From Department of the Environment, Climate and Communications
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The Minister for the Environment, Climate and Communications, Eamon Ryan, has announced government approval of the General Scheme of the Energy (Windfall Gains in the Energy Sector) Bill 2023. The legislation is necessary to implement the temporary solidarity contribution and the cap on market revenues to address windfall gains in the energy sector.
The war in Ukraine has led to significant increases in wholesale natural gas prices. As a result, consumers are paying higher prices for gas and electricity. High wholesale gas prices have also led to windfall gains for some entities in the fossil fuel production and refining sectors, and in the electricity sector.
The level of proceeds to be raised by the temporary solidarity contribution and the cap on market revenues is currently estimated to range from circa €280 million to circa €600 million. Council Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices, which came into force in October 2022, seeks to address the issue of windfall gains by collecting and redistributing proceeds from these gains by:
Proceeds from the cap on market revenues are expected to be collected in September 2023 and will be used to support electricity customers in mitigating the impact of high electricity prices as set out in the Council Regulation.
Proceeds from the temporary solidarity contribution are expected to be collected in September 2023 and September 2024. The Council Regulation allows for these proceeds to be used in a wider range of areas, including to financially support energy consumers, to reduce energy consumption or to promote investments in renewable energy. It will be a matter for Government to decide how to allocate proceeds collected.
On 22 November 2022, the government approved the implementation of the measures contained in the Council Regulation along with key high-level decisions in relation to their implementation. The General Scheme of the Energy (Windfall Gains in the Energy Sector) 2023 Bill, approved today, will implement the temporary solidarity contribution and the cap on market revenues.
The General Scheme has been developed by the Department of the Environment, Climate and Communications following consultation with relevant departments, agencies and stakeholders. It seeks to ensure collection of windfall gains while minimising the impact on energy markets, security of energy supply and future investments.
Further consultation with stakeholders and the Joint Oireachtas Committee on Environment and Climate Action is expected as the detailed legislation is developed. The General Scheme will be the basis of the Energy (Windfall Gains in the Energy Sector) 2023 Bill, which will be brought to Government before being published and introduced in the Oireachtas. It is intended that this legislation would be enacted before the summer recess.
The Council Regulation sets out that the proceeds can be used to the benefit of energy consumers. The government will determine, in due course, how best to distribute these proceeds.
The draft General Scheme can be found on the department's website.
It should be noted that a wide range of supports for all energy consumers have been put in place by the government. Full details are available at www.gov.ie/ReduceYourUse.
ENDS
The temporary solidarity contribution will:
The effective rates of the temporary solidarity contribution based on the share of additional profits will be as follows:
The proceeds from the temporary solidarity contribution will be remitted to the exchequer and expended in line with the requirements set out in the Council Regulation.
The cap on market revenues will: