Written by 9:52 pm EU Investment

Exxon sues EU over windfall profit tax

ExxonMobil is suing the European Union (EU) over the bloc’s windfall tax on energy companies and is arguing that the move is counterproductive amid Europe’s energy supply challenges. 

In September, the EU adopted a 33 percent tax on oil, gas and coal profits that are at least 20 percent higher than average profits in recent years. The EU called the tax a “solidarity levy” and argued it was meant to address high energy prices.

Exxon blasted the tax in announcing its lawsuit Wednesday.

“Our challenge is targeted only at the counter-productive windfall profits tax, and not any other elements of the package to reduce energy prices,” said a statement from the company shared by spokesperson Erin McGrath. 

“This tax will undermine investor confidence, discourage investment, and increase reliance on imported energy and fuel products,” the statement said, adding the company’s potential future investment in Europe will depend on “how attractive and globally competitive Europe will be.”

European Commission spokesperson Arianna Podesta told The Hill in a statement the commission “maintains that the measures in question are fully compliant with EU law.”

The commission also argued that the levy will “ensure that the whole energy sector pays its fair share in these difficult times.”

Europe in particular has faced an energy supply crunch following Russia’s invasion of Ukraine early this year.

Russia was a major supplier of European energy, particularly oil and natural gas. The conflict and subsequent attempts to limit the imports of Russian goods sent fuel prices spiking, though prices have come down in recent weeks.

Major energy companies including Exxon reported high earnings this year amid the high fuel prices. Those earnings prompted some on the left to call for a windfall tax as well, though such efforts are unlikely to pass in a divided Congress. Despite the congressional hurdle, President Biden also threatened a tax on oil company profits if they don’t increase production.

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