EU proposes steps to deal with energy crisis amid Iran war

EU unveils 'AccelerateEU' plan to tackle energy crisis, forgoes windfall tax

The European Commission on Wednesday presented a comprehensive set of measures aimed at easing the energy crisis triggered by the war in Iran, including plans to cut taxes on electricity and loosen state aid rules, while stopping short of imposing a windfall tax on oil and gas companies as some EU ministers had urged.

The package, named 'AccelerateEU', is designed to help member states manage current pressures and prepare for future disruptions, according to the Commission. EU Energy Commissioner Dan Jorgensen described the crisis as a 'wake-up call and a turning point,' urging Europe to accelerate its shift away from fossil fuels.

'This must be a wake-up call and a turning point,' Jorgensen said at a press conference in Brussels, as reported by the European Commission's announcement. Even if a diplomatic solution to the standoff between Iran and the United States is reached, the effects of the crisis are likely to be felt for years, he added.

The Commission said that diversified gas and oil supplies, strategic reserves and expanded LNG import capacity have so far helped ensure security of supply. However, it warned that price spikes and fuel shortages continue to pose risks across the bloc.

Measures to reduce reliance on fossil fuels

Central to the plan are proposals to reduce taxes on electricity, which could incentivize the uptake of things like heat pumps, and to accelerate the shift to homegrown clean energy to replace oil, gas and fossil transport fuels. The Commission also announced it would set an electrification target before the summer and propose action to lower the price ratio between electricity and fossil fuels, according to The Guardian's report.

The plan also includes coordinating the timing of gas purchases to avoid price hikes, as well as possibly facilitating oil stock releases, and a fertiliser action plan to diversify supply sources and support domestic production. In addition, the Commission will loosen oil and fertiliser subsidy rules, allowing states to subsidise up to 50% of the price increase since the war began.

The Commission said it would adopt temporary state aid rules to allow member countries to directly shield consumers and businesses from high energy prices, but warned that any support must be 'targeted, timely and temporary', as quoted by The Guardian.

No windfall tax despite ministerial calls

The package stops short of measures introduced after the Russian invasion of Ukraine, such as a windfall tax on oil and gas companies, which five EU finance ministers had called for earlier this month, according to The Guardian. The Commission also ruled out a cap on gas prices, which energy experts had warned would be counterproductive.

Earlier in May, the finance and economy ministers of Austria, Germany, Italy, Portugal and Spain wrote a joint letter to EU Climate Commissioner Wopke Hoekstra, asking for such a levy, as reported by Deutsche Welle. They argued it would 'send a clear message that those who profit from the consequences of the war must do their part to ease the burden on the general public.'

The ministers highlighted 2022 as a precedent, when Brussels imposed a temporary 'solidarity contribution' on energy companies, imposing a minimum 33% tax on all oil and gas company profits that exceeded the average of the previous four years by more than 20%. That measure gathered over €26 billion in additional tax revenue, according to Deutsche Welle's report.

However, critics say a windfall tax sits on fragile legal ground, a concern that may have influenced the Commission's decision to leave it out of the current package.

Impact of the Iran war on energy prices

The surge in energy prices in the wake of the Iran war has been significant. Oil companies have made massive profits as a result of the spike in prices, according to Deutsche Welle. An analysis by The Guardian, using data from Rystad Energy, found that leading oil and gas companies could make an extra $234 billion (€200 billion) by the end of the year if the oil price continues to average around $100.

The EU has spent an additional €24 billion on energy imports since the start of the war due to rising prices, a figure cited in the Commission's announcement.

Experts say the lingering reliance on foreign fuels has left the EU vulnerable to price spikes, and some analysts fear these could persist even if the war ends quickly. Europe sped up its deployment of wind turbines and solar panels after the last energy crisis in 2022 but has made little headway in replacing machines that burn oil and gas.

Meanwhile, BP reported an 'exceptional' performance in the first three months of 2026, with profits more than doubling on the same period last year to hit $3.2 billion, according to Deutsche Welle.

The Commission's new plan aims to address these vulnerabilities by reducing the bloc's dependence on fossil fuels and accelerating the transition to clean energy, a move that Commissioner Jorgensen said would 'unlock more money for our economy' by producing homegrown energy instead of buying and burning it.