Electricity taxes could be slashed under a new European Union proposal to offset the impact of the Iran war on energy prices, according to a draft European Commission proposal due to be published on 22 April. The plan is being sold as relief, but it also shows how quickly the machinery of European governance moves to manage crisis from above while households absorb the shock below.
Who Pays for the Shock
The proposal is expected to include measures to curb energy bills and plans to reduce the EU’s fossil fuel dependency to better shield member states from energy shocks. European Commission President Ursula von der Leyen said this week, as oil prices once again rose above $100 a barrel, that “We are paying a very high price for our over-dependency on fossil fuels.” She also said, “The grim reality for our continent is fossil fuel energy will remain the most expensive option in years to come.”
The article said European natural gas prices are up more than 70 per cent since the start of the conflict, with the Strait of Hormuz — through which around 20 per cent of global oil flows — effectively closed. Wholesale electricity prices across Europe are still largely determined by the cost of gas-fired power, so the surge in gas prices since the start of the conflict has fed directly into electricity bills. The people at the bottom are the ones left to absorb the consequences when geopolitical conflict and energy dependence collide.
The Price of Dependence
The piece said taxes on electricity are far higher than on fossil fuels in most European countries, despite the climate impact of oil and gas. According to Eurostat, the average EU household electricity price stood at around €0.29 per kWh in early 2025, while household gas prices averaged just €0.11 per kWh, meaning electricity cost roughly two and a half times more per unit. It said last year almost 28 per cent of the average European consumer’s electricity bill went on taxes and levies.
The article said electricity taxes are high in part because governments use them to fund renewable energy and environmental policies, and that historically lower gas prices also aimed to keep fossil fuel-dependent heating and transport affordable. But with those sectors becoming increasingly electrified, critics say the current system is actively discouraging the switch to cleaner energy. In other words, the existing setup keeps people trapped in a pricing structure built by policy choices made far above their heads.
The European Commission has argued that lowering electricity taxes is key to encouraging a shift from fossil fuels. The article said EU rules on electricity taxes have not changed since 2003, and attempts to amend them have repeatedly stalled. In November 2025, a tax reform proposal failed to gain the required unanimous support of member states. The reform route, as usual, runs into the familiar dead end of institutional unanimity, where the machinery of rule can stall even when the problem is obvious.
What the Commission Wants Next
From next month, the Commission will reportedly propose legal changes to EU taxation rules to make tax on electricity lower than that of oil and gas. To make up for shortfalls if those changes come into force, experts have called for a windfall tax on fossil fuel profits, which have surged since the onset of the Iran war. The European Commission has already signalled support for such a tax, and the article said a similar tax was temporarily introduced to combat the energy crisis caused by Russia’s invasion of Ukraine.
The upcoming proposal is set to build on and accelerate the EU’s Affordable Energy Action Plan, which aims to encourage electrification by lowering taxes, while expanding renewables and improving grids. The Commission is reportedly planning to propose a binding electrification target before summer. For now, the whole package remains a top-down attempt to steer a crisis-ridden energy system with tax tweaks and legal changes, while the underlying dependence on fossil fuels and the volatility it creates continue to shape what ordinary people pay.