BRUSSELS - The European Union presented plans on Wednesday to tap into the windfall profits of energy firms as part of measures to tame gas and electricity prices that have soared following Russia's invasion of Ukraine.
European Commission chief Ursula von der Leyen outlined a "deep and comprehensive" reform of the electricity market during her annual State of the European Union address in front of the bloc's parliament in Strasbourg, France.
A cap on electricity producers' profits would raise 140 billion euros ($140 billion) and "cushion" consumers from high prices, she said.
"These companies are making revenues they never accounted for, they never even dreamt of," von der Leyen said, dressed in Ukraine's blue and gold colours.
"In these times it is wrong to receive extraordinary record profits benefiting from war and on the back of consumers," she said, adding that major oil, gas and coal companies would also "have to give a crisis contribution".
The idea to tax profits by non-gas electricity providers is to divert the money to households and businesses to weather the situation.
Other steps laid out by von der Leyen include rationing energy, temporary state aid and decoupling the prices of gas and electricity.
She also announced the creation of a new bank designed to spur investment of up to three billion euros in hydrogen as a green alternative to fossil fuels.
The measures were in response to soaring energy costs as Europe painfully unhitches its decades-long dependency on Russian fossil fuels.
Sanctions on Russia and retaliation by Moscow by cutting off gas supplies have sent prices skyrocketing, leaving Europe to confront a difficult coming winter.
"Russia keeps on actively manipulating our energy market. They prefer to flare the gas than to deliver it," von der Leyen said.
"This market is not functioning anymore."
- Gas reserves -
EU countries have rushed to prepare for the winter, stocking up on gas while urging consumers and businesses to conserve energy in anticipation that Russia would cut off supplies.
The bloc's gas reserves have hit 84 percent of capacity well ahead of an October deadline, von der Leyen said.
At the same time, she highlighted that the EU is pivoting to "reliable suppliers", naming the United States, Norway and Algeria among them, and that in the longer term the EU wants greater reliance on renewable energies.
Countries have taken their own steps to cope with the crisis.
In a show of solidarity with Germany after Russia stopped deliveries to the country through the Nord Stream pipeline, French operator GRTgaz said Wednesday that new capacity for exports to France's neighbour would be available from mid-October.
French Prime Minister Elisabeth Borne announced on Wednesday that her government would cap an expected increase in gas and electricity prices at 15 percent next year.
The new measures, however, are less far-reaching than caps introduced this year that limited domestic electricity price rises to four percent and fixed gas prices at October 2021 levels.
The Danish government unveiled its own 45-billion-kronor ($6-billion) plan to cap gas, electricity and heating bills to help households following a five-fold increase in energy prices.
- Kyiv trip -
Von der Leyen also announced plans for legislation to secure critical raw materials for the EU as it shifts towards greater use of electric vehicles and other more environmentally friendly technologies.
In her speech, she highlighted the stranglehold China has over resources such as lithium that are key to the energy transition.
"Today, China controls the global processing industry. Almost 90 percent of rare earths and 60 percent of lithium are processed in China," she said in her address.
The proposed law would identify "strategic projects all along the supply chain" and "build up strategic reserves where supply is at risk", she said.
As for Russia, the EU chief signalled that the bloc would maintain its sanctions pressure as long as Moscow waged its war in Ukraine.
"I want to make it very clear, the sanctions are here to stay. This is the time for us to show resolve, not appeasement," she said.
Ukraine's first lady Olena Zelenska attended the gathering in Strasbourg, receiving a standing ovation from lawmakers.
Von der Leyen told MEPs that she would travel to Kyiv to meet Ukrainian President Volodymyr Zelensky, her third trip to the Ukrainian capital since the war started, to discuss the continuation of European aid.
"For the first time in its history, this parliament is debating the state of our union while war is raging on European soil," said von der Leyen.