The new diplomatic turn by the US president, Donald Trump, and the agreement for a ceasefire in Iran have given new breathing room to oil markets. Crude prices have plummeted amid expectations that the new scenario opens the possibility that the Strait of Hormuz begins to operate with some normality.
Far from only giving air to the costs of the barrel, the European Commission takes advantage of the truce to recalculate the battery of measures aimed at alleviating the energy crisis that it has been preparing since the beginning of the conflict, now without part of the pressure that fell on the institution.
Brussels gains margin of maneuver
The leader of the community Executive, Ursula von der Leyen, has been weighing measures such as that of reducing the tax burden on electricity. In fact, in a document prior to the last European Council summit, the German opened the door to studying the elimination of certain non-energy levies from electricity bills, as well as ensuring that electricity has a more favorable taxation than fossil fuels.
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Now, the new open scenario grants Europeans more time before making hasty decisions. “It is likely that the Commission will relax. It still remains to be seen if the ceasefire is permanent”, expresses socialist MEP Nicolás González Casares, in conversation with Demócrata, who foresees that before taking new steps the European Union could wait for future meetings within the Council.
Coordination between the Twenty-Seven
The community Energy department maintains the idea of the need to strengthen coordination among the Twenty-Seven, as they agreed during an extraordinary meeting of the Energy Council. “We agreed that measures at European and national level must be carefully designed, in a coordinated, specific, and adapted to the current situation,” explained then the head of Cyprus's energy portfolio, Michael Damianos.
Awaiting the European Commission to announce its battery of measures, some States, such as Spain, got ahead and moved the pieces first when presenting their demands. The First Vice-President, Carlos Cuerpo, together with his counterparts from Germany, Italy, Austria and Portugal, requested from Brussels a new tax that affects the extraordinary profits of electricity companies. As the Spaniard defined it, it would be “a temporary solidarity instrument for companies to contribute and alleviate the burden on consumers”.
Casares regrets that this tax on “benefits fallen from the sky” is not yet in force, as it was proposed at the time during the processing of the electricity market reform. “Although crises are not the same, the pattern that repeats is that there are those who are benefiting,” he criticizes. The socialist affirms that, instead of “making emergency regulations,” what needs to be on the table are “prepared tools” that go beyond improvising on the fly.
The components to take into account
They did not want to take false steps. Therefore, community services had been asking that, when analyzing how to intervene in citizens' energy bills, four components be taken into account to draw a complete framework: the cost of energy, which represents more than half of the bill; network tariffs (18%); taxes (15%); and the cost of carbon, close to 10%. In any case, these are averages that “vary according to the energy mix of each Member State”. Thus, initially, what Brussels intended was for the States to have all the tools before using the available instruments.
In this way, the Spanish Government seemed to understand the message and approved, among the measures of the anti-crisis decree due to the war in Iran, the reduction of VAT on fuels to 10%. However, two days after the measure went ahead, the European Commission alerted La Moncloa that this tax reduction was not contemplated in community regulations regarding VAT. “We can confirm that we sent this letter. We explained to Spain that the directive does not include the possibility of reducing the VAT on fossil fuels,” a spokesperson for the community executive explained this Wednesday.
So how to face the crisis? According to the same spokesperson, what Brussels would have proposed to the Government in return would be the reduction of special taxes on fuel. Something that the Ministry of Finance already included in the decree, by reducing to the minimum allowed by European regulations the taxes on diesel and unleaded gasoline, as well as on fuel oil, liquefied gas, natural gas and kerosene.
Reduce consumption to relieve pressure
“The general cost of living crisis is determined in part by high energy prices, so we need to act,” stated the European Commissioner for Energy, Dan Jorgensen, at the beginning of the crisis. In the plan for affordable energy, presented by the Executive in October 2025, the possibility of this type of tax cuts was already contemplated.
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But Brussels does not only look at the cost side. The Commission also wants to involve citizens in the response to the crisis through measures of reduction of energy consumption. Jorgensen even assessed with the capitals the possibility of reducing the maximum speed on motorways by 10 km/h to achieve an immediate effect.
In addition, States would have received proposals such as promoting teleworking, avoiding air travel when alternatives exist —as it can quickly relieve pressure on aviation fuel—, as well as boosting public transport and car sharing.
The debate on the European climate model
In the socialist group of the European Parliament, faced with “the enormous volatility”, they point out that “all savings are always positive if they do not create a destruction of demand”. “The lesson learned is that whoever bet the most on decarbonizing, has suffered less during this time,” states González Casares.
What the president has confirmed is her defense of the current system of carbon credits (ETS). “More realistic trajectories, aid to companies beyond 2025 and work with all involved parties,” Ursula von der Leyen slipped in regarding the review planned for this semester, for which she has proposed reinforcing investment with 30 million euros.
The Commission had planned to reform it in the coming months to adjust its operation, but the crisis has reopened a deeper debate about the whole of the European Green Deal. Some countries see in the current context an opportunity to slow down or redefine the energy transition. Italy directly asks to eliminate the ETS model, in operation since 2005; Germany maintains an ambiguous position; while Spain prepares to firmly defend it next July.
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This mechanism, which sets emission limits and allows trading pollution rights, has become one of the pillars of European climate policy. Even so, Brussels has recently proposed not to automatically suppress the accumulated rights in the market stability reserve when they exceed the threshold of 400 million, so that they remain available instead of being definitively eliminated, awaiting a deeper reform.
Again, Europeans dodge the urgency of making concrete decisions thanks to the external turn of the Republican administration. So far, according to the International Energy Agency, the conflict kept traffic practically blocked through the Strait of Hormuz, causing flows to fall from 20 million barrels per day to barely a trickle, which caused an increase in crude oil prices of over 60%.