EU ministers deadlock over gas tax plan as affordability warning grows

European Union energy ministers have failed to agree on new measures to shield consumers from rising gas costs, after a meeting ended in deadlock over a European Commission proposal to raise gas taxes. The dispute comes as EU officials warn that nearly 50 million Europeans cannot adequately heat their homes. The row has sharpened concern over how the bloc will balance climate policy, consumer protection and energy security.

EU Energy Commissioner Dan Jorgensen said the main risk is not an immediate shortage of oil or gas, but an economic shock that could make basic utilities unaffordable. According to the information provided, gas reserves across the bloc are at 75% of capacity, down from 83% last year. Ministers were split over the tax proposal, with 13 countries, including Germany and Italy, calling for it to be withdrawn to protect low-income households.

The Council has delayed further action and is now looking at a possible compromise in December 2026. The affordability warning lands at a time when energy prices remain elevated. Gas prices recently climbed above €97 per megawatt-hour, their highest level since 2022, adding pressure on households and businesses already facing volatile costs.

Between 2021 and 2023, 62% of companies reported operational bottlenecks linked to energy price swings, while 80% of EU enterprises faced supply-chain constraints or reorganisation. Those figures underline why the issue is being treated as more than a technical tax debate. The deadlock also reflects the wider strain on Europe's energy system since Russia's invasion of Ukraine.

Russia once supplied about 45% of EU gas imports, but that share had fallen to around 12% by 2025 as the bloc shifted to suppliers such as Norway, the United States and Algeria. The end of the Russia-Ukraine gas transit agreement on 31 December 2024 removed a route that carried around 15 billion cubic metres of Russian gas in 2024. That shift has left Europe more exposed to global LNG competition and price swings.

Geopolitical tensions in the Middle East are adding to the pressure. The Strait of Hormuz carries almost 20% of global LNG supplies, and shipping disruptions after the war broke out reduced exports from major producers including Qatar and the United Arab Emirates. The International Energy Agency said LNG shipments from those countries fell by about 35 billion cubic metres between March and June 2026.

With Europe competing with major Asian importers for cargoes, even short-lived disruptions can quickly feed through to prices. The Commission's tax proposal has become a focal point because it sits at the intersection of decarbonisation and affordability. Supporters see higher gas taxes as a way to encourage a shift towards greener energy, while opponents argue that the timing is wrong when many households are already struggling with heating bills.

Italy is also pursuing its own price-cap approach, showing that member states are not aligned on how to respond. The disagreement highlights the difficulty of building a common EU energy policy when national priorities differ sharply. For now, the immediate outcome is delay rather than resolution.

Ministers are expected to keep working toward a compromise in December 2026, but the details of any deal remain unclear. It is also not yet clear whether the Commission will revise its proposal or whether enough countries will shift their position to break the deadlock. What happens next will be closely watched by households, businesses and energy markets across the bloc.

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