European move to contain the repercussions  of the economic war

 Amid escalating geopolitical tensions, the European Union is considering a new proposal aimed at sharply lowering electricity taxes to offset the economic impact of the war on Iran on global energy prices.

On April 22, the European Commission is due to publish  a draft that includes a series of urgent measures to contain consumer bills and reduce dependence on fossil fuels, in an effort to protect member states from future energy shocks.

Ursula von der Leyen, the head of the commission, stressed that the continent is paying a heavy price for its over-reliance on oil and gas, especially as prices return to above the $100 per barrel threshold.

Closure of the Strait of Hormuz and the Flames of Prices

The fallout from the war has cast a heavy shadow over energy markets, with natural gas prices jumping by more than 70% since the start of the conflict, coinciding with the de facto closure of the Strait of Hormuz, through which 20% of the world's oil supply passes.

European sources  pointed out that electricity  prices in Europe are structurally linked to the cost of operating gas stations, and this jump was directly reflected in the bills of homes and factories.  

  The Commission chief warned  that the "grim reality" suggests that conventional energy will remain the most expensive and difficult option in the coming years.

The imbalance of taxes between electricity and fuel

The current crisis highlights a tax paradox: electricity is taxed much higher than fossil fuels in most EU countries, despite the latter's negative environmental impact.

Eurostat data for 2025 reveals that the price of household electricity was around €0.29 per kilowatt-hour, which is equivalent to two and a half times the price of gas.

While governments have historically kept gas taxes low to provide cheap heating, experts now see the system as an impediment to the transition to cleaner energy and discourage overall "electrification" efforts.

Green Transformation Plan

The European Commission is seeking to break the legislative deadlock that has been going on since 2003 over tax rules with a proposal to ensure that the tax on electricity is always lower than that of oil and gas.

To make up for the projected fiscal deficit, the bloc is moving towards an "exceptional tax" on record profits of fossil fuel companies that have sprung up since the war began.

The moves aim to accelerate the "Action Plan for Affordable Energy", with a move to set binding targets to increase the rate of electrification in critical sectors before next summer.