Ireland

What are European countries doing to help their citizens with rising energy bills?

Approach taken across EU ranges from frozen bills, price caps and lump-sum payments

In the United Kingdom all households will get a grant which will cut energy bills by £400 (€460) from October. File photograph: PA

Jennifer Bray
Jack Horgan-Jones
Tue Sep 6 2022 - 05:00

European governments have moved to relieve the significant pressure on households struggling with soaring energy bills through multibillion euro packages to cut taxes, increase allowances and in some cases freeze bills.

An emergency meeting of EU energy ministers will take place this Friday to consider options to rein in rising prices which could include gas price caps. Many countries have already moved to implement measures to shield citizens, with most countries opting for cash lump sum payments for households, similar to the €200 electricity credit paid out to Irish consumers earlier this year, although this figure was significantly higher in other countries.

In Germany, which is more reliant than other European countries on Russian gas, legislators have offered lump-sum reductions in income tax involving an energy price rate of €300 transferred through the employer’s payslip. Families who are in receipt of child support get an extra €100 while those on welfare get a €200 one-off payment. One-off payments will also be made to pensioners and students.

Public transport tickets were subsidised this summer, with prices set at €9, and this popular measure will now be extended. The government has also offered a multibillion-euro bailout to power utility Uniper. In all, the country has pledged €65 billion to protect businesses and customers.

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German chancellor Olaf Scholz also vowed to crack down on energy providers that are making excess profits, saying that windfall profits should not be allowed. Some 9,000 energy-intensive businesses will also receive tax breaks worth €1.7 billion.

Read more on the energy crisis

Lower-income households

In the Netherlands, the Dutch government are working on a €16 billion plan which will include a 10 per cent increase to the minimum wage, subsidies which will be targeted at lower-income households, and a reduction in energy taxes. The government is also offering eligible households a one-off energy allowance of €800. It is also reducing VAT on energy from 21 per cent to 9 per cent and cutting duty on petrol and diesel by 21 per cent, a cap which will remain in place until the end of the year.

In the United Kingdom, all households will get a grant which will cut energy bills by £400 (€460) from October. The Government also announced a one-off payment of £650 for eight million families. Energy price caps of £3,549 per year are also in place for dual fuel for an average household. A windfall tax on energy profits designed to raise £5 billion was introduced in May. It has also been reported that Britain’s new prime minister Liz Truss is considering a freeze on household energy bills.

In Denmark, a so-called “heat check” worth 6,000 kroner (€615) per household was paid out early in August. Danish politicians also agreed to cut a levy on power prices.

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In France, the government has pledged a €22 billion energy package, with a freeze on gas prices for consumers as well as a 4 per cent cap on electricity price increases. This came about after the state-owned energy provider EDF was told to cap price rises for a year. A one-off payment of €100 was also made last year to nearly six million households

In Italy, low-income households earning less than €12,000 a year have had their energy bills frozen as part of a €17 billion package. A one-off payment of €200 was also made for people earning up to €35,000 and this looks set to be expanded to middle-income Italians who previously did not receive it. Taxes have been increased for energy companies booking supernormal profits. The government also announced a 20 per cent tax cut for exposed energy-intensive companies. The country is also promoting a cap on gas prices at a European level to help contain price increases.

Electricity bills

In Spain, the government announced a €3 billion windfall tax on energy companies. Prime minister Pedro Sánchez pledged that under his plan citizens would pay no more for their electricity than they did in 2018. VAT has been reduced on energy bills from 21 per cent to 10 per cent, while also cutting an existing tax on electricity from 7 per cent down to 0.5 per cent.

Furthermore, in April, the European Commission agreed a price cap for gas in Portugal and Spain — an average of €50 per megawatt-hour.

Norway’s government pays 90 per cent of household electricity bills when wholesale prices exceed prescribed thresholds.

Meanwhile, the Polish government in July agreed on a one-off payment of 3,000 zlotys (€635) to households to help cover the rising cost of coal, while Greece has spent about €7 billion in power subsidies and other measures since last September to help households, businesses and farmers pay their electricity and gas bills.

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