Faced with rising energy costs, geopolitical instability and mounting pressure on Europe's power grids, the European Commission wants to make electricity taxation more favourable than natural gas in a bid to lower bills, according to a document seen by Euronews.
The measure would be a partial response to industry demands that the EU lower electricity bills while accelerating the bloc's efforts to electrify transport, heating and industry and removing fiscal incentives that currently encourage continued reliance on fossil fuels.
The draft proposal from the Commission emerges against the backdrop of a renewed energy price shock linked to conflict in the Middle East and concerns over the Strait of Hormuz, which the Commission estimates has increased EU fossil fuel costs by roughly €500 million per day.
For energy-intensive industries, governments would be given greater flexibility to reduce electricity taxes — potentially to zero in some cases — to keep European manufacturing competitive. This coincides with a promise made by Commission President Ursula von der Leyen even before tensions in the Middle East exacerbated high electricity costs in the EU.
Environmental groups note that the Commission is attempting to introduce this change in the electricity market design rules, rather than in the energy taxation legislation, which would require unanimous approval from all member states. Previous attempts to review the tax framework in 2021 failed to reach a consensus.
