REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS State of the Energy Union 2022 (pursuant to Regulation (EU) 2018/1999 of the Governance of the Energy Union and Climate Action)
Date: 2022-10-18
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, energy cooperation, energy diversification, energy efficiency, energy supply, energy transition, reduction of gas emissions, renewable energy, security of supply, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 18.10.2022  COM(2022) 547 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS State of the Energy Union 2022        (pursuant to Regulation (EU) 2018/1999 of the Governance of the Energy Union and Climate Action)  
 
 
1. INTRODUCTION AND HIGHLIGHTS 

The State of the Energy Union report  reviews the latest  policy  developments  and  describes 
the  progress  made  at  Union  level  towards  meeting  the  objectives  of  the  Energy  Union, 
including the Union's  2030 targets  for energy and climate. The 2022  edition of the report 
takes stock of the EU’s energy policy response to the current energy crisis and elaborates 
on  their  scope,  anticipated  impacts  and  consistency.  This  report  is  accompanied  by  the 
proposals addressing energy prices and security of supply ahead of this winter. 

Russia’s unprovoked and unjustified military aggression against Ukraine has upended energy 
markets,  triggering price volatility and energy insecurity  across the world with impacts and 
repercussions for the EU’s energy system. The EU and its Member States are dynamically 
reshaping  their  energy  strategies  to  reflect  new  geopolitical  realities  and  to  address  the 
need for affordable energy. This includes intensified actions to increase gas supplies from the 
EU’s trusted partners. Record-high energy prices since the second half of 2021 have been 
exacerbated  by  the  conflict,  with  Russia’s  weaponisation  of  energy  supplies  and  heavily 
impacted  also  by  the  record-high  temperatures  in  the  summer  period.  It  is  imperative  to 
accelerate the transition to clean energy and bring dependence on Russian energy to an 
end as soon as possible1 and well before the end of this decade2.  

A crucial new element in the European policy response to this unprecedented situation is the 
REPowerEU  Plan3,  presented  by  the  Commission  in  May  2022  and  building  on  the  full 
implementation  of  the  European  Green  Deal.  The  plan,  adopted  with  a  new  Joint 
Communication on EU external  energy  engagement4, includes a set  of integrated actions to 
save energy, diversify and secure  energy supplies, boost renewable energy deployment 
and smartly combine investments and reforms. REPowerEU increases the ambition of Fit-
for-55  legislative  proposals  in  energy  efficiency  and  renewables,  which  are  currently  in 
advanced stage of legislative negotiations. 

The  REPowerEU  Plan  was  preceded  by  a  proposal  for  a  Regulation  on  Gas  Storage5, 
adopted  by  the  co-legislators  on  27  June  2022,  and  the  establishment  of  the  EU  Energy 
Platform  in  April  2022.  It  was  swiftly  followed  by  emergency  interventions,  including  the 
Save  Gas  for  a  Safe  Winter  Communication6,  a  new  legislative  instrument  and  a 
European Gas Demand Reduction Plan to reduce gas demand in Europe by 15% by next 
spring, as well as a proposal for a Regulation on an Emergency Intervention to  Address 
High Energy Prices7 politically agreed at the extraordinary meeting of the Energy Council 
on 30 September. Annex I provides an overview of actions taken in view of the rising energy 
prices since October 2021. 

The  2022  State  of  the  Energy  Union  report  highlights  that  the  Energy  Union  will  help 
accelerate  the  implementation  of  the  European  Green  Deal,  foster  energy  security  and 
affordability,  encourage  the  uptake  of  renewable  energy  and  promote  energy  savings  and 

1  Versailles  Declaration  by  Heads  of  State  and  of  Government  (10  and  11  March  2022),  page  5,  European  Council 
conclusions of 24-25 March 2022, point 15. 
2 Communication on REPowerEU (COM(2022) 108 final – 8 March 2022), page 2. 
3 COM(2022) 230 final 
4 JOIN(2022) 23final 
5 COM(2022) 135 final 
6 COM (2022) 360 final 
7 COM(2022) 473 final 

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energy  efficiency  measures.  It  also  elaborates  on  the  EU  support  to  its  neighbours  and  the 
new  partnerships  that  have  been  established  to  accelerate  the  global  green  and  just  energy 
transition. 

Together with this report, the Commission is publishing energy snapshots for each Member 
State  that  provide  a  comprehensive  overview  of  its  energy  situation.  The  accompanying 
annexes of the State of the Energy union report 2022 will be published shortly: 

-  2022 Report on energy subsidies in the EU; 
-  EU Climate Action Progress 2022; 
-  2022 Report on the Achievement of the 2020 Renewable Energy Targets; 
-  2022 Report on the Achievement of the 2020 Energy Efficiency Targets; 
-  Guidance  on  cost-benefit  sharing  in  cross-border  renewable  energy  cooperation 

projects; 

-  Report on performance of support for electricity from  renewable sources granted by 

means of tendering procedures; 

-  Report on Progress on competitiveness of clean energy technologies; 
-  Fuel quality report; 
-  Report on the functioning of the carbon market (ETS). 

State of the Energy Union 2022 – key findings 

  Current high and volatile energy prices are having an impact on consumers across all 
EU  Member  States,  affecting  not  only  low-income  households,  but  also  lower  middle-
income households, SMEs and industries. Between 2019 and 2022 on average across EU 
Member States, the energy expenditure share8 increased by more than one third, with the 
share  having  almost  doubled  in  some  countries9.  According  to Eurostat's figures,  about 
35  million  EU  citizens  (approximately  8%  of  the  EU  population)  were  unable  to  keep 
their  homes  adequately  warm  in  2020.  The  surge  in energy  prices that  started  in  2021 
and worsened with Russia’s invasion of Ukraine in February 2022, along with the impact 
of  the  COVID-19  crisis,  are  likely  to  have  worsened  an  already  difficult  situation  for 
many EU citizens. 

  All Member States have implemented measures to tackle higher energy prices. National 
measures related to the Commission's toolbox ‘Tackling rising energy prices: a toolbox 
for action and support’ of October 202110 were adopted to avert the crisis. For instance, 
regulated  prices/social  tariffs  have  been  set;  energy  vouchers  and  temporary  subsidies 
have  been  introduced  for  private  consumers  and  business  consumers  (including  SMEs 
and industries). The reduction of energy-related taxes and network tariffs are additional 
key measures taken by Member States to  cushion the impact of higher energy prices on 
the end consumer. In several instances, these constitute fossil fuel subsidies that are likely 
to affect the EU’s targets and commitments. 

  The EU’s gas storage filling was above 91% by mid-October. 14 Member States had 
already exceeded 80% by 5 October 2022 and are well in advance of the target of 80% by 
1 November 2022. 

8 This does not include transport fuel costs. 
9 European Commission (forthcoming): Energy prices and costs report 2022. 
10 COM(2021) 660 final. 

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  The share of Russian pipeline gas in EU imports went down from 41% in 2021 to 9% in 
September 2022. Liquefied Natural Gas (LNG) is now a key source of supply accounting 
for 32% of EU total net gas imports. 

 

In  2021  subsidies  for  oil,  coal  and  gas  showed  a  slight  increase,  while  subsidies  for 
fossil electricity generation fell, with fossil fuel subsidies overall remaining fairly stable.  
Subsidies  for  renewable  energy  were  up  7%  in  2020  and  fell  slightly  back  in  2021. 
Energy efficiency subsidies fell in 2020 but rebounded in 2021. 

  The  EU  has  substantially  surpassed  the  2020  emission  reduction  target  set  under  the 
United  Nations  Framework  Convention  on  Climate  Change,  achieving  a  reduction  in 
domestic net greenhouse gas emissions (without LULUCF11) of 32% in 2020 in the EU. 
Provisional  estimates  show  that  emissions  are  expected  to  rebound  in  2021,  but  still 
falling compared to pre-pandemic levels. 

  The  EU  energy  efficiency  and  renewable  energy  targets  for  2020  were  overachieved.  
Final  Energy  Consumption  (FEC)  and  Primary  Energy  consumption  (PEC)  were  5.4% 
and 5.8% lower than the 2020 targets, respectively. The EU reached a share of 22.1% of 
renewable  energy  in  gross  final  energy  consumption,  thus  exceeding  the  20%  share 
aimed at under the 2009 Renewable Energy Directive. 

 

In 2019 and 2020, the increase in the use of renewable energy substituted around 155.6 
Mtoe and 164.6 Mtoe of fossil fuels respectively. This corresponds to a saving of EUR 
43.5  billion  from  avoided  fossil  fuel  use  for  the  EU  in  2019,  and  EUR  34.6  billion  in 
2020. 

  The EU generated a record 12% of its electricity from solar from May to August 2022; 
and  13%  from  wind.  Early  indications  suggest  that  2022  will  be  a  record  year  for  the 
European solar photovoltaics (PV) market with annual deployment growth in the largest 
EU  Member  State  markets  between  17-26%.  Nevertheless,  hydroelectricity  production 
decreased  from  14%  to  11%  in  summer  2022  compared  to  previous  years,  due  to 
drought-related low water levels in rivers and reservoirs. 

  The share of renewables in the electricity mix is expected to grow from 37% in 2021 to 
69%  in  2030.  Cumbersome  permitting  procedures,  grid  integration  issues  and 
difficulties  in  the  supply  chains  need  to  be  addressed  as  a  priority  to  speed  up  this 
process. 

  The  EU  has  remained  at  the  forefront  of  clean  energy  research,  with  Member  States 
steadily increasing public R&I investments, and the EU confirming its leading position in 
technologies  such  as  offshore  wind.  However,  more  public  and  private  investments  in 
R&I,  as  well  as  scaling  up  and  deployment  activities  are  needed  to  reinforce  EU 
competitiveness.  

  There  is  a  substantive  increase  in  funding  options  at  EU  and  national  level  for  the 
European  hydrogen  value  chain.  Under  the  Important  Projects  of  Common  European 
Interest mechanism, EUR 10.6 billion of public investments in the hydrogen value chain 
have been approved as incentive to crowd-in private investment in the hydrogen sector. 

11 Land use, land use change and forestry. 

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Approximately  EUR  10.6  billion  will  be  available  under  the  Recovery  and  Resilience 
Facility to support hydrogen projects. Electrolyser manufacturers in Europe committed to 
increase their capacity to manufacture electrolysers tenfold: to 17.5 GW by 2025.  

  Member States are implementing measures to boost energy efficiency across all sectors. 
In  industry,  businesses  are  now  obliged  in  some  instances  to  implement  energy  audit 
recommendations when the payback period is less than 5 years. Measures to utilise waste 
heat  are  reaping  significant  savings  potential.  Member  States  are  implementing  energy 
renovation  measures,  including  programmes  dedicated  to  social  housing  and  to  tackle 
energy poverty, upgrade of public buildings notably schools, universities and health care 
infrastructure.   

2.  ENHANCING ENERGY SECURITY, DIVERSIFICATION AND ACCELERATING THE EUROPEAN 

GREEN DEAL 

Gas and electricity prices have hit all-time highs in 2022. Over the past  year, electricity 
prices  in  Europe  have  rapidly  risen  to  a  level  much  higher  than  in  recent  decades.  This 
dynamic  is  intrinsically  related  to  the  high  price  of  gas,  which  increases  the  price  of 
electricity produced from  gas  fired power plants. Prices  started rising rapidly  during the 
second half of 2021 when the world economy picked up after COVID-19 restrictions were 
eased. Subsequently, Russia’s invasion of Ukraine has exacerbated this situation. 

At the same time, electricity generation in the EU has been below usual levels. Record-
breaking  temperatures  this  summer  have  driven  energy  demand  for  cooling  and  have 
added pressure on electricity generation due to droughts (challenging hydro production) and 
high water temperatures (challenging nuclear production). The extreme weather conditions 
and its consequences on water have thus contributed to energy scarcity and high energy 
prices,  constituting  a  burden  for  consumers,  businesses  and  industry  and  dampening  the 
economic  recovery.  Additional  supply  pressures  on  energy  and  food  commodity  prices  are 
feeding  global  inflationary  pressures,  eroding  the  purchasing power of  households  and 
the economy. 

Figure  1.  Wholesale  and  retail  gas  and  electricity  prices  and  carbon  prices  in  the  EU.  Sources:  Platts, 
VaasaETT 

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The 14 September Commission proposal for a regulation on an emergency intervention to 
address high energy prices received the political agreement of the Energy Council in record 
time, on 30 September. It sets out a target for an overall reduction of electricity demand 
from all consumers with a focus on reducing demand during peak price hours, a revenue cap 
for inframarginal technologies and a solidarity contribution on excess profits generated 
from activities in the oil, gas, coal and refinery sectors. The revenues would be collected by 
Member States and redirected to energy consumers, in particular vulnerable households, 
hard-hit companies, including SMEs, and energy-intensive industries. It also expands the 
Energy Prices Toolbox available for Member States  to  help  consumers, which would  allow 
below  cost  regulated  electricity  prices  and  expand  regulated  prices  to  also  cover  small  and 
medium-sized enterprises. 

Further to this action to reduce electricity prices, the Commission proposed a set of measures 
on 18 October to dampen the price of natural gas and to strengthen solidarity between 
Member States. The  Commission  proposed to equip  the EU with  the legal  tools to  jointly 
purchase  gas,  ensure  gas  flows  where  it  is  needed  and  to  boost  the  EU’s  ability  to  react 
swiftly in case of emergency by setting default rules on bilateral solidarity agreements for 
those Member States that have not concluded them yet. To dampen gas prices, ACER would 
be tasked to develop a new, complimentary benchmark for LNG purchases. Moreover, in 
order  to  respond  to  the  ongoing  energy  crisis,  the  Commission  proposes  to  put  in  place  a 
mechanism to limit prices via the main European gas exchange, the TTF, to be triggered 
when needed. 

The Commission is closely monitoring and discussing with Member States’ the progress of 
the ongoing adequacy assessments that should provide an overview of concrete risks for 
this winter. These assessments  are based on the most up to  date measures and  the  state of 
generation sources over the winter, and the actions needed to tackle the concrete risks. Such 
action should fully respect the internal market, as cross-border trade is not only an essential 
element of the internal market but also a key feature of European solidarity in electricity and 
gas.  Any  undue  restriction  may  therefore  jeopardise  the  security  of  electricity  supply 
of Member States, regions, and the EU. 

2.1. ENERGY SUPPLY 

Since  the  start  of  Russia’s  invasion  in  Ukraine,  Russia  has  been  manipulating  gas 
supply  with  the  aim  of  undermining  EU  solidarity  and  energy  security.  Overall,  13 
Member  States  are  directly  affected  by  partial  or  total  supply  reductions12  with  five 
Member States (Bulgaria, Poland, Lithuania, Latvia and Finland) no longer receiving any 
gas supply from Russia. Gazprom has gradually reduced gas flows by Nord Stream 1 to 
zero by the beginning of September, and the recent incidents regarding Nord Stream 1 and 2 
have been another wake-up call for the EU to strengthen security of supply and to increase 
preparedness  to  tackle  serious  disruption  scenarios.  The  EU  energy  system  is  robust, 
including  with  respect  to  hybrid  threats.    However,  beyond  energy  security  of  supply,  we 
need  to  continue  the  work  on  protection  of  critical  infrastructure  and  cybersecurity.  The 
continuous manipulations of gas supply to the EU has led to a considerable reduction in the 
Russian  share  in  our  pipeline  imports.  While  the  Russian  Federation  supplied  41%  of  EU's 
natural  gas  imports  in  2021,  Russian  pipeline  gas  imports  have  decreased  to  9%  by 
September 2022.  

12 BG, PL, DE, FI, DK, NL, IT, FR, AT, CZ, SK, LV – and LT who decided on its own to stop all imports from Russia. 

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With the implementation of the REPowerEU Plan and the EU External Energy Strategy, the 
steady drop in Russian supply since the start of the war has been compensated by an increase 
of  alternative  gas  supplies  thanks  to  successful  efforts  to  reach  out  to  our  international 
partners. Between January and July, non-Russian deliveries via liquefied natural gas (LNG) 
increased  by  19bcm  and  14bcm  via  pipelines.  LNG  now  is  a  key  source  of  supply  and 
accounting  for  32%  of  total  net  gas  imports.  Norway  and  the  USA  are  the  EU’s  main 
suppliers.  

The  Commission  also  decided  to  act  on  a  major  element  of  preparedness  for  winter:  gas 
storage. The Storage Regulation set a target of at least 80% of gas in storage by November 
2022.  Today,  the  EU  gas  storage  filling  level  was  above  91%  by  mid-October  and  14 
Member States had already exceeded 80% by 5 October 2022. The Member States are all in 
line  with  their  storage  trajectories  and  the  Commission  is  continuing  its  work  on 
implementing  the  Regulation  to  ensure  that  none  will  have  difficulty  in  achieving  these 
targets. 

The EU’s electricity supply has also been affected by some other disruptions. While the 
EU generated a record 12% of its electricity from solar from May to August 2022 and 13% 
from  wind,  the  share  of  hydropower13  fell  from  14%  to  11%  compared  to  previous  years, 
due to low water levels in several rivers and reservoirs related to the summer droughts. 

In 2020, nuclear power plants generated around 24.6 %14 of the total electricity produced in 
the EU. However, the EU’s nuclear fleet is ageing, and until new investments are coming 
online,  its  total  output  is  set  to  temporarily  decline  until  the  end  of  the  decade15. 
Droughts and high temperatures have led to a lack of cooling water for nuclear power plants 
and  to  low  water  levels  which  have  hampered  production  and  the  transportation  of  nuclear 
fuels. This has resulted in lower production in 2022. 

Since March 2022, tightness and even shortages of some key petroleum products (mainly 
diesel,  jet  fuel  and  fuel  oil)  have  been  observed,  mainly  due  to  increasing  demand  and 
self-sanctioning by EU operators in anticipation of EU wide measures. This was aggravated 
during  the  summer  by  incidents  in  some  EU  refineries  as  well  as  by  some  logistic 
difficulties,  driven  by  the  low  water  levels  on  the  Rhine  and  Danube,  which  are  key 
waterways for transporting fuel. This prompted some Member States to  release emergency 
oil  stocks  to  compensate  for  the  shortages  in  petroleum  products.  Developments  are 
continuously monitored by the Commission in close cooperation with the Member States and 
the European Oil Coordination Group.  

2.2. DIVERSIFICATION OF EU ENERGY SUPPLY 

The EU, as the biggest importer of natural gas in the world has a long strategy to diversify 
sources  and  importing  routes  of  natural  gas.  This  includes  connecting  EU  with  new 
sources of supply, for instance via the Southern Gas Corridor and new sources of LNG in 
the  Mediterranean  area.  Diversification  efforts  have  accelerated  recently,  for  instance  with 

13 Within the Copernicus Programme, the Copernicus Climate Change Service (C3S) offer support to the renewable energy 
sector with dedicated products targeting near-real-time PV, wind and hydropower production (historical, near-real-time 
and projections under different scenarios). 
14 Latest Eurostat data: Nuclear energy statistics - Statistics Explained (europa.eu) 
15 Nuclear energy is projected to have 16% share in gross electricity generation by 2030 (‘Fit for 55’ modelling) and 15% 
share in power generation by 2050 (Communication ‘A Clean Planet for all’ and the Climate Target Plan). 

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the Baltic Pipe, supported by the Trans-European Networks for Energy,  inaugurated on 28 
September  2022.  The  Baltic  Pipe enhances  the  diversification  of  gas  supply  in  Central-
Eastern Europe and the Baltic States by opening a new import route from the North Sea to the 
EU. It will make it possible to import up to 10 bcm of gas annually from Norway to Poland 
and to transport 3 bcm of gas from Poland to Denmark. Also recently, the Greece-Bulgaria 
interconnector, a game changer in the diversification and resilience strategy, was inaugurated 
on 1 October.  

Faced  with  today’s  energy  supply  pressure,  the  Commission  and  Member  States  set  up  the 
EU Energy Platform as voluntary coordination mechanism supporting the purchase of 
gas,  LNG  and  hydrogen,  and  aimed  at  helping  to  diversify  gas  supplies.  The  EU  Energy 
platform  builds  on  three  pillars:  aggregating  gas  demand  for  joint  purchase,  optimising 
infrastructure usage in the EU to support change in flow patterns and coordinating outreach to 
international partners. 

The  Platform  fast-tracked  agreements  with  reliable  and  trusted  energy  partners  to 
diversify and secure the EU energy supply over the short and medium term. On 15 June 2022, 
a trilateral agreement between the EU, Egypt and Israel was concluded in Cairo to support 
the export of gas supplies from Israel to the EU via Egypt’s LNG terminals. On 18 July 2022, 
the  EU  and  Azerbaijan  signed  a  Memorandum  of  Understanding  (MoU)  on  a  Strategic 
Partnership in the Field of Energy. The new MoU will support doubling the capacity of the 
Southern Gas Corridor up to at least 20 billion cubic metres annually as of 2027 in line with 
the REPowerEU plan while continuing to ensure attractive and stable conditions for natural 
gas supplies to the EU, reflecting the long-term nature of the energy partnership between the 
EU and Azerbaijan.  In addition,  the EU has intensified dialogue on increasing  gas supplies 
with  its  trusted  partners  including  the  US,  Norway  and  Algeria.  It  has  also  intensified 
discussions with Canada for possible supplies in the medium-term.  

In its direct neighbourhood, the EU has taken the bold and unprecedented step to support the 
emergency  synchronisation  of  the  Ukrainian  and  Moldovan  with  the  continental  European 
electricity network thereby preserving grid stability and creating the conditions for mutually 
beneficial electricity trade.  

As the inputs from companies in the gas market is key for this mechanism to be successful, 
the Commission is also establishing an Industry Advisory Group16. This group will advise 
the Commission on the practical implementation of the joint purchasing and on the technical 
specifications for joint purchase in line with industry needs. It will look at arrangements such 
as joint tendering and the creation of joint ventures for gas purchase.  

Cooperation with  industry  is  already leading to  results. For instance,  the  implementation  of 
the REPowerEU Action  plan on  bio-methane has  attained an important  milestone with  the 
official  launch  of  the  Bio-methane  Industrial  Partnership  (BIP).  The  action  plan  will 
facilitate  achieving  the  35  bcm  annual  EU  production  of  sustainable  bio-methane  by  2030. 
The  Bio-methane  Industrial  Partnership  will  support  the  implementation  of  the  action  plan 
through  several  task  forces,  made  up  of  experts  from  industry,  the  primary  sector  public 
authorities, academia, and civil society.  

Furthermore,  five  Regional  Groups  have  been  established  under  the  Energy  Platform 
involving  the  Commission,  the  Member  States  and  the  Energy  Community  countries 
identified. They will create a better understanding of potential  gas demand, which will feed 
into the joint purchase scheme, once established. 

16 https://ec.europa.eu/transparency/expert-groups-register/screen/expert-groups/consult?lang=en&groupID=3865   

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The  diversification  of  routes  needs  to  be  accompanied  by  a  diversification  of  energy 
sources,  for  example  by  boosting  renewable  energy,  accelerating  renewable  hydrogen 
uptake,  scaling  up  sustainable  biomethane,  reducing  fossil  consumption  in  industrial  and 
transport sectors where GHG are hard to abate and speeding up permitting and innovation. 
As  regards  the  use  of  domestic  sources,  202117  saw  a  record  of  36  GW  newly  installed 
renewable  power  generation  capacity.  With  the  increase  of  renewable  energy,  the  EU 
substituted  around  164.6  Mtoe  and  155.6  Mtoe  of  fossil  fuels  in  2020  and  2019 
respectively, compared to the level of use of renewable energy in 2005. This corresponds to a 
saving of EUR 43.5 billion for the EU collectively from avoiding fossil fuel use in 2019, and 
EUR  34.6  billion  in  202018.  Fossil  fuel  savings  from  deploying  renewables,  which  would 
strongly  increase  when  meeting  the  proposed  2030  target  of  45%  renewables,  would  allow 
the EU to steadily reduce to zero dependence on fossil fuel from Russia by 2027. 

The  EU’s  well-advanced  policies  to  deploy  renewable  energy  sources  have  been  given  a 
significant  boost since  the adoption  of REPowerEU, helping  renewables  to  grow massively 
also in all end-use sectors. Early indications suggest that 2022 will be a record year for the 
European  solar  photovoltaic  market  with  annual  deployment  growth  in  the  largest  EU 
Member State markets between 17% and 26%19. All in all, the share of renewables in the 
electricity generation is expected to grow from 37% in 202120 to 69% in 2030.  

With the Hydrogen Accelerator proposed in the REPowerEU Action Plan, the Commission 
has provided an estimate of the investment needs and additional costs with specific focus on 
replacing  natural  gas  use.  In  her  State  of  Union  address  before  the  European  Parliament  in 
September,  the  President  of  the  Commission  announced  the  setting  up  of  the  European 
Hydrogen  Bank.    The  Hydrogen  Bank aims  to move  the  hydrogen  market  from  niche  to 
scale by accelerating the production and the use of renewable hydrogen and connecting these 
by developing the necessary infrastructures in a coordinated manner.   

As  regards  nuclear  energy  contribution  to  the  security  of  electricity  supply  in  the  coming 
years,  Member  States  need  to  take  timely  decisions  regarding  investments  in  the  long-term 
operation  of  existing  nuclear  power  plants,  and  appropriate  safety  and  efficiency 
improvements,  including  in  climate  adaptation  measures.  Moreover,  to  help  mitigate  the 
risks in  some Member  States21  related  to security of supply  of Russian nuclear fuel  and 
nuclear fuel cycle services, as well as equipment and technology, the Commission and the 
Euratom Supply Agency (ESA) are stepping up efforts in collaboration with Member States 
and  their  authorities  to  ensure  the  availability  of  alternative  fuel  supplies  from  the  EU  and 
reliable international partners.   

2.3 ENERGY DEMAND 

Improving  energy  efficiency  and  reducing  energy  demand  is  key  to  shield  against 
potential supply disruptions and minimise their impacts and costs. This can often be the 
cheapest, safest, and cleanest way to reduce our reliance on fossil fuel imports from Russia, 

17https://www.iea.org/news/renewable-power-is-set-to-break-another-global-record-in-2022-despite-headwinds-from-higher-
costs-and-supply-chain-bottlenecks  
18 https://www.eurobserv-er.org/pdf/20th-annual-overview-barometer/ 
19 Global Market Outlook For Solar Power 2022-2026 - SolarPower Europe 
20 European Electricity Review 2022 | Ember (ember-climate.org) 
21  Out  of  13  EU  Member  States  generating  nuclear  energy,  four  Member  States  are  fully  and  one  partially  dependent  on 
supply  of  Russian  nuclear  fuel.  Some  of  these  countries  are  especially  vulnerable  as  nuclear  energy  represents  a  large 
proportion in electricity production (up to 53.8%) and their dependence on other Russian energy supplies (gas, oil) is high. 

8 

 
 
                                                           
while contributing to reducing GHG and air pollutant emissions, contributing to fight climate 
change.  

Figure 2: Reduction in Final Energy Consumption in industry, transport, households, and services. Source: 
Eurostat, 2022.22  

In  May  2022,  the  Commission  proposed  a  set  of  initiatives  starting  with  the  EU  ‘Save 
Energy’  plan  to  guide  Member  States  to  design  the  best  tailored  measures  to  cut  energy 
consumption.  The  Commission  also  proposed  a  new  legislative  tool  and  a  European  Gas 
Demand Reduction Plan in July 2022 in order to reduce gas use in Europe by 15% by next 
spring  and  Council  adopted  the  Regulation  on  reducing  gas  demand  on  5  August  202223. 
Member  States  are  now  implementing  demand  reduction  measures,  which  will  be  factored 
into the update of National Emergency Plans due at the end of October 2022. 

In  line  with  the  objectives  of  the  REPowerEU  plan  and  the  Save  Gas  for  a  Safe  Winter 
package,  most  Member  States  have  adopted  measures  to  encourage  energy  savings  in 
buildings,  industry  and  transport  in  the  short-term.  Many  introduced  communication 
campaigns. Several Member States implemented measures to set maximum heating and 
minimum cooling temperatures in specific categories of buildings and recommendations to 
lower  the  highway  speed  limit.  Some  Member  States  have  also  adopted  more 
comprehensive and structural measures, which will already have an effect in the upcoming 
winter  season,  either  by  strengthening  existing  regulations  or  topping  up  the  existing 
support schemes for buildings, industry, and transport. 

Additionally, the Commission proposed an increased EU 2030 energy efficiency target of 
13% to raise private financing for energy efficiency. In 2023, it will also launch a high-
level European Energy Efficiency Financing Coalition with the financial sector. 

22 The graphs for households and services have been corrected to take into consideration climate conditions. The climate 
correction factor is obtained by dividing the Heating Degree Days (HDD) measured in each year with the average HDD in 
the 1980-2004 period. 
23 https://www.consilium.europa.eu/en/press/press-releases/2022/08/05/council-adopts-regulation-on-reducing-gas-demand-
by-15-this-winter/ 

9 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
With  REPowerEU,  the  Commission  also  proposed  to  ensure  that  all  new  buildings  are 
designed  to  optimise  their  solar  energy  generation  potential  as  part  of  the  ongoing 
revision  of  the  Energy  Performance  of  Buildings  Directive  (EPBD).  This  revision  aims  at 
fully decarbonising the European building stock by 2050, minimum energy performance 
standards  to  trigger  energy  efficient  renovation  of  buildings,  increasing  the  rate  of 
renovations  by  2030,  phase-out  fossil  fuel  based  heating,  and  maximising  the  potential  for 
solar  energy  in  buildings.  Such  measures  will  be  important  for  vulnerable  households, 
especially in the current context of high energy prices. 

Reviewing and updating existing regulations for energy-related products constitutes the main 
body  of  work  of  the  ecodesign  and  energy  labelling  working  plan24,  with  heating  and 
cooling  appliances  being  the  priority.  At  the  same  time,  an  ambitious  revision  of  the 
Ecodesign Directive is ongoing25. 

2.4 JUST TRANSITION, AFFORDABILITY AND SUSTAINABILITY 

Just transition and affordability 

The policy framework to advance the just energy and climate transition targets regions, 
sectors  and  businesses  with  high  GHG  intensities  or  high  dependency  on  the  extraction  of 
solid fossil fuels. Coal, peat and oil shale and carbon intensive regions most affected by 
the  transition  to  climate  neutrality  can  receive  funding  from  the  Just  Transition 
Mechanism. The Commission aims to adopt all Territorial Just Transition Plans by the end 
of 2022 and supports all regions through the Just Transition Platform and the Coal regions in 
transition  initiative.  The  Council  Recommendation  on  ensuring  a  fair  transition  towards 
climate  neutrality,  adopted  on  16  June  2022,  provides  an  additional  joint  framework  for 
comprehensive and  coherent  employment, skills  and social policies to  ensure no one is  left 
behind, in line with the European Pillar of Social Rights. 

The impact of high and volatile energy prices on consumers, SMEs and industries across 
all the EU Member States is deeply worrying. Between 2019 and 2022 on average across EU 
Member  States,  the  energy  expenditure  share26  increased  by  more  than  one  third,  with  the 
share  having  almost  doubled  in  some  countries.27  There  is  a  risk  that  a  larger  group  of 
households  could  not  be  able  to  pay  their  energy  bills,  affecting  not  only  low-income 
households,  but  also  lower  middle-income  households  and  potentially  beyond  in  some 
Member States. This risks aggravating a situation of energy poverty in which 35 million EU 
citizens  (approximately  8%  of  the  EU  population)  were  unable  to  keep  their  homes 
adequately warm in 2020. Therefore, it has become even more urgent for Member States to 
address  both  the  immediate  and  “root  causes”  of  energy  poverty,  combining  targeted 
emergency  measures  with  longer-term  actions,  such  as    energy  efficiency  measures,  and 
lowering  any  possible  negative  impacts  from  climate  and  energy  policy.  In  May  2022,  the 
Commission  set  up  a  Coordination  Group28  on  energy  poverty  and  vulnerable  consumers 
which will help Member States to exchange experiences addressing energy poverty. 

Moreover, high energy prices are unevenly impacting businesses and industry, in addition to 
households, creating significant energy affordability issues for some enterprises and sectors. 

24 C/2022/2026, OJ C 182, 4.5.2022, p. 1–12 
25 https://environment.ec.europa.eu/publications/proposal-ecodesign-sustainable-products-regulation_en  
26 This does not include transport fuel costs. 
27 European Commission (forthcoming) Energy prices and costs report 2022. 
28 https://ec.europa.eu/transparency/expert-groups-register/screen/expert-groups/consult?lang=en&groupID=3849  

10 

 
 
                                                           
In line with  REPowerEU, the  amendment  of the  Temporary Crisis  Framework for State 
Aid refers to the possibility of granting aid for fuel switching.  In particular, the Temporary 
Crisis  Framework  is  extended  to  cover  measures  that  accelerate  the  rollout  of  renewable 
energy,  and  facilitate  the  decarbonisation  of  industrial  processes.  The  latter  entails  that 
Member States can support investments in industry, to phase out fossil fuels and create a less 
volatile business environment, through electrification, energy efficiency, and the switch to the 
use of renewables and electricity-based hydrogen.  

A  wide  range  of  support  measures  have  been  put  in  place  by  Member  States,  including 
measures based on the Energy Prices Toolbox. Among others, Member States provided direct 
income  support,  reductions  in  taxes,  levies  and  rebates  on  consumers’  energy  bills,  and 
measures to support energy efficiency and on-site renewable production. Member States also 
intervened  in  retail  prices  for  electricity  and  gas.  As  part  of  the  March  2022  REPowerEU 
Communication29,  the  Commission  provided  Guidance  on  the  application  of  State 
intervention into price setting, for the supply of electricity, ensuring they benefit consumers 
during this current crisis and enhance competition to the benefit of consumers over the longer 
term. In addition, as set out in the Communication on Short-Term Market Interventions and 
Long-Term  Improvements  to  the  Electricity  Market  Design,  the  Commission  presented 
legislation  to  allow  retail  price  regulation  for  SMEs  and  households  below  cost.  This  was 
politically agreed at the extraordinary meeting of the Energy Council on 30 September.  

As regards international engagement and outreach, the EU has made important progress in 
the implementation of the Global Methane Pledge and the Just Energy Transition partnership 
with South Africa, as a follow-up to the announcements made at COP26. 

Sustainability 
Further  reducing  air  pollution  is  imperative  to  reach  the  ambition  set  out  in  the  Zero 
Pollution  Action  Plan  and  to  respond  to  the  continued  high  number  of  premature  deaths 
linked to  air pollution. The  REPowerEU as  well as  the update of the  National  Energy  and 
Climate  Plans  plan  provide  an  opportunity  to  further  cut  emissions  of  air  pollutants 
when bringing forward improvements in energy efficiency and through the shift towards non-
combustible  renewable  energy  sources,  notably  solar  and  wind.  At  the  same  time, 
diversifying supply and energy sources, even if only on a temporary basis, entails risks linked 
to increased reliance on coal and bioenergy, which would result in higher air pollution.  

The overall effect on air quality is likely to vary geographically, and this will be looked at 
in the Third Clean Air Outlook report30 as part of the wider Zero Pollution Monitoring 
and  Outlook  report.  Such  analysis  can  help  guide  Member  States  in  their  implementation 
choices to avoid that short term needs undermine long-term public health objectives.  

Work  is  well  underway  on  the  revision  of  the  Ambient  Air  Quality  Directives,  to  align 
European air quality standards more closely with the revised air quality guidelines adopted by 
the World Health Organization in 2021, and a legislative proposal is expected to be adopted 
by the end of the year. This will bring further improvements in air quality everywhere in the 
EU and make close coordination across policy fields more necessary than ever, to ensure that 
different policies are mutually reinforcing. 

29 COM(2022) 108 final 
30 to be adopted by the end of 2022. 

11 

 
 
                                                           
Whilst a shift from steam turbine technologies to renewable power generation from solar and 
wind  resources  will  reduce  the  overall  consumption  of  freshwater,  there  will  be  additional 
fresh water needs due to the enhanced roll-out of renewable hydrogen production, especially 
at  local  level.  It  is  therefore  important  to  comply  with  the  Water  Framework  Directive  in 
considering the location for the roll-out of additional electrolyser capacities. 

3.  PROGRESS  WITH  THE  ENERGY  UNION  –  STOCKTAKE  ACROSS  ALL 
DIMENSIONS OF ENERGY AND CLIMATE POLICY 

3.1. Decarbonisation and greenhouse gas emissions  

The  latest  reports  by  the  Intergovernmental  Panel  on  Climate  Change  (IPCC)  confirm  that 
fast and transformative action must be taken at global level if we are to meet the goals of the 
Paris Agreement and avoid dangerous climate change. The EU has firmly committed to limit 
global warming and is setting tangible policies in line with the 2030 targets and the goal of 
climate  neutrality  by  2050.  The  EU  also  put  in  place  financing  mechanisms  to  ensure  a 
sustainable,  socially  just  and  cost-efficient  transition,  as  well  as  an  ambitious  climate 
adaptation strategy.  

The  EU  has  substantially  overachieved  its  2020  reduction  target  of  20%  greenhouse  gas 
(GHG) reduction compared to 199031. Total GHG emissions32, excluding land use, land use 
change  and  forestry  and  including  international  aviation,  decreased  by  32%  in  the  EU 
compared  to  the  1990  base  year:  a  reduction  of  1.55  billion  tonnes  of  CO2  equivalent  by 
2020.  However,  provisional  estimates  show  that  EU  GHG  emissions  are  expected33  to 
rebound in 2021 compared to their exceptionally  low 202034 level as the economy recovers 
from the pandemic and exceptional high gas prices have caused a temporary switch from gas 
to coal.  

Progress with European climate action  
The EU has made substantial progress in delivering the European Green Deal. In July 2021, 
the  Commission  proposed  a  comprehensive  package  of  climate  and  energy  legislation 
(further  strengthened  by  the  most  recent  REPowerEU  Plan),  which  is  currently  being 
negotiated  by  the  European  Parliament  and  the  Council,  to  ensure  that  the  EU  policy 
framework  is  fit  for  the  EU’s  increased  2030  climate  target.  The  European  Scientific 
Advisory  Board  on  Climate  Change  was  appointed  in  2022  to  provide  independent 
scientific  advice  on  EU  measures  and  climate  target.  The  Commission  has  also  adopted 
climate proofing guidance and updated its better regulation instruments to ensure it takes 
the  same  approach  when  assessing  whether  draft  measures  are  consistent  with  climate-
neutrality and progress on adaptation, as set out in the Climate Law.   

In 2022, the EU also strengthened its policy action in key sectors with a legislative proposal 
for a new F-gases Regulation to achieve additional cumulative emission savings by 2050. A 

31 https://unfccc.int/sites/default/files/resource/European%20Union-BR4_C_2019_8832_and_SWD_2019_432_2.pdf  
32 Within the Copernicus Programme, the Copernicus Atmospheric Monitoring Service (CAMS) provides near-real-time 
emissions monitoring data and products, assisting in the assessment of emission reductions, and distance to target with 
respect to EU regulations and International legally binding policy instruments (Paris Agreement). 
33 The 2021 approximated estimates for GHG Emissions will be published by the EEA at the end of October 2022 and 
reported in the EEA report on “Trends and projections in Europe 2022” and in the Climate Action Progress report. 
34 As set out in the EU’s 2022 GHG inventory submission to the UNFCCC. Provisional data will be provided together with 
the Climate Action Progress Report 2022, to be published by end of October 2022. 

12 

 
 
                                                           
further legislative proposal to strengthen CO2 emissions standards for heavy duty vehicles 
is due by the end of 2022. 

Renewable energy 
In 2020, the EU reached a share of 22.1% of  renewable energy sources (RES) in gross 
final  energy  consumption,  exceeding  the  target  level  of  20%  set  for  202035.  The  overall 
renewables (RES) share increased by 2.2 percentage points from 2019 to 2020, facilitated by 
lower  energy  consumption  due  to  the  COVID-pandemic.  The  RES  shares  in  2020  vary 
widely across Member States. Sweden achieved the highest share in 2020 (60.1%), followed 
by  Finland  (43.8%)  and  Latvia  (42.1%).  Considering  national  deployment  and  currently 
notified  statistical  transfers,  all  Member  States  except  France  achieved  their  2020  national 
target36. Belgium,  Ireland,  Luxembourg,  Netherlands, and Slovenia  used statistical  transfers 
to achieve their RES target in the RES Directive.  

Figure  3:  Overall  RES  shares  with  and  without  statistical  transfers  vs.  2020  RES  targets.  Source:  Eurostat 
SHARES; RED I Directive  

With  a  contribution  of  37.5%  in  2020,  the  relative  share  of  renewables  is  largest  in  the 
electricity sector. The share of renewables in the heating and cooling sector reached 23.1% 
in 2020. For the transport sector, the shares are relatively lower and reached 10.2% in 2020. 
Bioenergy continues to  be the main source of renewable energy in the EU, with a share of 
58.1% of the total in 2020. In Europe, bioenergy remains largely the main renewable energy 
source  (around  60%).  In  view  of  decreasing  carbon  sinks  and  the  need  to  preserve 
biodiversity,  the  Commission  proposal  to  revise  the  Renewable  Energy  Directive  in  the  Fit 
for  55  package  reinforces  the  sustainability  criteria  for  the  use  of  biomass  for  energy  and 
includes  an  obligation  to  Member  States  to  apply  the  cascading  principle  in  their  support 
schemes. 

The  proposal  on  increasing  the  overall  ambition  for  RES  to  45%  and  speeding  up 
permitting  procedures  is  currently  being  discussed  in  the  Council  and  the  European 
Parliament. A swift adoption as part of the RED II revision would be a key element to boost 

35 By Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of 
energy from renewable sources. 
36 France achieved 19.1%; missing its target by 3.9% percentage points. 

13 

 
 
 
                                                           
the further deployment of renewable energy. To  achieve the new, higher proposed target of 
45%  from  REPowerEU,  a  steep  increase  in  the  deployment  of  renewable  energy  will  be 
required,  almost  tripling  the  average  annual  increase  over  the  last  decade.  For  the 
decarbonisation of transport advanced biofuels37 can contribute in a sustainable way together 
with  Renewable  Fuels  of  Non-Biological  Origin  to  achieve  such  a  target.  RED  II  sets  a 
3.5%  target  in  2030  for  the  share  of  advanced  biofuels.  Since  2016,  EU  production  has 
more  than  doubled  to  1224  ktoe  in  2020.  In  addition,  the  RED  II  revision  also  proposed  a 
target for Renewable Fuels of Non-Biological Origin of 2.6% in 2030. 

For  transport,  the  Sustainable  and  Smart  Mobility  Strategy  lays  the  foundation  for  how  the 
EU  transport  system  can  achieve  its  green  transformation.  Several  actions  of  the  Strategy 
have  been  completed  -  the  Commission  proposed  to  boost  the  production  and  uptake  of 
sustainable  aviation  and  maritime  fuels  through  the  FuelEU  Maritime  and  ReFuelEU 
Aviation  initiatives,  and  to  increase  the  deployment  and  use  of  renewable  and  low-carbon 
fuels and related infrastructure through the Alternative Fuels Infrastructure Regulation. 

Urgent and full transposition of the 2018 Renewable Energy Directive RED II is key for 
the success of the energy transition, since it lays the foundation for a wider rollout of RES. 
The  Commission  is  currently  checking  transposition  and  has  launched  infringement 
procedures against all Member States, which are at different stages. 

3.2. Energy efficiency 

Bearing in mind the unique situation of COVID-19, the 2020 targets for both primary and 
final  energy  consumption  were  achieved  by  the  EU.  Primary  energy  consumption  in  the 
EU amounted to 1236 Mtoe, 5.8% lower than the 2020 target. Primary Energy Consumption 
decreased for the third consecutive year and was 8.7% lower than in 2019 reaching 907 Mtoe. 
Final  Energy  Consumption  was  5.4%  lower  than  the  2020  target,  with  a  decrease  of  8% 
compared  to  Final  Energy  Consumption  in  2019.  This  was  the  second  consecutive  year  of 
decrease after six years constantly increasing. For primary energy consumption all Member 
States achieved their 2020 national contributions except Belgium, Bulgaria, and Poland. For 
final  energy  consumption  Belgium,  Bulgaria,  Germany  Lithuania,  Austria,  and  Sweden  did 
not achieve their national contributions. 

As regards Article 7 of the Energy Efficiency Directive, the cumulative energy savings over 
2014-2020, available from 24 Member States, amounted to 197.5 Mtoe, which is equivalent 
to  103%  of  the  sum  of  the  cumulative  end-use  energy  savings  obligations  for  2014-2020 
(191.7  Mtoe)  –  and  97.5%  (202.5  Mtoe)  for  27  Member  States.  Depending  on  the  final 
achievements  by  the  three  missing  Member  States,  the  sum  of  cumulative  savings  required 
for  the  27  Member  States  could  be  met.  Out  of  the  24  Member  States  that  submitted  the 
complete  data  regarding  their  final  achievement,  14  Member  States  fulfilled  their  energy 
savings obligation, whereas ten Member States did not meet their energy savings obligation.  

37 Feedstock included in Annex IX of the Renewable Energy Directive. 

14 

 
 
 
                                                           
Figure 4. Evolution of the EU Final and Primary Energy Consumption from 2005 to 2020 (the dots represent 
the 2020 EU Energy Efficiency Targets). Source: Eurostat, JRC, 2022. 

Energy consumption in 2020 was undoubtedly influenced by the COVID-19 pandemic. 
This  exceptional  situation  led  to  a  slight  growth  in  energy  consumption  in  the  residential 
sector due to the increased time spent by people at home (lockdown and teleworking) and a 
decrease in energy consumption in the transport, industry and service sectors. The transport 
sector  had  the  most  accentuated  decrease  in  consumption  driven  by  the  steep  decline  in 
activity, mainly due to travel restrictions during the Covid-19 pandemic.  

In the period from 2005 to 2020, EU energy consumption followed a general downward 
trend, as depicted in Figure 4. The decrease in energy consumption was accompanied with 
an overall drop in energy intensity and energy consumption per capita, reflecting a possible 
increase in competitiveness. 

Regarding progress towards the 2030 targets, the EU’s primary energy consumption was 
7.2% above  (and final  energy  consumption was  9.6% above)  the 2030  energy  consumption 
targets  levels.  This  represents  a  reduction  of  32.5%  compared  to  the  2007  reference 
scenario  baseline.  Nevertheless,  far  more  effort  is  needed  if  we  are  to  achieve  a  structural 
reduction in energy consumption and meet the new target of 13% proposed in REPowerEU. 

Buildings and products 
Several  actions  under  the  Renovation  Wave  action  plan  have  already  been  completed  or 
significantly advanced with the aim of at least doubling the annual energy renovation rate 
of buildings by 2030 and promoting deeper energy renovations. 

Member  States  have  submitted  their  national  long-term  renovation  strategies,  with 
concrete policy measures for easier access to financing, promotion of advisory tools such as 
one-stop-shops,  tackling  energy  poverty,  improving  the  energy  performance  of  public 
buildings and better information.38 Since the beginning of 2021, nearly zero-energy became 
the official norm for new buildings in the EU. 

The  publication  of  the  official  Communication  on  the  New  European  Bauhaus  (NEB)39 
marked the transition between the co-design phase and the delivery of the Bauhaus initiative 
and introduced activities that will further support its objectives. One of the key instruments is 

38  With  a  view  to  sharing  best  practices  among  Member  States,  the  Commission  developed  a  Staff  Working  Document 
(SWD) analysing national long-term renovation strategies in Member States. 
https://energy.ec.europa.eu/system/files/2021-12/swd-on-national-long-term-renovation-strategies.pdf  
39 https://new-european-bauhaus.europa.eu/about/about-initiative_en  

15 

 
 
  
                                                           
the NEB Lab aiming to connect people to work around concrete and tangible projects. Since 
April  2022,  eight  measures  have  already  started  under  this  framework,  including  the  NEB 
Labelling Strategy, financing schemes, education, and regulation. 

Eco-design  and  energy  labelling  delivers  a  vital  and  growing  contribution  to  European 
Green Deal and Fit for 55 objectives, as well as to consumers faced with high energy prices 
whose bills would otherwise be much higher. The total estimated energy savings generated 
by  all  eco-design  and  energy  labelling  measures  amounted  to  1037  TWh/y  (or  89 
Mtoe/y) in 2020, corresponding to 7.2% of the total EU primary energy consumption in 
2020.  Compared  to  the  estimate  for  2020  published  in  the  latest  edition  of  the  eco-design 
impact  accounting  report40  (EUR  60  billion),  the  reduction  in  consumer  expenditure  is 
estimated  to  have roughly  doubled  in  2021  (reaching  more  than EUR  120  billion)  and  may 
well  be  even  higher  in  202241.  On  30  March  2022,  the  Commission  adopted  an  updated 
working  plan  for  eco-design  and  energy  labelling  for  energy-related  products42,  the 
implementation of which represents a significant savings potential in the coming years. 

3.3. Energy security  

Europe’s  security  of  energy  supply  has  been  robust  despite  exceptional  challenges 
thanks  to  the  resilience  of  the  existing  framework,  strengthened  preparedness  based  on  a 
spirit  of  solidarity  between  Member  States,  prompt  policy  support  over  the  last  year  and  a 
strong  outreach  to  our  international  partners.  The  TEN-E  Regulation  has  contributed 
significantly  to  this  robust  security  of  supply  by  interconnecting  Member  States’  energy 
systems through Projects of Common Interest (PCIs). 

The  EU  has  been  preparing  for  different  possible  disruption  scenarios,  by  making  a 
comprehensive preparedness overview and putting in place measures at national and EU level 
to  reinforce  preparedness  and  security  of  energy  supply.  In  these  difficult  times,  regional 
cooperation and solidarity will remain essential to guaranteeing the resilience of the EU 
and ensuring that flows and access to storage across borders remain possible in all situations. 
In  this  regard,  the  high-level  groups,  under  the  TEN-E  Regulation,  strategically  coordinate 
and oversee joint implementation of cross-border Projects of Common Interest (PCIs).  

The sectoral European coordination groups (for electricity, gas and oil) have met regularly 
and  played  a  key  role  in  monitoring  security  of  supply,  exchanging  information  and 
coordinating measures, to be ready for all possible scenarios.  
Regarding the implementation of the security of supply rules for gas43, all Member States 
have put  in  place national  emergency plans to  prevent  or mitigate the impact  of gas supply 
in  concluding  bilateral  solidarity 
disruptions.  Member  States  have  made  progress 
arrangements.  In  the  electricity  sector,  the  implementation  of  the  Risk  Preparedness 
Regulation44  has  produced  the  first  set  of  national  risk-preparedness  plans.  Concerning  the 
security  of  the  oil  supply45,  18  Member  States  (including  two  Member  States  who  are  not 
members  of  International  Energy  Agency)  participated  in  collective  action  initiated  by  the 

40 https://op.europa.eu/en/publication-detail/-/publication/568cac02-5191-11ec-91ac-01aa75ed71a1/language-en  
41 See section 6 of SWD/2022/0101 final 
42 C/2022/2026, OJ C 182, 4.5.2022, p. 1–12 
43 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 
44 Regulation (EU) 2019/941 of the European Parliament and of the Council of 5 June 2019 on risk preparedness in the 
electricity sector 
45 Council Directive 2009/119/EC of 14 September 2009 imposing an obligation on Member States to maintain minimum 
stocks of crude oil and/or petroleum products 

16 

 
 
                                                           
Agency  on  1  March  and  1  April,  to  make  emergency  oil  stock  available.  In  June,  the 
Commission issued a Recommendation46 for Member States not to replenish the emergency 
stocks to the level required by the Oil Stocks Directive at least until 1st November, to avoid 
putting additional stress on the oil market.  

The  future  energy  system  will  require  more  flexibility  tools,  such  as  demand  response  or 
energy storage. The Commission has been working on identifying key EU actions to support 
the development of future-proof energy storage as a key flexibility tool.  
As a follow-up to the study47 published in October 2021, the Commission has been closely 
monitoring potential bottlenecks in the raw materials supply chains for energy technologies 
that are critical for energy security and the clean energy transition. 

3.4. Internal energy market 

Against  the  background  of  drastically  rising  energy  prices,  the  European  Commission  had 
tasked  the  European  Union  Agency  for  the  Cooperation  of  Energy  Regulators  (ACER) 
with  assessing  the  benefits  and  drawbacks  of  the  EU’s  current  wholesale  electricity 
market  design.  In  April  202248  ACER  concluded  that  the  current  energy  crisis  is  in 
essence a gas price shock, which also impacts electricity prices.   

ACER also concluded that, over the last decade, cross-border trade and the major efforts 
undertaken to further integrate electricity markets in Europe have delivered significant 
benefits for consumers. These are estimated to amount to around EUR 34 billion a year, by 
enabling cross-border trade between Member States and improving security of supply across 
a  larger  geographical  area.  ACER’s  report  highlights  that  those  benefits  have  materialised 
even  in  the  current  crisis,  when  an  integrated  market  has  helped  us  avoid  electricity 
curtailment or blackouts in certain regions.    

Market coupling, which means that electricity and the interconnector capacities to transport 
it can easily be traded on a common EU trading platform, has further improved, in both the 
day-ahead  and  the  intraday  markets.  The  day  ahead  market  coupling  has  been  successfully 
extended  to  all  borders  between  EU  Member  States.  To  further  optimise  the  use  of 
interconnectors,  the  Commission  is  working  towards  extending  market  coupling  to  the 
Energy Community. 

Against  the  background  of  drastically  increased  electricity  prices,  the  Commission  has 
published  a  Communication  on  Short-Term  Market  Interventions  and  Long-Term 
Improvements to Electricity Market Design49. Acknowledging that there may be scope for 
further  optimising  the  functioning  of  the  electricity  market  design,  the  Commission  has 
launched  an  impact  assessment  process  and  is  discussing  possible  improvements  with 
Member States. It is necessary to develop more resilient and efficient long-term markets, both 
to drive the energy transition and to better shield consumers and small businesses from price 
volatility.  This  process  will also  be used to  assess the REMIT framework50,  with  a view to 
mitigating the risks of market abuse more effectively by improving transparency, and market 
data quality and ensuring better enforcement where rules are breached.  

46 Commission Recommendation (EU) 2022/867 of 1 June 2022 on the release of emergency oil stocks by Member States 
following the invasion of Ukraine (OJ L 151, p. 72). 
47 Study on the resilience of critical supply chains for energy security and clean energy transition during and after the 
COVID-19 crisis’ ISBN 978-92-76-38453-3 
48 https://www.acer.europa.eu/events-and-engagement/news/press-release-acer-publishes-its-final-assessment-eu-wholesale  
49 COM(2022) 236 final of 18 May 2022 
50 Regulation  (EU) No 1227/2011 on Wholesale Energy Market Integrity and Transparency 

17 

 
 
                                                           
Efforts to optimise the functioning of the electricity market design should not slow down 
efforts  to  implement  the  existing  framework51.  This  includes,  improving  consumers’  rights;  
working  towards  the  target  that  in  2025  at  least  70%  of    interconnector  capacities  are 
available  for  trade;  structuring  the  market  so  that  it  provides  the  right  signals  to  where 
investment is needed; identifying and eliminating regulatory distortions and market failures, 
and fostering demand-side response and storage.  

To reduce the need for capacity mechanisms, the huge potential of demand side flexibility 
needs to be better used. The Commission therefore called on ACER to do preparatory work 
for developing a network code on demand side flexibility.  

In  the  current  geopolitical  situation,  the  liquid  and  competitively  organised  internal  gas 
market  has  played  an  important  role  in  attracting  gas  to  Europe.  We  also  witness  gas 
flowing from Western to Eastern Europe at maximum capacity these days, showing that price 
signals and the increasingly interconnected gas markets which Europe has developed over the 
last decade are helping to distribute gas supplies where most needed.   

3.5. Research & innovation and competitiveness 

The EU is facing technological and non-technological challenges related to high energy 
prices,  critical  raw  materials  supply  chain  disruptions,  natural  resources  stress  (e.g. 
land and water) and skills shortages. As half of the 30 critical raw materials listed by the 
EU  are  imported  in  proportions  above  80%  in  volume,  surging  prices52  are  affecting  the 
competitiveness  of  clean  energy  technologies.  Over  70%  of  EU  businesses  involved  in 
manufacturing  the  equipment  have  faced  materials  shortages  in  2022,  and  30%  have  also 
experienced labour shortages in 2022. These trends show the growing risk of  disruptions to 
the clean energy supply chain. 

To make EU clean energy sector more competitive, the EU will have to secure supplies and 
build  up  strategic  reserves  where  supply  is  at  risk.  For  this  reason,  the  Commission 
announced  a  European  Critical  Raw  Materials  Act53,  which  will  also  identify  strategic 
projects all along the supply chain (extraction, refining, processing and recycling) and ensure 
that these project attract private and public investments.  

Reducing  the  EU’s  dependency  on  raw  materials,  making  more  efforts  on  the  circular 
economy,  and  overcoming  the  shortage  of  skilled  workforce  will  shape  the  more  resilient, 
independent,  secure  and  affordable  energy  system  needed  to  deliver  the  REPowerEU  Plan. 
Considering  that  about  half  of  the  greenhouse  gas  emissions  reductions  expected  by  2050 
require  technologies  which  are  not  yet  ready  for  the  market54,  Research  and  Innovation 
(R&I) activities are crucial to deliver on the European Green Deal objectives.  

The  EU  is  at  the  forefront  of  clean  energy  research.  However,  more  public  and  private 
investments in R&I, and scaling up and deployment activities are needed.  In 2022 the EU 
has confirmed its leading position in the global wind sector R&I, as well as its position as 
one of the largest markets for PV, where competition remains fierce in several segments of 
the  value  chain.  The  EU  is  also  at  a  crossroads  for  several  technologies.  For  example,  the 
Heat  Pumps  sector  will  have  to  accelerate  its  already  fast-growing  deployment  and  EU 
suppliers  will  have  to  ramp  up  production.  On  batteries,  despite  initiatives  which  are 

51 Notably Regulation (EU) 2019/943 and Directive (EU) 2019/944 
52 Prices of lithium and cobalt more than doubled in 2021. 
53 As announced in the 2022 State of the Union address on 14 September 2022. 
54  European Commission, Directorate-General for Research and Innovation, Research and innovation to REPower the EU, 
Publications Office of the European Union, 2022, https://data.europa.eu/doi/10.2777/74947. 

18 

 
 
                                                           
underway55,  the  lack  of  EU  domestic  raw  materials  and  advanced  materials  productions 
represent a challenge for the EU competitiveness. Even though the EU can rely on its strong 
comprehensive approach to pull demand and supply, surge in electricity prices and reliance 
on critical raw materials are also main challenges for the EU hydrogen production through 
electrolysis.  

A  stronger  R&I  ecosystem  supported  by  the  EU  funding  programmes,  enhanced 
cooperation  between  Member  States45,  and  a  continuous  monitoring  of  national  R&I 
activities, are crucial in order to define a successful R&I pathway, to bridge the gap between 
research and innovation and market uptake, exploit the opportunities of the EU clean energy 
technologies and reinforce EU competitiveness.   

4. EU FINANCING FOR REPOWEREU, ACCELERATING THE CLEAN ENERGY 
TRANSITION AND THE EUROPEAN GREEN DEAL 

4.1. Main investment needs and available EU financing for REPowerEU 

According to the Commission investment needs analysis56, implementing the full potential 
to reduce dependence on Russian fossil fuel imports to zero would require EUR 300 billion, 
from  now  until  2030.  This  investment  needs  to  complement  the  Fit-for-55  proposals  and 
include57: solar photovoltaic and wind (EUR 86bn), renewable hydrogen (EUR 27bn), energy 
efficiency and heat pumps (EUR 56bn), adapting industry to use less fossil fuels (EUR 41bn), 
increasing biomethane production (EUR 37bn), investing in the power grid to enable greater 
electrification (EUR 29bn), investment in new LNG infrastructure and gas pipeline corridors 
(EUR 10bn), and oil infrastructure necessary to ensure security of oil supply (EUR 1.5-2bn).  

The Recovery and Resilience Facility (RRF) will play a critical role in addressing these 
needs  via  different  measures,  including  the  REPowerEU  chapters,  as  part  of  the  national 
Recovery and Resilience Plans (RRPs).  Both REPowerEU and the REPowerEU chapters in 
the national RRPs should be also reflected in the update of the National Energy and Climate 
Plans  (NECPs)  (to  be  submitted  by  mid-2023).  The  Commission  will  provide  guidance  on 
these  updates.  The  Commission  proposed  additional  funds  for  the  RRF,  and  has  initiated 
bilateral  discussions  with  Member  States  to  identify  reforms  and  investments  that  could 
potentially be eligible for financing under the new REPowerEU chapters.  

When preparing their REPowerEU chapters, Member States will need to take into account the 
Country  Specific  Recommendations  (CSR)  identified  in  the  European  Semester 
exercise,  which  this  year  included  energy-specific  CSRs  focusing,  in  particular,  on 
additional  reform  and  investment  needs  related  to  the  need  to  reduce  energy  dependencies 
and to accelerate the energy transition. The European Semester framework will play a central 
role in monitoring the REPowerEU measures. The REPowerEU objectives are supported by 
the  clean  energy  transition,  and  will  also  be  financed  from  other  EU  programmes,  and 
supported  via  several  EU  initiatives  (see  Section  4.2).  The  EU  funding  complements  other 
available public and private financing, which will play a key role in delivering the investment 
needed for REPowerEU. 

4.2. EU financial support for clean energy transition 

EU support for clean energy transition is provided through various programmes: 

55 E.g. the European Batteries Alliance and Important Projects of Common European Interest (IPCEI). 

56 (SWD(2022) 230 final) of 18 May 2022 
57 Estimated values obtained by the modelling investment needs analysis 

19 

 
 
                                                           
  Recovery  and  Resilience  Facility:  the  climate-related  investment  in  the  26  approved 
RRPs58 are  approximately EUR  200 billion59, above the 37% obligation set  by the RRF 
Regulation.60 The largest part of the climate investments allocation is dedicated to clean 
energy, energy efficiency and building renovation measures (around EUR 88bn). Another 
significant part is dedicated to sustainable transport (around EUR 70bn). Approximately 
EUR 10 billion is allocated for renewable and low-carbon hydrogen. 

  Cohesion policy also provides significant support to energy efficiency, renewable energy 
and energy infrastructure. During 2014-20, EUR 27.5 billion was allocated for investment 
recognised  as  a  priority  under  REPowerEU.  For  2021-27,  the  Commission  expects 
Member States will allocate further EUR 34-36 billion to such priorities. In June 2022 a 
new  model  financial  instrument  to  support  the  REPowerEU  was  prepared  with  the 
European Investment Bank (EIB). 

  InvestEU  programme:  By  July  2022,  already  around  EUR  1.6  billion  of  the  EU 
guarantee  under  the  “Sustainable  Infrastructure  Window”  was  allocated,  including  for 
investment  in  solar  photovoltaic,  wind  energy  and  energy  efficiency.  Key  initiatives 
under the InvestEU Advisory Hub,  cover the areas of energy efficiency and hydrogen:  
o  Since  2011,  the  ELENA  facility  supports  the  development  of  energy  efficiency  and 
clean mobility projects. With a leverage factor of 33, it has an impressive capacity to 
attract (‘crowd-in’) private financing. In 2021, EUR 35.8 million was allocated to 18 
new projects. These are expected to generate around 500 GWh of energy savings per 
year.  

o  The  Commission  is  cooperating  with  the  EIB  to  develop  an  advisory  facility 
supporting  the  renewable  power  purchase  agreement  projects,  including  to  support 
hydrogen uptake and electrification in industrial sectors. 

  The  Horizon  Europe  programme  allocated  EUR  15  billion  to  support  research  and 
innovation in renewable energy technologies, energy efficiency, electrification of heating 
and cooling and digitalisation of the energy system. 

  CEF Energy is financing the better interconnection of energy networks towards a single 
EU  energy  market  and  the  clean  energy  transition.  Since  2014  CEF  Energy  had 
supported 154 projects with a total of EUR 5.7 billion. In March 2022, the Commission 
launched the first CEF call for renewable energy cross-border projects. In May 2022, the 
Commission launched a new call for key cross-border energy infrastructure projects for 
projects included in the 5th EU list of Projects of Common Interest. 

  LIFE Clean Energy Transition (CET): in May 2022, the LIFE CET Call for proposals 
was published, making available EUR 98 million for energy efficiency and clean energy 
projects.  This  Call  covers  REPowerEU  objectives,  such  as  reduction  in  fossil  fuel 
consumption  for  heating  and  accelerated  deployment  of  energy  efficiency  solutions  in 
housing, businesses and public sector. 
In 2022, the first ever cross-border tender will take place under the Renewable Energy 
Financing  Mechanism.  The  tender  will  focus  on  solar  photovoltaic  projects.  The 
mechanism will help unlock the EU’s full renewable potential, and help Member States 
achieve the decarbonisation objective in a more cooperative manner.  

 

58 AT, BG, BE, CY, CZ, DE, DK, EE, EL, ES, FI, FR, HR, IE, IT, LT, LU, LV, MT, NL, PL, PT, RO, SE, SI, SK 
59 The expenditures reported for the RRF are estimates produced by the Commission, based on the information on climate 
tracking published as part of the Commission’s analyses of the recovery and resilience plans. The data reported cover the 25 
national  recovery  and  resilience  plans  that  had  been  assessed  and  approved  by  the  Commission  by  17  June  2022.  See: 
https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility/recovery-and-
resilience-plans-assessments_en 
60 In line with conditions in the annexes to the Council implementing decisions approving national RRPs.  

20 

 
 
                                                           
  Carbon  prices  increased  during  2021,  and  so  did  the  total  revenues  from  the  EU  ETS, 
amounting  to  about  EUR  31  billion  in  total.  This  money  will  support  the  Innovation 
Fund and the Modernisation Fund.   

  The  Common  Agricultural  Policy  (CAP)  also  supports  energy  efficiency,  renewable 
energy  and  energy  infrastructure  through  the  European  Agricultural  Fund  for  Rural 
Development (EAFRD). Depending on the needs identified and the strategy developed 
in  the current  Rural  Development  Programmes or future CAP  Strategic Plans, Member 
States have the possibility to support investments in the production of renewable energy 
or  in  the  improvement  of  energy  efficiency  for  agricultural  holdings  but  also  for  rural 
businesses. 

The  Commission  also  supports  the  Member  States  through  the  Technical  Support 
Instrument,  providing  tailor-made  technical  expertise  to  design  and  implement  reforms, 
including  on  the  clean  energy  transition.  In  particular,  the  Commission  is  helping  Member 
States to identify reforms and investments to phase out fossil fuel imports from Russia. 

Active  EU  initiatives  play  an  important  role  in  mobilising  financing  for  the  clean  energy 
transition: These include:  

 

 

 

the  Sustainable  Energy  Investment  Forums  initiative  -  a  highly  successful  initiative 
facilitating dialogue between public and private stakeholders, aiming to mobilise private 
financing for energy efficiency and sustainable energy investments; 
the Energy Efficiency Financial Institutions Group, whose key mission is to identify 
barriers to energy efficiency financing and to provide recommendations to policymaking 
bodies and financial institutions on how to address them;  
the Investors Dialogue on Energy, launched in 2022 as a stakeholder platform bringing 
energy  and  financial  experts  together  to  identify  investment  barriers  for  the  energy 
sector, assess financing policies and instruments, and propose relevant solutions. 

Climate mainstreaming 

At  least  30%  of  the  EU  budget  for  2021-2027  is  allocated  to  climate  (up  from  20%  in 
2014-2020).  Specific  programmes  have  30%  or  higher  climate  spending  targets  -  European 
Regional  Development  Fund  (30%),  Horizon  Europe  (35%),  Cohesion  Fund  (37%),  RRF 
(37%), Connecting Europe Facility (60%), LIFE (61%) and the Just Transition Fund (100%). 
In 2021, Member States RRPs earmarked 40% for climate investment, well beyond the 37% 
regulatory obligation. 

4.3. Energy subsidies in the EU 

Energy  markets  underwent  unexpected  and  sudden  developments  over  the  last  two  years, 
which have had a significant impact on the consumption and prices of energy products, amid 
COVID-related lockdowns, the post-pandemic recovery and the current period of extremely 
high and volatile energy prices. The energy subsidies report61 to be published in October will 
(i)  present  the  final,  more  precise  numbers  on  the  evolution  of  energy  subsidies  during 
COVID-stricken  2020,  and  (ii)  make  estimates  for  the  impact  of  the  global  economic 
recovery and high energy prices on energy subsidies in 2021. 

61 Stemming from the Governance Regulation, the Commission reports every year on the evolution of energy subsidies, 
particularly fossil fuel subsidies in the Member States, and on what measures countries have undertaken to present a 
roadmap on their gradual phase-out. 

21 

 
 
                                                           
Fossil  fuel  subsidies,  after  falling  by  more  than  5%  in  2020  in  the  EU,  owing  to 
lockdowns and travel restrictions for people and business, remained fairly stable in 2021, as 
the increase in transport and industry was compensated by the decreasing in fossil subsidies 
in the energy sector. Subsidies on oil products, especially in the transport sector, fell by 12% 
in 2020, whereas subsidies on coal were up 7% amid a slight decrease in  gas subsidies (by 
2%) year-on-year, being affected by their role in power generation. In 2021 subsidies on oil, 
coal and gas showed a slight increase, and the subsidy to fossil fuel electricity generation 
fell.  Since  autumn  2021,  in  parallel  with  increasing  energy  prices  in  European  markets, 
several  EU  Member  States  have  taken  measures  to  alleviate  the  impact  of  energy  bills  on 
citizens and businesses, which have resulted in larger subsidies for energy consumption. 

Subsidies on renewable energy were up 7% in 2020, as long-standing support schemes still 
had a measurable impact, but they fell back slightly in 2021. Energy efficiency subsidies fell 
in 2020, but rebounded in 2021. A further rise in subsidies was observed for nuclear energy, 
on account of payments for the early closure of nuclear power plants in two Member States. 

Figure  5.  Fossil  fuel  subsidies  in  different  sectors  in  the  EU.  Source:  Study  on  energy  subsidies  and  other 
government interventions in the European Union 2022. 

22 

 
 
 
Annex I - Actions taken in view of the rising energy prices since October 2021 

1.  Energy prices toolbox, 13 Oct 2021 

  Support consumers including through emergency income support for energy-poor 

consumers; temporary, targeted reductions in taxation rates for vulnerable 
households; authorisation of temporary deferrals of bill payments; putting in place 
safeguards to avoid disconnections from the grid; 

  Provide aid to companies or industries, in line with EU state aid rules; 
  Enhance international energy outreach to ensure the transparency, liquidity and 

flexibility of international markets; 

  Investigate possible anti-competitive behaviour in the energy market and enhance 

monitoring of developments in the carbon market; 

  Facilitate a wider access to renewable power purchase agreements and support 

them via flanking measures. 

2.  REPowerEU Communication, 8 March 2022 

  Consumers: Guidance confirming the possibility to regulate prices in exceptional 
circumstances, and setting out how Member States can redistribute revenue from 
high energy sector profits and emissions trading to consumers; 

  State aid rules: Commission consultation with Member States on the needs for and 
scope of a new State aid Temporary Crisis Framework to grant aid to companies 
affected by the crisis, in particular those facing high energy costs; 

  Announces a legislative proposal for the Gas Storage Regulation, the RePowerEU 

Plan, and assesses options to optimise electricity market design. 

23 

 
 
 
 
  
3.  Gas storage regulation proposal, 23 March 2022 

  Legislative proposal introducing a minimum 80% gas storage level obligation for 

next winter; 

  Communication setting out the options for market intervention at European and 

national level, and assessing the benefits and limitations of each option; 

  Regulation adopted by EP and Council 27 June. 

4.  EU Energy Platform, 7 April 2022 

  Voluntary participation of Member States for joint purchasing of gas to ensure more 

equal access across EU Member States and support security of supply; 

  Establishment of an industry advisory group and five Regional Task Forces to 
help to get a better understanding of potential demand to be introduced to the joint 
purchasing mechanism. 

5.  REPowerEU Plan, 18 May 2022 

  Accelerating the roll-out of renewables:  

o  Increases the headline 2030 target for renewables from 40% to 45%; 
o  Recommendation to speed up permitting for major renewable projects;  
o  Targeted amendment to the Renewable Energy Directive to recognise 

renewable energy as an overriding public interest; 

o  EU Solar Strategy; 
o  Solar Rooftop Initiative; 
o  Doubling of the rate of deployment of heat pumps; 
o  Sets target of 10 million tonnes of domestic renewable hydrogen by 2030; 
o  Biomethane Action Plan. 

  Saving energy:  

o  Increases the binding 2030 Energy Efficiency Target from 9% to 13%; 
o  EU Save Energy Communication encourages strengthening of energy 

savings. 

  Diversifying energy supplies and supporting international partners: 

o  EU External Energy Strategy reinforces the EU’s engagement with 
international partners and strengthens its energy diplomacy ensuring 
diversification of energy supply and boosting the green and just energy 
transition. 

6.  Save Gas for a Safe Winter, 20 July 2022 

  Gas demand reduction regulation (proposal), 20 July 2022 

o  Sets a target for all Member States to reduce gas demand by 15% between 1 

August 2022 and 31 March 2023; 

o  Gives the Commission the possibility to declare, after consulting Member 
States, a ‘Union Alert' on security of supply, imposing a mandatory gas 
demand reduction on all Member States; 

o  Regulation based on 122 TFEU, and was adopted by Council 27 July. 

  Gas demand reduction plan, 20 July 2022 

24 

 
 
o  Sets out measures, principles and criteria for coordinated gas demand 

reduction; 

o  Provides guidelines for Member States to take into account when planning 

curtailment; 

o  Encourages substitution of gas with other fuels, preferably cleaner energy 

sources; 

o  Incentivises overall energy savings in all sectors. 

7.  Emergency market intervention on high electricity prices (proposal), 14 Sep 2022 

  Proposes that Member States aim to reduce overall electricity demand by at least 10% 

until 31 March 2023; 

  Sets a temporary revenue cap on inframarginal electricity producers; 
  Sets a temporary solidarity contribution on excess profits generated from activities 

in the oil, gas, coal and refinery sectors, redirected to energy consumers; 
  Allows below cost regulated electricity prices for the first time, and expand 

regulated prices to also cover small and medium-sized enterprises; 

  Regulation based on 122 TFEU, and was adopted by Council on 30 September. 

25