Five EU finance ministers call for tax on energy companies' windfall profits

European gas prices have risen more than 70 percent since the war began

Five European Union finance ministers are calling for a tax on windfall profits of energy companies in reaction to rising fuel prices due to the Iran war, according to a letter from the ministers to the EU Commission seen by Reuters on Saturday.

The finance ministers of Germany, Italy, Spain, Portugal and Austria made the joint call in a letter dated Friday, saying such a measure would be a signal that "we stand united and are able to take action".

"It would also send a clear message that those who profit from the consequences of the war must do their part to ease the burden on the general public," they wrote.

Oil and gas prices have spiked since the US-Israeli strikes on Iran began on Feb 28, creating a price shock similar to the energy crisis Europe went through after Russia invaded Ukraine in 2022 - even though EU countries are now getting more energy from renewable sources.

Letter Highlights ‘Market Distortions’

In the letter, addressed to EU Climate Commissioner Wopke Hoekstra, the ministers pointed to a similar emergency tax in 2022 to address high energy prices.

"Given the current market distortions and fiscal constraints, the European Commission should swiftly develop a similar EU-wide contribution instrument grounded on a solid legal basis," they wrote.

The letter gave no details of what level of windfall tax the ministers were proposing, or on which companies it should fall.

The bloc's energy chief said on Tuesday it was considering reviving energy crisis measures used in 2022, including proposals to curb grid tariffs and taxes on electricity.

The EU introduced a suite of emergency policies in 2022, after Russia cut gas deliveries. They included an EU-wide cap on gas prices, a tax on energy companies' windfall profits, and targets to curb gas demand.

Europe's heavy reliance on imported fuel leaves it exposed to the Middle East conflict's impact on global energy prices. European gas prices have risen more than 70 percent since the US-Israeli war with Iran began on Feb 28.

EU Energy Commissioner Dan Jorgensen said Brussels was particularly concerned in the short term about Europe's supply of refined petroleum products such as jet fuel and diesel.