26 Oct, 2022

How the EU is tackling the energy crisis

Over the past months, the European Commission, together with national governments, has proposed a series of measures to secure energy supply and shield households and businesses from the impact of energy price hikes.

European liberals believe that we must act urgently to shield consumers, without forgetting the middle class and businesses, particularly SMEs, from the impact of the energy crisis while safeguarding the economy and accelerating the green transition.

“To tackle this crisis effectively, we need to be able to buy gas together, to target excessively high prices, and to ensure solidarity between our Member States in case of shortages”, said European Commissioner for Energy Kadri Simson in remarks this week.

But what is the impact on citizens’ daily lives? ALDE Party has compiled an overview of the measures here.

1. Solidarity contribution from fossil fuel industries

Fossil fuel industries that have benefited from the energy crisis are asked to give a solidarity contribution from their additional revenue. Governments can decide how to distribute these contributions, for example through direct consumer support or incentive schemes.

2. Price cap on extra revenues of energy companies

A price cap on energy companies producing electricity that benefitted from the energy crisis and generated additional revenue. Governments can decide how to distribute these funds, as for the solidarity contributions.

3. Reduction of energy consumption

The EU and national governments agreed a voluntary 10% electricity reduction and a mandatory reduction of 5% electricity during peak hours (3-4 hours per day).

EU countries can trigger a ‘Union alert’, i.e., a mandatory gas usage reduction for all countries, in case of energy shortage.

4. Saving energy awareness campaigns

National awareness campaigns have been spread across Europe to encourage citizens to save energy ahead of the upcoming winter. The EU has also launched a campaign on how citizens can reduce energy use and save money.

5. Retail measures for SMEs

These measures include a price set for the supply of electricity to support small and medium-sized enterprises struggling with high energy prices.

6. REPowerEU: a plan to end energy dependency and tackle the energy crisis

This plan includes a toolbox of suggested measures to encourage energy savings (e.g., reduced VAT rates on energy efficient heating systems) and to diversify supply.

Other measures being discussed include joint gas purchasing to increase supply, default bilateral solidarity rules in case a country is in emergency and a dynamic price limit for gas.

Photo credit: Jennifer Jacquemart, European Union 2022

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