EU nations unite in implementing austerity measures to combat rising energy costs

By Sibel Morrow

ANKARA (AA) - European Union (EU) countries have recently announced fresh contingency measures to reduce rising energy bills by seeking alternative energy sources, revitalizing idle nuclear plants, ramping up coal production and rapidly filling natural gas inventories.

These measures came in response to rising energy costs amid a worldwide energy crisis prompted by the Russia-Ukraine war that erupted on Feb. 24. Since then, the EU has slapped seven sets of sanctions on Russia, intending to cripple its economy by banning gold, oil and coal imports.

The war has not only culminated in an unprecedented rise in energy and food prices but also triggered a global economic recession and high inflation.

The historical peak in natural gas and electricity prices, in particular, has had a detrimental impact on all market participants, with European countries implementing very different measures to safeguard consumers and businesses against high energy prices while ensuring energy supply security throughout the winter.

- Germany

Germany has been overly dependent on Russian supplies due to its very close energy ties with pre-war Russia. However, difficulties emerged from record oil and food prices for businesses dealing with costlier expenses, as well as German households whose incomes have dropped while grappling with high inflation.

To minimize the impact of rising energy costs on household consumers, the German government has paid each taxpayer a one-time sum of €300.

Fuel taxes have been temporarily reduced and citizens have been provided with unlimited public transportation passes valid on train, bus and metro for €9 per month between June and September.

Energy-saving measures have been extended to public institutions. Public buildings will not be heated by more than 19 degrees Celsius and hot water will be switched off in these buildings, except for hospitals and social facilities. Corridors and little-used rooms in administrative buildings will not be heated.

Lights on government buildings and monuments will be shut off if they are used only for purely aesthetic reasons.

The plan also introduces new restrictions for businesses, forcing them to turn off lights in shop windows overnight. They will be required to close doors while heating their shops to improve energy efficiency.

Several coal-fired power plants that were due to be shut down will now be reactivated to save gas for the winter. The government also started the process to extend the lifespan of the country’s last three nuclear power plants.

- France

The government has offered lower-income households a €100 inflation bonus.

Following a government decree announced in June, an extension until the end of the year has been applied to the freeze in natural gas prices at October 2021 levels.

Electricity wholesale price rises have been limited to 4% for one year. An initiative aiming to reduce energy consumption by 10% has been adopted and heating and cooling degrees in public buildings have been readjusted. Low-income French households have received fuel aid in the form of a €100 inflation bonus.

The country has also regulated the use of air conditioning. Government offices will only be able to switch on air conditioning if it is hotter than 26 Celsius indoors, and a limit will apply to a maximum of 19 degrees Celsius.

Shop window lighting must be turned off between 01.00 a.m. and 06.00 a.m. GMT.

Public service announcements have been devised to encourage energy savings.

- The UK

Millions of UK citizens have started to receive extra financial help to cope with rising energy prices. Lower-income households began receiving the first batch of a £650 cost of living allowance in July. And in October, a £400 energy discount will be distributed in six monthly installments.

In autumn, pensioners will receive an additional one-time payment of £300.

The government will invest £700 million in the Sizewell C nuclear project as part of a plan to secure future power supply.

In a sharp policy change, the government has declared its support for shale gas fracking. The operational periods of some coal-fired electricity plants, which had been scheduled for closure, have been extended.

It is anticipated that the new UK prime minister, who will be appointed on Sept. 5, will determine new measures to cope with rising costs, ensure energy savings and secure supplies.

- Italy

Fuel taxes have been slightly reduced and financial support will be given to low and middle-income families for their bills with a €200 bonus payment.

The government signed a natural gas supply deal with Algeria.

Subsidies will be given for solar energy investments and energy company contracts have been shielded against unilateral alterations.

According to the government’s draft emergency savings plan, household heating will decrease by 2 degrees Celsius while street lighting at night will reduce by 40%, and shops are required to close early.

- Spain

Spain has issued a decree, ordering businesses to curb air conditioning to 19 degrees Celsius in the summer and heating to 27 degrees Celsius in the winter.

The government also ordered shops to turn off their shopfronts from 10.00 p.m. GMT. Additionally, automatic locks will be installed to stop customers from leaving doors open while heating systems are on.

From October, VAT on natural gas will drop from 21% to 5%. A natural gas price ceiling has been adopted for electricity generation and citizens and businesses have been advised to apply energy-saving measures.

- Belgium

Social energy tariffs for low-income citizens have been extended and expanded to include more households.

People using heating oil for home heating have received a payment of €225.

Along with a temporary reduction in VAT on electricity from 21% to 6% between April 1 and July 1, all Belgian households have been given a one-off heating cheque of €100.

Special consumption taxes on diesel and gasoline have been lowered and VAT rates have been decreased on a variety of goods, including heat pumps, solar panels and thermal insulation materials.

All lights in public buildings have been turned off between the hours of 7.00 p.m. and 6.00 a.m. GMT.

Temperatures in buildings will range between a minimum of 19 degrees Celsius and a maximum of 27 degrees Celsius.

The operational lifespans of two nuclear power stations, which had been scheduled for closure in 2025, have been extended by ten years. The operational periods of two additional reactors have also been extended.

- Switzerland

The Swiss government has urged people to save energy to prevent an energy crisis over the winter.

Residents have been urged to cut down household heating, use less hot water, and turn off any superfluous electrical appliances.

- Serbia

The government has prepared a plan to reduce energy consumption by 15% relative to last year. The use of decorative lights and street lighting have been reduced.

A project has been initiated to expand the use of solar panels, led lighting, improve building insulation and includes recommendations for energy savings.

Further discounts have been offered for households that lowered electricity consumption compared to last year.

In line with a joint EU agreement, EU countries have set a goal to fill natural gas tanks to 80% capacity by Nov.1.

In the event of Russia cutting off natural gas supplies to Europe, the EU has developed an emergency plan in which all participating nations are required to cut gas consumption by 15%.

The bloc had announced it would urgently intervene in the electricity market to counteract rapidly increasing prices.

Options, including unbundling the costs of resources used for electricity production, raising a ceiling on natural gas prices, or freezing gas prices are all up for consideration as part of this intervention.

The cost of natural gas has quadrupled over the past six months and increased twelve-fold in the past year in Europe. Similarly, wholesale electricity rates have risen eight-fold in a year and five-fold over six months.

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