Exxon Mobil has sought to block a so-called “counterproductive” new windfall tax imposed by the European Commission as part of efforts to soften the sting of rising energy prices in the bloc of 27 countries.
Subsidiaries of the American oil giant in Germany and the Netherlands filed a lawsuit on Wednesday at the General Court of the European Union in Luxembourg. The court must now decide whether to hear the case, which alleged that the European Council had no authority to impose the tax.
Since the disruption of fossil fuel supplies to Europe following Russia’s invasion of Ukraine in February, major oil and gas companies have made billions of dollars in profits, while households have faced energy prices that have more than doubled.
Exxon said this year that the tax would cost the company $2 billion through 2023. The company reported worldwide earnings of $20 billion for the year.
An Exxon Mobil spokesperson, Casey Norton, said that while the company acknowledged the burden that high utility bills had placed on people and businesses in Europe, it disagreed that a windfall tax would solve the problem.
“This tax will undermine investor confidence, discourage investment and increase dependence on imported energy and fuel products,” said Mr Norton. “European industries are already facing a very real competitive crisis and governments should support the production of reliable and affordable energy.”
The European Council, the executive arm of the European Union, approved the tax under a clause that allows the bloc’s parliament to overrule in emergency situations, which Exxon says exceeds the body’s authority. The tax goes into effect on Saturday.
Individual EU countries have issued their own policies to try and spread the pain of high energy bills.
This month, Germany’s parliament passed legislation to halt rising electricity and gas bills for households and industry by capping the price of gas and electricity back to last year’s levels. The package, which limits bonuses for managers of companies benefiting from the law, is financed by a levy on the excess profits of energy producers. The law, which is expected to raise 100 billion euros or 106 billion dollars, will take effect in March and will be retroactive from January.