Iran war sparks EU proposal to reduce tax on electricity and encourage green transition

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🗞️ Driving the news: The European Commission is preparing a proposal to cut taxes on electricity across the European Union in response to energy price spikes linked to the Iran conflict

🔭 The context: Electricity in Europe is currently taxed significantly more than gas and oil
• According to Eurostat, the average EU household electricity price reached €0.29 per kWh in 2025, compared with €0.11 per kWh for gas
• Nearly 28% of household electricity bills consist of taxes and levies
• European electricity prices have spiked sharply, driven by soaring natural gas costs triggered by disruptions near the Strait of Hormuz
• The draft proposal, expected on 22 April, aims to reduce energy bills while accelerating electrification and reducing dependence on fossil fuels

🌍 Why it matters for the planet: Lower electricity taxes could accelerate electrification of heating, transport and industry, making it easier for households and businesses to switch from fossil fuels to cleaner power sources
• By narrowing the price gap between electricity and gas, the proposal could help expand renewable energy use and reduce long-term greenhouse gas emissions across Europe

⏭️ What’s next: The European Commission is expected to propose legal changes to EU tax rules next month
•They may also introduce binding electrification targets before the summer as part of its broader energy transition strategy

📈 One stat: Natural gas prices in Europe have risen more than 70% since the start of the Iran conflict, amplifying pressure on electricity prices across the region

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