BRUSSELS – European Union countries should set a price cap on Russian natural gas and seek a “solidarity contribution” from European oil and gas companies making extraordinary profits as the war in Ukraine drives up energy costs, European Commission President Ursula von der Leyen said Wednesday.
With winter approaching, the 27 EU members are struggling to contain an energy crisis that could lead to rolling blackouts, shuttered factories and a deep recession. Russia has already cut gas supplies partially or entirely to 13 EU countries that use the fuel to heat homes, generate electricity and run factories.
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“We are facing an extraordinary situation, because Russia is an unreliable supplier but also because Russia’s actively manipulating the gas market,” von der Leyen told reporters in Brussels. “We must cut Russia’s revenues, which (President Vladimir) Putin uses to finance his atrocious war in Ukraine.”
She declined to recommend any price cap levels, saying that should be agreed during emergency talks among EU energy ministers Friday. The bloc’s executive arm is putting a raft of proposals on the table for the ministers to discuss.
Putin threatened to completely cut energy supplies to the West if it tries to cap prices of Russian exports, saying the move would violate contracts.
“In that case, we will just halt supplies if it contradicts our economic interests," Putin said Wednesday at an economic forum in the far-eastern port city of Vladivostok. “We won’t supply any gas, oil, diesel oil or coal.”
Meanwhile, Von der Leyen said the EU's executive Commission, which proposes EU rules and policies, noted that oil and gas companies have made “massive profits.” A European drought is fueling higher electricity demand and limiting the production of hydropower, just as Russia is wielding its energy might.
“We will therefore propose a solidarity contribution for fossil fuel companies,” von der Leyen said, urging member countries to “invest these revenues to support vulnerable households and invest in clean homegrown energy sources.”
She gave no other details. Some countries already have passed taxes on the windfall profits of energy companies.
Russian pipeline gas accounted for 40% of all imported gas into Europe before Putin ordered the invasion of Ukraine in February but now only accounts for 9%, von der Leyen. Norway now delivers more gas to the bloc than Russia.
The commission believes the EU is prepared for the winter, with joint gas storage levels at 82%; well ahead of the 80% target that had been set for the end of October.
Also Wednesday, Austria proposed a power price cap that should ease costs for an average household of three by about 500 euros ($494) per year, Chancellor Karl Nehammer said.