High Electricity Taxes Are Crippling European Industry

Authored by Tsvetana Paraskova via OilPrice.com,

European countries need to work out ways to lower taxes on electricity to revive the competiveness of Europe’s energy-intensive industries, Leonhard Birnbaum, president of electricity lobby Eurelectric, told Reuters in an interview published on Monday. 

Power prices in the EU are up to three times higher than in the United States, for example, which further erodes the competitiveness of energy-intensive industries including aluminum, steel making, chemicals, and cement production. 

Europe is losing and will continue to lose competitiveness and jobs if it doesn’t tackle its high energy costs compared to other regions, Morten Wierod, chief executive of Switzerland-based engineering giant ABB, told Bloomberg last month. 

To restore competitiveness for European companies which have been suffering from high energy costs, the EU governments should look to lower the high energy taxes, according to Eurelectric’s Birnbaum. 

“We appreciate that states always need more money, but if you really want to electrify then you can’t have, for example, an over-proportional tax burden on electricity compared to the tax burden on gas,” said Birnbaum, who is also chief executive of German utility giant E.ON. 

The problem with these taxes lies in the fact that part of the levies and fees on electricity are individually set by the single EU countries, where the EU has no jurisdiction. 

Earlier this month, Eurelectric and energy intensive representatives CEFIC and European Aluminium discussed how to strengthen Europe’s competitiveness and electrify industry. 

The group proposed six actions to ease the pressure on energy-intensive industries, which include “level out electricity taxes and levies.”

“Fixing Europe’s perverse energy taxation” is a way to lower energy prices and support electrification, said Eurelectric and the lobbies of the energy-intensive industries.

Taxes on electricity in the EU as a share of the final bill are respectively three and three and a half times higher for household and industrial consumers compared to natural gas, the industry said. 

“A well-functioning market with long-term investment signals, incentives to reinforce infrastructure and lower taxes on electricity are no-regret solutions that can be implemented immediately,” said Eurelectric’s Secretary General Kristian Ruby.