LAST UPDATE | 2 Aug 2023

THE DEPARTMENT OF Energy estimates that a new, temporary tax on windfall gains in the energy sector will raise between €200-€450 million.

The Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Act 2023 takes effect from today and applies to fossil fuel production and refining.

It also applies for last year, as well as this year.

The Department said the Act “seeks to ensure collection of windfall gains while minimising the impact on energy markets, security of energy supply and future investments”.

In a statement today, the Department noted that the war in Ukraine “has led to significant increases in wholesale natural gas prices”.

“As a result, consumers are paying higher prices for gas and electricity,” said the statement.

“High wholesale gas prices have also led to windfall gains for some entities in the fossil fuel production and refining sectors, and in the electricity sector.”

The Department estimates that a tax on these windfall gains will be in the range of €200 million to €450 million.

However, a Department spokesperson added: “These estimates continue to remain highly sensitive to wholesale gas prices, which can be driven by weather, gas storage levels, developments of the war in Ukraine, for example.”

Companies within the scope of the Act are required to register with the Revenue Commissioners by 30 August.

They also have to file their return and pay the 2022 temporary solidarity contribution to the Revenue Commissioners by 23 September.

Speaking on the Act in March of this year, Minister Eamon Ryan said the money generated will be “ring fenced” and “recycled” to help households.

In March, he estimated that the Act would generate between €280 and €600 million.

In a statement to The Journal, a Department spokesperson said a Bill for a second windfall measure, the Cap on Market Revenues, has been approved by Government and is due to be published shortly.

This Bill will go through the Oireachtas when the Dáil resumes in the autumn.

“The proceeds estimated to be raised by the Cap on Market Revenues are in the range €80 million to €150 million,” a Department spokesperson told The Journal.

“The total proceeds to be collected from both windfall measures are in the range €280-€600 million as indicated by the Government last March. 

“These figures are lower than estimates in 2022 due to the significant reduction in futures prices.”