Profits in energy: France in turn favors a “European contribution mechanism”

Emmanuel Macron at a press conference after a videoconference with German Chancellor Olaf Scholz on the subject of the energy crisis, at the Elysee Palace in Paris, September 5, 2022 (POOL/AFP/Ludovic MARIN)

France said on Monday that it was in favor of the European Union imposing a contribution on energy operators who would make “undue profits” with the surge in wholesale electricity prices on the continent, joining Germany who proposed this approach Sunday.

“We are defending a European contribution mechanism (…) which would therefore be requested from energy operators”, declared French President Emmanuel Macron, as the European Commission prepares its own plan to contain the soaring electricity prices seen this summer.

Rather than a national tax on superprofits, France therefore supports a non-fiscal mechanism, harmonized at European level, which would make it possible to recover part of the profits made by producers of renewable or nuclear electricity, who today produce a electricity at low cost but resold at record prices.

European electricity prices, whatever their mode of production, are in fact correlated to the price of gas, which has reached historic highs since the war in Ukraine. The total shutdown of the Nord Stream gas pipeline, which connects Russia to northern Germany, further boosted prices on Monday.

EU energy ministers will meet on Friday to discuss the situation at an extraordinary meeting. The Commission has proposed capping part of wholesale electricity prices, adopting regulated tariffs for the most vulnerable and strengthening incentives to reduce consumption, according to a draft consulted by AFP.

The energy contribution could “then be paid back to the States to finance their targeted national measures”, towards households and businesses, of the tariff shield type, explained the French president.

Germany, whose Chancellor Olaf Scholz spoke to Emmanuel Macron on Monday, is also defending this type of mechanism with the Commission.

“Producers are simply taking advantage of the very high gas prices which determine the price of electricity”, lamented the Chancellor on Sunday.

– “Sobriety” –

If the European Union does not adopt such a special contribution on energy operators, then “we will return to national debates”, said the French president, who for the moment rules out the creation of a special French tax on energy sector companies.

“To reduce price volatility, we believe it is essential to have measures to combat speculative practices,” added Mr. Macron, referring to the very sharp price variations of recent weeks in Europe. “Our wish is that there can be control mechanisms for these speculative operations at European level”.

Emmanuel Macron also said he was “in favor of common gas purchasing practices” in Europe, to buy “cheaper”, as well as capping the price of Russian gas delivered by pipeline.

“If the Commission were to decide to put a ceiling on the price of gas purchased through the gas pipelines from Russia, France will support such a measure”, he also declared.

Emmanuel Macron has announced that Paris is committed to delivering more gas to Germany, which could supply it with electricity, if the energy crisis requires it this winter.

“We are going to finalize the gas connections to be able to deliver gas to Germany (…) If there was a need for solidarity” and the latter “will put itself in a position to produce more electricity and from us (in ) bring in peak situations,” he explained.

While the energy situation is tense, Mr. Macron urged the French to “be on the lookout for sobriety” to avoid gas and electricity rationing this winter.

Finally, he considered that there was “no evidence of need” for a new gas pipeline between France and Spain.

This Midcat project, supported by Madrid and Berlin, is viewed with suspicion by Paris.

In Europe, “we need more electricity interconnection. I am not convinced that we need more gas interconnection, the consequences of which, in particular on the environment, and in particular on the ecosystem, are more important”.

© 2022 AFP

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