EU countries approve energy windfall levies, turn to gas price cap - Reuters

• EU approves energy windfall profit levies
• Countries eye gas price caps as their next move
• States split over how to contain sky-high prices

BRUSSELS, Sept 30 (Reuters) - European Union countries agreed on Friday to impose emergency levies on energy firms' windfall profits, and began talks on their next move to tackle Europe's energy crunch - possibly a bloc-wide gas price cap.

Ministers from the 27 EU member countries met in Brussels on Friday, where they approved measures proposed earlier this month to contain an energy price surge that is stoking record-high inflation and threatening a recession.

The package includes a levy on fossil fuel companies' surplus profits made this year or next, another levy on excess revenues low-cost power producers make from soaring electricity costs, and a mandatory 5% cut in electricity use during peak price periods.

With the deal done, countries began talks on Friday morning on the EU's next move to contain the price crunch, which many countries want to be a broad gas price cap, though others - most notably Germany - remain opposed.

"All these temporary measures are very well, but in order to find the solution to help our citizens in this energy crisis, we need to cap the gas price," Croatian economy minister Davor Filipovic said on his arrival at Friday's meeting.

Fifteen countries, including France, Italy and Poland, this week asked Brussels to propose a price cap on all wholesale gas transactions to contain inflation.

The cap should be set at a level that is "high and flexible enough to allow Europe to attract the required resources", Belgium, Greece, Poland and Italy said in a note explaining their proposal seen by Reuters on Thursday.

The countries disputed the Commission's claim that a broad gas price cap would require "significant financial resources" to finance emergency gas purchases should market prices break the EU's cap.

Belgian energy minister Tinne Van der Straeten said only 2 billion euros ($1.96 billion) would be required, as most European imports fall under long-term contracts or arrive by pipeline with no easy alternative buyers.

That would be a fraction of the 140 billion euros the EU expects its windfall profit levies on energy firms to raise.

But Germany, Austria, the Netherlands and others warn broad gas price caps could leave countries struggling to buy gas if they cannot compete with buyers in price-competitive global markets.

A diplomat from one EU country said the idea posed "risks to security of supply" as Europe heads into a winter with tight energy supplies after Russia slashed gas flows to Europe in retaliation for Western sanctions against Moscow for invading Ukraine.

The European Commission has also raised doubts and suggested the EU instead move ahead with narrower price caps, targeting Russian gas alone, or specifically gas used for power generation.

"We have to offer a price cap for all Russian gas," EU energy policy chief Kadri Simson said.

Brussels suggested that idea earlier this month, but it hit resistance from central and eastern European countries worried Moscow would retaliate by cutting off the remaining gas it still sends to them.

By introducing EU-wide measures Brussels hopes to overlay governments' uneven national approaches to the energy crunch, which have seen richer EU countries far outspend poorer ones in handing out cash to ailing companies and consumers struggling with bills.

Germany, Europe's biggest economy, set out a 200 billion euro package on Thursday to tackle soaring energy costs, including a gas price brake.

Luxembourg energy minister Claude Turmes urged Brussels to change EU state aid rules to stop the "insane" spending race between countries.

"That's the next frontier, to get more solidarity and to stop this infighting," Turmes said.

($1 = 1.0182 euros)

Reporting by Kate Abnett and Gabriela Baczynska; Additional reporting by Philip Blenkinsop, Bart Meijer and John Chalmers; Editing by Jan Harvey

Our Standards: The Thomson Reuters Trust Principles.

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