Finance
EU Exec to Propose Lower Electricity Taxes to Counter Iran Price Shock
Published by Global Banking & Finance Review®
Posted on March 19, 2026
2 min readLast updated: March 19, 2026
Quick Summary
The European Commission, led by Ursula von der Leyen, plans to propose cutting electricity taxes and enhancing subsidies to counteract surging energy prices stemming from the U.S.–Israeli war on Iran, alongside launching a €30 billion ‘ETS investment booster’ funded via 400 million Emissions Trading
EU to Propose Cutting Electricity Taxes to Combat Iran War Energy Crisis
European Commission's Response to Energy Price Shock
BRUSSELS, March 20 (Reuters) - The European Commission will propose that EU countries cut taxes on electricity and subsidise prices as a quick way to soften the energy price shock caused by the U.S.-Israeli war on Iran, Commission head Ursula von der Leyen told a news conference.
Taxation Disparity and Proposed Changes
"In some cases, electricity is taxed much more than gas, up to 15 times more. And this cannot be so. We will propose to lower tax rates on electricity and to make sure that electricity is taxed less than fossil fuels," she said.
State Aid Measures for Energy Costs
"Member states can already make use of state aid measures to compensate for the cost increases of the energy source, and we and we will further flexibilize state aid," she said.
Financial Support and Industry Investments
Von der Leyen also said she proposed to leaders financial support to the industry through investments that would help companies move away from fossil fuels.
Emissions Trading System (ETS) Investment Booster
"We call it an Emissions Trading System (ETS) investment booster. It will have a budget of round about 30 billion euros. It is financed by 400 million ETS allowances. And the aim is to finance projects for decarbonization," von der Leyen said.
Reporting and Editorial Credits
(Reporting by Jan Strupczewski, editing by Bart Meijer)
Key Takeaways
- •Electricity in some EU states is taxed up to 15× more than gas, prompting proposals to cut electricity tax rates
- •Member states may receive more state aid flexibility to shield consumers and industry from the Iran-related energy shock
- •An ‘ETS investment booster’ with a budget of €30 billion, financed by 400 million ETS allowances, is set to support decarbonisation projects
Frequently Asked Questions about EU exec to propose lower electricity taxes to counter Iran price shock
1Why is the EU considering cutting electricity taxes?
The EU is looking to cut electricity taxes to soften the impact of higher energy prices caused by the U.S.-Israeli war on Iran.
2How does EU electricity taxation compare to gas?
In some EU countries, electricity is taxed up to 15 times more than gas, prompting calls for reform.
3What is the proposed ETS investment booster?
The ETS investment booster is a 30 billion euro fund to help companies invest in decarbonization projects, financed by 400 million ETS allowances.
4Can EU member states offer direct financial support for energy costs?
Yes, member states can provide state aid to help compensate for increased energy costs.
