By Kate Abnett BRUSSELS, April 22 (Reuters) - The European Commission will publish a package of measures on Wednesday seeking to offset surging energy prices, as countries grapple with the biggest
Factbox-Europe's response to the Iran war energy crunch
By Kate Abnett
European Union Measures to Address the Energy Crisis
BRUSSELS, April 22 (Reuters) - The European Commission published a package of measures on Wednesday seeking to offset surging energy prices, as countries grapple with the biggest shock to energy markets in history from the Iran war.
Here's how the European Union plans to respond.
Electricity First
Reducing Reliance on Oil and Gas
Central to the EU proposals is a focus on reducing reliance on oil and gas, to cushion against future fossil fuel supply disruptions and price spikes.
Tax Rule Changes and Incentives
The Commission set out plans on Wednesday to change EU tax rules, to ensure electricity is taxed below natural gas, confirming draft plans previously reported by Reuters.
That aims to incentivise consumers and companies to replace systems running on gas with heat pumps, and industrial machinery that runs on electricity.
The proposal will also make it easier for governments to cut energy-intensive industries' and vulnerable households' electricity taxes to zero, to curb bills in the near term.
Brussels will make legal proposals to amend the tax rules in May. EU tax rules are politically difficult to change, because they require unanimous approval from all 27 member states.
Current Electricity Taxes
Electricity taxes and levies in the EU are, on average, around twice as high as those for natural gas, according to analysis by think tank Strategic Perspectives.
Electrification Target
The Commission will also propose an electrification target before summer, to push industries to switch from fossil fuels to electricity.
Oil and Gas Stocks
Coordinating Gas Storage
The European Commission will coordinate countries' efforts to fill gas storage in the coming months - including the timing of purchases.
The aim is to avoid price spikes, which could be caused by companies rushing to buy at the same time.
Gas storage is currently 31% full, but the EU requires this to rise to 80% ahead of winter and companies have been slow to replenish stocks while prices are unusually high.
Oil Stock Releases
Brussels will also facilitate possible releases of oil stocks, by coordinating the timing and volumes in the EU, the Commission said. International Energy Agency members - which include most EU countries - agreed last month to release 400 million barrels of oil from their reserves, in a bid to calm oil markets.
Jet Fuel
Jet Fuel Imports and Risks
The EU imports about 40% of its jet fuel, of which half comes via the Strait of Hormuz. Airports have warned Europe could face jet fuel shortages within weeks.
Mapping and Managing Fuel Supply
The Commission will map Europe's transport fuel supply and stocks and step in to optimise the distribution of fuel to avoid shortages, it said. It will also consider reviewing the EU's requirement for countries to hold at least 90 days of oil stocks, to include a specific jet fuel requirement.
Guidance for Shortages
Brussels will draw up guidance on how to handle potential jet fuel shortages - on issues such as airlines losing airport slots due to cancellations and the EU's anti-tankering rule, designed to prevent planes from loading extra fuel in cheap locations.
Refining Capacity Measures
The European Commission will also map Europe's refining capacity and introduce measures next month to ensure that existing capacity is fully used, it said.
'Immediate Relief'
Recommendations for Immediate Action
The EU proposals include a list of recommendations to provide "immediate relief", although it will be up to individual governments to take them up.
They include delaying nuclear power plant closures, financial help to quickly install plug-in batteries and solar panels, and reducing the price of public transport.
State Aid
Subsidies for Fuel and Fertiliser
Separately to the proposals published on Wednesday, the EU is preparing plans to let countries subsidise fuel and fertiliser prices more.
In a draft of these temporary state aid rules, seen by Reuters, the EU would let governments subsidise up to 50% of fuel or fertiliser price increases companies have paid since the Iran war began.
Eligibility and Aid Intensity
In a bid to avoid massive, untargeted subsidies straining public budgets, only a few sectors will be eligible - including farming, fishing and road transport. The subsidies must be granted this year.
The draft EU plan would also allow a higher intensity of aid to help industries pay their power bills.
(Reporting by Kate Abnett; Editing by Kirsten Donovan)
