The effectiveness and distributional consequences of excess profit taxes or windfall taxes in light of the Commission’s recommendation to member states
Executive summary
Author
Nicolay, Katharina
Spix, Julia
Steinbrenner, Daniela
Woelfing, Nikolas
Date
2023-04-03Subject headings
Crisis management ; Electrical energy ; Energy market ; EU Member StateAbstract
The current energy crisis is in essence a shock in natural
gas prices, which also affects electricity prices. Energy
prices had been increasing in Europe for over a year
before the Russian invasion of Ukraine in February
2022. With the economic recovery in 2021, global
natural gas demand bounced back to pre-pandemic
levels and outstripped supply. European natural gas
prices increased further following the invasion of
Ukraine, and surged after Russia began restricting its
exports to the EU in June 2022. Since many power
plants are gas-fired, the lower natural gas supply
induced an increase in electricity prices. Wholesale
electricity prices are not homogeneous across Member
States and reflect different levels of dependency on
natural gas imports and of electricity interconnection with neighbouring countries. This upsurge in energy
prices has dramatically increased firms' input costs and households' energy expenditure.
Number of pages
4p.Language
EnglishDescription
DOI 10.2861/995695Catalogue number QA-09-23-152-EN-N