EU lays out five-point plan to tackle energy crisis as Russia stops gas flow via pipeline

As Russia cut off the gas supply via its main pipeline 'Nord Stream 1' to Europe, the governments across the bloc scrambled to find ways to shield households from the impact of the energy crisis and surge the costs to record highs. The EU laid out the plans for imposing the windfall taxes, introducing mandatory electricity savings and capping the price of Russian gas to limit Kremlin revenues and weaken Russia's president Vladimir Putin's resolve in Ukraine. EU's Ursula von der Leyen on Wednesday underscored the key five-point plan to tackle the energy price crisis, exacerbated due to the surging post-COVID-19 pandemic demands. 

In the EU, the price of electricity is determined via gas, and the dearth of supply via the Nord Stream 1 has expanded the income for the low-carbon electricity generators. “These revenues do not reflect their production costs,” Von der Leyen said at a conference. She stressed, that it was time that the consumers utilize the low-cost low-carbon sources as a means of energy.” She proposed to  “re-channel these unexpected profits” in order to support vulnerable households and businesses.

EU to cap the prices of Russian energy to shrink revenue

EU member Czech Republic, which currently holds the European Union's rotating presidency, is mulling summoning an emergency energy summit to discuss the price caps. The low-carbon energy companies, including the renewable and nuclear suppliers, have made "huge income" and a cap on their revenues was the need of the hour, said Von der Leyen. Putin in a state address dismissed EU's attempts to cap the prices of oil and gas as “stupid” and “sheer nonsense." 

EU plans to introduce the windfall tax for the oil and gas companies that cash enormous profits. The commission is planning to tax the corporations at €200 (£173) per megawatt hour limit to the price of electricity generated by low-carbon technologies, according to the document accessed by the Guardian newspaper. This arrangement would "mimic the market outcomes that could be expected where global supply chains functioning normally and not subject to the weaponisation of energy through gas supply disruptions," the document outlined. 

Additionally, the EU is planning to impose a mandatory 5% reduction in electricity consumption, particularly during peak hours for businesses. Bloc is expected to set a mandatory target for consumers to conserve energy for the harsh winters. EU will explore alternatives to the nearly €88bn of Russian fossil fuels imports since the invasion. EU plans to introduce the measures to combat the effects of climate change as it switches to renewable sources as “energy insurance for the future”.