REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 2022 Report on Energy Subsidies in the EU
Date: 2022-11-15
Institutions: Directorate-General for Energy, European Commission
Subjects: EU aid, EU energy policy, carbon neutrality, coal, energy cooperation, energy market, energy transition, fossil fuel, natural gas, renewable energy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.11.2022  COM(2022) 642 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 2022 Report on Energy Subsidies in the EU  
 
 
Commission Report linked to the State of the Energy Union – Energy subsidies in the 
EU 

1.  Introduction and main findings 

This  is  the third annual report on monitoring  Member States’ progress  towards phasing out 
energy subsidies – and more specifically fossil-fuel subsidies– in the EU. Phasing out these 
subsidies is a requirement under the Regulation on the Governance of the Energy Union and 
Climate Action1. This report builds on the two previous reports2 on subsidies annexed to the 
State of the Energy Union published by the European Commission in 2020 and 2021.  

The  first  two  reports  were  principally  based  on  direct  data  collections  from  national 
authorities and revealed some significant data gaps in the 2020 national energy and  climate 
plans (NECPs). However, the annual  continuity  of the data collection will contribute to  the 
improvement of data quality in the NECP progress reports due in 2023. 

The European Union has the target of reducing its GHG emissions by 2030 by at least 55% 
compared to 1990 and to be climate neutral by 2050. This implies the need to end subsidising 
fossil fuels, while creating favourable conditions for energy efficiency and renewable sources 
of energy and taking into account the need of vulnerable customers in the energy transition. 

In  November  2021,  the  Glasgow  Climate  Pact3  called  for  ‘accelerating  efforts  towards  the 
phasedown  of  unabated  coal  power  and  phase-out  of  inefficient  fossil-fuel  subsidies,  while 
providing  targeted  support  to  the  poorest  and  most  vulnerable  in  line  with  national 
circumstances and recognizing the need for support towards a just transition’4. 

The Russian military aggression in Ukraine has resulted in new short-term policy actions in 
the European Union. The REPowerEU communication in March and the REPowerEU plan5 
in  May  2022  mostly  strengthened  the  objectives  of  the  clean  transition,  laid  down  in  the 
European Green Deal and enshrined in the EU Climate Law. However, with the phasing-out 
of fossil-fuel imports from Russia, changes in subsidies for fossil-fuel energy will probably 
be  more  significant  in  the  future.  National  action  to  bring  coal-based  and  oil-based  power 
generation back online will also have a temporary impact. 

A  Commission  Sustainable  Finance  Taxonomy  Delegated  Regulation6  was  also  adopted  in 
June  2021.  This  set  the  technical  screening  criteria  for  determining  the  conditions  under 
which  an  economic  activity  qualifies  as  contributing  substantially  to  climate-change 
mitigation or climate-change adaptation, while ensuring that the respective economic activity 
causes  no  significant  harm  to  any  of  the  EU’s  other  environmental  objectives.  This  was 
complemented  by  an  additional  delegated  regulation,  adopted  in  March  20227,  covering  a 
number  of  economic  activities  in  certain  energy  sectors,  namely  certain  natural  gas  and 
nuclear energy-related activities. 

1 Article 35, point n of the Regulation on the Governance of the Energy Union (2018/1999/EU), hereinafter: the Governance Regulation. 
2 https://ec.europa.eu/energy/sites/default/files/annex_to_the_state_of_the_energy_union_report_on_energy_subsidies_in_the_eu.pdf, 
hereinafter: previous Commission studies on subsidies (2020 and 2021). 
3 https://unfccc.int/sites/default/files/resource/cma2021_10_add1_adv.pdf.  
4  Furthermore,  Council  Recommendation  on  ensuring  a  fair  transition  towards  climate  neutrality  (2022/C  243/04)  stresses  that  ‘the 
composition of tax-benefit systems and social protection systems should be examined against the specific needs stemming from the green 
transition,  reflecting  also  the  ‘polluter  pays  principle’  and  the  need  that  accompanying  policies  do  not  introduce  subsidies  to  fossil  fuels 
consumption, do  not  lock in  consumers  to  a  specific  technology,  do  not decrease  incentives  for  building  renovations  and  thermal  energy 
system substitutions and do not decrease incentives within general energy efficiency measures.’ 
5 https://ec.europa.eu/commission/presscorner/detail/en/IP_22_3131. 
6 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32021R2139&from=EN.  
7 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R1214&from=EN. 

1 

 
 
                                                           
For the preparation of the current report, the Commission conducted a study8 to gather data 
from Member States and expand and/or correct earlier datasets which contained incomplete 
results from 2020 and 20219. When the Commission study was completed (July 2022), 2021 
data were not  complete  and  were therefore subject  to  significant  estimates. For this reason, 
2021  numbers  should  be  treated  cautiously  in  the  current  report10.  To  ensure  good  data 
quality, Member States were asked to cross-check the new database. The Commission study 
has  also  carried  out  an  initial  stocktaking  of  how  energy  subsidies  relate  to  the  taxonomy 
criteria. 

The  results  of  this  study  confirm  that  a  significant  –  albeit  slightly  decreasing  –  amount  of 
subsidies  was  spent  on  fossil-fuel  energy  in  recent  years.  This  means  that  the  EU  and  its 
Member States must step up their efforts to meet their international commitments on fossil-
fuel subsidies and achieve climate neutrality by 2050. In 2020, overall energy subsidies in the 
EU  reached  EUR 173  billion,  rising  by  7%,  or  EUR 14  billion,  between  2015  and  2020. 
Subsidies  for  renewables  rose  by  15%,  reaching  EUR  81  billion  in  2020,  and  energy-
efficiency  subsidies  increased  by  20%  (EUR  15  billion  in  2020)  in  the  same  2015-2020 
period  –  a  favourable  development  that  will  help  the  EU  to  attain  its  objectives  for  clean-
energy transition. 

In  2021,  total  subsidies  for  all  types  of  energy  (fossil  fuels,  nuclear  and  renewables) 
continued  to  rise.  This  was  due  to  increasing  demand  for  energy  as  the  economic  recovery 
continued  following  2020,  a  year  characterised  by  COVID-19  related  restrictions.  As  data 
estimates from 2021 show, total energy subsidies rose by EUR 11 billion in 2021 compared 
to 2020, reaching EUR 184 billion. Of these energy subsidies, subsidies for energy demand11 
reached  EUR  65  billion  in  2021,  around  EUR  8  billion  higher  (+14%)  than  in  2020  and 
subsidies for energy efficiency reached EUR 19 billion, around EUR 3 billion higher (+29%) 
than in 2020. At the same time, subsidies for renewables fell by almost EUR 3 billion (-3.5%) 
compared  to  the  previous  year  (falling  to  EUR  78  billion  in  2021),  owing  to  increasing 
wholesale electricity prices, implying lower feed-in premia. 

Fossil-fuel  subsidies,  reaching  EUR 50 billion  in  2020,  fell  by  1.5%  (or  -EUR  0.7  billion) 
between 2015 and 2020, as the result of: (i) a decrease in non-fuel-specific subsidies (-EUR 
1.4 billion); (ii) a fall in coal subsidies (-EUR 0.9 billion); (iii) a rise in gas subsidies (+EUR 
0.5  billion);  and  (iv)  a  rise  in  subsidies  for  oil  and  petroleum  products  (+EUR  1.2  billion). 
Fossil-fuel  subsidies  decreased  in  most  Member  States  in  this  period.  However,  in  a  few 
countries,  like  Belgium,  Bulgaria,  Finland,  France,  the  Netherlands,  Poland  and  Slovakia, 
fossil-fuel  subsidies  rose  significantly  between  2015  and  2020.  At  EU  level,  the  share  of 
fossil-fuel subsidies within the GDP remained practically unchanged between 2015 and 2020. 

In the transport sector, fossil-fuel subsidies (primarily on oil products) increased dramatically 
(by 29%, or EUR 3.1 billion) between 2015 and 2019 and fell back by EUR 3 billion in 2020. 

8  Study  on  energy  subsidies  and  other  government  interventions  in  the  EU  –  2022  edition,  hereinafter  ‘the  Commission  study’ 

https://op.europa.eu/en/publication-detail/-/publication/34a55767-55a1-11ed-92ed-01aa75ed71a1  

 9 Due to both re-assessment of the subsidy inventory for the earlier years, and the change in the monetary basis (‘expressed in 2021 euros’ 
in the current report) total amounts on the charts of this report may differ from the last energy-subsidy report published in 2021 or earlier. 
10 For some subsidy items, if 2021 values were not available, 2020 values were taken as an estimate for 2021. In most cases, 2021 data are 
referred to in this report. However, if only 2020 data are robust enough for the analysis, they are taken as being the latest dataset available. 
11 Subsidies related to energy demand incentivise energy consumption in various economic sectors, for example via: (i) tax reductions or 
refunds  on  energy  consumption;  (ii)  regulated  prices  in  certain  sectors;  and  (iii)  direct  payments  aiming  at  alleviating  consumer  burdens 
stemming  from  energy  costs.  Some  energy-demand  subsidies  have  social  implications,  going  beyond  purely  economic  considerations.  In 
times of high energy prices, especially vulnerable consumers should be taken into consideration in policy decisions on subsidies. 

2 

 
 
                                                           
 
In  2021,  even  amid  the  increase  in  transport  activities  following  the  end  of  COVID-19 
restrictions,  fossil-fuel  subsidies  remained  stable  overall  compared  to  2020  as  fossil-fuel 
subsidies fell in other sectors of the economy, for example in the energy sector. 

Fossil-fuel  subsidies  in  agriculture  also  increased  (by  13%,  or  +EUR  0.7  billion)  between 
2015 and 2020, overwhelmingly in the form of  fuel consumption support (e.g. reduction or 
exemption of fuel taxes). 

Fossil-fuel subsidies for households increased by 15% (EUR 0.4 billion) in the same period, 
principally  in  the  form  of  subsidies  for  heating-oil  and  natural-gas  consumption.  In  2021, 
fossil-fuel subsidies for households continued to increase from their 2020 levels. 

Subsidies for natural gas grew by 6% (EUR 0.5 billion) between 2015 and 2020, representing 
around 19% of fossil-fuel subsidies, and in 2021 they rose further by an estimated EUR 0.7 
billion (+10%) compared to 2020. Subsidies on coal and lignite, representing 18% of the total 
fossil  fuel  subsidies,  fell  by  9%  (-EUR  0.9  billion)  in  the  EU  between  2015  and  2020,  but 
rebounded by an estimated 6% (EUR 0.6 billion) in 2021. 

In the  coming  years, bearing in  mind the probable impact  of greater  coal  use, subsidies  for 
coal might increase in the energy sector. And the expected fall in gas use over the medium-
to-long term points to decreasing gas subsidies in the future, even though high gas prices at 
present might point to increasing gas subsidies in the short term. Subsidies for nuclear energy 
in the form of compensation for early closure and early decommissioning of nuclear facilities 
(mainly  in  Germany and France) rose  further in  2021  due to  planned shutdowns. Subsidies 
for  renewables  will  strongly  depend  on  wholesale  energy  prices,  but  we  can  expect  higher 
prices to imply lower subsidies via feed-in premia or contracts for difference12. 

2.  Energy subsidies and fossil-fuel subsidies in the EU 

2.1. Energy subsidies in the EU 

Subsidies in this report are defined following the methodology set forth by the World Trade 
Organization  (WTO)13,  which  was  used  in  the  supporting  Commission  study14  and  the 
previous  two  energy-subsidy  reports  (2020  and  2021).  This  methodology  groups  subsidies 
into  four  categories:  (i)  government  measures  involving  the  direct  transfer  of  funds;  (ii) 
government  revenue  that  is  otherwise  foregone  (not  collected);  (iii)  governments  providing 
goods and services or purchasing goods; and (iv) price and income supports. 

In this  report, energy subsidies  are also  examined from  different  perspectives, for example: 
(i)  by  the  goal  they  seek  to  promote  (production,  consumption/demand,  infrastructure  or 
energy  efficiency);  (ii)  by  fuel  type  (fossil  fuels,  renewables,  nuclear);  (iii)  by  economic 
sectors (the energy sector, transport, industry, agriculture15, residential, services, etc.); or (iv) 
by  the  types  of  instrument  used  to  impose  subsidies  (tax  reliefs,  grants,  price  supports, 
income supports, etc.). 

12 For more information on concepts, definitions, purposes, sectors, instruments, fuel types, etc. see Annex 5 of the Commission study.  
13 World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures. 
https://www.wto.org/english/tratop_e/scm_e/scm_e.htm.  
14 See more on energy-subsidy methodology in the Commission study. 
15 In the current report also including subsidies for fishing. 

3 

 
 
                                                           
Looking  at  changes  in  energy  subsidies  in  the  EU,  total  financial  support  amounted  to 
EUR 173  billion  in  2020,  up  by  7%  (+  EUR  14  billion)  since  2015.  Subsidies  for  energy 
production  grew  by  11%  (+EUR  9  billion)  during  the  same  period,  principally  owing  to 
subsidies for the generation of renewable energy (EUR 81 billion in 2020), whereas subsidies 
for  energy-efficiency  measures  were  up  by  20%  (+EUR  2.5  billion  in  the  same  period, 
reaching EUR 15 billion in 2020). 

The  improving  pandemic  situation  and  permanent  easing  of  containment  measures  in  2021 
allowed the EU economy a chance to recover. In that year, the EU economy recovered faster 
than  initially  expected,  a  recovery  which  also  upwardly  impacted  energy  consumption  and 
subsidies  on  energy  products.  As  estimated  data  show,  energy  subsidies  in  the  EU  rose  to 
EUR 184 billion in 2021 (up by EUR 12 billion, or 7% compared to 2020). Subsidies related 
to  energy  demand16  rose  by  14%  (+EUR  8  billion)  in  2021  compared  to  2020,  principally 
owing to increasing energy consumption amid economic recovery. This showed that the fall 
in energy-demand subsidies in 2020 was only temporary. The impact of measures taken by 
Member States starting in the second half of 2021 to support businesses and the public – even 
if  only  temporarily  –  amid  high  energy  prices  can  already  be  seen  in  increasing  energy-
demand-related subsidies for this time. However, it will only be possibly to quantify precise 
details in the next edition of the energy subsidies report. 

Subsidies for energy-efficiency measures, after a temporary fall in 2020, rose again in 2021, 
reaching EUR 19 billion. This amounted to a 54% increase (+EUR 6.5 billion) compared to 
2015.  Furthermore,  the  estimated  amount  of  subsidies  for  industry  restructuring  rose  to 
EUR 4.6  billion  in  2021  (up  from  EUR 2.3-2.4  billion  in  each  of  the  previous  2  years), 
principally owing to increased financial support for the decommissioning of coal and lignite 
mines  and  related  economic  transformation  measures.  However,  subsidies  for  energy 
production  fell  by  5%  (-EUR 5 billion),  as  subsidies  on  renewables  (principally  solar)  fell 
substantially  amid  higher  wholesale  electricity-market  prices,  which  impacted  feed-in-
premium and contract-for-difference types of support schemes. 

Figure 1 – EU energy subsidies by purpose 

16 Subsidies related to energy demand incentivise energy consumption in various economic sectors, for example via: (i) tax reductions or 
refunds  on  energy  consumption;  (ii)  regulated  prices  in  certain  sectors;  and  (iii)  direct  payments  aiming  at  alleviating  consumer  burdens 
stemming  from  energy  costs.  Some  energy-demand  subsidies  have  social  implications,  going  beyond  purely  economic  considerations.  In 
times of high energy prices, especially vulnerable consumers should be taken into consideration in policy decisions on subsidies. 

4 

 
 
 
                                                           
Source: Study on energy subsidies and other government interventions in the European Union  – 2022 edition. Throughout 
this  document,  sphered  stack  bars  show  that  these  2021  data  are  based  on  estimations,  and  each  category  should  be 
interpreted as adding a sphered bar (estimations) to the filled bar (factual data) to compare with earlier years. 

As  an  indicator  of  the  energy-subsidy  intensity  of  the  economy,  energy  subsidies  in 
comparison to GDP in EU Member States can be used to make cross-country comparisons. 
This  is  because  absolute  subsidy  values  also  depend  on  the  size  of  a  given  country’s 
economy.  In  2020,  energy  subsidies  in  comparison  to  GDP  varied  significantly  across 
Member States, ranging from 2.9% of GDP in Latvia to only 0.3% of GDP in Luxembourg. 
Energy subsidies as a percentage of GDP in the EU amounted to 1.2% in 2020 on average, 
showing a high degree of stability in  2015-2020  in  the EU  in  general  and in  most Member 
States as well. 

The analysis also shows that different countries use subsidies to support different policies and 
measures, and that these different policies and measures  impact the objectives for the EU’s 
clean-energy transition differently. For example, Latvia spent 2% of its GDP on subsidies for 
energy-efficiency measures in 202017 (and 0.4% of its GDP on both fossil fuel and renewable 
subsidies),  while  Germany,  Italy  and  Greece  spent  around  1%  of  their  GDP  on  subsidising 
renewables. Germany and Italy respectively spent 0.4% and 0.3% of their GDP on fossil fuel 
subsidies.  

At the same time, other countries still tend to spend more on fossil fuels18 than on measures 
incentivising  the  clean-energy  transition.  In  2020,  Cyprus  spent  about  1.3%  of  its  GDP  on 
subsidising fossil fuels (and only 0.2% on renewable subsidies), and in Greece and Belgium 
this  share  was  close  to  1%,  discouraging  the  clean-energy  transition.  Nevertheless,  these 
latter two countries respectively spent 0.9% and 0.5% of their GDP on renewables. In 2021, 
energy subsidies as a percentage of GDP remained stable (or decreased slightly compared to 
2020) in most EU Member States. 

Figure 2 - Subsidies for different energy sources, as a percentage of GDP in 2015 and 2020, and in billion 
euros in 2020 

17 These measures were principally linked to European Regional Development Fund (ERDF) programmes in the 2014-2020 period, aiming 
at shifting to low-carbon developments in all economic sectors. As of 2021, preliminary data showed that these ERDF measures had ended, 
bringing down the overall subsidy amount. 
18 Overall, most fossil-fuel subsidies still aim at incentivising consumption and/or energy production from such fuels, whereas the share of 
subsidies aiming at reducing reliance on fossil fuels is minimal. 

5 

 
 
  
                                                           
Source:  Study  on  energy  subsidies  and  other  government  interventions  in  the  European  Union  –  2022  edition.  Electricity 
refers  to  general,  non-technology-specific  support  for  electricity,  while  ‘All  energies’  represents  subsidies  not  directly 
attributable  to  energy  carriers  or  fuels  (e.g.  energy-efficiency  measures  and  energy-demand/consumption  incentives, 
irrespective  of  the  energy  carrier;  investment  grants;  and  particular  R&D  expenditures).  For  more  details,  see  the 
Commission study. 

Subsidies for renewable sources of energy, representing around 44% of the overall value of 
energy subsidies in recent years, grew by 7% (+EUR 5.5 billion) in 2020 compared to 2019. 
However,  in  2021  these  subsidies  decreased  by  3%  (-EUR  2.8  billion,  impacted  by  higher 
wholesale energy prices and consequently, lower feed-in premia or contract for differences), 
as estimated numbers show. On the other hand, fossil-fuel subsidies, which have accounted 
for 31% of the total value of energy subsidies in recent years, decreased by 5.5% (-EUR 2.9 
billion) in 2020 and remained practically stable in 2021. In 2021, in spite of a recovery in fuel 
consumption for transport, overall fossil-fuel subsidies did not increase as  they did in other 
sectors, such as energy. On the contrary, fossil-fuel subsidies for transport fell. 

Subsidies  on  electricity19  fell  slightly  between  2015  and  2020,  whereas  subsidies  for  ‘all 
energies’  (multiple energy sources or measures  not directly  attributable  to  energy products) 
rose from EUR 20 billion to EUR 26 billion (+30%). In 2021, both  subsidies on electricity 
and ‘all energies’ increased, implying an increase in tax expenditure on energy products that 
cannot be attributed to a given carrier (relating to support for energy demand). 

Subsidies  for  nuclear  energy,  after  being  stable  for  several  years  since  2015  (averaging  at 
EUR 4.2 billion),  reached  almost  EUR  5 billion  in  both  2019  and  2020.  However,  in  2021 
they rose further to EUR 7.2 billion, although even after this increase nuclear subsidies still 
only represented 4% of total energy subsidies in the EU. This increase was mainly linked to 
financial  instruments  to  compensate  for  the  early  closure  and  decommissioning  of  nuclear 
facilities,  principally  in  Germany  and  France.  Compensation  schemes  are  mainly  based  on 
paying  for  electricity  that  will  not  be  generated  (due  to  the  early  closure)  or  for  ‘stranded’ 
assets20. In Germany, compensation of EUR 2.4 billion was paid in November 2021, which 
substantially impacted the total amount of subsidies for nuclear energy in Europe.  

Figure 3 – EU energy subsidies by fuel type 

Source: Study on energy subsidies and other government interventions in the European Union – 2022 edition. ‘All energies’ 
represents subsidies not directly attributable to energy carriers or fuels (e.g. energy-efficiency measures, representing around 

19 Subsidy amounts for electricity use have been re-allocated to their energy-generation sources (e.g. fossil fuels, nuclear, renewables) based 

on the national energy balances. 

20 Stranded assets are assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities 

6 

 
 
 
                                                           
55% of ‘all energies in 2021’ and energy-demand/consumption incentives irrespective of the energy carrier; investment 
grants; and particular R&D expenditures). 

The  share  of  energy  subsidies  that  could  directly  be  linked  to  the  energy  sector21  (i.e.  the 
electricity-generation sector, coal miners, and oil and gas companies) was around 56-58% in 
2019  and  2020,  whereas  in  2021  this  fell  to  54%.  In  the  same  period,  the  share  of  energy 
subsidies paid to households showed an increasing trend, reaching around 12-13%, while the 
share of industry was just above 10%, and that of transport was slightly below 10%. Between 
2015  and  2020,  subsidies  rose  by  almost  EUR  10  billion  in  the  energy  sector  (+10%),  and 
non-sector-specific energy subsidies also increased by EUR 2.7 billion over the same period. 
At the same time, energy subsidies in the commercial sector fell by EUR 1 billion. 

In  2021,  energy  subsidies  paid  to  the  household  sector  increased  by  an  estimated 
EUR 5 billion  compared  (+26%)  to  2020,  as  high  energy  prices  induced  more  financial 
support from governments for households. In the industrial sector, energy subsidies increased 
by EUR 1.7 billion (+8%), whereas in the energy sector they fell by EUR 2.1 billion (-2%). 

Figure 4 – EU energy subsidies by economic sector 

Source: Study on energy subsidies and other government interventions in the European Union – 2022 edition 

The  overall  majority  (around  90%)  of  renewable  subsidies  in  the  EU  (EUR  81  billion  in 
2020) were in the energy sector. Around 38% of renewable subsidies could be linked to solar 
energy  in  2020,  whereas  wind  power  generation  accounted  for  around  27%  of  renewable-
energy subsidies, and the share for biomass was around 22%. This left only a small share for 
hydro,  geothermal  and  other  renewables  (13%).  In  2021,  the  share  of  solar  renewable 
subsidies  captured  by  solar  decreased  to  34%,  whereas  the  share  captured  by  wind  and 
biomass was around 24% each. 

The most significant renewable-energy subsidy instruments in the EU Member States are 
feed-in  tariffs22  (amounting  to  EUR  54  billion  or  67%  of  the  total  renewable  subsidies  in 
2020).  These  feed-in  tariffs  reflect  subsidies  stemming  from  long-term  contracts  mostly 
concluded more than a decade ago, as recent contracts no longer apply feed-in tariffs with the 
exception  of  some  small  producers.  Feed-in  premia  and  renewable  quotas  with  trading 
certificates accounted for less (respectively EUR 8 billion, or 10% and EUR 7 billion, or 8% 

21 For more information on definitions, purposes, sectors, instruments, fuel types, etc. see Annex 5 of the Commission study. 

22 More information on the concepts and the role of different instruments can be found in the Commission study 

7 

 
 
 
                                                           
in 2020). Tax-relief instruments (mainly in the form of tax reductions and exemptions) also 
contributed around EUR 6 billion (7%) to the total amount of renewable subsidies. 

Energy-efficiency subsidies in the EU increased between 2015 and 2019, whereas in  2020 
they  fell back slightly (falling by 6% to EUR 1 billion), reaching EUR 15 billion, although 
they  were  still  up  almost  20%  compared  to  2015.  In  2021,  energy-efficiency  subsidies 
rebounded,  reaching  an  estimated  EUR  19  billion  (+29%  compared  to  2020),  increasing 
particularly  in  households  (+EUR  1.3  billion)  and  in  industry  (+EUR  0.5 billion).  Grants 
were particularly significant, accounting for 39% of all energy-efficiency subsidies in 2020-
2021.  The  next  most  significant  categories  of  energy-efficiency  subsidy  were  tax 
expenditures  (30%),  soft  loans  (18%),  and  energy-efficiency  obligations  (13%).  In  2021, 
many  EU  Member  States  started  to  implement  recovery  plans23  that  became  a  significant 
source  of  energy-efficiency  investments.  The  increase  in  support  for  energy  efficiency 
between 2020 and 2021 has largely been driven by the building sector. 

Increasing  energy-efficiency  subsidies  is  aligned  with  the  ‘energy-efficiency  first’  principle 
of  EU  energy  policies,  and  these  subsidies  have  also  contributed  to  the  decreasing  energy 
intensity of the EU economy. Amid economic recession, EU GDP in 2020 showed only 2.6% 
growth compared to 2015, even though EU final energy consumption had fallen by 5% in the 
same  five-year  period,  implying  that  the  energy  intensity  of  the  EU  economy  decreased  by 
7.4% over this time. Although GDP grew by 5.3% in the EU in 2021, it is unlikely that the 
decreasing  trend  of  energy  intensity  reversed.  Further  shifts  from  subsidies  that  incentivise 
energy consumption towards subsidies for energy-efficiency measures could help to maintain 
this decreasing trend. 

Figure 5 – Energy-efficiency subsidies in the EU 

Source: Study on energy subsidies and other government interventions in the European Union – 2022 edition 

Looking at other sectors, households received around 11% of total energy subsidies in 2020 
allocated  to  all  economic  sectors.  More  than  half  of  subsidies  for  households  could  not 
directly  be  attributable  to  energy  carriers  (e.g.  subsidies  for  energy-efficiency  measures). 
Support  to  electricity,  and  fossil-fuel  (e.g.  heating  oil,  gas,  coal)  consumption  also 

23  The  national  recovery  and  resilience  plans  were  prepared  and  adopted  in  2021.  Their  impact  will  probably  be  felt  only  in  the  coming 

years. Beyond energy-efficiency spending, the RRPs allocate significant sums for other purposes, such as renewable energy. 

8 

 
 
 
                                                           
represented  significant  shares  (respectively  26%  and  17%)24.  For  industry,  most  of  the 
subsidies could directly be attributed to electricity, gas, oil products and renewables; whereas 
for the transport sector, subsidies were predominantly attributable to oil products. 

Price regulation on the consumer side (consumer price guarantees) declined in significance 
between  2015  and  2020.  However,  in  2021  the  cost  of  these  guarantees  rose  above 
EUR 5 billion  from  only  EUR  1.8  billion  in  2020,  probably  due  to  increasing  energy-price 
supports for households and industry, amid rising energy prices. At the same time, support on 
the  producer  side  (producer  price  guarantees,  such  as  purchase  agreements,  fuel-cost 
guarantees, etc.) remained in the range of EUR 4-5 billion over the past few years in the EU. 

Capacity-payment  subsidies  showed  a  high  degree  of  stability  in  2015-2020,  averaging 
around  EUR  2.1  billion  in  this  period  and  rising  to  an  estimated  EUR  2.6  billion  in  2021. 
Capacity mechanisms mostly paid for electricity generation from fossil fuels in this period. 

increased  greatly 

from 
Subsidies  on  hydrogen  have 
EUR 195 million in 2015 to EUR 329 million in 2021. In 2021, two thirds of this support was 
in  the  form  of  support  for  R&D  expenditure,  with  the  remainder  mainly  made  up  of  direct 
transfers25. In the years to come, and as preliminary data already show, a significant increase 
in subsidies for hydrogen is expected. 

recent  years,  climbing 

in 

Different subsidy categories might incentivise different energy technologies. However, it is 
not  always  possible  to  determine  which  subsidy  categories  are  most  typical  for  specific 
energy groups. As Table 1 shows, tax-expenditure subsidies (exemptions, reductions, etc.) are 
significant  for  fossil  fuels,  as  they  cover  around  two  thirds  of  fossil-fuel  subsidies.  In 
contrast, income and price supports (e.g. feed-in tariffs/premia) account for 85% of the total 
support  for  renewable  energies  (and  account  for  41%  of  total  energy  subsidies).  Tax-
expenditure  subsidies  are  also  significant  for  electricity  (86%)  and  the  ‘all  energies’  (40%) 
category (the ‘all energies’ category also includes energy-efficiency subsidies), while for ‘all 
energies’, direct-transfer subsidies also play an important role (around one third within total 
subsidies for ‘all energies’). 

Table 1 – Distribution of subsidies across different energy carriers and instruments 

Source: Study on energy subsidies and other government interventions in the European Union – 2022 edition 

2.2 Fossil-fuel subsidies in the EU 

24 Mainly in the form of reduced VAT. Special forms of financial support to vulnerable households needs to be made with care, as it goes 
beyond considerations strictly related to the energy market. However, in the current subsidy report and the underlying study data are only 
provided for the household sector as whole, deeper socio-economic breakdown (e.g. income level, age, household composition, etc.) is not 
available 
25 Breakdown of data on different hydrogen-generation technologies and sources (e.g. renewables or fossil) is not available. 

9 

 
 
 
                                                           
Fossil-fuel  subsidies  fell  by  1.5%  in  the  EU  in  the  5  years  since  2015,  reaching 
EUR 50 billion in 202026. In 2020, fossil-fuel subsidies were EUR 3 billion less than in 2019, 
principally  owing  to  reduced  transport  activities.  However,  looking  at  the  estimated  2021 
data, overall fossil-fuel subsidies in the EU did not show a sharp upturn with the economic 
rebound,  but  instead  stayed  close  to  their  2020  level.  This  was  the  result  of  differences  in 
fossil-fuel  subsidies  in  different  economic  sectors,  as  it  is  outlined  in  the  following 
paragraphs. 

Fossil-fuel subsidies in the energy sector fell by EUR 1.9 billion (-11%) between 2015 and 
2020, mainly as a consequence of decreasing subsidies on non-fuel-specific and multi-fossil-
fuel  subsidies,  whereas  subsidies  specifically  assigned  to  coal,  lignite  and  natural  gas 
remained practically unchanged. All in all, decreasing subsidisation of fossil fuels in energy 
production  is  a  positive  development  for  the  EU’s  climate  objectives  and  international 
commitments.  In 2021, fossil-fuel  subsidies continued to decrease in  the energy sector, and 
were 25% lower than in 2015. 

In  the  transport  sector,  fossil-fuel  subsidies  (primarily  on  oil  products)  increased 
dramatically  (by  29%,  or  EUR  3.1  billion)  between  2015  and  2019,  before  falling  back  in 
2020 by EUR 3 billion (primarily owing to lower petroleum consumption) and rebounding in 
2021 by EUR 0.9 billion (+9% compared to 2020). According to estimations in the context of 
the study, consumption of kerosene in aviation in 2021 was still lower than in 2019. 

Fossil-fuel subsidies in agriculture also increased (by 13%, or +EUR 0.7 billion) between 
2015 and 2020, and the sector received subsidies overwhelmingly in the form of support for 
consumption  of  petroleum  products  (e.g.  reduction  or  exemption  of  fuel  taxes).  Fossil-fuel 
subsidies for households increased by 15% (EUR 0.4 billion) in the same period, principally 
in  the  form  of  subsidies  for  heating-oil  and  natural-gas  consumption.  In  2021,  fossil-fuel 
subsidies for households continued to increase from their 2020 levels. 

In contrast,  fossil-fuel  subsidies  in  industry, provided mainly in  the form  of tax reductions 
and  exemptions  for  energy  use,  fell  by  EUR  0.2  billion  (-2%)  between  2015  and  2020. 
Subsidies on coal  decreased by  EUR  1.4 billion,  whereas subsidies on  gas and oil  grew by 
EUR 0.5 billion and EUR 1.1 billion respectively in the five-year period. 

26 To follow a consistent methodology across Member States, energy carriers, sectors and subsidy instruments, some items considered as a 
subsidy in other sources were not counted in the total numbers in the Commission study. For example, many Member States apply different 
excise  rates  for  petrol  and  diesel,  so  subsidies  on  these  products  might  be  significant.  Similarly,  extra-EU  international  aviation  and 
maritime transport are not covered. As capital infusions or purchases by the government are not included in the scope of the  Commission 
study, some financial support given to enterprises consuming fossil fuels (e.g. financial rescue packages for airline companies) are also not 
included  among  fossil-fuel  subsidies.  The  database  also  does  not  contain  information  on  abated  and  unabated  fossil-fuel  generation 
technologies. 

10 

 
 
                                                           
 
Figure 6 – Fossil-fuel subsidies in different sectors in the EU 

Source: Study on energy subsidies and other government interventions in the European Union – 2022 edition 

Subsidies  on  oil  and  petroleum  products,  representing  more  than  half  of  total  fossil-fuel 
subsidies in the EU, grew by 6% (+EUR 1.2 billion) between 2015 and 2020, although these 
subsidies  fell  by  EUR  3.1  billion  in  2020  owing  to  the  COVID-19  related  lockdowns. 
Subsidies on diesel fuel rose by 44% (+EUR 3.4 billion) between 2015 and 2020 in the EU, 
with  the  biggest  contributors  being  Belgium  (+EUR  1.8  billion,  more  than  tripling)  and 
France (+EUR 1.2 billion, or +74%). Oil and petroleum subsidies grew by an estimated EUR 
0.8 billion in 2021 compared to 2020. 

Subsidies  on  coal  and  lignite  fell  by  9%  (-EUR  0.9  billion)  in  the  EU  between  2015  and 
2020, owing to decreased use of solid fuels in several sectors such as industry. However, in 
electricity  generation,  coal  subsidies  did  not  show  any  significant  change  in  this  five-year 
period. In the future, subsidies for the coal sector might increase for a limited time, owing to 
both  the  expected  short-term  increase  of  coal  in  electricity-generation  mixes  and 
compensation schemes for coal and lignite plant closures planned in several Member States. 
However,  there  may  be  changes  in  the  plans  for  these  compensation  schemes  given  the 
current challenges for energy security and supply. The biggest drop in solid-fuel subsidies in 
this five-year period could be observed in Germany (by 11% or -EUR 0.8 billion), whereas in 
Poland  coal  subsidies  increased  by  65%  (+EUR  0.6  billion).  Coal  subsidies  in  the  EU 
increased by an estimated EUR 0.6 billion in 2021 across the EU compared to 2020. 

Subsidies  for  natural  gas  grew  by  6%  (EUR  0.5  billion)  between  2015  and  2020, 
representing  around  19%  of  fossil-fuel  subsidies,  slightly  more  than  the  share  of  subsidies 
accounted for by coal and lignite (18%). Subsidies on gas rose in the industrial sector during 
this  period,  while  there  was  no  change  in  subsidies  in  the  electricity-generation  sector. 
Natural-gas  subsidies  rose  by  around  EUR  0.5  billion  both  in  Germany  (+9%)  and  France 
(+113%) in this period, whereas the change between 2015 and 2020 showed a mixed picture 
in other countries. 

Increasing coal prices amid extreme high gas prices made it more difficult to replace gas with 
coal  in  the  power  mix  of  many  EU  Member  States,  but  they  encourage  replacement  with 
cheaper  renewable  energy  sources.  As  a  result  of  the  current  geopolitical  situation,  the  EU 
has introduced two initiatives. The first initiative is the REPowerEU plan to reduce reliance 
on  gas  consumption  (principally  aiming  at:  (i)  diversifying  gas  supplies  away  from  Russia; 
(ii)  boosting  energy  efficiency  and  energy  savings;  and  (iii)  accelerating  the  rollout  of 

11 

 
 
 
renewables.  The  second  initiative  is  the  ‘Save  gas  for  a  safe  winter’  plan  to  reduce  gas 
consumption in winter 2022-202327. In the future, these two initiatives will probably impact 
subsidies on natural gas28. Gas subsidies across the EU rose by an estimated EUR 0.7 billion 
(+10%) in 2021 compared to 2020. 

Subsidies on fossil fuels have different significance in different EU countries depending on 
the size of national GDP. In 2020, Cyprus spent 1.3% of its GDP on subsidising fossil fuels 
(principally oil products). Bulgaria  also  spent 0.9% of its  GDP on fossil-fuel subsidies that 
year (mostly on measures not assigned to particular fuels). On the other hand, Luxembourg 
and  Austria  spent  less  than  0.1%  on  fossil-fuel  subsidies  in  2020,  whereas  the  EU  average 
was 0.3% of GDP. After Cyprus, Belgium and Greece spent the most on oil-product subsidies 
(0.7% and 0.5% of their GDP respectively), while Slovakia and Poland spent 0.3% of GDP 
on coal subsidies. 

Compared  with  2015,  the  intensity  of  fossil-fuel  subsidies  (the  amount  spent  on  fossil-fuel 
subsidies per euro of GDP) rose by 0.9 per cent in Cyprus, and by 0.4 per cent in Bulgaria in 
2020,  whereas  it  decreased  by  0.5  per  cent  in  Latvia,  and  by  more  than  0.3  per  cent  in 
Lithuania and Ireland. At EU level, this intensity of fossil-fuel subsidies remained practically 
unchanged between 2015 and 2020. In 2021, the intensity of fossil-fuel subsidies decreased 
slightly compared to 2020 in most Member States. 

Figure 7 – Fossil-fuel subsidies in the EU Member States, as a percentage of GDP and in billion euros in 
2020, compared with fossil-fuel subsidies as per cent of the GDP in 2015 

Source: Study on energy subsidies and other government interventions in the European Union – 2022 edition 

3.  Consistency of different energy subsidies with the energy taxonomy 

The EU taxonomy might have an impact on subsidies in the future, providing tools to identify 
sustainable  activities.  It  could  facilitate  EU  and  national  policies  to  target  activities  that 
contribute  substantially  to  climate-change  mitigation  and  adaptation,  without  significantly 
harming  other  environmental  objectives.  The  Commission  study  has  carried  out  the  first 

27  On the top of these initiatives, other important legislative acts, having impact on gas consumption and subsidies, have been adopted by 
the EU, such as the Gas demand reduction regulation, Gas storage regulation, etc. 
28 Subsidies on gas only refer to subsidies for the production and consumption of gas and energy from gas. They do not include support to 
potential infrastructure developments, such as upgrading the European gas grid to enable better gas flows, building new LNG regasification 
terminals, or expanding existing terminals, etc. 

12 

 
 
 
                                                           
stocktaking  exercise  on  how  energy  subsidies  are  consistent  with  underlying  economic 
activities defined in the taxonomy29. 

To  classify  subsidies,  the  Commission  study  set  out  four  different  categories30.  The  first 
category is ‘consistent’ and can be applied to cases where subsidies benefit activities known 
as  ‘taxonomy-eligible  economic  activities’,  such  as  renewables  or  energy  efficiency  in 
general. The second category is ‘not consistent – transitional’, and covers subsidies benefiting 
activities  not  eligible  under  the  EU  taxonomy,  but  which  might  also  support  the  energy 
transition,  such  as  decommissioning  of  fossil-fuel  assets.  The  third  category  is  ‘not 
consistent’,  and  covers  all  subsidies  supporting  directly  or  indirectly  the  production  or 
consumption of fossil fuels. The final  category is ‘not applicable’ and covers subsidies that 
cannot  be  classified  under  previous  categories  such  as  market  mechanisms  (e.g.  capacity 
market or security reserves). 

As the data from the Commission study show, the vast majority of subsidies on renewables 
(EUR 79 billion out of the total EUR 81 billion in 2020) belongs to the ‘consistent’ category 
(the  remaining  EUR  2  billion  of  subsidies  is  distributed  among  non-consistent  and  not 
applicable  categories,  covering  mainly  tax  or  surcharge  reductions  on  renewable  electricity 
for some industries). In contrast, most of the fossil-fuel subsidies are classified under the ‘not 
consistent’  category.  In  the  two  other  categories,  (‘not  consistent  –  transitional’  and  ‘not 
applicable’) we can find, for example, subsidies for coal-mine restructuring and benefits for 
the  social  transition  of  people  employed  in  the  mining  sector.  These  two  other  categories 
accounted for EUR 2.8 billion of the total EUR 50 billion in fossil-fuel subsidies in 2020. In 
the ‘All energies’ category, around 63% of the total amount of  EUR 26 billion in subsidies 
fell  under  the  ‘consistent’  category  in  2020,  while  other  measures  (e.g.  tax  reductions  on 
energy  and  grants  for  certain  activities  and  investments)  were  in  the  other  three  categories. 
For both  electricity  and  nuclear  generation, the vast  majority  of subsidies  (more than 80%) 
fell into the ‘not consistent-transitional’ category in 2020. 

Figure 9 – Classification of subsidies relating to consistency with taxonomy classification in 2020 

Source: Study on energy subsidies and other government interventions in the European Union – 2022 edition 

4.  Conclusions 

29 It is important to keep in mind that at the time of the drafting of the Commission study, that the Complementary Climate Delegated Act, 
addressing nuclear and gas energy activities, has already been proposed by the European Commission, but the adoption process by the co-
legislators, has not been finished, and as the Delegated act did not yet enter into force 

30 The detailed description of each classification can be found in Chapter 5.1.2 on EU taxonomy classification of the Commission study 

13 

 
 
 
                                                           
Recent  geopolitical  developments  and  elevated  energy  prices  have  called  for  new  policy 
initiatives  in  the  European  Union.  These  new  initiatives  are  exceptional  in  their  nature,  but 
could  fundamentally  impact  the  energy  market  and  energy  infrastructure.  Less  energy 
consumption  and  continuously  reducing  reliance  on  fossil  fuels  in  the  residential,  power, 
transport  and  industrial  sectors  will  help  to  reduce  imports  of  fossil  fuels,  speeding  up  the 
clean-energy  transition  and  increasing  security  of  energy  supply  in  the  EU.  This  implies  a 
reduction  in  associated  fossil-fuel  subsidies,  and  redirecting  resources  to  renewables  and 
energy efficiency remains a tool to achieving these and the EU climate policy objectives. A 
significant  mid-term  decrease  in  gas  consumption  will  most  likely  entail  a  decrease  in  gas 
subsidies.  The  current  high  gas  prices  and  the  expected  temporary  increase  in  coal-fired 
generation should not lead to substantially higher fossil-fuel subsidies. At the same time, in 
the forthcoming few years, policy considerations for affordability also need to be taken into 
account.  Coal-  and  lignite-fired  electricity-generation  capacity  –  as  well  as  some  nuclear 
plants – are likely to remain a part of electricity generation in some EU Member States for 
longer than was previously expected. 

In order to implement the clean-energy transition, avoid lock-in and stranded assets in fossil-
fuel  technologies  and  minimise  the  use  of  fossil  energy,  further  investments  are  needed  in 
renewables  and  energy  efficiency.  This  will  likely  require  shifting  the  focus  of  energy 
subsidies  towards  renewables  and  efficiency,  including  demand  response.  Newly  emerging 
technologies,  such  as  renewable  hydrogen,  will  become  increasingly  significant,  implying 
higher  subsidies.  Energy  efficiency  will  play  a  key  role  in  implementing  the  objectives  of 
REPowerEU and the ‘Save gas for a safe winter’ plan. The necessary investments for these 
programmes  may  imply  greater  financial  support  for  energy  efficiency  in  the  form  of 
increased subsidies.  

At the same time, EU Member States have taken a number of measures to reduce the impact 
of high retail prices for energy. These measures are likely to be translated into higher energy-
demand subsidies for households and businesses, at least in the short and medium term. 

The detailed results of the Commission study on subsidies will be published jointly with this 
report to provide a comprehensive picture of the situation. 

14