National policies to shield consumers from rising energy prices
Last update: 11 May 2022
This dataset will be updated regularly.
by Giovanni Sgaravatti, Simone Tagliapietra and Georg Zachmann
The current increase in wholesale energy prices in Europe has prompted governments to put in place measures to shield consumers from the direct impact of rising prices. The purpose of this dataset is to track and give a (non-exhaustive) overview of the different policies used by countries at national level to mitigate the effect of the price spike for consumers.
Measures at the sub-national and supra-national levels are excluded from the scope of this dataset, but this by no means implies that they are less relevant. While policies at the regional level can have a sizeable impact on consumers, for example in Belgium, in most European Union countries both energy regulation and levies are set at the national level. Similarly, long-term measures to counteract energy-price volatility are also of extreme importance. Countries like Italy and Spain (among others) are calling for joint action at the EU level to implement strategic stocks and joint procurement of natural gas while others, such as Hungary and the Czech Republic, want to rethink the Emissions Trading Scheme mechanism and France is vocal about reforming the pricing mechanism of the European energy market. We recognise these developments as worth investigating and have looked into them in a publication ahead of the European Council meeting in December, where EU leaders returned to the issue of energy prices.
The table below classifies measures by all EU countries as well as Norway and the United Kingdom into six types of responses to the spike in energy prices. All the measures have been discussed, proposed or enacted since September 2021, when the energy crisis was already unfolding. We define a measure to be ‘discussed’ when important actors in civil society, such as political parties, have publicly discussed the measure but no formal action to implement it has been taken. By the term ‘proposed’ we refer to measures that have been publicly announced by high government officials such as ministers. Finally, ‘enacted’ are all those measures already in implemented.
detailed Country breakdown (with sources)
Karl Nehammer, Chancellor of Austria, announced on a relief package of €1.7 billion for almost all households on 28 January 2022. Households will receive €150 in energy cost compensation, an amount that will be doubled for those in need. Moreover, tax refund schemes for the private sector are being studied, as well as taxes and fee reductions.
On 20 March 2022, Finance Minister Magnus Brunner and Climate and Energy Minister Leonore Gewessler announced energy subsidies worth €2 billion, including tax cuts and employee compensation, in an effort to ease the burden of rising costs on the economy.
The latest measures include a 90% cut to natural gas and electricity tariffs through mid-2023, at a cost of €900 million, and higher commuting subsidies for employees totalling €400 million.
The government will also offer support to companies by delaying some tax payments, and will provide €250 million in investment support, intended to help ease energy reliance on Russian gas.
On 2 October 2021, Federal Energy Minister Tinne Van der Straeten proposed extending the social energy tariff introduced during the pandemic to enable vulnerable people to better cope with the health crisis. Ten days later, the measure was introduced in the federal budget and is set to last until the end of March 2022, costing €208 million and targeting nearly 500,000 households.
Moreover, the Minister of Economy and Employment Dermagne has announced that from October 2021 the most vulnerable citizens will also benefit from an €80 energy check to be deduced from their bill. The budget for this energy check will amount to €72 million.
On 12 October, a €16 million Fund for Gas and Electricity was established to support households in need that are not eligible to receive the social tariff.
Certain taxes such as the federal contribution for gas and electricity and green power certificates are being replaced by excise duties which can easily be adjusted by the government to compensate for energy price variations. The point is to keep revenues at a constant level, rather than increasing along with energy prices.
The government has also forbidden unilateral changes in energy contracts, by which energy suppliers could independently increase the down payment invoice of consumers also in fix-price agreements.
On 1 February 2022, Alexander De Croo announced a VAT reduction for electricity from 21% to 6% from March to July. Moreover the government will provide every household with a €100 cheque and will roll-out further charge-reductions for low-income families. The energy package should amount to €1.1 billion.
On 14 March 2022, the Federal government decided to extend a VAT reduction until the end of September and oil-heated households will receive a payment for €200 euros. An extended social tariff benefitting one in five households is extended until 30 September. The total cost of the measures is estimated at €1.3 billion.
Belgian Prime Minister Alexander de Croo said that Belgium will take the lead in pushing for a cap on European gas prices.
On Saturday 19 March 2022, taxes on diesel and petrol were reduced by 17.5 cents per litre and Prime Minister Alexander De Croo announced that “the federal government has decided to take the necessary steps to extend the life of two nuclear reactors by 10 years”. The measure will delay the Belgian phase-out from nuclear that was planned for 2025. Belgium will also increase renewable energy investments, including an additional €1 billion for wind and solar energy projects, according to De Croo.
On 22 October 2021, the Bulgarian government announced an instrument to compensate companies with €55/MWh for two months. The €225 million required for the subsidies came from windfall profit tax on the nuclear power plant Kozloduy.
Towards the end of December 2021, the Bulgarian Minister of Energy Alexander Nikolov announced a new measure, compensating businesses for 75% of the electricity price increase above a threshold of 95 €/MWh but not more than 30% of the actual average monthly price (the actual price then went to 219 EUR/MWh, the 30% ceiling was activated and the compensation was about 66 EUR/Mwth). The minister said at the time that the compensation for the high electricity prices will exceed €460 million for the four months, with the state budget covering most of the cost.
On 20 January 2022, the formula was amended and maximum compensation, while staying put at 75% of the bill above 95 €/MWh, was brought to 128 €/MWh.
For household, on 16 December the new ruling coalition voted to freeze power and heating prices until the end of March.
In late February, Croatian Prime Minister Andrej Plenković presented a €636 million package to mitigate the growth of energy prices. The package will contain the energy price increases to 9.6 percent for electricity and 20 percent for gas. The package will also address the most vulnerable energy customers, estimated to be over 90,000. This extends the number of eligible people who receive vouchers for both electricity and gas bills.
Government measures include, among other things, a permanent reduction in the value added tax (VAT) rate for gas and heat to 13 from 25 percent. In addition, the rate for gas will temporarily fall to five percent, in the period from the beginning of April this year to the end of March 2023.
On 17 September, the government announced a 10 percent discount on the electricity bill of all households from November to February.
On 4 November, the cabinet approved a reduction of VAT from 19 per cent to 5 per cent on electricity bills for vulnerable groups for six months. The Minister of Finance Petrides said that the government would also augment the disbursement of cost-of-living allowances.
In November and December 2021, electricity and gas were exempted from value-added tax ( VAT ). The government also claimed that households (and other consumption points, such as cottages) will be exempted from energy fees if the electricity comes from renewables.
On 29 December 2021, the new coalition government approved the “Aid to households and entrepreneurs” act, to provide targeted assistance for households and entrepreneurs significantly affected by rising energy prices. Small and medium enterprises whose energy provider failed and that have experienced increases of their energy bills of more than 100% are offered a state-backed guarantee with a 0% interest rate to meet the costs of their operational expenses. This is provided under the Guarantee Program 2015 to 2023 through the National Development Bank. In early February 2022, the Minister of Industry and Trade Jozef Síkela outlined a proposal to support companies facing a rise in energy prices. The package compensates energy-intensive industries with payments from the emission allowances or VAT. Bridging loans from state financial institutions or loans from commercial banks with a state guarantee was also considered.
In March, the Minister of Labour and Social Affairs Marian Jurečka said that energy prices could be capped, or there could be some forthcoming tax breaks, including VAT.
After the Russian invasion of Ukraine, the government cancelled road taxes for cars, buses and trucks up to twelve tons. At the same time, the obligation to add more expensive biofuel to gasoline and diesel was lifted.
The Danish government has set aside €13.4 million to top an existing scheme to help vulnerable households and it is designing a tax-free cheque to help around 400,000 households pay their energy bills. By February 2022, the measures were finalised and entered into force with a so-called “heat-cheque” (around €800) for 320,000 of the hardest-hit households.
Low-income households will benefit (also retroactively) from discounted electricity prices between September 2021 to March 2022.
Network fees for all electricity consumers (both firms and households) were halved from October this year to March 2022.
The Minister of the Environment, Tõnis Mölder, announced that the total cost of the measures amounts to about €100 million.
At the end of 2021, Estonia decided to extend the energy price subsidy to low-income families to households with an income of less than €1,126 per month per first earner. According to the Estonian Minister of Public Administration Jaak Aab, this means that around 380,000 households across Estonia will benefit. The estimated cost of this subsidy is approximately €79 million, to be covered by the proceeds from the sale of CO2 emission credits.
On 25 January, the Estonian government approved a cap on electricity (€0.12/KWh) and gas prices (€65/MWh) for households and the abolition of electricity distribution charges for businesses (previously only halved), in an effort to mitigate the negative effects of rising energy prices. The benefits will be valid from January to March.
On 22 February, Euroactiv reported that the government decided on temporary targeted measures to alleviate the problems caused by soaring energy prices. The measures focus on transport, agricultural entrepreneurs and household. These include a temporary increase of the maximum deduction for commuting expenses from €7,000 to €8,400,
Also, the mileage allowance for commuting expenses when using one’s own car has been slightly increased. For professional drivers, the plan is to create an arrangement where “occupational diesel” would have a lower tax rate.
According to Finance Minister Saarikko, the measures will decrease tax revenues, but will not increase government spending. The state will lose some €450 million in revenues.
At a ministerial council on 17 March 2022, the Executive promised direct grants to the agricultural sector of about 300 million euros in direct support to alleviate the agricultural cost crisis and improve the security of supply of domestic food production. A similar package of €75 million was also rolled out for the logistic sector.
The government is trying to determine a model where income support could be paid to households automatically if there is a spike in market prices and to consider energy prices when granting social assistance to the lowest-income households.
In the third emergency package since the beginning of the war, the government also agreed on a 7.5 percentage point reduction in the fuel distribution obligation for 2022 and 2023. The reduction in the distribution obligation will benefit both professional and private drivers.
Extra €350 million have been set aside for longer-term energy security, including investments in hydrogen and batteries. In the short time horizon, according to Mika Lintilä, Finland will increase the domestic supply of forest chips (through extra funding and timber terminals) and of peat.
On 15 September, the government announced plans for a one-off €100 payment to the 5.8 million households that already receive energy vouchers. Prime minister Jean Castex has also announced a cap on the price of gas until April 2022. Both measures were then strengthened on 21 October, augmenting the number of beneficiaries of the voucher (to everyone earning less than €2.000 per month net – around 38 million people), and extending the price cap to the end of 2022. A fuel-voucher and a reduction of the electricity tax rate are also being discussed. Reuters reports that French Economy and Finance Minister Bruno Le Maire said that the payouts to more than 38 million people would cost €3.8 billion, paid mostly this year.
On 9 December 2021, the French government began discussions on changes to the formula used to compute tariffs of the country’s main electricity supplier Électricité de France (EDF), reducing the market link in the formula. The new measure follows Prime Minister Jean Castex’s promise to limit the increase in regulated tariffs to 4% for the whole of 2022.
Moreover, in December 2021 there were plans to increase the volume of electricity that EDF is obliged to sell to its competitors by 50%, however in March 2022 the increase was agreed at 20% (from 100 to 120 TWh). This compulsory sale, for the period from 1 April 2022 to 31 December 2022 at €46.2/MWh, is part of the Arenh system (a regulated access to historic nuclear electricity), which ensures a preferential purchase price for alternative producers.
As of 7 January 2022, discussions are ongoing, while current measures are beginning to look insufficient to contain increases to 4% over the winter.
By 31 January 2022 the estimated cost for the state has been €8bn, while EDF, forced to lower the cost of electricity by charging below the market rate (to contain the increase to 4%), warned its investors that it would take an estimated €8.4bn financial hit from French energy price cap. Some other estimates put the government spending to contain high energy prices as high as €15.5 billion since the fall of 2021.
From February 2022 to January 2023, the government also reduced the electricity tax from €22.50 per megawatt hour to €1 for households and 50 cents for businesses.
According to Finance Minister Bruno Le Maire’s “the new measures announced since the Ukraine crisis – such as helping companies with the cost of higher gas and power bills – bring the total cost of the government package to €25-26 billion”.
On 19 March the Prime Minister Jean Castex announced that from April to July motorists will be able to benefit from a discount of 15 cents per litre at the pump (and 35 cents per litre for the diesel used by boats in the fishing industry). On the 18 March 2022, road hauliers were also informed that they would receive a direct grant of 400 million euros from the government. This corresponds to a boost ranging from 1,300 euros for tractors and 300 euros for ambulances. This latest intervention will cost 2 billion.
On 23 September 2021, Reuters reported that “a spokesperson for the economy ministry said on 22 September that Germany does not see a need for government intervention to counter rising gas prices”. However this position was then reconsidered a few weeks later, when the government announced a reduction on the Erneuerbare-Energien-Gesetz (EEG) surcharge – a levy on the price of electricity – from 6.5 to 3.72 cents on the wholesale price per kilowatt-hour of electricity. The measure, costing €3.3 billion, became effective on 1 January 2022 and will be financed by the federal budget and higher CO2 pricing.
On 9 January 2022, the new coalition government announced targeted measures to help vulnerable households cover their heating bills in full, while the minister for environment and consumer protection, Steffi Lemke, told Reuters she will “clamp down on suppliers who try to profiteer from contract expiries, competitor insolvencies and people moving house”.
The state has also offered a €130m package of one-time grants to low-income households, which will be paid over the summer when households receive their bills from energy suppliers.
At the start of February 2022, multiple politicians, within and outside the coalition government, started calling for a further reduction of the EEG surcharge before 2023, which would relieve households by an average of €300.
Electricity prices for German households are the highest in the European Union. Reuters indicates that some 4.2 million German households will see their electricity bills rise by an average 63.7% in 2022 while 3.6 million face gas bills 62.3% higher than in 2021 as suppliers pass on record wholesale costs.
On 24 March, Germany’s ruling coalition agreed on additional measures worth about €15 billion, including a temporary reduction in fuel prices for three months through a tax cut (by 30 cents for gasoline and 14 cents for diesel). Other measures encompass a one-time payment of €300, a €100 cheque to boost child support and a monthly reduction to €9/month for public transport. These new measures will complement the already agreed subsidies for low-income households, the increase in allowance for commuters and the EEG surcharge cut. Chancellor Scholz indicated that the overall cost of these policies bring the total cost of shielding consumers from the rise in energy prices to around €30 billion.
Plans were announced on 14 September 2021 to offer subsidies on the electricity bills of to the majority of Greek households and small businesses by the end of the year and were then expanded in mid-October. The value of the subsidy was initially €9 for the first 300 kilowatt-hours (KWh) consumed per month and was later increased to €18 for low voltage consumers and €24 for the beneficiaries of the social household tariff. On January 7 2022, the subsidy for households was then raised to €42 for the first 300KWh and €65/MWh for businesses (regardless of size, sector and voltage level). For households included in the Social Housing Tariff (CTO) the subsidy will amount to 180 €/MWh, ie 90% of the increase. The government-owned Public Power Corporation also expanded its existing discount policy to fully cover the price rise for the average household with a consumption of up to 600 kWh per month.
At the same, heating allowances caps and inclusion criteria have been expanded and the government estimates that the number of beneficiaries will exceed 1 million, compared to 700,000 in 2020.
For January 2022, natural gas will also be subsidised for both households and firms at €20/MWh and €30/MWh respectively. VAT subsidies have also been implemented for both groups.
Some of the funding to shield consumers up to December 2021 were funded through the Special Support Fund for the energy transition, with at least €150 million diverted from the increased revenue from the Carbon Emissions Trading Rights System for Greece in 2021. However, the total cost of the measures is around €500 million, while the cost of the January 2022 package (for the month of January alone) is estimated to be €400 million.
Finally, Environment and Energy Minister Kostas Skrekas announced €100 million from the Recovery and Resilience Fund for the construction of photovoltaic stations by municipal energy communities will be used to provide power to vulnerable households.
In March, the government €65/MWh subsidy to the industrial sector fell far from covering for the spike in wholesale electricity prices observed after the start of the war in Ukraine (€360/MWh on the Greek exchange).
Reuters reported that Greece spent some €2.5 billion in power and gas bill subsidies since September and detailed additional aid of €1.1 billion of upcoming help, which includes a fuel rebate for low-income households.
In April 2022, the government also introduced a one-time support cheque of €200 for all low-income pensioners.
On Thursday 5 May 2022, Finance Minister Christos Staikouras announced a new package worth €3.2 bn to relieve pressure on household budgets and businesses from soaring energy prices. The measure would come after the subsidies for power and gas and the one-off grant to vulnerable groups that already costed €4 billion. Prime Minister Kyriakos Mitsotakis also said that the government will set a ceiling on wholesale electricity prices and refund up to 60% of all the surcharges that electricity consumers with annual incomes of up to €45,000 have paid from December 2021 to -May 2022.
Prices for households are regulated below cost and on 11 November the government announced that it will also put a price-ceiling of €1.30 per litre on petrol and diesel. The cap will last for three months.
Electricity prices for Irish households were the fourth-highest in the EU in the first half of 2021, rising to number one when taxes are stripped out. Presenting the Irish budget for 2022 on 12 October, Finance Minister, Paschal Donohoe, introduced a 30% tax rebate on vouched expenses for heat and electricity. Other measures include spending for €202 million from carbon tax revenue in residential and community retrofit schemes (over 22,000 home energy upgrades in total). More than half of the funding will be for free upgrades for low-income households at risk of energy poverty. A new low-cost loan scheme for residential retrofitting will also be introduced.
On 14 December 2021, the government approved a €210 million scheme to credit all domestic electricity customers with €100 in 2022. Approximately 2.1 million account holders will benefit from the scheme for a one-off, exceptional payment.
In March 2022, the electricity credit payment to households was doubled to €200 and will continue through to March and April. Funding for the scheme had also to increase accordingly, from €215 million to €400 million.
On 27 September, Italy approved short-term measures worth short of €3 billion to offset the expected rise in retail power prices until the end of 2021.
The funding is split into €2 billion to eliminate general system charges in the electricity sector and €480 million to reduce general charges on gas bills. The system charges on electricity bills will be offset with €700 million from the proceeds of CO2 auctions and €1.3 billion from the National Fund of Energy and Environmental Services.
VAT on the use of natural gas will drop to 5% on supplies for “civil and industrial uses”. The measure applies from the last quarter of 2021 (October to December). VAT on gas bills is now at 10% and 22% depending on consumption. Italy is also set to strengthen the ‘social bonus’ on bills for families in economic difficulty and with serious illnesses, for which €450 million will be allocated. The facilities will be redetermined by the energy authority for the last quarter of 2021 to “minimise increases in supply costs”.
For around 6 million small businesses (with low-voltage users up to 16.5kW) and around 29 million domestic customers, the rates relating to general system charges are set at zero for the last quarter of 2021.
New measures will likely be introduced early next year, bringing the total cost of containing energy prices for the government to around €5 billion.
On 9 December 2021, the Italian government agreed to supplement the €2.8 billion spending already planned for 2022 with an additional billion.
On December 18 2021, the government outlined how it will spend the funds for 2022: €1.8 billion will be used to eliminate system charges for electricity users (households and micro-businesses with power needs up to 16.5 kilowatts). A further €480 million has been earmarked to cancel the charges on gas bills for all users. Then, as in September, there will be a reduction in VAT to 5% for both civil and industrial uses, with an estimated revenue loss of €608 million . Finally, €912 million will be used to increase the social bonus (the discount on bills for economically disadvantaged families or those with serious health conditions) in order to compensate for new increases. The Italian government also introduced the possibility for consumers to pay their energy bills in multiple instalments for the whole of 2022.
On January 12 2022, the Italian Minister of Industry announced a forthcoming increase in corporate taxes on energy companies that have benefited from surging power prices. This comes days after Matteo Salvini, the head of the Minister of Industry’s political party, called for a deficit-hike of at least €30 billion .
Overall, state support for struggling households is expected to reach €8.5bn through March 2022.
On 21 January 2022, the Council of Ministers announced new measures (up €1.7 billion) against high bills. These are on top of the planned €3.8 billion and bring the total to €5.5 billion for the first quarter of 2022 alone. The extra measures are more targeted to support the business world with a 20% tax credit for all energy-intensive companies experiencing a 30% price increase with respect to 2019. Some of the extra funding will be financed through a windfall profit tax from February to the end of 2022 on solar, wind, hydro and geothermal electricity producers.
On 19 March 2022, Italy approved a new €4.4 billion package to enlarge the social bonus to 5.2 million households (who will pay electricity and gas at 2021 summer’s prices) and to reduce the price of gasoline by 25 cents until the end of April. Other measures contained in the package are tax-credits for firms and allowing citizens to pay their energy bills in instalments. The funds will be found by a 10% windfall tax on energy companies and bring the total amount to €20.4 billion spent since September.
On 21 April 2022 the Senate approved €8 billion in extra spending, 5.5 billion of which is to counteract rising energy prices and the rest to help the most affected productive sectors of the economy. System charges on electricity bills will be kept at zero throughout summer and VTA will be fixed at 5% of gas bills. Also the social bonus for electricity and gas was extended for all low income households (whose category was previously expanded). Tax credits for energy-intensive companies were also designed and a fund of 800 million was activated for the automotive sector. Measures to favour the installation of renewables (photovoltaic and wind in particular) were also adopted. The degree also envisages that air conditioning will need to stay above 25 degrees Celsius during the summer period.
On 2 May PM Mario Draghi outlined a new package of measures worth 14 billion to help families and business but also to speed up the deployment of renewable energy and regassification plants. The flag-measure of the package is a €200 one-off bonus for 28 million workers and pensioners (with an income level lower than 35.000 euros). Then the decree includes a 0.8 percentage points cut on the social security tax rate of civil servants, a €200 million fund for businesses trading with Russia, Ukraine and Belarus and tax credits for SMEs for investments in intangible assets (50%) and for training (70% for small firms and 50% for medium ones). A €600 million fund has also been designed to help big cities with the implementation of the Recovery and Resilience Facility objectives. The Superbonus (a 110% tax credit on energy efficiency improvements for buildings) and the social bonus for energy expenses (regarding families with an income lower than 12 thousand euros) have been extended until the end of September. The cut in excise duty on fuels has also been prolonged: the discount, worth 30 cents per litre on petrol and diesel, is expanded to methane cars, whose excise duty will get to zero and VAT will be reduced from 22% to 5%. This will last for all fuels until 8 July 2022. For companies, the tax credit for the purchase of gas and electricity increases to 25%. And hauliers will benefit from a 28% tax credit for the first quarter of 2022 for the expenditure incurred on the purchase of diesel. A 10% tax credit is also targeted at energy-intensive firms for natural gas purchased in the first quarter of 2022. Three billion euros will be used to adjust the prices of public procurement, as the raw materials used in construction are affected by high inflation. The draft decree allocates 3 billion for 2022, 2.5 billion for 2023 and 1.5 billion for every year from 2024 to 2026. The measures will mainly be funded by increasing the windfall taxation of energy firms from 10 to 25%.
In Latvia, around 150,000 of the most vulnerable households, including those with a disabled member and large families, will receive between €15 and €20 per month from November until at least the end of 2022 to pay their electricity or gas bills.
The Ministry of Economics developed and on 30 November the Cabinet of Ministers supported, a proposal reducing the country’s mandatory procurement component to €7.55/MWh (from €17/ MWh in 2021).
The government also rolled out a 50% reduction in fixed-term electricity distribution tariffs. The subsidy is allocated to the distribution system operator, compensating it for the reduced distribution tariffs it applies to end-users.
Residents over the age of 60 and disabled citizens have been receiving a monthly subsidies of €20 per month from November 2021 until the end of March 2022. Households with children are getting €50 per child.
The previously proposed aid instrument, a time-limited reduction in value added tax, was not approved.
The overall cost for the government is estimated to be €450 million.
On 14 October, the Lithuanian government announced that it will delay the final stages for liberalising the energy market, due to the possible disruptions caused by the spike in energy prices. Moreover, the increase in heating and gas prices will be spread to consumers over 5 years.
Finally, the extension of heating-aid for the poorest 110,000 households is also under discussion.
The Lithuanian Parliament has also passed new legislation enabling more people to apply for heating subsidies to cover around 110,000 people. The government also planned to set a ceiling on electricity prices for consumers, spreading the increase over the next five years.
Luxembourg Energy Minister Claude Turmes says he continues to monitor the evolution of energy prices closely and to inform the Council of the Government.
On 1 January 2022 the government increased its cost-of-living allowance by €200 to better protect vulnerable households from rising energy prices.
In February 2022, the government approved the “Energiedësch” pack, putting €75 million in use for the following elements:
- A one-off energy premium with a ceiling of €400 for low-income households was introduced. The benefit went to households receiving the cost- of-living allowance (COLA) and households whose income is up to 25% higher than the income of those eligible for COLA.
- Electricity prices were stabilised through an increase in the state’s contribution to the compensation mechanism for renewable energy.
- Gas network costs were temporarily covered by the state. The reduction in energy costs was estimated at around €500 per household.
Financial aid measures were being stepped up to accelerate the energy transition by supporting energy renovation, the installation of renewable energies and even sustainable mobility.
On 31 March, the government introduced new measures to shield companies from the higher energy prices effective until the end of 2023.
The measures were: a guarantee scheme aiming at facilitating bank loans for eligible companies (those with liquidity needs due to the war in Ukraine). The state guarantee could cover up to 90% of the loans. An overall amount of €500 million is allocated to the scheme. An aid scheme to compensate for part of the additional costs of higher electricity and natural gas prices. This scheme provides support to companies that are qualified as energy-intensive (whose purchases of energy products account for at least 3% of their production value/turnover) and in the commercial sector, covering between 30% and 70% of the additional cost exceeding the doubling of natural gas and electricity prices. The granting of aid with an intensity of more than 30% is, however, subject to the conditions that the company is making a loss and that the eligible costs are at least 50% of the loss. The government also proposed to analyse the possibility of opening the scope to the road haulage sector, the construction sector and to the food industry. Then a measure was specifically drafted for the agricultural sector and designed to compensate for part of the additional costs linked to the rise in the price of energy, fertilisers and inputs, up to a limit of €35,000 per enterprise. Another aid scheme to offset the extra costs of the greenhouse gas emission allowance trading system (ETS) for the period 2021-2030. This measure covers part of the indirect emissions costs incurred in the years 2021 to 2030 by companies exposed to a real risk of carbon leakage. In return for this aid any beneficiary company is required to make investment commitments that promote the energy transition. Other measures concerning the medium term were also rolled out.
Additional support schemes, tax credits and the reduction of 7.5 cents/euro per litre of fuel (diesel, petrol) and per litre of heating oil until the end of 2022, were introduced to increase the purchasing power of citizens and vulnerable groups. Finally, housing measures were introduced or revised to help with the increasing costs for households. These are a temporary rent freeze until December 2022, higher rent subsidies for large families and the revision of the financial support scheme to renovate fist houses.
The government has mandated Enemalta, the (67%) state-owned energy provider in the country, to freeze prices at their 2014 level. To make it business feasible, the government has been compensating the firm for the losses the price cap implied due to the increasing cost of energy imports. In 2021, the government has committed €200 million and the same amount has been allocated for this year.
The government reduced the energy tax for households and businesses for 2022. This will cost €2.7 billion for the compensation of households and €0.5 billion for the compensation of companies. The cabinet is also making €150 million available to support vulnerable households with a high energy bill and/or poorly insulated homes through insulation-improving measures. The system will be managed at the municipality level.
On 21 March, the government agreed to raise the one-off energy allowance (energietoeslag) for people on incomes around the level of social assistance to €800 (previously €200). At the same time, the government lowered the rate of value-added tax (VAT) on energy from 21% to 9%, and cut the excise duty on petrol and diesel by 21% from 1 April 2022 until the end of the year. This additional package will cost a total of €2.8 billion. The government will fund the package in part from extra gas revenue and will also use remaining funds from the Brexit Adjustment Reserve.
The coalition of the Labour Party and the Centre Party on 10 January 2022 announced that a subsidy for household electricity consumption will increase an estimated €893 million. Reuters reports that the government will pay 80% of the portion of power bills above prices of 0.70 krone per kilowatt hour (KWh), up from 55% in the plan devised last month. Previous measures amounted to €501 million, taking the overall cost to €1.39 billion.
On 1 April, the government put forward budgetary measures to deal with the extraordinarily high electricity prices. The measures include an extension to March 2023 of the electricity support scheme for households (worth €770 mil), agriculture and greenhouses (€52 mln), the voluntary sector (€24 mln) and sustainable housing (€16 mln). The Parliament has also adopted increased housing support, an extraordinary grant for students, increased support for widows and increased framework grants to municipalities to cover increased social assistance payments. Furthermore, the electricity charge is reduced significantly in the winter months.
The new measures bring the total cost of protecting consumers against high electricity prices to €2.3 billion.
On 22 October 2021, Climate Minister Michał Kurtyka submitted a bill aimed at shielding the most vulnerable 20% of households from the recent spike in energy prices. The measure will be implemented by extending for 6 months the number of beneficiaries of energy bills allowances and increasing their value.
At the end of November 2021, the government announced a package of tax breaks and contributions for the vulnerable worth more than €2 billion.
On 11 January 2022, Polish Prime Minister Mateusz Morawiecki detailed his second “anti-inflation shield”: VAT on food, gas and fertilizers goes to 0%, while that on petrol and diesel to 8% and that on heating at 5%, for six months. Financial aid measures to shield public administration entities were also rolled out.
An allowance to help households struggling with energy bills has been strengthened, to provide a maximum of €106 per person per year based on income, type of heating and the number of people in the household (the largest of which can get up to €306 per year). The first instalment is paid out at the end of March 2022, while the second will be sent out in December 2022 and should cover 7 million households.
The government is also working at a new package labelled “Putin-shield” to apply to those sphere of economic life that have suffered as a result of Russia’s invasion of Ukraine.
Starting on 1 February 2022, Poland lowered the tax rate on fuel for six months. The VAT rate for petrol and diesel was reduced from 23 to 8 percent. Gas and fertilizers were also completely exempt from VAT for the same period.
On 27 April, Secretary of State Piotr Naimski announced that the government is extending the tariff protection of the individual customers and the so-called sensitive recipients – e.g. hospitals or kindergartens – until 2027.
In late September 2021, the minister of environment and climate action Matos Fernandes has announced a reduction of at least 30% in the tariff for access to networks for industrialists.
The minister also granted the elimination of the extra “fee of production” under the Special Renewable Regime (PRE) to the value of €250 million, as well as the extra cost removal of the Power Purchase Agreement (CAE) for the Pego coal-fired power plant, generating annual savings of €100 million.
Additional measures include the revocation of the interruptibility mechanism, by which factories reduce or suspend their energy consumption when the electricity system fails to meet demand in exchange for financial compensation and the full allocation of revenues from the sale of CO2 licenses, at an estimated value of €270 million (against the previously planned €150 million), to the Environmental Fund.
Finally, in the package there is also the ‘buffer’ for the consignment of revenues arising from the “extraordinary contribution” of the energy sector, estimated at €110 million, bringing the total amount to €680 million, which guarantees a reduction in network access tariffs of 13%.
On 15 Oct 2021, the Portuguese national regulatory authority announced its proposal for electricity tariffs for 2022, in which it incorporates the measures announced by the government, following which it is worth noting that network tariffs will decrease more than 50% for households and 94% for industrials. It also announced that the regulated tariff for household consumers will decrease 3,4%, or 0,2% if compared with the 2021 average tariff.
In early March 2022, the government decided to extend (until 30 June) a reimbursement mechanism for the VAT revenues along those from ISP (a tax on derivates of petrol) resulting from the increase in fuel prices, as well as suspending an increase in the carbon tax. Moreover in March 2022, the government increased the value of the Autovaucher (obtained by paying at a fuel pump with a card) from €5 to 20 per beneficiary.
On 25 March, Portugal obtained the permission from the EU institutions to apply unique measures to lower electricity prices, taking into account, together with Spain, their status of “energy island” (the electricity interconnecting of Spain with northern Europe is only 2.8%). This will probably translate into price caps to downplay the role of gas as price-setter in the electricity market.
On the 28 March, the country’s energy regulator announced that the COVID-related measures, by preventing providers to cut off electricity and gas to consumers in financial difficulty, will be dismissed by the end of March.
Economically vulnerable consumers in Portugal are entitled to a discount by means of a social tariff for both the supply of electricity and natural gas (before the crisis). The discount of 33.8% applies to everyone, regardless of whether they are in the regulated or liberalised market. Vulnerable individuals are also exempt from two of the three additional fees and taxes applied to electricity bills: the “special consumption tax” (IEC) and (partially) from the audiovisual (CAV) or ‘Netflix’ tax. At the start of April 2022, the government introduced a new subsidy for the purchase of gas bottles of €10/month per bottle. The subsidy will last until the end of June and will be apply to the beneficiaries of the social tariff, an estimated 762,320 people. The funds will come from the Environmental Fund up to a maximum “ceiling” of €4 million.
On 26 April, the European Commission agreed on a price cap on gas for Spain and Portugal (the energy island) at €50/MWh – de facto decoupling the price of electricity from gas – for the next 12 months.
Euronews reports that this should result in electricity bills being halved for about 40% of Spanish and Portuguese consumers with regulated rates.
On 7 September 2021, the Romanian Parliament passed a law to shield vulnerable consumers from the energy price increases from 1 November 2021, with subsidies to be used for home-heating assistance, energy consumption, energy-efficient house equipment and the purchase of products and services improving the energy performance of buildings or connection to the energy network.
On 4 October, the Minister of Energy, Virgil Popescu, announced compensation for both electricity and gas bills. The measures are expected to last from 1 November 2021 to 31 March 2022 and affect approximately 6 million families or 85% of the Romanian population.
In addition to households, compensation will given to public and private hospitals, schools, nurseries, NGOs and public social service providers.
On 31 October, the Romanian Parliament voted in favour of the bill to implement the above measure and to levy a windfall tax on producers (on revenues exceeding €91/MWh) to finance them.
On 11 January 2022, the government announced a new protection scheme for household consumers with a monthly consumption of up to 300 kWh, including a VAT reduction to 5%, as well as compensation for the green certificate and the cogeneration bonus for consumption. The government is also developing a support scheme for natural gas. These new measures will be introduced by the beginning of April.
On 20 March, the Romanian government imposed a one-year ceiling on electricity and natural gas prices. Household customers who do not consume more than 100 kW per month will pay 14 cents per kilowatt, and if their consumption exceeds 300 KW, then they will be charged a maximum of 16 cents per kilowatt. Industrial customers will pay up to 20 cents per kilowatt. As for natural gas, its price for domestic consumers will be a maximum of 6 cents, and for industrial customers no more than 7 cents per kilowatt.
In early February 2022, the Slovakian Minister of the Economy Richard Sulík proposed introducing a windfall profit tax on Slovenské elektrárny, the company running the two power plants in the country. The proposal made Slovenské elektrárny warn that it might be forced to file for bankruptcy, while stopping the process of launching the third unit of the nuclear power plant in Mochovce and the completion of unit four. Ownership of Slovenské elektrárny is split into three between the Ministry of the Economy, and two foreign companies (the energy holding EPH Daniel Křetínský and Patrik Tkáč and the Italian energy company Enel).
In later February, the Slovakian government reached a deal with the company, which agreed to sell 6.15 TWh for selected customer groups at a price of €61.2/MWh for 2023 and 2024. The company claimed that “the total value of the aid will be around EUR 850 million”.
Households should save a total of about €1 billion, including VAT, on electricity bills by 2024. According to the Minister of Economy, the average savings per household will reach €500.
In late January 2022, the government provided a one-off energy subsidy to low-income citizens: around 621,000 people received a one-time energy voucher of €150 and large families received €200. The state will allocate a total of €106 million for this measure and money for the payment will be drawn from the climate fund. From 1 February 2022 to the end of April, households were exempt from paying electricity bills and excise duties on electricity and fuel were lowered. Prime Minister Janša explained that part of the costs for the mentioned symmetric measures will be covered from the profits of companies that have a network fee for electricity.
The government is also proposing a temporary exemption from the contribution for the provision of support for the production of electricity in high-efficiency cogeneration and from renewable energy sources for household customers and for low-voltage customers without power metering.
The government has also rolled out about €70 million in aid for the most affected economic sectors (notably agriculture).
On 24 June 2021, the Spanish Government adopted a Royal Decree Law 12/2021 including a series of tax and market measures to address price increases, among them it was included the reduction of VAT rate from 21% to 10% for customers with less than 10 kW of contracted power until 31 December 2021 and the temporary suspension of the generation tax (7%) until 30 September 2021.
On 3 August 2021, the Spanish Government adopted a Bill setting up CO2 clawback to non-CO2 emitting generation installed before 2003 (mainly to hydro and nuclear producers, as well as renewables without any regulated schemes); implying that energy companies should deduct their market revenues in relation to the CO2 prices and in the understanding that companies incomes have been increased due to the rising CO2 prices.
On 14 September 2021, Spain passed a new Royal decree which establishes a temporary deduction of market revenues for non-CO2 emitting power plants with the aim of reducing customers bills. The figure is calculated as a proportion of the excess of natural gas prices over a base gas price set at 20 €/MWh and the total amount of this deduction initially foreseen was around €2.6 billion. This measure is set to last from 15 September 2021 until 31 March 2022.
Other measures included in this Royal Decree Law are, the future implementation of a new type of long-term power purchase auction to be held alongside the auctions of the wholesale market. Moreover, the excise duty rate on electricity was reduced from 5.11% to 0.5% until the end of 2021, the suspension of the generation tax (corresponding to 7%) is being extended until the end of the year and VAT is being frozen at 10% for modest energy-consumption households. In addition, it introduces a cap on gas price reviews for the regulated tariff of natural gas, known as the “last resort tariff” (TUR) for customers that have annual consumption of less than 50 MWh and are not in the liberalised market. Furthermore, the RDL increases from €1,1 to €2 billion the amount of revenues from CO2 emission allowance auctions to finance levies in the electricity bill.
On 26 October, a new Royal Decree Law 23/2021 was adopted increasing the social bonus to vulnerable consumers from the current 25% to 60% and from 40% to 70% in the case of the severely vulnerable – until 31 March 2022. Moreover, the budget for the thermal social bonus is doubled in 2021, rising to €202.5 million (the Council of Ministers announced an increase in the heating social bonus) up to 90 euros on average (35 in the warmest areas and 124 in the coldest) to help vulnerable families to face the escalation of electricity and gas. This last Royal Decree Law also introduces some exemptions to the application of the temporary reduction of market revenues for non-CO2 emitting power plants.
On the 25 March 2022, Spain obtained permission from the EU to apply unique measures to lower electricity prices taking into account, together with Portugal, their status of “energy island” (the electricity interconnecting of Spain with northern Europe is only 2.8%). This will probably translate into price caps to downplay the role of gas as price-setter in the electricity market.
On 29 March 2022, the government approved further measures to mitigate rising energy prices in the form of the ‘National Response Plan for the consequences of the war in Ukraine’. This includes a further €6 billion in direct aid and rebates combined with €10 billion in credits, with direct support for business across multiple sectors (transport, food and energy intensive sectors).
The transport sector will be the main beneficiary of the new package with a minimum bonus of 20 cents per litre of fuel until 30 June (the Executive will apply a reduction of 15 cents and the oil companies a minimum of 5 cents) and freight and passenger transport companies will also receive €450 million in direct aid. Other measures are the reduction to one month of the deadline for the tax on hydrocarbons refund, and an additional 80% rebate on the ship tax and the goods tax on maritime lines connecting the mainland and ports outside the mainland belonging to the state-owned port system.
The remaining part of transfers to the economy will be split as follows: €362 million for agriculture and livestock, €68 million for the fisheries sector, over €500 million in aid to large electricity consumers, and €125 million for the intensive gas industry.
Third Deputy Prime Minister Teresa Ribera also outlined that “the special system enjoyed by plants producing renewable energy is being updated […] freeing up €1.8 billion to reduce the fixed part of households’ electricity bills.” She added that renewable generation plants will be able to sell their electricity outside the wholesale market from 1 January 2023.
The third vice-president explained that the Plan envisages an 80% reduction in the tolls paid by the electricity-intensive industry for the use of electricity transmission and distribution networks, for an amount equivalent to €250 million. In addition, it includes an increase in the allocation to compensate indirect CO2 costs to the beneficiary industries. It also includes specific aid for sectors where gas consumption per final product is particularly high.
Teresa Ribera emphasised that the Social Electricity Voucher addressed to households, is being made more flexible and will be automatically renewed for the next two years. In addition, it will automatically include all Minimum-Living-Income beneficiaries.
Last, the prohibition on increasing the gas bill by more than 5% per quarter for consumers who have contracted the Last Resort Tariff is being extended.
Since April 2022, all type of drivers (private and business) will be reimbursed 20 cents per litre of gasoline and diesel at petrol stations until the end of June. The government will finance 15 cents of the discount whilst oil companies will cover 5 cents.
On 26 April, the European Commission agreed on a price cap on gas for Spain and Portugal (the energy island) at €50/MWh – de facto decoupling the price of electricity from gas – for the next 12 months.
Euronews reports that this should result in electricity bills being halved for about 40% of Spanish and Portuguese consumers with regulated rates.
On 13 January 2022, the Swedish Finance Minister Mikkel Damberg announce the allotment of €590 million to to help the households most affected by soaring electricity prices. Those who consume more than 2,000 kWh per month (1.8 million households) will receive compensation of €195 a month for December, January and February.
On 21 March, the government presented a new package of measures to address rising fuel and electricity prices as a result of the invasion of Ukraine. Tax on diesel and petrol will temporarily reduce, from June to October 2022, to the lowest level permitted under EU regulations. The total cost of this measure is estimated at €360 million. A compensatory payment of between €96 and €144 was also approved for private individuals who own a car. The total cost of this measure is estimated at €380 million. Additional funds will be distributed to the purchasing of electric vehicles (to €6,700 in financial support). The estimated additional cost is €370 million. The compensation programme described above has also been extended by another month (for an extra cost of €86 million). The housing allowance for families with children has also temporarily increased from July to December 2022. The extra child allowance will be equivalent to 25 per cent of the preliminary housing allowance and will at most amount to €128 per month. The total cost is estimated at €48 million.
To grant the correct functioning of the “supplier of last resort” system, by which the country’ regulator Ofgem allocates customers of failed firms to new providers, the government is considering offering state loans to energy companies that take on customers from firms that go bust due to soaring wholesale natural gas prices. However, there will be “no rewards for failure or mismanagement, and smaller energy firms will not be given bailouts” Business Secretary Kwasi Kwarteng said on 20 September.
The country’s energy regulator Ofgem has raised the cap on the most widely used tariffs by 12-13% from October, after a previous increase in April, due to high wholesale costs. Some fear that Ofgem could apply a further increase in April 2022, bringing the price cap to £1,995, after a row of bankruptcies of energy firms occurred in the country.
The government is also bailing out key CO2 manufacturers to avoid disruptions in the supply chain of food and is also considering intervening in the national carbon market in December if prices remain high.
Finally, the government designed a £500 million fund to help the most vulnerable people pay their energy bills, particularly heating bills, but also to cover food and clothing expenses. This is in addition to the Warm Home Discount scheme by which medium and large energy suppliers support people who are living in fuel poverty or a fuel poverty risk group and the Winter Fuel Payment (an allowance between £100 and £300 to help households pay their heating bills).
On 3 February 2022, the Chancellor Rishi Sunak announced £350 for the vast majority of households to help pay rising energy bills. If implemented, the measure would have covered just over half of the £693 increase in the price cap on the cost of energy for households after 1 April 2022. In the end the support was designed to be a one-off repayable discount of £200 off energy bills.
In the October 2021 budget, Sunak resisted calls to cut tax on energy, saying at the time that such a step would be poorly targeted. However, after the Russian invasion of Ukraine and in response to rising energy bills, Sunak announced a £150 council-tax rebate to be given to homes in bands A to D. The Independent reports that a government-backed loan scheme of that order will cost around £5bn to £6bn.
From 1 April 2022, Ofgem announced that the price cap for tariffs will rise from £1,277 to £1,971 for a household on average usage. Prepayment meter customers will see an increase of £708 from £1,309 to £2,017.
Sgaravatti, G., S. Tagliapietra, G. Zachmann (2021) ‘National policies to shield consumers from rising energy prices’, Bruegel Datasets, first published 4 November, available at https://www.bruegel.org/publications/datasets/national-policies-to-shield-consumers-from-rising-energy-prices/
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