Energy: Giorgetti proposes safeguard clauses and EU extra-profit tax

For Giorgetti, “the global macroeconomic prospects they have weakened Due to new recent geopolitical tensions, we are facing an energy shock, worsening growth prospects and significant downside risks. Inflation is bound to increasethere could be one on the horizon monetary tightening and structural dependence on energy imports remains high”, which underlines “the need to accelerate the transition towards safer and more sustainable energy sources”.

The minister emphasizes that “the dependence on imports from the Gulf economies is relatively low in the case of Italy, however not negligible. The Italian economy is demonstrating resilience, but we are very worried about the potential impact on our industry, starting with the chemical sector, seriously affected by the shortage of critical materials.”

‘We need a rapid, coordinated and proportionate response’

According to Giorgetti, “the energy shock caused by the Iranian crisis requires a rapid, coordinated and proportionate response from the EU, which draws lessons from the 2022-2023 crisis. Emergency mitigation measures remain necessary, but should be targeted, temporary and integrated within a common European framework. We should distinguish between short-medium term measures, aimed at reducing negative impacts, and long-term interventions, aimed at reducing dependencies.”

And therefore, for the minister “if the situation continues to worsen, it would be appropriate to activate a general escape clause at EU level to obtain greater budgetary space”. This is the clause that was activated in March 2020 to allow member countries to run deficits to save their respective economies from ruin, in the face of the lockdowns imposed by the Covid -19 pandemic.

But there is no consensus on this among the member states: Germany and the Netherlands, and not only them, are clearly against it. Furthermore, for the Commission, the conditions to activate it do not exist, at least for now. The minister knows it.

And, therefore, he added that “if the necessary consensus for this solution is not reached, a coordinated activation of national escape clauses would represent the best alternative, with a rigorous commitment to maintaining fiscal sustainability. Its use would be temporary, limited in scope and targeted at the most exposed sectors, in line with the flexibility now foreseen by the Commission for the EU State aid framework (the Temporary Framework for State Aid in the Middle East – Metsaf)”.

‘We need an EU tax on extra profits from energy companies’

For Giorgetti, a similar approach “would guarantee equal conditions between Member States, enabling targeted support while preserving the integrity of the single market. I hope – he underlines – that the Commission will take this into consideration. Measures should remain focused on mitigating the impact on most affected sectorsin particular agriculture, fisheries, transport and energy-intensive industries, through proportionate and temporary support.”

Another option, according to the Minister of Economy, “would be to extend, leaving the ceiling already envisaged unchanged, the application of the national safeguard clause (NEC) for defense purposes to the Iranian crisis, with regard to the negative consequences on the energy sector, invoking the national security issues already foreseen in the Temporary Framework approved last week by the EU Commission”.

The minister also says he is “interested in discussing selective measures to increase revenue. From this perspective, I would support the introduction at EU level of a tax on extra profits from energy companies, as suggested by Italy and four other member states (Germany, Portugal, Austria and Spain) in a letter sent to the Commission on 3 April”.

In its AccelerateEu communication of 22 April, Giorgetti recalled, “the Commission stated that it will not present a specific proposal, but declares itself ready to provide assistance in the drafting of these taxes. Therefore, I hope for fruitful collaboration and constructive help in this area. I believe that the ‘wait and see’ policy is over. Now it’s time to act“, he concluded.