As UK households feel the pressure, how are other European countries coping with the energy crisis? | Energy industry

In next week, Britain’s energy regulator will announce the biggest increase ever to its energy price cap, leaving millions of households with an annual energy bill of nearly £2,000.

The hit to household finances follows nearly six months of record high energy market prices due to the global gas crisis. Despite the growing gloom facing bill payers, ministers have yet to agree a set of measures to head off a national energy crisis.

After a fourfold increase in market prices for energy in Europe, households will pay on average 54% more for energy this year than in 2020, according to Bank of America. The bank warned that the biggest increases would be felt by Italy and the UK.

While European governments have taken action to shield households from the full brunt of the global energy crisis, the UK government has remained silent. The UK’s failure to act comes despite desperate pleas from groups representing vulnerable households, small businesses and economists, who fear record energy bills threaten to unleash economy-wide inflation and a cost of living crisis.

Britain

In Britain, the next energy price hike is due to be announced on February 7 and households are hoping that further support measures can be agreed before it takes effect on April 1.

Potential measures include reducing the 5% VAT rate on energy bills or shifting policy costs levied on energy bills to general taxation. More radical ideas include setting up a “stabilization mechanism” to give complementary payments to energy suppliers based on the market price. Labor has backed a plan to subsidize bills by introducing a windfall tax on profits made by North Sea oil and gas producers during the crisis.

The Treasury is expected to remain tight-lipped on whether households can expect a reprieve until its spring statement at the end of March. But elsewhere in Europe, multi-billion euro deals are already giving households the reassurance that bill payers in Britain are hoping for.

Will bill payers in Britain get a reprieve? Photograph: Christian Briggwater/Alamy

The Netherlands

The Netherlands, like the UK, is heavily dependent on gas for electricity generation and domestic heating. Unlike the UK, its government took action weeks after energy markets hit record highs to deliver a multi-billion euro package of measures to protect households and small businesses.

The Dutch cabinet agreed in October to cut energy taxes to save households an average of €400 (£332.79) a year. In addition, some €150 million are planned to reinforce the insulation of homes. Another €500 million will be used to compensate small businesses in the form of lower energy taxes.

The measures, which will cost a total of 3.2 billion euros, entered into force on January 1 and will last for one year.

Wind turbines
Wind turbines near Port-Saint-Louis-du-Rhone, near Marseille, France. Photography: Jean-Paul Pelissier/Reuters

France

The French government has also wasted no time in agreeing a package of measures to soften the blow of rising energy bills, after a fuel tax hike in 2018 sparked widespread outcry against the cost of living and provoked protests from the yellow vests (yellow vests).

The French government has already cut some electricity taxes to help slow rising household energy bills, at an estimated cost to the state of 8 billion euros. He will also use his powers to pressure state power company EDF to reduce the cost of electricity by charging well below the market rate for the electricity it produces.

EDF has warned investors it will suffer an estimated €8.4bn (£7bn) financial hit from the plan.

Germany

In Germany, the government plans to reduce energy bills by reducing the cost of supporting renewable energy projects.

Starting this year, the German government will reduce a green surcharge that appears on household energy bills from 6.5 cents per kilowatt hour to 3.7 cents. The government plans to cover the levies due using 3.3 billion euros collected by the Treasury via carbon taxes.

The state has also proposed a one-off €130 million grant package for low-income households, which will be paid over the summer when households receive their bills from energy providers.

Spain

The Spanish government was one of the first to take action to protect households against a sharp rise in energy bills.

He agreed last September to scrap taxes on home energy bills until May, which would instead be paid for by imposing a windfall tax on utilities that were poised to take advantage of soaring market prices for energy.

The windfall tax is expected to bring in around €2 billion to soften the blow to households and prevent Spanish gas and electricity producers from raking in “unacceptable” profits during the crisis. The policy has been seized upon by Britain’s Labor Party as a model that can be applied to North Sea oil and gas producers.

Italy

Italian households pay some of the highest energy bills in Europe and can expect one of the biggest increases in their energy bills due to the global gas crisis. In response, the Italian government has put in place a plan to protect households against rising gas prices.

This includes reducing the gas tax for all consumers and reducing charges that fund renewable energy subsidies, in addition to additional subsidies for low-income families. Overall, state support for struggling households is expected to reach 8.5 billion euros until March this year.

Sweden

In Sweden, the government has set aside 6 billion crowns (£473 million) to mitigate the impact of soaring electricity markets on household energy bills. Earlier this month, it announced its intention to subsidize winter bills by up to 6,000 kroner from December to February for around 1.8 million households whose electricity consumption exceeds 2,000 kilowatt hours per month.

Norway

The Norwegian government introduced a series of measures to help bill payers totaling more than 8 billion crowns (£664 million) in December, consisting mainly of direct subsidies to households.

Earlier this month, the Norwegian government promised to tackle the ‘socially unjust’ effect of soaring energy bills by covering 80% of electricity costs when the market price for electricity is over 70 Norwegian øre (6p) per kilowatt hour from January to March.

Gas processing plant
An offshore gas processing plant in Norway. Photography: Scanpix/Reuters

Denmark

The Danish government remains in talks to decide how much help it can offer with household bills.

It has so far set aside 100m crowns (£11.1m) to top up an existing scheme which aims to help vulnerable households. But the government is preparing to act to help the households most exposed to the global gas crisis: those who depend on gas heating or gas district heating networks.

About 800,000 households could receive a tax-free check from the government to help pay their energy bills. The exact amount has not yet been approved by the Danish parliament.

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