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EU unlikely to cap Russian gas prices: Report

A Floating Storage Regasification Unit (FSRU) is docked at the new EemsEnergyTerminal in Eemshaven on September 8, 2022. - In order to be less dependent on Russian gas the terminal will convert liquefied natural gas into gaseous natural gas after which it can be fed into the national natural gas network. (Photo by Siese VEENSTRA / ANP / AFP) / Netherlands OUT (AFP)Premium
A Floating Storage Regasification Unit (FSRU) is docked at the new EemsEnergyTerminal in Eemshaven on September 8, 2022. - In order to be less dependent on Russian gas the terminal will convert liquefied natural gas into gaseous natural gas after which it can be fed into the national natural gas network. (Photo by Siese VEENSTRA / ANP / AFP) / Netherlands OUT (AFP)

The European Union is retreating from imposing a price cap on Russian gas, but pushing ahead with windfall taxes on energy companies' surplus profits, the Guardian reported on Tuesday, citing a leaked document.

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Is the European Union retreating from imposing a price cap on Russian gas? Instead moving towards a windfall tax on energy company's ‘surplus’ profits. The Guardian reported on Tuesday, citing a leaked document. 

A draft guideline document on the "electricity emergency tool" accessed by the newspaper fails to mention either a price cap on Russian gas nor on imported gas. This comes after European nations couldn't settle on restrictions last week. The EU is instead looking at demanding bonus charges on the high benefits of fossil fuel companies, with a separate cap on revenues of low-carbon power producers. 

The retreat comes after Russia's offensive on cutting gas supply to the region, leading to an unprecedented power crisis in the region and pushing the nations towards recession.

The last text might in any case change, yet the draft uncovers the Commission's questions over acquiring sufficient help from EU part states for its favored choice of setting a limit for Russian gas because of what it has called the Kremlin's weaponisation of supply.

With EU states divided, the Commission, which is liable for drafting EU legal proposition, is chasing after measures that join the 27 countries. EU legislatures are generally supportive of capping the price of electricity from low carbon sources, for example, renewables or atomic, and reusing these assets to vulnerable families and businesses.

While Netherlands, Denmark and Germany are wary of any caps on Russian gas prices, as it may lead to division.

The EU states that import large amount of gas from Russia have spoken against capping the Russian gas prices because they fear Kremlin will stop the gas supply which will put their countries into recession. 

Putin has already threatened to halt supplies if EU plans anything like that.

Oil and gas companies will face a separate windfall tax, described as a “solidarity contribution". The leaked document estimates that there will be a fivefold increase in oil, gas and coal companies’ profits in 2022. These “surplus" and “unexpected" profits, do not result from any economic or investment choices, states the commission, but “unpredictable developments in the energy markets following the ongoing illegal war in Ukraine". No rate for the windfall tax is proposed in the text.

With inputs from agencies.

 

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