The European Union is formulating measures for member states to respond to surging energy prices which threaten to inflate consumer prices with winter approaching. According to EU energy commissioner Kadri Simson, the bloc would release guidance on tackling the energy price spike in the coming weeks. It is expected to help countries quickly navigate options to respond to soaring energy prices, including by using direct consumer support and tweaking value-added tax (VAT) and excise duties.
Electricity prices have skyrocketed in Europe this year, mainly fuelled by the rising price of natural gas, low renewable energy output, and high EU carbon pricing. European natural gas prices have risen by more than 250% since the start of the year amid high demand as economies reopened from COVID-19 lockdowns.
Some countries, including Spain, Italy, and Greece, are already planning national measures, such as price caps and subsidies, to protect consumers from rising costs. Meanwhile, Germany said it did not intend to intervene in the market to counter soaring gas prices. The EU said the price spike should encourage governments to accelerate their shift away from fossil fuels. However, it also prompts opposition to the bloc’s plan to introduce a new carbon market for transportation and buildings.
