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Dáil Éireann Debate, Thursday - 22 September 2022

Thursday, 22 September 2022

Questions (214)

Pearse Doherty

Question:

214. Deputy Pearse Doherty asked the Minister for Finance the discussions that have been held at the Eurogroup regarding a windfall tax on energy companies since October 2021; the views that he has expressed with regards to this issue at Eurogroup level; and if he will make a statement on the matter. [46500/22]

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Written answers

There is an energy crisis currently, affecting not only Ireland but also all of Europe. The war in Ukraine has led to volatility in energy markets and exacerbated supply constraints in the electricity market. I am well aware of the difficulties Irish households and businesses are going through arising from substantial increases in energy bills.

It is clear the increase in energy prices is leading to windfall gains for some energy companies across Europe, particularly those involved in the production of fossil fuels and those producing energy using technologies that are not dependent on gas. Where such producers sell at the current market price, they benefit from the market price inflation but without suffering any significant increase in their production costs. My officials have been working with the Department of the Environment, Climate, and Communications to attempt to quantify such gains, and to explore the potential of collecting a portion of these windfall gains to provide support to energy consumers during these difficult times.

Work in this regard is now focusing on a proposed European Commission Regulation which is under rapid negotiation. Gains to electricity producers are driven by the market structure, which determines the marginal price paid for each unit of electricity sold. For this reason, the EU Regulation proposes to include an infra-marginal price cap in the electricity market, designed to limit windfall revenues for producers that are not experiencing input cost inflation. The Regulation also includes a proposed solidarity contribution from fossil fuel producers. The proposal will be negotiated throughout the remainder of this month with a view to being approved at a meeting of the Council of Energy Ministers on 30 September. I fully support the objectives of this proposal.

The Deputy has referenced discussions at Eurogroup and I can confirm that, since last October, the Eurogroup has regularly discussed energy prices and inflation. Euro area Finance Ministers have worked to coordinate policy measures so as to continue to drive the energy transition to more sustainable sources, while also targeting Government supports towards the most vulnerable. At our most recent Eurogroup meeting on 9th September last, we agreed to work with businesses and workers to avoid a wage-price spiral, and also agreed that supernormal levels of profitability should not be experienced by some while so many are suffering the economic consequences of a war.

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