EU Weighs Emergency Measures to Curb Energy Price Surge Amid Iran Conflict

The European Union is considering a package of urgent, temporary measures, including tax cuts and direct support for the energy sector, in an effort to contain the economic fallout from the ongoing conflict with Iran and limit the sharp rise in energy prices.

At the conclusion of a summit in Brussels, EU leaders called for short-term solutions such as reducing electricity taxes, lowering energy network fees, and allowing governments to provide direct financial support to the most affected sectors.

The move comes amid mounting pressure on European markets following the effective closure of the Strait of Hormuz and attacks on energy infrastructure in the region. 

The disruption has significantly impacted global supplies, with roughly 20 percent of the world’s oil and liquefied natural gas trade passing through the critical route.

In this context, Ursula von der Leyen confirmed that the European Commission is preparing proposals to cut electricity taxes. 

She noted that in some member states, electricity is taxed up to 15 times more than gas, calling the disparity unjustified under current conditions.

She added that the Commission will allow the use of state aid mechanisms to support affected industries, alongside drafting legislation aimed at improving the efficiency of energy networks and reducing associated costs, particularly for energy-intensive sectors.

Von der Leyen also revealed plans to launch a €30 billion investment incentive under the EU Emissions Trading System to fund decarbonization projects and accelerate the shift toward renewable energy sources.

Despite broad agreement on the need for intervention, divisions remain among member states over how to implement the measures. 

Concerns persist about widening gaps between wealthier and less financially resilient countries, especially as public budgets face increasing strain from higher defense spending.

Disagreements have also emerged over potential adjustments to the emissions trading system, with countries such as Spain and the Netherlands opposing steps that could weaken the mechanism, which has contributed to cutting emissions by around 50 percent since its launch in 2005.

The summit’s final statement emphasized that the EU’s strategic objective remains accelerating the transition to low-carbon domestic energy production, reducing dependence on fossil fuels, and limiting exposure to global market volatility, while preserving fair competition within the single market during the implementation period.