Johanna Cludius – Öko-Institut, Andreea Vornicu-Chira – CSD, Piotr Gutowski – WiseEuropa, Alexander Eden – adelphi
Since the second half of 2021, the EU is experiencing a sharp rise in energy prices, mainly caused by an unprecedented increase in the price of natural gas. In 2021, demand for energy increased as the global economy recovered after Covid lockdowns, and production was not able to meet the rising demand. The Russian invasion of Ukraine has since escalated the situation, driving up gas prices and stoking fears of supply shortages. Robust allowance prices in the EU Emissions Trading System (EU ETS) have also contributed, although to a smaller extent. Even before the Russian invasion, the effect of the gas price increase on electricity prices was estimated to be nine times higher than the effect of the carbon price. Even so, member states with a high reliance on fossil fuels have seen relatively greater effects.
The significantly higher energy prices have strong ramifications for European consumers, with effects most acutely felt by low-income households. Governments are taking action to mitigate the distributional effects of the price increase, in some cases endeavouring to target those experiencing the most significant cost burden. While the EU has proactively responded to the energy crisis, individual EU member states have thus far taken the lead in rolling out compensatory measures. EU member states have passed legislation aimed at shielding households and businesses from the impact of rising prices, covering a range of different measures and committing considerable funds [11] .
In this Policy Brief, we focus on measures directed at households taken at the national level in Germany, Poland and Romania that were enacted in the context of rising energy prices.
We ask the question: Are the measures efficient, effective, and have a long-lasting impact? Do they reach those most in need? What should be done differently in the future?