Tax changes to reduce energy bills - EU proposal part of response to consequences of war in Iran
The European Union is preparing changes to energy taxes and network tariffs, including plans to tax electricity at a lower rate than gas, in a bid to lower consumer bills.
The European Commission's proposal is part of the EU's response to the consequences of the Iran war on energy markets, which have driven up oil and gas prices, increasing consumer bills due to the bloc's dependence on imported fossil fuels.
The move would require national governments to tax electricity at a lower rate than natural gas, aiming to accelerate the shift from fossil fuels to electricity in transport, industry and heating, where oil and gas still dominate. By reducing the relative costs of energy, this would increase the competitiveness of technologies such as electric cars and heat pumps. Swift EU action is needed "to reduce electricity bills and the EU's dependence on fossil fuels," the draft says.
Governments would still be able to set national tax rates, provided they are consistent with the general rule. The draft, which could still change before publication, would also require countries to encourage consumers to shift usage to times of day when energy is cheaper.
"Network users should be incentivized to behave in a system-friendly manner, by adjusting their energy use or shifting it to times and places where cheaper energy sources are available," the draft said.
To support this, the EU will set a target for half of all electricity consumers to have a smart meter by 2030, enabling them to track consumption and benefit from cheaper prices during off-peak hours.
The tax changes would need approval from EU lawmakers and a supermajority of EU countries. EU diplomats said some countries opposed the plans, arguing that tax changes should require unanimous approval and warning that it could set a precedent for speeding up such measures.
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