COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Tackling rising energy prices: a toolbox for action and support
Date: 2021-10-13
Institutions: European Commission, Secretariat-General
Subjects: EU energy policy, economic recovery, electricity supply, energy consumption, energy cooperation, energy supply, gas supply, price increase, price of energy, security of supply

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 13.10.2021  COM(2021) 660 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Tackling rising energy prices: a toolbox for action and support   
 
 
 
 
1.  Introduction  

The European Union, like many other regions in the world, is currently facing a sharp spike 
in energy prices. This is a high concern for citizens, businesses, the European institutions and 
governments all over the EU. 

Today’s spike is principally driven by increased global demand for energy at large and gas in 
particular, linked to the recovery. While energy price fluctuations have occurred in the past, 
today the EU emerges from the COVID-19 crisis. European households and companies face 
the  prospect  of  higher  energy  bills  at  a  time  when  many  have  been  fragilised  by  loss  of 
income from the pandemic. This can weigh on the recovery and its fairness and inclusiveness. 
It also risks undermining confidence and support in the energy transition required not just to 
avert  disastrous  climate  change  but  also  to  reduce  the  EU  vulnerability  to  fossil  fuel  price 
volatility.  

The  European  Commission  wants  to  help  and  support  addressing  the  negative  impact  on 
households and businesses, as a priority. Having listened to Member States and the European 
Parliament, it has prepared this communication to enact and support appropriate measures to 
mitigate the impact of temporary energy price rises. 

The  EU’s  policy  framework  already  allows  Member  States  to  immediately  take  a  series  of 
targeted  measures to  protect  vulnerable  consumers  and  mitigate  the  impacts  on industry. 
Indeed,  most  Member  States  have  already  announced  measures  to  address  the  current 
situation. The present toolbox allows a co-ordinated approach to protect those most at risk. It 
is  carefully  calibrated  to  meet  the  goal  of  addressing  the  negative  effects  of  sudden  price 
hikes  and  ensure  affordability  without  fragmenting  the  European  single  energy  market  or 
jeopardizing investments in the energy sector and the green transition.  

While energy supply is not at immediate risk and the markets currently expect wholesale gas 
prices to stabilise at a lower level by April 2022, security of supply, gas storage levels and the 
proper functioning of the gas market need a particular monitoring ahead of the winter season. 
In addition to short term measures, this Communication provides an outlook onto coordinated 
measures  the  Commission  considers  to  take  over  the  medium-term  to  ensure  a  better 
preparedness to gas price fluctuations while reducing the EU’s dependence on fossil fuels.  

2.  Energy prices  

Due  to  cheaper  fuels,  subdued  demand  and  rapidly  expanding  renewable  generation, 
wholesale  energy  prices  fell  sharply  in  2019  and  negative  electricity  prices  became 
widespread  in  2020.  This  downtrend  has  been  abruptly  reversed  in  the  course  of  this  year. 
Wholesale  electricity  prices  have  increased  by  200%  on  a  yearly  basis1.  This  in  turn  has 
driven up retail prices, but to a much lesser degree (+9% EU average until August 20212).  

1  

2  

Compared to the average price in 2019, prices at the beginning of October 2021 have increase by 166% 
for the benchmark EP5 (DE, ES, FR, NL) and Nordpool market (NO, DK, FI, SE, EE, LT, LV)  
VaasaETT (https://www.vaasaett.com/) 

1 

 
                                                           
2.1.  What is causing the current spike? 

The current electricity price increase is primarily due to global demand for gas soaring 
as  economic  recovery  is  picking  up.  Rising  demand  has  not  been  matched  by  increasing 
supply with effects felt no only in the EU but also in other regions of the world. In addition, 
lower-than-expected  gas  volumes  have  been  observed  coming  from  Russia,  tightening  the 
market as the heating season approaches. Though it has fulfilled its long-term contracts with 
its European counterparts, Gazprom has offered little or no extra capacity to ease pressure on 
the  EU  gas  market.  Delayed  infrastructure  maintenance  during  the  pandemic  has  also 
constrained gas supply. 

As natural gas prices are a fundamental determinant of electricity prices in most of the EU, 
these  dynamics  underpin  most  of  the  current  increase  in  the  latter.  In  addition,  electricity 
prices  also  increased  because  of  seasonal  weather  conditions  (low  water  and  wind  over 
summer). This has resulted in lower production of renewables in Europe.  

The European carbon price has also risen sharply in 2021, albeit much less than the gas 
price. The effect of the gas price increase on the electricity price is nine times bigger than the 
effect  of the carbon price increase3. The  carbon price rose by  around  EUR 30 per tonne of 
CO2  this  year,  to  the  current  level  of  around  EUR  60  per  tonne  of  CO2.  The  price  rose 
because of higher demand for allowances due to higher economic activity following COVID-
19  and  expectations  linked  to  the  2030  climate  ambition  but  not  only.  High  gas  prices 
themselves contribute to an increasing carbon price since they lead to an increased use of coal 
for power generation and consequently higher demand for emission allowances. The ETS has 
in-built  safeguards  designed  to  address  situations  of  excessive  price  fluctuations.  While the 
conditions for triggering these measures are currently not met4, the Commission will continue 
to monitor the evolution of the carbon price. It is important to note that the carbon price from 
the  ETS  provides  a  fundamental  incentive  to  switch  to  cheaper  renewable  energy,  more 
energy  efficiency  and  performing  buildings,  and  to  low-carbon  energy  sources,  thus 
contributing in the longer term to lower wholesale prices and reduced vulnerability to global 
shocks like the current one. 

3  

4  

From  January  2021  to  September  2021,  the  ETS  price  has  increased  by  about  30  EUR  /  tCO2,  which 
translates  into  a  cost  increase  of  about  10  EUR  /  MWh  for  electricity  produced  from  gas  (assuming  a 
50%  efficiency)  and  about  25  EUR  /  MWh  for  electricity  produced  from  coal  (assuming  a  40% 
efficiency). This is clearly outweighed by the observed increase of the gas price of about 45 EUR / MWh 
over the same period, which translates into additional electricity production cost of about 90 EUR / MWh 
Article 29a ETS Directive provides that if, for more than six consecutive months, the allowance price is 
more than three times the average price of allowances during the two preceding years on the European 
carbon market, the Commission shall immediately convene a Committee meeting with Member States in 
order to discuss potential measures. 

2 

 
 
 
 
 
                                                           
Natural gas still plays an important role in the EU energy mix.  It currently represents 
around a quarter of the EU's overall energy consumption. Today, about 26% of that gas 
is  used  in  the  power  generation  sector  (including  in  combined  heat  and  power  plants)  and 
around  23%  in  industry.  Most  of  the  rest  is  used  by  households,  and  the  service  sector, 
mainly for heating and cooling5. Although we have witnessed fuel switching towards gas and 
renewables  in  recent  years,  while  the  share  of  nuclear  remained  at  around  25%  of  the 
electricity  mix,  surging  gas  prices  have  at  least  temporarily  reversed  this  dynamic  back 
towards coal in some Member States despite it generating a higher CO2 intensity per MWh.  

In 2019, the EU’s energy import dependency rate was 61% (56% in 2000). The high reliance 
on  imports6  exposes  the  EU  economy  and  key  sectors  to  high  fluctuations  in  the  price  of 
fossil fuels, which are traded on global markets. Gas prices are increasing globally, but more 
significantly  in  net  importer  regional  markets  like  Asia  and  the  EU.  So  far  in  2021,  prices 
tripled in EU and more than doubled in Asia while only doubling in the US.  

2.2.  The impact of high energy prices 

Today’s  high  gas  and  electricity  prices  affect  most  Member  States,  although  to  different 
degrees  and  at  different  times.  The  link  between  wholesale  and  retail  prices  varies  in  each 
Member  State  and  depends  on  the  regulation  and  structure  of  retail  prices  and  energy  mix. 
The  wholesale  element  typically  makes  up  only  a  third  of  the  final  price,  the  rest  being, 
transmission  and  distribution  costs  and  taxes  and  levies.  All  else  equal,  where  gas  plays  a 
greater  role  in  the  energy  mix,  retail  prices  were  affected  the  most;  where  retail  prices  are 
more  closely  tied  to  the  wholesale  price  in  their  contracts,  the  effects  were  felt  earlier. 
Member States where long–term contracting is more common are likely to see a slower pass-
through of the higher price increases over the coming weeks and months. 

5  

6  

Natural  gas  can  be  imported  into  the  EU  either  through  pipelines  from  its  source  or  transported  in  the 
form of liquefied natural gas (LNG). The gas must be stored to balance fluctuations in daily and seasonal 
demand. It also secures the supply of gas in the event of supply disruptions or particularly high demand. 
The main advantage of stored gas is that it is available close to consumers and can be supplied without 
delay.  
Oil (97%), coal (44%) and gas (90%) 

3 

 
 
 
 
 
 
                                                           
Gas & electricity price changes from in 2019-2021 

BE 

BG  CZ  DK  DE 

EE 

IE 

EL 

ES 

FR  HR 

IT 

CY 

LV 

592%  159%  565%  554%  559%  264%  100%  11%  370%  562% 

N/A 

406% 

N/A 

271% 

38%  23% 

7% 

51% 

5% 

-12% 

0% 

28% 

4% 

25% 

5% 

14% 

N/A 

25% 

306%  122%  227%  245%  259%  151%  343%  121%  271%  281%  153%  210% 

N/A 

153% 

21% 

8% 

15%  16% 

5% 

23%  14%  19% 

-8% 

5% 

3% 

-2% 

-2% 

4% 

LT  LU4  HU  MT  NL  AT 

PL 

PT  RO 

SI 

SK 

FI 

SE  EU5 

283%  572%  410% 

N/A 

572%  462%  504%  0% 

-41%  52%  37%  289%  7%  429% 

8% 

17% 

-6% 

N/A 

29%  19% 

-2% 

-4%  103% 

-1% 

-8% 

N/A 

6% 

14% 

154%  259%  143%  171%  273%  258%  83%  271%  121%  151%  206%  83%  135%  230% 

17% 

7% 

-5% 

0% 

-20%  14% 

3% 

-4% 

48% 

5% 

9% 

5% 

17% 

7% 

Wholesale gas1 

Retail gas2 

Wholesale 
electricity3 

Retail electricity2 

Wholesale gas1 

Retail gas2 

Wholesale 
electricity3 

Retail electricity2 

1 Source: Hubs data and EUROSTAT (latest available data). The latest available data is September 2021 for countries with a 
functioning hub (BE, BG, CZ, DK, DE, EE, ES, FR, IT, LV, LT, HU, NL, AT,PL, FI ) 
 For the other Member States the data is from  June 2021 (EUROSTAT) with the exception of SE (May 2021). 

2 Source: VAASAETT (September 2021). 

3 Source: ENTSO-E and multiple sources (September 2021). 

4 Luxembourg wholesale data is based on Germany data for electricity and the Netherlands data for gas. 

5 Different proxies were used for estimating EU benchmarks based on the data availability 

While  the  recent  price  hikes  affect  everyone,  the  energy  poor  and  the  low  and  lower-
middle-income  households  are  most  impacted  because  they  spend  significantly  higher 
shares  of  their  incomes  on  energy7.  Energy  poverty  has  been  closely  monitored  by  the 
Commission. Based on the latest available data, in 2019, about 7% of the EU 27 population, 
i.e.  31  million  people,  were  unable  to keep  their  homes  adequately  warm,  with  significant 
differences between income groups and Member States. Moreover, 6% of the EU population 
lived in households with arrears on utility bills.  

Social  and  distributional  effects  depend  on  current  contracts,  as  well  as  on  regulatory 
frameworks,  including  existing  safeguards  protecting in  particular  vulnerable and  energy-
poor consumers. Such safeguards may include social and public policy measures,  including 
social  tariffs,  and  other  means  in  line  with  the  EU  internal  energy  market,  notably  the 
Electricity Directive8 and the Gas Directive9 and guidance by the Commission10.  

7  

8  

9  

During COVID-19, 8 Member States (of 21 where data is available) saw a year-on-year increase in the 
energy poverty rate in 2020, while 13 saw a decrease, including the 5 Member States with rates above 
15% in 2019 (Bulgaria, Greece, Cyprus, Lithuania and Portugal) 
Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules 
for the internal market for electricity and amending Directive 2012/27/EU 
Directive  2009/73/EC  of  the  European  Parliament  and  of  the  Council  of  13  July  2009  concerning 
common rules for the internal market in natural gas and repealing Directive 2003/55/EC 

4 

 
 
 
 
 
  
                                                           
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inability to keep home adequately warm (% of population below 60% of median 
equivalised income)

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EU

BE BG CZ DK DE EE IE EL ES FR HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE

2010

2019

Source: Eurostat database

Rising gas and electricity prices can also have major repercussions on industry and on 
SMEs.  The  impact  of  high  energy  prices  is  felt  unevenly  across  sectors,  with  the  surge  in 
prices  hampering  production  in  industrial sectors  while  impact  on  services  is  more  limited. 
The  current  situation  further  exacerbates  the  post-COVID  19  liquidity  issues  of  some 
businesses and of SMEs in particular, with different impacts across sectors.  

High  energy  prices  affect  global  and  European  supply  chains  with  repercussions  on 
production,  employment  and  prices.  Energy-intensive  industries11  are  hit  hard.  The 
fertilisers  sector  illustrates  this  point.  Highly  dependent  on  natural  gas  as  a  raw  material, 
production  in  the  sector  has  become  unprofitable  and  was  therefore  cut  back  substantially 
over the last  weeks. This  in  turn affects  the jobs  in  the sector. Furthermore, lower fertiliser 
production  is  expected  to  temporarily  result  in  higher  food  prices  or  lower  margins  for  the 
food industry.  

An  increase  in  energy  prices  is  also  having  a  significant  and  immediate  impact  on  the 
transport and mobility sector, resulting in higher costs for drivers, passengers and for freight 
transport users.  

Global  high  energy  prices  can  also  lead  to  lower  raw  materials  and  component  supplies  if 
production  is  cut  down.  This  in  turn  momentarily  affects  various  EU  manufacturers  who 
depend on those components and materials, with the notable example of magnesium and the 
EU car industry. 

In  terms  of  the  macro  economic  impact,  the  sharp  increase  in  energy  prices  has  added  to 
higher inflation. After several  years, inflation has picked up markedly  in  the EU  and many 
other  advanced  economies  since  the  beginning  of  the  year.  This  is  mostly  explained  by 

10  
11  

See Commission Recommendation (EU) 2020/1563 of 14 October 2020 on energy poverty 
Energy  costs  account  for  a  significant  part  of  production  costs  in  certain  sub-sectors  e.g.   71%  of 
production costs in fertilisers, 40% in primary aluminium, 31% in zinc and 25% in flat glass.  

5 

 
 
 
 
 
                                                                                                                                                                                     
transitory  factors,  including  the  return  of  some  commodity  prices  from  their  historic  low 
levels back to, or above, their pre-pandemic levels, and supply bottlenecks for certain goods. 
As these drivers are expected to be transitory, inflation is expected to ease again as of next 
year.  

Overall,  the  EU  economy  is  recovering  faster  than  anticipated,  and  is  set  for  continued 
growth in the short term. First-round effects on fiscal balances will depend on the extent to 
which fiscal revenues increase due to higher VAT collection on energy products and higher 
than  expected  revenues  from  the  auction  of  emission  allowances,  on  the  one  hand,  and  the 
magnitude  of  measures  aimed  at  shielding  end-users  on  the  other,  notably  government 
transfer targeted at the vulnerable households or lowering of VAT.  

2.3.  Trends and expectations 

Current  market  expectations  on  energy  commodities12  indicate  that  the  current  price 
increases are likely to be temporary. Wholesale gas prices are likely to remain high over 
the winter months and fall from April 2022 onwards. The prices would remain, however, 
higher than the average of the past years13.  

While the current level of gas storage in Europe is tight14 it seems adequate to address supply 
risk  in  a  winter  similar  to  the  previous  one.  Yet,  the  evolution  of  the  weather  during  the 
winter season is a key variable to watch.  

Use of storage capacity  

Source: Gas Infrastructure Europe 

The EU Regulation governing the security of natural gas supply15 lays down the framework 
for EU emergency preparedness and resilience to gas disruptions. It provides for information 

12  

13  
14  

The Dutch TTF Gas Futures index, currently at around 90 €MWh has a price around 50€MWh in April 
2022. 
Year-ahead: 42 EUR/MWh, two-year ahead: 35 EUR/MWh, three year ahead: 32 EUR/MWh 
Current EU gas storage levels are slightly above 75%, below the 90% seen on average over the past 10 
years. As of the 3th of October 2021.  

6 

 
 
 
 
 
 
 
                                                           
exchange  and  regional  cooperation  and  the  development  of  contingency  plans.  The 
Regulation  includes  a  solidarity  mechanism  that  can  be  activated  in  extreme  gas  crisis 
situations.  The  Commission  is  regularly  convening  the  gas  security  of  supply  network  and 
constantly monitoring the situation at regional level.  

In  the  medium  term,  price  fluctuations  may  continue  and  future  temporary  sharp  changes 
cannot be ruled out as global supply and demand may not  always adjust smoothly due to a 
geopolitical, technological and economic factors. 

The global electricity demand is set to grow by close to 5% in 2021 and 4% in 2022, driven 
by  the  global  economic  recovery.  In  Europe  electricity  demand  is  expected  to  increase  in 
2022 by almost 2%. 

3.  A toolbox of measures to help meet the challenge  

The  current  price  spike  requires  a  rapid  and  coordinated  response.  The  existing  legal 
framework enables the EU and its Member States to take such action to address the effects of 
sudden price fluctuations. 

The  immediate  response  should  prioritise  tailored  measures  that  can  rapidly  mitigate  the 
effects on the vulnerable groups, can easily be adjusted when the situation improves for these 
groups and avoid interfering with market dynamics or dampening incentives for the transition 
to a decarbonised economy. In the medium term, the policy response should focus on making 
the EU more efficient in the use of energy, less dependent on fossil fuels and more resilient to 
energy price spikes, while providing affordable and clean energy to end-users.  

3.1. 

Immediate measures to protect consumers and businesses 

Twenty Member States have taken or are envisaging taking measures, often with a focus on 
mitigating  the  impact  on  the  most  vulnerable,  the  smaller  businesses  and  energy  intensive 
industries.  This  includes  price  caps  and  temporary  tax  breaks  for  vulnerable  energy 
consumers, or vouchers and subsidies for consumers and businesses.   

Such immediate measures could be partly financed from the revenue generated from the 
auctions of the EU ETS allowances, levies and taxes on energy prices, as well as through 
environmental taxes. In the current context, higher than expected ETS revenues can be used 
to  finance  the  unforeseen  needs  for  targeted  social  support.  From  1  September  2020  to  30 
August  2021,  the  revenues  generated  from  the  auctioning  from  EU  ETS  allowances16 
amounted to EUR 26, 3 billion.  

15  

Regulation  (EU)  2017/1938  of  the  European  Parliament  and  of  the  Council  of  25  October  2017 
concerning  measures  to  safeguard  the  security  of  gas  supply  and  repealing  Regulation  (EU)  No 
994/2010  

16   While ETS funds should primarily support further emission reductions through in particular investments 
into energy efficiency measures, the energy transition and innovation in clean technologies, Article 10(3) 

7 

 
 
 
 
 
 
 
                                                                                                                                                                                     
 
3.1.1.  Emergency income support and avoiding disconnections from the grid 

Member States can make specific social payments to those most at risk to help them afford 
their energy bills in the short term or provide for support for energy efficiency improvements, 
while ensuring effective market  functioning.  This could  be done as  lump-sum  payments, so 
as to maintain the incentive to reduce energy consumption and invest in energy savings.  

In addition17, Member States can also put in place safeguards to avoid disconnections from 
the  energy  grid  or  can  defer  payments  temporarily,  where  consumers  face  short-term 
difficulties  in  paying  their  bills.  Several  Member  States  introduced  such  measures  at  the 
beginning of the COVID-19 pandemic18 and these could now be extended.  

Building  on  last  year’s  Recommendation  on  Energy  poverty19,  the  Commission  will  call 
Member State representatives and energy regulators to engage on how to best protect, 
vulnerable consumers. This will enable Member States to exchange best practices and better 
focus measures to address energy poverty – in step with related EU policies such as energy 
efficiency and the renovation wave.  

Member States could:  

-  Provide time limited compensation measures and direct support to energy-poor 
end-users including groups at risk, e.g. through vouchers or by covering parts of the 
energy bill, financed inter alia from the ETS revenues. 

-  Put in place and/or maintain safeguards to avoid disconnections from the energy 

grid or defer payments temporarily.  

-  Exchange  best  practices  and  coordinate  measures  through  the  Commission  Energy 

poverty and vulnerable consumers coordination group. 

3.1.2.  Taxation 

Taxes and levies provide revenue to compensate the most vulnerable households and address 
energy poverty, while providing incentives for investment into renewable energy sources and 
in support of the green transition. 

of the ETS Directive (Directive 2009/29/EC) determines that Member States can use the ETS revenues to 
provide financial support in order to address social aspects in lower- and middle-income households.  
Regulated retail prices for energy poor and vulnerable households are allowed under EU legislation only 
in  exceptional  situations  and  under  strict  conditions.  Regulated  prices  distort  investment  signals  in 
generation and disempower consumers.   
Special  COVID-19  measures  to  protect  vulnerable  consumers:  National  governments  and  energy 
regulators  introduced  suspended  disconnections  for  non-payment  of  energy  bills.  In  addition  to 
government  measures,  a  number  of  energy  companies  across  the  EU  adopted  voluntary  initiatives  to 
support customers such as payment arrangements and no disconnection policy. 
Commission Recommendation (EU) 2020/1563 of 14 October 2020 on energy poverty 

17  

18  

19  

8 

 
 
 
 
 
 
 
 
 
                                                                                                                                                                                     
Taxes and levies20 on electricity and gas retail prices vary widely. On average, they account 
for  41%  of  household's  electricity  prices  and  30-34%  of  industry  electricity  prices,  and  for 
32% of households’ gas prices and 13-16% of industry gas prices. The EU Energy Taxation 
Directive21 and  VAT  Directive22  give  some  flexibility  to  Member  States. The  Energy 
Taxation Directive allows Member States to exempt or to apply a reduced rate on electricity, 
natural gas, coal and solid fuels used by households. Member States can give effect to these 
exemptions or reductions in the level of taxation directly, by means of a differentiated rate or 
by refunding all or parts of  the amount of taxation. Reduced rates have to  be targeted and 
avoid  introducing  distortions. Member  States  may  decide  to  apply  reduced  VAT  rates  on 
energy products as long as they respect the minima laid down in the EU’s VAT Directive23, 
and they consult the EU VAT Committee.   

Some Member States use the additional tax revenue to provide lump sum compensations for 
vulnerable households. Others divert  parts of revenues from  environmental taxes to finance 
social  protection  systems.  Member  States  in  which  levies  for  subsidies  for  renewable 
generation account for a significant share of the retail electricity price, may consider funding 
such policies with public revenues other than electricity bills. This would have the benefit of 
relieving vulnerable consumers from a significant part of their energy bill.  

The  proposal  for  a  revised  Energy  Taxation  Directive,  tabled  in  July  2021,  aims  at 
modernizing energy taxation in  the EU by  aligning it  with  the EU’s climate objectives and 
ensuring  social  fairness.  The  revised  directive  would  encourage  investment  in  and  use  of 
renewable  energy  sources  and  introduce  the  possibility  of  targeted  exemptions  to  support 
vulnerable and energy poor households, especially during the transition  to  a cleaner  energy 
system.  

Member States could:  

-  Reduce  taxation  rates  for  vulnerable  populations,  in  a  time  limited  and  targeted 

way 

-  Consider shifting the financing of renewable support schemes away from levies to 

sources outside the electricity bill.  

3.1.3.  State Aid  

Measures of a general nature, equally helping all energy consumers, do not constitute State 
aid.  Such  non-selective  measures  can  e.g.  take  the  form  of  reductions  in  taxes  or  levies,  a 
reduced rate to the supply of natural gas, electricity or district heating. To the extent national 
interventions  qualify  as  aid,  they  may  be  considered  compatible  with  state  aid  rules  if  they 
meet  certain  requirements.  For  example,  aid  in  the  form  of  reductions  in  harmonised 

20  

21. 

22  
23. 

Such taxes and levies notably include  excise duties on energy products and electricity and value added 
tax (VAT), which are harmonised at EU level, but also other domestic environmental taxes and levies to 
finance renewable investments necessary for the green transition. 
Council  Directive  2003/96/EC  of  27  October  2003  restructuring  the  Community  framework  for  the 
taxation of energy products and electricity 
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 
The legal framework on VAT rates is currently under review in Council. 

9 

 
 
 
 
 
                                                           
environmental  taxes  up  to  the  minima  set  in  the  Energy  Taxation  Directive  can  be 
implemented by Member States without prior notification to the Commission.  

More  targeted  support  measures  can  be  used  to  help  undertakings  or  industries  to 
adapt in a timely manner and fully participate in the energy transition. Compliance with 
state aid  rules  and international  subsidy rules will  ensure that such measures do not  unduly 
distort competition or lead to a fragmentation of the internal market. Aid interventions should 
be technology neutral and not be discriminatory24 for undertakings in a comparable situation. 
They  should  also  not  undermine  the  efficiency  of  existing  market-based  mechanisms 
(including  the  EU  ETS)  be  aligned  with  the  general decarbonisation objectives  and  those 
contained in national energy and climate plans.  

Long-term renewables power purchase agreements should be encouraged. They can provide 
benefits  both  to  industrial  electricity  users  and  renewable  power  producers.  They  are  long-
term contracts where a producer and an electricity buyer, agree to buy and sell an amount of 
renewable  electricity  and  an  agreed  price  over  a  longer  period  of  time.  Such  agreements 
provide certainty for the producer about a certain income whilst the user can benefit from a 
stable electricity price. The Commission will work with Member States to facilitate a wider 
market  for  decarbonised  power  purchase  agreements  beyond  large  businesses,  including 
SMEs,  for  instance  by  aggregating  end-user  demand,  by  addressing  relevant  administrative 
barriers or by providing standard contract clauses. In the short term, flanking measures such 
as match-making, standard contracts and de-risking through InvestEU financial products can 
support the deployment of such agreements.  

Member States could:  

-  Take measures reducing energy costs for all energy end-users. 
-  Provide  aid  to  companies  or  industries  to  weather  the  crisis,  in  full  compliance 
with  the  state  aid  framework,  while  using,  as  appropriate,  the  scope  for  flexibility 
provided for in the framework and encouraging transition away from fossil fuels.   
-  Facilitate a wider access to renewables power purchase agreements beyond large 
business,  including  SMEs,  for  instance  by  aggregating  end-user  demand  in 
compliance with competition rules.  

-  Support  power  purchase  agreements  through  flanking  measures  such  as  match-
making, standard contracts and de-risking through InvestEU financial products.  

3.1.4.  Stepping up market surveillance  

In  the  current  context  of  high  prices,  it  is  more  important  than  ever  to  anticipate  risks  to 
security of supply and ensure the transparency and integrity of the functioning of the markets, 
dispelling  concerns  of  manipulative  practices  or  abuses  including  with  regards  to  current 

24.  

In  accordance  with  Block  Exemption  Regulations  and  State  aid  Guidelines,  any  state  interventions 
should be set in a transparent, non-discriminatory manner, based on objective and proportionate criteria. 

10 

 
 
 
 
 
 
                                                           
developments.  This  requires  mobilising  all  the  market  monitoring  and  enforcement  levers 
available to the Commission, in partnership with Member States. 

The  EU  has  a  strong  and  robust  instrument  that  allows  to  detect  market  manipulation,  the 
Regulation on Wholesale Energy Market Integrity and Transparency (REMIT). REMIT sets 
the ground for increased market transparency and integrity, and ultimately protects the 
interests of companies and consumers.  

In  the  public  debate  around  the  energy  price  spikes,  a  concern  has  emerged  for  possible 
distortions of competition by companies active in European gas markets. The Commission is 
currently  investigating  as  a  matter  of  priority  all  allegations  of  possible  anti-competitive 
commercial  conduct  by  companies  producing  and  supplying  natural  gas  to  Europe25.  The 
Commission is closely cooperating in the framework of the European Competition Network 
(ECN)  with  the  national  competition  authorities  of  the  Member  States. The  EU’s  trade 
defence instruments can also be relevant to ensure open and fair competition between energy 
intensive companies in third countries and the ones located in the EU.  

Questions have also emerged around the functioning of the European carbon market and the 
reasons  for  the  carbon  price  increase.  However,  there  is  no  evidence  in  recent  market 
information  that  speculation  is  a  major  driver  of  the  price  in  the  carbon  market.  In  mid-
September 2021, the reports of the European Securities and Markets Authority (ESMA) show 
that  the  majority  of  positions  (over  90%)  are  held  by  entities  with  compliance  obligations 
under  the  ETS,  and  banks,  which  play  an  important  role  in  servicing  the  hedging  needs  of 
compliance  companies.  The  participation  of  financial  entities  in  the  market  increases 
liquidity, which reduces pressure on prices. 

Fair price formation  and integrity of the European carbon market  is  guaranteed by  a robust 
oversight  regime  also  applicable  to  other  financial  markets26.  The  participation  of  financial 
entities  in  the  carbon  market  should  increase  liquidity,  thereby  helping  to  reduce  volatility 
and  pressure  on  prices.  To  examine  more  closely  patterns  of  trading  behaviours  and  the 
potential need for targeted actions, the Commission will ask ESMA, for a first preliminary 
assessment  by  15  November  and  task  itto  analyse,  by  early  2022,  the  trading  of  emission 
allowances.  The  Commission  will  consequently  assess  whether  certain  trading  behaviours 
would require further regulatory actions.  

The Commission will:  

- 

Investigate indications for any possible anti-competitive behaviour in the energy 
market. 

25  

26  

Commercial conduct implies that companies can determine independently their decisions, without being 
compelled to behave in a certain way by law.  
The  market  is  supervised  by  financial  regulators  of  27  Member  States  under  the  coordination  of  the 
European Securities and Markets Authority (ESMA). 

11 

 
 
 
 
 
 
                                                           
-  Ask  ESMA  to  further  enhance  the  monitoring  of  developments  in  the  European 

carbon market. 

-  Together with ACER and national authorities ensure REMIT is effectively enforced.  

3.1.5.  Engaging international partners 

Given  the  global  nature  of  the  current  price  surge,  international  cooperation  on  the  supply, 
transport and consumption of natural  gas can help keeping natural  gas prices in  check. The 
Commission is in dialogue with the main natural gas producing and consuming countries to 
facilitate  natural  gas  trade.  This  dialogue  with  our  international  partners  aims  at  enhancing 
the liquidity and  flexibility of the international  gas market  in  order to  ensure sufficient  and 
competitive natural gas supplies. 

The Commission will:  

-  Enhance  its  international  energy  outreach  in  order  to  ensure  the  transparency, 

liquidity and flexibility of international markets 

-  Present an international energy engagement strategy in early 2022 that will, inter 
alia,  consider  the  actions  necessary  to  ensure  security  and  competitiveness  of 
international energy markets throughout the ongoing energy transition.  

3.2.  Medium-term measures 

The current, unexpected price rise, is casting a light on some unknowns in the clean energy 
transition underway at global level.  

Learning lessons from the this crisis, the EU should consider measures that without having an 
immediate  impact  on  the  current  situation,  will  strengthen  preparedness  for  possible  future 
price shocks, increase market integration and resilience, empower consumers, enhance access 
to affordable energy and reduce the dependence on volatile fossil fuels.  

The EU will continue to develop measures to facilitate an energy system with high shares of 
renewable energies, including through  adequate  storage, cross-border interconnectors, base-
load  and  flexible  power  generation,  thus  offsetting  possible  temporary  supply  shortages  or 
surpluses. 

3.2.1.  Storage capacity and a resilient EU energy system  

Recent events remind us that the resilience of the European energy system is increasingly 
important as the EU energy system integrates more decentralised renewable energy and fossil 
fuels  are  gradually  phased  out.  The  security  of  supply  and  risk  preparedness  arrangements 
must be fit for the clean energy transition.   

The  current  gas  market  situation  shows  that  the  level  of  gas  storage  remains  a  relevant 
variable. Today, storage is  not available in all EU Member States.  In around half of the 
Member  States  the  use  of  storage  is  supported  by  national  obligations,  such  as  strategic 

12 

 
 
 
 
 
 
 
 
 
 
reserves used in case of emergency. A more integrated European approach could optimise the 
costs and benefits of gas storage across the EU territory to help cushion volatility in energy 
prices.  

Source: developed by JRC based on data from Gas Infrastructure Europe (GIE) 

The Commission plans to revise in December 2021 the gas security of supply regulation. In 
this context, the resilience of the EU gas market could be strengthened, for instance through 
provisions  for  an  easier  access  to  storage  capacity  across  borders,  including  for  renewable 
and low carbon gases. The Commission could explore the potential benefits of marked-based 
support mechanisms (e.g. involving auctions) to ensure that available gas storage capacities 
are  optimally  used.  In  this  context,  it  is  also  key  that  Member  States  put  in  place  the 
necessary technical, financial, and legal arrangements to supply gas across borders.  

The  Commission  will  also  explore  the  possible  benefits  of  joint  procurement  of  reserve 
stocks of gas by regulated entities or national authorities to allow pooling forces and creating 
strategic  reserves.  Participation  in  the  joint  purchasing  scheme  would  be  voluntary  and  the 
scheme  should  be  structured  in  a  way  so  as  not  to  interfere  with  the  functioning  of  the 
internal energy market and respect competition rules. 

Based on Regulation  (EU) 2017/1938 concerning measures to safeguard the security of gas 
supply, the Commission intends to adopt shortly a delegated act setting up new cross-border 
regional  gas  risk  groups.  The  risk  groups  will  analyse  risks  for  the  next  four  years  and 
advise Member States and the Commission on the measures to properly manage these risks. 
Particular attention will be paid to regions with unusual low storage. The risk groups will also 
assess the possibility of joint voluntary regional storage arrangements. 

As  announced  in  the  Commission’s  Communication  of  April  2021,  the  Commission    will 
adopt a complementary Delegated act of the EU Taxonomy Regulation covering activities not 
yet covered in the EU Taxonomy Climate Delegated Act. This complementary Delegated Act 
will  cover  nuclear  energy  subject  to  and  consistent  with  the  results  of  the  specific  review 

13 

 
 
 
 
 
process  underway  in  accordance  with  the  EU  Taxonomy  Regulation.  This  complementary 
Delegated Act will also cover natural gas and related technologies as transitional activity in 
as  far  as  they  fall  within  the  limits  of  Article  10(2)  of  the  EU  Taxonomy  Regulation.  The 
merits  of  a  sunset  clause  for  transitional  activities  will  be  considered  in  this  context.  The 
Commission will consider proposing legislation to support the financing of certain economic 
activities,  primarily  in  the  energy  sector,  including  gas,  that  contribute  to  reducing 
greenhouse gas emissions in a way that supports the transition towards climate neutrality, but 
are not eligible to be included in the Taxonomy. 

Energy storage is increasingly key for the EU power sector and its sustainability. Both short 
to  medium  (batteries)  and  long-term  storage  (Power  to  X)  options  need  to  be  exploited. 
Increasing  electricity  storage  in  particular  supports  integrating  renewables  into  the  system 
and  smoothening  peak  demand.  This  could  also  lower  electricity  prices  during  peak  times 
when  generators  using  fossil  fuels  often  set  the  price.  Substantial  investment  need  to  be 
directed  in  this  domain.  The  Commission  will  identify  key  EU  actions  to  support  the 
development  of  electricity  storage  as  a  key  flexibility  tool,  ensuring  a  level  playing  field 
and adequate economic signals.  

The EU electricity market is based on a marginal pricing method and the pay-as-clear market 
which  means  that  everybody  receives  the  same  price  for  electricity  at  wholesale  level.  As 
gas-fired  power  plants  are  currently  still  frequently  needed  to  meet  electricity  demand,  the 
price of gas has an impact on the cost of producing electricity, with negative impacts as seen 
now.  However,  there  is  general  consensus  that  the  marginal  pricing  model  is  the  most 
efficient  for liberalised  electricity markets  and the most suited to  foster  effective electricity 
trading  across  Member  States  on  the  wholesale  market.  It  is  also  tailor  made  to  promote 
integration of renewable energies, which drive down prices thanks to  their zero operational 
costs.  

While  there  is  of  yet  no  clear  evidence  that  alternative  market  framework  would  provide 
cheaper  prices  and  better  incentives,  the  Commission  will  task  the  Agency  for  the  Co-
operation of Energy Regulators (ACER) to assess benefits and drawbacks of the current 
wholesale  electricity  market  design,  among  other  its  capacity  to  address  situations  of 
extreme  price  volatility  in  the  gas  markets  and  available  measures  to  reduce  such 
situations,while ensuring a cost effective transition towards a net zero energy system, and to 
propose  recommendations  which  the  Commission  will  assess  for  follow-up  as  appropriate. 
Meanwhile, the Commission will liaise with ACER to have a preliminary assessment of the 
situation in the electricity market on which it will report by mid- November. 

Additionally, it is also important to adapt the resilience of the energy system to new evolving 
threats  such  as  cyber  threats  or  extreme  weather  events.  The  Commission  will  undertake 
actions  by  the  end  of  2022  to  further  improve  the  resilience  of  critical  energy 
infrastructure  in  view  of  new  evolving  threats.  These  will  include  new  rules  on  the 
cybersecurity  of  electricity  fully  harmonised  with  horizontal  cybersecurity  legislation27,  a 
Commission’s  recommendation  towards  a  harmonised  approach  to  identify  critical  energy 

27  

COM/2020/823  final,  Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on 
measures  for  a  high  common  level  of  cybersecurity  across  the  Union,  repealing  Directive  (EU) 
2016/1148 

14 

 
 
 
                                                           
infrastructure,  exchange  of  information,  and  available  options  to  finance  the  resilience  of 
critical energy infrastructure. It will also include the creation of a European standing group of 
operators and authorities on the resilience of energy infrastructure. 

The  Commission  will  also  study  the  potential  of  fully  aligned  regional,  or  EU-wide,  retail 
markets.  Evidence28  shows  that  greater  cross-border  alignment  of  rules  and  practices  in  the 
retail market boosts cross-border competition and helps keep prices under control. This work 
would  build  on  two  important  ongoing  pieces  of  work  –  Interoperability  Implementing 
Acts. As was the case for wholesale electricity market coupling, such market alignment could 
initially be through cooperation between individual Member States before moving over time 
to a fully integrated internal energy market for consumers.  

Innovation  is  an  important  component  to  ensure  a  resilient  EU  energy  system.  Europe  is  a 
leader  on  sustainable  energy  start-ups  with  innovative  solutions  ranging  from  deep 
geothermal energy to hydrogen. Member States and the EU should work together to facilitate 
that the innovative solutions are deployed.  

The Commission will:  

-  Propose regulatory framework for the gas and hydrogen market by December 2021. 
-  Consider revising the security of supply regulation to ensure more effective functioning 
of  gas  storages  across  the  Single  Market  and  conclude  the  necessary  solidarity 
arrangements. 

-  Adopt  by  November  2021  a  regulation  setting  up  new  cross-border  regional  gas  risk 
groups  to  analyse  risks  and  advise  Member  States  on  the  design  of  their  national 
preventive and emergency action plans. 

-  Support  the  development  of  future-proof  energy  storage  as  a  key  flexibility  tool,  both 
for short to  medium  –term  (for example demand-response and batteries)  and long-term 
storage options (for example hydrogen). 

-  Explore the potential  benefits  and  design  of  a  voluntary  joint  procurement  of  reserve 

gas stocks, in line with energy market regulation and the EU competition rules.  

-  Adopt a rule book for cybersecurity for electricity. 
-  Task ACER to study the benefits and drawbacks of the existing electricity market design 

and propose recommendations for assessment by the Commission by April 2022.  

-  Study  the  potential  of  an  initiative  on  developing  fully  aligned  regional,  or  EU-wide, 

retail markets.  

3.2.2.  Supporting a just transition and protecting end users  

As future energy price spikes cannot be ruled out, being able to support vulnerable consumers 
and  enterprises  will  remain  important.  Tools  and  initiatives  aiming  at  supporting  a  just 
transition will be of particular relevance. 

28  

https://ec.europa.eu/info/news/commission-publishes-report-barriers-eu-retail-energy-markets-2021-feb-
23_en 

15 

 
 
 
 
 
 
                                                           
By  the  end  of  the  year,  the  Commission  will  propose  a  Council  Recommendation29 
providing  further  guidance  to  Member  States  on  how  best  to  address  the  social  and  labour 
aspects  of  the  green  transition  to  ensure  its  fairness.  This  initiative  will  indicate  the 
accompanying policies needed to alleviate the possible adverse distributional impacts of the 
transition as well as to realise the opportunities the transition offers in terms of quality jobs 
and social co-benefits, such as affordable energy for all, while mitigating or compensating for 
adverse distributional impacts as needed. 

The newly proposed Social Climate Fund would ensure a structural response to addressing 
energy and mobility poverty.  It  will provide Member States additional funding for building 
improvements,  infrastructure  development  and  direct  income  support  that  can  support 
citizens throughout the initial phase of the green transition. With EUR 72.2 billion, the Fund 
specifically  targets  population  groups  (households,  transport  users,  microenterprises) 
vulnerable  to  the  challenges  arising  from  the  proposed  extension  of  emission  trading  to 
sectors of building and road transport. The Fund can provide resources for Member States to 
grant temporary direct income support. With a proposal to draw on matching Member State 
funding, the Fund would mobilise EUR 144.4 billion.  

EU consumers should enjoy a high degree of protection and empowerment to actively engage 
in  the  energy  market.  Concretely,  consumers  need  to  be  better  informed  about  their  energy 
consumption,  the  possibilities  to  reduce  their  consumption  and  to  switch  the  supplier  to 
reduce  costs.  Consumers  should  have  the  possibility  to  contact  consumer  organisations, 
energy  agencies  and  providers  of  energy  efficiency  services  to  receive  feedback  on  their 
energy consumption behaviour over a defined period of time, and advice about how to reduce 
their  energy  consumption  and  bills.  They  should  have  the  possibility  to  build  their  own 
renewable energy production and storage capacity at affordable prices and with a good return 
on investment, acting in their role as prosumers in  the decentralised energy system. Special 
attention  shall  go  to  further  development  of  energy  communities,  with  a  special  focus  on 
consumers living in rural areas.  

An important part of the Commission’s December gas package will be enhanced consumer 
provisions,  also  for  gas  markets.  The  Commission  is  considering  minimum  requirements 
for  contractual  conditions,  faster  and  free-of-charge  switching,  and  an  enhanced  smart 
metering  rollout  to  enable  consumers  to  benefit  from  more  and  greener  offers  and  better 
manage their consumption costs. A favourable framework for citizen energy communities on 
the  gas  market  will  enable  consumers  to  buy  renewable  gases  irrespective  of  their 
geographical  location, as  well as bring benefits  for the local  economy. This  will help  boost 
public acceptance of renewable gas projects and help mobilise private capital investments in 
renewable and low-carbon gases. 

The  market  exit  or  failure  of  a  supplier  can  have  negative  consequences  for  consumers  – 
which  they  cannot  control.  Increasing  energy  prices  can  represent  an  undue  pressure 

29  

COM/2021/550 final. Communication from the Commission to the European Parliament,  the European 
Economic and Social Committee and the Committee of the Regions 'Fit for 55': delivering the EU's 2030 
Climate Target on the way to climate neutrality. 

16 

 
 
 
 
 
                                                           
especially  on  small  suppliers  offering  fixed  price  contracts.  It  is  therefore  necessary  to 
facilitate access of all energy suppliers, including the small one, to financial markets so that 
they  can  hedge  their  contracts  against  future  price  developments.  To  remedy  this  EU 
legislation recognises that Member States may appoint a supplier of last resort. However, it 
is  also  important  that  this  does  not  create  a  moral  hazard  –  protecting  suppliers  from  their 
commercial decisions at the cost of all consumers. In conjunction with measures to improve 
access to long-term markets for small suppliers, the Commission will clarify rules to protect 
consumers from the failure of individual suppliers and the operation of supplier of last resort 
schemes. 

The Commission will:  

-  Propose, by December 2021, a Council Recommendation providing further guidance to 
Member  States  on  how  best  to  address  the  social  and  labour  aspects  of  the  green 
transition. 

Member States could: 

-  Support consumer empowerment, providing consumers with information and offering 
options  on  how  they  can  participate  in  the  energy  market,  be  better  protected  and  in  a 
stronger position in the energy supply chain.  

-  Appoint a supplier of last resort, in the event of market exit or failure of a supplier.  
-  Further  boost  the  role  of  consumer  in  the  energy  market,  by  contributing  to  improving 
demand response, as well asby developing self-supply via individual renewable energy 
and energy community arrangements.  

3.2.3.  Stepping up investments in renewable energy and in energy efficiency 

Wind  and  solar  have  close-to-zero  variable  costs.  With  more  renewable  energy  in  the 
power  system,  the  most  expensive  fossil  fuels  will  be  pushed  out  of  the  market.  In  an 
increasing number of hours each year, the amount of renewable electricity in the system will 
allow to meet all demand and whole prices will be close to or at zero  – or even negative30. 
Overall, the predominant expert view it that all else equal,  more renewables translate into 
lower wholesale market prices31.  

Looking beyond electricity markets, the overall cost of a number of renewable technologies 
has dramatically reduced over the past  years. For instance, costs for electricity from utility-
scale  solar  photovoltaics  (PV)  fell  85%  between  2010  and  202032.  Renewables  are  today 
already, in many sectors and uses, the cheapest form of energy, and consumers could in many 
cases reduce their energy bills by turning to renewable energy. This is true for industry and 
services,  but  also  for  households,  that  can  for  instance  invest  in  solar  photovoltaic  panels, 

30 
31  

32  

If certain non-flexible power plants have to continue producing despite negative prices. 
It is for instance estimated that the increase in renewable electricity was responsible, ceteris paribus, for 
a 24% decrease of spot electricity prices in Germany over 2008-2015, and of 35% in Sweden over 2010-
2015 (Hirth, 2018) 
IRENA, Power Generation Costs in 2020  

17 

 
 
 
 
 
 
 
                                                           
heat pumps, solar thermal equipment, or advanced biomass boilers – and by doing so reduce 
their electricity and heating bills. 

For  this,  Member  States  should  speed  up  permitting  by  reducing  lengthy  and  complex 
permit procedures which are one of the biggest obstacles to development and deployment of 
clean energy infrastructure. Supporting self-consumption and renewable energy communities 
could  also  help  households  reap  the  benefits  of  cheaper  renewables.  Ramping  up  the 
production of equipment for renewables is another critical success factor for accelerating the 
deployment of renewables. 

New technologies and digitalization provide new possibilities for demand side flexibility. The 
Commission  will  initiate  work  on  a  network  code  to  remove  regulatory  barriers  for  the 
development of demand side flexibility at the beginning of 2022. 

Energy  efficiency  lowers  energy  consumption  and  thus  energy  costs,  but  it  requires 
investment.  It  addresses  one  of  the  root  causes  of  energy  poverty,  notably  through  the 
improved  energy  performance  of  buildings  and  appliances.  The  Commission  will  also  put 
forward a proposal to improve the energy performance of the European building stock. 
With certain renovation measures targeting social housing – and new rules for EU countries 
to  measure  and  monitor  figures  for  those  that  struggle  to  pay  their  energy  bills  –  these 
building renovation rules will help to combat energy poverty.  

At  EU  level,  investments  in  the  green  transition  have  been  stepped up.  The  2021-2027 
Multiannual Financial Framework reinforced by the NextGenerationEU are the main tools to 
bring about rapid recovery and a green and digital transition that will set our economy on a 
sustainable  growth  path.  Under  the  Recovery  and  Resilience  Facility,  of  the  22  plans 
approved  by  the  Commission,  EUR  177  billion  have  been  allocated  to  climate-related 
investments33.  

Furthermore,  bigger  and more integrated  markets with  cross-border infrastructure provide  a 
better  deal  for  consumers.  Complete  and  efficient  physical 
interconnection  with 
neighbouring  markets,  cross-border  access  for  new  suppliers  will  foster  competition  and 
ensure the supply of electricity at the most competitive price. Member States should continue 
promoting  investment  in  trans-European  networks  to  enhance  competition  and  avoid 
curtailment,  based  on  Projects  of  Common  Interest34.  These  include  interconnectors, 
removing  national  bottlenecks,  storage  and  smartening  the  transmission  and  distribution 
grids. The Commission will work with Member States on the necessary measures to achieve 
the  15%  electricity  interconnection  target  by  2030,  in  line  with  the  European  Council 
Conclusions of October 201435. 

33  

34  
35 

The expenditures reported for the RRF are Commission’s estimates based on the climate tracking figures 
published  as  part  of  the  Commission’s  analyses  of  the  recovery  and  resilience  plans.  The  amount 
reported covers the 22 national recovery and resilience plans assessed and approved by the Commission 
by 5 October. It will evolve as more plans are assessed. 
https://ec.europa.eu/energy/topics/infrastructure/projects-common-interest_en  
https://data.consilium.europa.eu/doc/document/ST-169-2014-INIT/en/pdf 

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The  Commission  has  recently  proposed  to  review  the  Guidelines  on  State  aid  for 
Environmental  Protection  and  Energy  to  enlarge  the  possibilities  for  Member  States  to 
grant financial support for climate protection and decarbonisation of the whole economy. The 
new rules, which are expected to enter into force next year, will reduce the recourse to fossil 
fuels,  prevent  stranded  assets  and  make  possible  to  introduce  schemes  to  fund  new 
technologies,  such  as  storage  and  renewable  hydrogen  and  facilitate  funding  for  energy 
efficiency measures.  

Member States should:  

-  Accelerate  auctions  for  renewable  energy  and  ensure  the  rapid  and  full 
implementation of relevant investments under the Recovery and Resilience Fund. 
-  Speed up permitting by reducing lengthy and complex permit procedures which are 
one  of  the  biggest  obstacles  to  development  and  deployment  of  clean  energy 
infrastructure.  

-  Ramping up the production of equipment for renewables which is another critical 

success factor for accelerating the deployment of renewables.  

-  Step  up  investments  on  energy  efficiency  and  in  buildings  performance,  which 
lowers energy consumption and energy costs and eases pressure on energy markets. 
-  Step  up  investments  in  trans-European  networks  to  avoid  curtailment,  based  on 
Projects  of  Common  Interest.  These  include  interconnectors,  removing  national 
bottlenecks, storage and smartening the transmission and distribution grids. 

The Commission will: 

- 

- 

Issue  guidance  in  2022  on  accelerating  permitting  processes  for  renewable 
energies and  continue  working  closely  with  national  administrations  to  identify  and 
exchange on good practice.  
Initiate work on the development of a network code for demand side flexibility at the 
beginning of 2022. 

-  Complete  the  revision  of  the  Energy  and  Environmental  State  Aid  Guidelines  to 
facilitate  the  achievement  of  the  European  Green  Deal  at  the  least  cost,  facilitating 
energy efficiency and renewables investments. 

-  Continue  assisting  Member  States  in  making  the  best  use  of  the  financial  resources 

available in the EU budget and NextGenerationEU.  

4.  Conclusion  

The  measures  described  in  this  Communication  aim  to  provide  a  response  to  the  current 
energy  price  surge  and  will  contribute  to  achieving  a  socially  just  and  sustainable  energy 
transition. The Commission will closely follow the situation over the coming months.  

Member States can act and are already taking a number of measures linked to taxation, direct 
income support and other well targeted and time limited measures to provide short term relief 
to  the  problems  the  price  surge  creates  for  some.  At  the  EU  level,  a  number  of  additional 
measures on storage, market integration and energy communities can be done in the medium 

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term to ensure more resilient energy markets, better prepared for volatility and the challenges 
of the transition. Advances in energy efficiency and measures to modernise the energy system 
will bring down energy bills in the longer term.  

Europe’s  energy,  environmental  and  climate  policy,  funding  available  through  various  EU 
programmes as well as the Commissions recent ‘Fit for 55’ proposals are designed to create a 
sustainable energy sector for the long term. The European Union is firmly committed to the 
transition to climate neutrality and to decarbonising the energy system by substituting fossil 
fuels with renewable energy and consequently curtailing our dependence on energy imports.  

Clear commitments  to  invest  in  climate neutral  energy solutions  across Member States will 
help  reduce  energy  price  volatility  and  imbalances  in  energy  supply  and  demand  brought 
about  by  movements  in  international  fossil  fuel  prices,  and  other  external  factors.  They  are 
essential for keeping energy affordable for all consumers. 

A successful green transition will lead the transformation not only towards clean energy, but 
also more energy efficiency and different use. The EU’s commitment to significantly reduce 
its  greenhouse  gas  emissions  and  fossil  fuels  consumption  is  fully  confirmed  by  recent 
events.  Measures  need  to  be  accelerated,  both  on  the  regulatory  and  investment  side.  The 
clean energy transition is the best insurance against price shocks like the one the EU is 
facing today. It’s time to speed up. 

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