The government opens the door to rethink a special tax on big energy companies. In the new context, energy prices remain high but have moved away from last year’s crisis peaks. Vice President and Minister for Ecological Transition, Teresa Ribera, has shown that companies are weighing whether the extra benefits should continue and whether the provisional tax still serves to ease pressure while supporting the sizable investments needed to advance the energy transition.
Ribera told Efe Agency during the Dubai climate summit (COP28) that it is important to determine if the extraordinary benefits implied by this measure still apply. She added that ordinary taxation can be adjusted modularly, but this discussion is about something beyond extraordinary gains. The focus is on identifying real references, assessing needs, and finding the most technically sound way to address the issue.
Spain joins international alliance to stop oil and gas
During the worst moments of the energy crisis, the government approved a provisional tax of 1.2% on the turnover of large energy companies earning more than €1,000 million a year, to be applied for two years. Now, the executive, including its socialist wing, is open to reconsidering the tax after major groups warned that extending the levy could threaten billions in investments. This warning followed the government’s pact between PSOE and Sumar to extend the tax if needed.
Repsol, the Spanish oil company most affected by the measure, warned that projects like a €1.5 billion green hydrogen investment could move to other countries such as Portugal and France. Other large groups, including Cepsa, Iberdrola, Endesa, and Naturgy, are seeking greater regulatory stability and predictability to underpin the investments necessary to move green project plans forward.
Choose green investments
Ribera stressed the need to determine whether energy companies are earning extraordinary profits given the current price moderation while underscoring the requirement for substantial reinvestment into the energy system. She emphasized that the transformation hinges on corporate reinvestment to accelerate the shift toward cleaner energy sources.
She also noted that accelerating the transition through widespread renewable deployment will bring more stable, predictable, clean, and affordable energy prices. If extraordinary profits exist, they should be assessed for contribution. If profits rise sharply, a response may be required, but attention should also be given to safeguarding and increasing reinvestment by the companies themselves.
The legislative agreement between PSOE and Sumar, which maintains a progressive coalition, envisions continuing taxes on major energy companies and banks beyond the initial two-year period. The plan calls for reviewing such taxes with the aim of readjusting and maintaining them as the current application period expires, ensuring both sectors contribute to tax fairness and the welfare state. This approach keeps major energy players in a tense position, as the extraordinary tax may become permanent despite appeals from several involved companies.
Brussels declaration
The European Commission warned recently in a report on extraordinary measures taken by member states to mitigate the energy crisis that the price context supporting last year’s measures has shifted. The report notes that the development of fossil energy markets shows a different dynamic now than when Brussels approved the 2022 measures. It explains that the decline in energy prices during 2023, coupled with greater economic uncertainty and rising capital costs, led energy companies to report reduced profits compared with 2022’s extraordinary levels.