Irish hopes for billions under EU windfall tax proposals dashed

Hopes that the Government would receive billions of euro under European Commission proposals to cap energy prices and tax windfall profits were dashed on Wednesday.

Despite suggestions in recent days that Ireland could receive between “several billion” and €2 billion in European Union funding to assist with the energy crisis, the plan published in Strasbourg suggests that the amounts available will be considerably lower.

Although the commission had suggested that a figure of €140 billion could be raised by the plan over 12 months — from which it was hoped Ireland would receive about €2 billion — the measures are expected to be in place for only six months. The figure of €140 billion was based on “very rough estimates” and would be lower if energy prices fell, an EU official said.

In addition, the tax is proposed to be levied on companies where they are based and for revenues from the cap collected where the energy is produced. This would limit potential Irish earnings given some two-thirds of energy is imported into the country.

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European Commission president Ursula von der Leyen on Wednesday accused Russia of manipulating EU energy markets as a war tactic during her annual state-of-the-union address to the European Parliament. She declared that the EU would end its dependence on Russia as a source of energy.

Later, the commission revealed proposals for cuts of 5 per cent in the use of electricity during peak times to drive down prices and announced regulatory tweaks to prevent bankruptcies in the energy sector.

[ Inside Politics: Government left with jam on its face after EU over promises and under-delivers ]

[ Q&A: How will the EU’s proposals to siphon money from energy companies to households work? ]

Minister for Energy Eamon Ryan welcomed the EU proposals but said that the bloc has to move “quickly and decisively” to help people.

“The current electricity market is not working for people. This is one way we can begin to realign it,” he said.

He also said he fully endorsed Ms von der Leyen’s commitment to scaling up and speeding up the switch to renewable-energy systems, which she described as the “change of paradigm” needed to secure Europe’s energy independence.

Rising energy prices dominated exchanges in the Dáil as it returned following the summer recess.

Sinn Féin leader Mary Lou McDonald said the Government could protect households by “cutting and capping electricity bills” at levels from early last year. “It’s the right thing to do,” she said.

But Taoiseach Micheál Martin accused Ms McDonald of offering a “blank cheque” to energy companies and called on her to fully cost her proposals, which he said were “vague” and “one dimensional”.

The Taoiseach warned that the energy crisis would be “prolonged” and said the Government would “use a range of methods” to support households and reduce energy bills.

“But also giving flexibility to the people in the form of payments, either through the welfare system, through energy credits, through cost reductions or through investment in public services in the budget, which will also reduce costs for parents and for families,” he said.

He said that “many jobs could be at risk if enterprise become unviable because of the extraordinary increase in prices”.