on Putin’s comments

    Silver Will Take Revenge. Forecast as of 27.12.2024

    • December 27, 2024
    Silver Will Take Revenge. Forecast as of 27.12.2024

    USD/CHF: Elliott Wave Analysis and Forecast for 27.12.24 – 03.01.25

    • December 27, 2024
    USD/CHF: Elliott Wave Analysis and Forecast for 27.12.24 – 03.01.25

    Oil heads for weekly gain on China stimulus hopes

    • December 27, 2024
    Oil heads for weekly gain on China stimulus hopes

    USD/СAD: Elliott Wave Analysis and Forecast for 27.12.24 – 03.01.25

    • December 27, 2024
    USD/СAD: Elliott Wave Analysis and Forecast for 27.12.24 – 03.01.25