The European Commission is preparing to adopt next week a policy paper to recommend lowering energy taxes and grid charges as the EU looks to reduce the impact of the Hormuz crisis on households and industry, sources familiar with the plan told Bloomberg on Monday.
Various EU member states have already taken steps to support households and businesses in uncoordinated national measures to blunt the impact of the second major energy crisis in four years.
Now the Commission is set to adopt on April 22 a policy paper that would outline recommendations of lower taxes and reduced grid charges as a means to boost renewable energy rollout amid soaring natural gas prices, which have led to spiking power costs for consumers.
The paper is also expected to recommend reducing the taxation on electricity, and ensuring that electricity is taxed more favorably than fossil fuels, according to Bloomberg’s sources.
The energy crisis in Europe is already felt with spiking gasoline, diesel, and natural gas prices, while in the jet fuel market there is a real threat that shortages would arrive as soon as early May.
“We don’t expect any disruption until early May, but if the war continues, we do run the risk of supply disruptions in Europe in May and June, and we hope the war will finish sooner than that and the risk to supply will be eliminated,” Ryanair CEO Michael O’Leary told Sky News earlier this month.
Around that time, Dan Jørgensen, European Commissioner for Energy and Housing, warned oil and gas prices would not return to pre-war levels soon even if the conflict in the Middle East were to end today.
In financial terms, 30 days of conflict already added $16.2 billion (14 billion euros) to the EU’s fossil fuels import bill, Jørgensen said at an informal meeting of EU energy ministers at the end of March.
The EU’s import bill has further soared this month and risks of shortages of fuels has become all too real with supplies trapped at the Strait of Hormuz and oil and gas prices skyrocketing.
By Michael Kern for Oilprice.com
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