The European Union is preparing a reform of energy taxation and network fees that would place a lower tax burden on electricity compared to natural gas, according to a draft proposal reported by Reuters. The initiative is intended to ease pressure on household budgets, which have been strained by rising energy prices following turmoil in global markets linked to the Iran conflict and its impact on oil and gas supplies.
Under the proposed framework, member states would be required to ensure electricity is taxed at a lower rate than gas. The goal is to support a broader shift away from fossil fuels and toward electrification in key sectors such as transport, industry, and heating, where oil and natural gas still dominate. By narrowing the price gap in favor of electricity, the EU aims to strengthen the competitiveness of electric vehicles, heat pumps, and other low-carbon technologies.
The document stresses urgency, stating that swift action is necessary ?to reduce household bills and the EU’s dependence on fossil fuels,? as reported by Reuters.
While the proposal sets a common direction, national governments would retain authority over tax levels, as long as they follow the overarching rule. The text also foresees measures encouraging consumers to shift electricity use to periods of lower demand and lower prices.
It further states: ?Consumers of electricity grids should change their habits in a way that is favorable to the system, by adapting their energy consumption or redirecting it to times and places where the cheapest sources of energy are available.?
Another key element is the expansion of smart metering. The EU aims for at least half of electricity consumers to be equipped with smart meters by 2030, enabling households to track consumption in real time and benefit from off-peak pricing schemes.
Network charges, which fund the operation and modernization of electricity infrastructure, currently account for roughly one quarter of an average EU household electricity bill, according to the proposal.
Any changes to taxation rules would require approval by EU lawmakers and a reinforced qualified majority in the Council, representing at least 72 percent of member states and 65 percent of the EU population. Some governments, however, argue that such reforms should require unanimity, warning that a lower threshold could set a precedent for rapid adoption of similar measures, EU diplomats told Reuters.
The proposal is expected to be formally presented on July 22.
