Europe's response in the face of Iran war energy crisis

On Wednesday, the European Commission released a set of measures to counter the rising energy prices. This comes as countries deal with the greatest shock in energy market history - the Iran War.

The European Union has a plan.

ELECTRICITY FIRST

The EU's proposals are centered on reducing the reliance on fossil fuels, in order to protect against future price increases and disruptions of supply. The Commission announced plans on Wednesday to alter EU tax rules to tax electricity lower than natural gas. This confirms draft plans reported previously by.

This is a program that encourages consumers and businesses to switch from gas-powered systems to heat pumps and to industrial machinery powered by electricity.

This proposal also makes it easier for the government to reduce electricity taxes on energy-intensive industries and households that are vulnerable to bills to zero.

Brussels will present legal proposals in May to amend tax rules. EU tax rules can be politically difficult to change because all 27 members must agree.

According to Strategic Perspectives, the average electricity tax and levies across Europe are around two times higher than those for natural gas.

Before summer, the Commission will propose an electrification goal to encourage industries to switch to electricity from fossil fuels.

OIL AND GAS STOCKS

The European Commission will coordinate the efforts of countries to fill up gas storage in the next few months, including timing purchases.

It is important to avoid price increases that could result from companies buying?at the exact same time.

Gas storage is only 31% full. The EU wants this figure to reach 80% by winter. Companies have been'slow to replenish stock, while prices are unusually high.

The Commission stated that Brussels would also facilitate the possible release of oil stock by coordinating timing and volume in the EU. The International Energy Agency, which includes most EU member countries, agreed to release 400,000,000 barrels of crude oil last month in an effort to calm the oil markets.

JET FUEL About 40% of the EU's jet fuel is imported, and half of that comes through the Strait of Hormuz. Airports in Europe have warned that jet fuel shortages could occur within weeks.

It said that the Commission would map Europe's fuel supplies and stockpiles and intervene to optimize fuel distribution to prevent shortages. The Commission will also review the EU requirement that countries hold 90 days' worth of oil in order to meet specific jet fuel requirements.

Brussels will issue guidance on how it can handle possible jet?fuel shortages. This includes issues like airlines losing airport slots because of cancellations, and the EU anti-tankering regulation that prevents planes from?loading extra fuel at 'cheap places.

It said that the European Commission would also map Europe's refinery capacity and implement measures next month to make sure existing capacity is fully utilized.

'IMMEDIATE RELIEF'

The EU proposals contain a list containing recommendations for "immediate relief" although it is up to the individual governments whether they will implement them. The EU proposals include a list of recommendations to provide "immediate relief", although it will be up to individual governments whether they take them up.

STATE AID In addition to the proposals that were published on Wednesday, EU is working on plans to allow countries to subsidise fuel prices and fertilisers more. The EU will allow governments to subsidise 50% of the fuel and fertiliser price hikes that companies have paid in the past since the Iran War began.

To avoid large, untargeted subsides straining the public budget, only a select few sectors are eligible. These include farming, fishing, and road transportation. Subsidies must be given this year.

The draft EU plan also allows for a greater intensity of assistance to help pay the electricity bills by industries. (Reporting and editing by Kirby Donovan; Kate Abnett)

(source: Reuters)