Transport & Environment (T&E) has called on governments to tax the profits of fossil fuel companies in order to reduce low-income households’ exposure to fuel and energy price fluctuations.
T&E made the call as it reported that fossil fuel firms recorded more than €180 billion in profits across the EU during the two years following Russia’s invasion of Ukraine.
According to a study by PwC Belgium, which was commissioned by T&E, oil and gas firms across the European Union generated over €104 billion in profits in 2022, up 45% year-on-year, before seeing profits decline 21% in 2023 to €82 billion.
‘Clear policy choice’
T&E said that while governments have sought to limit energy price rises through tax reductions and consumer exemptions, by doing so, they have also helped sustain demand for fossil fuels and in turn boost earnings for companies in the sector.
It called on the EU to make a ‘clear policy choice’ – to either phase out fossil fuel subsidies (which currently exceed more than €100 billion annually), or impose sustained taxes on excessive profits generated by businesses in the sector.
‘Shifting wealth’
“Oil and gas companies have made fat profits in recent years due to circumstances completely out of their hands,” commented Antony Froggatt, senior director at T&E.
“Government measures that keep fossil fuel demand high, like fuel duty cuts in times of high prices, simply end up shifting wealth from the public purse to private oil and gas companies. This isn’t fair. The EU must tax oil companies’ excess profits for a fairer deal for European citizens, or end subsidies that are hurting taxpayers.”
Back in 2005, the EU’s Emissions Trading System (ETS) introduced a market price on carbon emissions in power generation, transport and industry. Since its inception, it has raised more than €230 billion, including nearly €39 billion in 2024.
In 2027, a new iteration of this system, ETS2, will come into force, extending carbon pricing to emissions from buildings and road transport, more directly impacting households with gas, coal, or oil heating and the drivers of petrol and diesel cars.
“Governments should tax fossil fuel projects and use that to help citizens switch to greener alternatives,” Froggatt added. “It’s likely oil, gas and energy companies will simply pass on the costs of the ETS2 to consumers. Taxing excess profits would ensure that money comes back to citizens to fund things like €150 a month EV schemes and better public transport.” Read more here.
