Updated 10.50am

The European Union intends to raise €140 billion by capping the massive profits of electricity providers, with that money distributed to member states to help cover costs of skyrocketing energy prices.

The plan was presented by EU Commission President Ursula von der Leyen during her State of the Union address on Tuesday.

“In our social market economy, profits are good,” von der Leyen told MEPs. “But in these times it is wrong to receive extraordinary record profits benefitting from war and on the back of consumers.”

Energy giants booked record-breaking profits in the past year, cashing on an energy supply crunch sparked by Russia’s war in Ukraine and Europe’s necessity to diversify away from relying on Russian gas.

The EU responded to Russia’s invasion by introducing multiple rounds of sanctions against Russia, and Von der Leyen told her audience on Wednesday that sanctions “are here to stay.”

"This is the time for us to show resolve, not appeasement,” she said.

She admitted the EU had been slow to wake up to the threat presented by Russian president Vladimir Putin.

“We should have listened to those who know Putin. We should have listened to the voices inside our Union – in Poland, in the Baltics, and all across Central and Eastern Europe,” she acknowledged. “They have been telling us for years that Putin would not stop. And they acted accordingly.”

Ukraine's first lady Olena Zelenska was among those present in the Strasbourg plenary used by the European Parliament and received a standing ovation from lawmakers.

Von der Leyen told MEPs that she would travel to Kyiv to meet Ukrainian President Volodymyr Zelensky.

 "I will travel to Kiev today to meet President Zelensky" to discuss "in detail" the continuation of European aid, she said in her major annual political address.

Olga Zelenska, Ukraine's first lady, stands next to EP president Roberta Metsola. Photo: EP

"For the first time in its history, this Parliament is debating the state of our Union while war is raging on European soil," said von der Leyen, dressed in Ukrainian colours.

"Dear Olena, it took immense courage to stand up to Putin's cruelty. You found that courage," she said. Other key EU plans for the upcoming year unveiled by the EU Commission president on Tuesday include: 

• Setting up a European Hydrogen Bank. The bank will tap €3 billion from the EU’s Innovation Fund to help guarantee the purchase of hydrogen, helping member states to set up a hydrogen-powered energy market. 
• Revising electricity price benchmarks and reforming electricity markets.Von der Leyen said the TFF benchmark is no longer representative of reality and needs to be changed. She also said the EU would work with regulators to reduce volatility of energy prices.
• New laws to secure critical raw materials. Von der Leyen highlighted the stranglehold China has over such resources, which are crucial for the energy transition. “Almost 90 per cent of rare earths and 60 per cent of lithium are processed in China,” she said. 
• A relief package focused on SMEs.This will include a revision to rules concerning late payment of invoices. “It is not fair that one in four bankruptcies are due to invoices not being paid on time,” von der Leyen said.
• New EU laws to tackle corruption“We will raise standards on offences such as illicit enrichment, trafficking in influence and abuse of power, beyond the more classic offences such as bribery.  And we will also propose to include corruption in our human rights sanction regime,” said von der Leyen.
• A European Convention A Convention is an opportunity for the EU to fundamentally alter its key treaties. “It is time to renew the European promise,” she said.