By Angela Symons
Published on 16/04/2026 – 7:02 UTC+2
The taxes on electricity could be significantly reduced under a new EU proposal aimed at offsetting the impact of the war in Iran on energy prices.
A draft proposal by the European Commission, set to be released on April 22, outlines measures to limit energy bills, reports Reuters.
It is also expected to include plans to reduce the EU’s dependency on fossil fuels, in order to better protect member states against energy shocks.
“We are paying a very high price for our overreliance on fossil fuels,” said European Commission President Ursula von der Leyen this week, as oil prices once again surpass $100 per barrel.
Gas prices in Europe have risen by over 70% since the conflict began, with the Strait of Hormuz—through which about 20% of the world’s oil transits—being effectively closed.
As wholesale electricity prices in Europe are still largely determined by the cost of generating electricity from gas-fired power plants, the surge in gas prices since the conflict began directly impacts electricity bills.
“The harsh reality for our continent is that fossil energy will remain the most expensive option in the years to come,” von der Leyen stated.
Gap Between Electricity and Fossil Fuel Prices
Currently, electricity taxes are much higher than those on fossil fuels in most European countries, despite the climate impact of oil and gas.
According to Eurostat, the average price of electricity for households in the EU was around €0.29 per kWh at the beginning of 2025, while gas prices for households averaged only €0.11 per kWh, making electricity about two and a half times more expensive per unit. Last year, nearly 28% of the average electricity bill of European consumers corresponded to taxes and levies.
This gap is no coincidence. In part, electricity taxes are high because governments use them to fund renewable energies and environmental policies. Historically, lower gas prices also aimed to keep heating and transportation, dependent on fossil fuels, affordable.
But as these sectors electrify more, critics argue that this tax policy actively discourages the shift to cleaner energy.
Lower Taxes on Electricity, a Lever for Green Transition
The European Commission argues that reducing electricity taxes is essential to encourage the phase-out of fossil fuels. However, EU rules on electricity taxation have not changed since 2003, and attempts to modify them have failed several times. In November 2025, a tax reform proposal did not receive unanimous support from member states.
Starting next month, the Commission is expected to propose legal changes to EU tax rules to make electricity taxation lower than that on oil and gas.
To offset revenue losses if these changes were implemented, experts advocate for a special tax on superprofits made in fossil fuels, which have surged since the start of the war in Iran.
This is a measure that the European Commission has indicated supporting, and such a tax had been temporarily introduced to address the energy crisis caused by Russia’s invasion of Ukraine.
The upcoming proposal should build on the EU’s plan for affordable energy and accelerate implementation. This plan aims to promote electrification by lowering taxes, expanding renewables, and modernizing electrical grids.
The Commission also plans to propose a binding electrification target before the summer.
