top of page

The European Commission’s toolbox to tackle increasing energy prices

On 13 October, the European Commission (EC) published a communication in which it proposes a set of measures in reaction to the global increase of energy prices.

The spike, mainly a consequence of the higher demand for energy linked to the post pandemic economic recovery, has raised concerns over the negative impact it has on both households and businesses. Indeed, continuously rising gas and electricity prices are expected to have major repercussions on individuals, as well as on industry. In this context, in addition to Member States’ measures to address the situation, the EC published a toolbox promoting a coordinated approach to protect the categories considered most at risk. The toolbox of measures aims both at tackling the immediate negative impact of the energy costs and at further strengthening resilience against future shocks.

The immediate response includes tailored measures to rapidly mitigate the effects on the vulnerable groups. These measures are shaped to be easily adaptable and to allow for adjustement when the situation improves. Overall, they should also avoid interfering with market dynamics or undermining incentives for the transition to a decarbonised economy.

The proposed immediate measures include, among others:

  • Providing emergency income support for energy-poor consumers, through vouchers or partial bill payments, which can be supported with EU ETS revenues.

  • Providing temporary, targeted reductions in taxation rates for vulnerable households. Though, reduced rates must be targeted and avoid introducing distortions. For instance, Member States may decide to apply reduced VAT rates on energy products as long as they respect the minima laid down in the EU’s VAT Directive.

  • Providing aid to companies or industries, in line with EU state aid rules.

  • Investigating possible anti-competitive behaviours in the energy market and request the European Securities and Markets Authority (ESMA) to further enhance monitoring of developments in the carbon market.

  • Facilitating a wider access to renewable power purchase agreements and support them via flanking measures.

In its medium term recommendation, the EC emphasized that focus should be put on a policy response making the EU more efficient in the use of energy, less dependent on fossil fuels and more resilient to energy price fluctuations.

The medium-term measures proposed include, among others:

  • Intensifying the investments in renewables, renovations and energy efficiency and accelerating renewables auctions and permitting processes.

  • Developping energy storage capacity, to support the evolving renewables share, including batteries and hydrogen.

  • A possible revision of the security of supply regulation to ensure a better use and functioning of gas storage in Europe.

  • Exploring the potential benefits of voluntary joint procurement by Member States of gas stocks.

  • Setting up new cross-border regional gas risk groups to analyse risks and advising Member States on the design of their national preventive and emergency action plans.

  • Boosting the role of consumers in the energy market, by empowering them to choose and change suppliers, generate their own electricity, and join energy communities.

  • Adopting a rule book for cybersecurity for electricity.

  • Issuing guidance on accelerate permitting processes for renewable energy.

  • The revision of the Energy and Environmental State Aid Guidelines (EEAG), facilitating energy efficiency and renewables investments.

The European Commission has reiterated that the clean energy transition is the best insurance against price shocks like the one the EU is facing today.

Further discussion on energy prices will take place at the upcoming European Council on 21-22 October 2021.

To read more, please click here.


bottom of page