Energy bills are exploding in Europe. Here’s what countries are doing to help you pay for them

Soaring inflation has sparked a cost of living crisis across Europe, and governments are stepping in to try to shield households and businesses from the seemingly endless spike in energy prices.

For many families these days, it feels like paychecks immediately evaporate as inflation drives up the cost of groceries and fuel, landlords raise rent, and utility bills continue to soar.

Eurozone inflation jumped to a new high historic high of 9.1% in August, fueled by rising energy costs.

There is no sign of energy crisis improve anytime soon, as Russia said this month that it would not fully resume its supply of gas to Europe until the West lifts the sanctions it imposed on Moscow following its invasion of Ukraine.

Belgian Prime Minister Alexander De Croo has warned that Europe could face 10 difficult winters due to the impasse.

European Union member states are largely responsible for their national energy policies, and EU rules allow them to take emergency action to protect consumers from rising costs. Here’s a look at what governments across the continent are doing to help.

UK

The UK government is capping wholesale energy bills for businesses this winter as part of a sweeping package of measures to protect individuals and businesses from soaring energy prices.

Prime Minister Liz Truss said the cap will apply for six months from October 1 and will ensure businesses “are able to weather the winter”.

She added that shops and pubs will get financial help on their energy bills beyond the initial six-month period.

A similar cap on household energy bills was unveiled earlier this month. The average household “will pay no more than £2,500 (€2,857) a year for each of the next two years,” said Truss, adding that this would represent annual savings of around £1,000 (€1,143) on the basis of current energy prices.

This is on top of a £400 (€457) energy bill rebate promised earlier this year for each household, which will either be paid directly to accounts that have automatic payment set up to their electricity supplier. energy, which could be claimed separately by the families.

Households already struggling to make ends meet and who have already received government allowances will also receive one-time help payment of “cost of living” of £650 (€743) on top of the £400 discount, and pensioners will receive an additional payment of £300 (€343) this winter.

People with disabilities should also benefit from a payment of £150 (171 €) to cover the increase in the cost of living.

Italy

Italy approved in early August a new aid package worth around 17 billion euros to help protect businesses and families against soaring energy costs and rising consumer prices. consumption. It comes on top of the some 35 billion euros budgeted since January to combat the cost of living crisis.

A draft seen by Reuters showed the government would provide a €200 bonus paid in July to low- and middle-income Italians who previously did not receive it.

Italy has also announced its intention to tax companies that profit from rising energy prices and is promoting a gas price cap at the European level to help contain price spikes.

Spain

Like Italy, Spain has decided to tax energy companies that profit from rising energy prices and use the money raised to help its citizens pay the bills.

Madrid has already reduced value added tax (VAT) on energy bills from 21% to 10%, while also reducing an existing tax on electricity from 7% to 0.5%.

Like Portugal, Spain currently applies a one-year cap on gas prices, agreed by the European Commission, which ensures that they remain below an average of €50 per megawatt hour.

France

France also offers a one-off payment to its citizens to help them cope with difficult times, although at just €100, that’s considerably less than in the UK and Italy.

But France has stepped up its game at the source, by completely nationalizing energy supplier EDF and forcing it to limit increases in wholesale electricity prices.

The government now says it will cap electricity and gas price increases for households at 15% in 2023. It says the average monthly household energy bill will cost an additional €20-25 as a result, up from an €200 additional without such a ceiling.

The country’s internal tax on final electricity consumption (TICFE) has also been reduced from €22.50 per megawatt hour to just €1 per megawatt hour for households and €0.50 for businesses.

Denmark

In June, Danish lawmakers agreed on financial aid for the elderly and other measures totaling 3.1 billion Danish kroner (417 million euros), including a reduction in a levy on electricity prices.

Parliament also approved a so-called “heat voucher” worth 2 billion Danish kroner (269 million euros) which will be paid to more than 400,000 households hit hard by rising energy bills.

Germany

Germany, which is struggling to reduce its heavy dependence on Russian gas, has pledged to lower the value added tax on natural gas from 19% to 7% until the end of March 2024.

Germany has also approved two relief packages totaling 30 billion euros to help its citizens cope with rising energy prices this year.

The German government will offer all taxpayers a single energy price flat rate of €300, which will be transferred to them via their employer’s payslip. Families receiving alimony will receive an additional €100 per child, while recipients will receive a one-off payment of €200. People receiving housing assistance will receive a supplement of €270 for people receiving housing assistance.

The country also offers subsidized public transport tickets.

However, German households will have to pay nearly €500 more a year for gas due to a new tax – which will be imposed from October – helping utilities to cover the cost of replacing Russian supplies.

The Netherlands

The Dutch government, which expects inflation to reach 5.2% this year, offer eligible households a single energy allowance of €800.

It also lowers VAT on energy from 21% to 9% and cuts duties on petrol and diesel by 21%, a cap that will remain in place until the end of the year.

Greece

Greece has spent around 7 billion euros on electricity subsidies and other measures since last September to help households, businesses and farmers pay their electricity and gas bills.

Subsidies absorb up to 90% of the increase in household monthly electricity bills and 80% of the increase for small and medium-sized businesses.

Norway

As energy market prices rise around the world, Norwegians will only pay a fixed amount decided by the government last year. Under a scheme introduced by the government in 2021, Norwegians only pay their bills in full when prices are below 70 crowns (€7) per kWh. When energy bills exceed this threshold, the government covers 80% of the total.

Despite this, Norwegians apparently still struggle to pay their bills, and the government is considering other options to help households this winter.

Bulgaria

Bulgaria in May approved a 2 billion lev (1 billion euro) package aimed at protecting low-income businesses and consumers from soaring energy and food prices caused by the conflict in Ukraine .

Since July, the government has also offered a rebate of 0.25 lev (€0.13) per liter of petrol, diesel and liquefied petroleum gas and methane until the end of the year and removes duties excise duties on natural gas, electricity and methane.

Finland

The Finnish government said on September 4 that it plans to offer up to €10 billion in liquidity guarantees to the energy sector to help prevent a financial crisis.

“The government program is a last resort financing option for companies that would otherwise be at risk of insolvency,” Finnish Prime Minister Sanna Marin told a news conference.

Hungary

Hungary has capped retail fuel prices at 480 forints (€1.19) per liter since November, well below current market prices. The measure caused such an increase in demand that the government was forced to limit eligibility for the program.

Sharp rises in gas and electricity prices have also forced the government to lower a one-year cap on retail utility bills, setting the limit at national average consumption levels as market prices fall. applying beyond.

Hungary also imposed a fuel export ban and recently relaxed logging regulations to meet the growing demand for solid fuels such as firewood.

Poland

Poland announced tax cuts on energy, gasoline and basic food items, as well as cash handouts to households. It also extended regulated gas prices for households and institutions like schools and hospitals until 2027.

In July, the government agreed a one-off payment of 3,000 zlotys (€633) to households to help cover the rising cost of coal. Prime Minister Mateusz Morawiecki said the total cost of reducing energy prices in Poland would reach around 50 billion zlotys.

Romania

Romania’s coalition government has implemented a system that caps gas and electricity bills for households and other users up to certain monthly consumption levels, and compensates energy suppliers for the difference. The scheme is expected to be in place until March 2023.

Prime Minister Nicolae Ciuca estimated in February that the support scheme would cost some 14.5 billion lei (3 billion euros), but analysts now expect it to exceed 10 billion euros.

Sweden

Sweden has earmarked 6 billion Swedish crowns (559 million euros) to compensate households most affected by soaring electricity prices.

Prime Minister Magdalena Andersson said on September 3 that Sweden would offer several hundred billion Swedish kronor in liquidity guarantees to energy companies to help avoid a financial crisis after Gazprom shut down the Nord Stream 1 gas pipeline.