REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 2023 Report on Energy Subsidies in the EU
Date: 2023-10-24
Institutions: Directorate-General for Energy, European Commission
Subjects: EU aid, EU energy policy, EU environmental policy, energy consumption, energy efficiency, energy transition, fossil fuel, price of energy, reduction of gas emissions, renewable energy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.10.2023  COM(2023) 651 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 2023 Report on Energy Subsidies in the EU  
 
 
Commission report on energy subsidies in the EU

Introduction and main findings 

The European Union is firmly committed to reducing its greenhouse gas (GHG) emissions by 
at least 55% (compared to 1990) by 2030 and to become climate neutral by 2050. Subsidies 
and  other  economic  and  legal  incentives  will  play  an  essential  role  in:  (i)  accelerating  the 
deployment of clean-energy and energy-efficient solutions; and (ii) reducing the use of fossil 
fuels.  Subsidies  can  have  economic,  environmental,  or  social  welfare  purposes.  If  they  are 
poorly  designed,  subsidies  can  distort  competition,  act  against  the  energy  transition,  and 
reduce the carbon price signal. The EU is actively engaged to phase out fossil fuel subsidies 
also as part of the EU’s international commitments made in the context of the G20 and in the 
World Trade Organization1. The current report is the fourth annual report monitoring energy 
subsidies  and  progress  towards  phasing  out  fossil-fuel  subsidies,  as  prescribed  by  the 
Regulation on the Governance of the Energy Union and Climate Action2. 

The energy crisis that started in 2021, and which was aggravated by the Russian aggression to 
Ukraine  in  2022,  had  significant  consequences  for  energy-related  subsidies.  These 
consequences can be seen in: (i) the amount of these subsidies; (ii) the distribution of these 
subsidies across technologies and beneficiaries; and (iii) the instruments used to provide these 
subsidies. Russia’s weaponisation of energy supplies and the progressive cuts in Russian gas 
supplies required  a strong EU policy response, including short-term  measures to  ensure the 
affordability of energy for vulnerable consumers and industries all over Europe. 

The results of this study confirm that energy subsidies followed a gradually increasing trend 
until  2021, and  increased  dramatically in  2022. Total  energy subsidies  in the EU  rose from 
EUR 177 billion in 2015 to EUR 216 billion in 2021, to reach an estimated EUR 390 billion 
in 2022.  

The  trend  of  decline  in  fossil  fuel  subsidies  continued  until  2021,  when  they  were  at 
EUR 56 billion,  before  increasing  rapidly  to  an  estimated  EUR  123  billion  in  2022  in 
response to the crisis. Renewable energy subsidies fell in 2021 to EUR 86 billion - the first 
time  since  2015  -  and  rose  only  slightly  to  EUR  87  billion  in  2022.  This  was  due  to  high 
prices  on  the  wholesale  electricity  market  that  reduced  the  subsidy  amounts  paid  under 
dynamic  support  instruments.  On  the  other  hand,  support  to  energy-efficiency  measures 
increased from EUR 22 billion in 2021 to EUR 32 billion by 2022. Support to all other forms 
of energy, including electricity as a carrier and nuclear amounted to EUR 180 billion in 2022. 

In  2021-2022,  energy  subsidies  linked  to  new  national  measures  to  protect  EU  consumers 
from the high prices accounted for an estimated EUR 195 billion. Across the EU, at least 230 
temporary national measures were introduced to address the energy price crisis. Households 
were the main direct beneficiaries of these support measures (EUR  58 billion), followed by 
business  and  industrial  consumers  (EUR  45  billion)  and  road  transport  (EUR  23  billion). 
Cross-sectoral support was EUR 69 billion. 

1 Since their 2009 Summit, G20 Leaders have called for phasing out and rationalising fossil fuel subsidies while providing targeted support 
for the poorest. The EU is one of the co-sponsors of the ministerial statement on fossil fuel subsidies adopted on 14 December 2021 in 
the context of the WTO.  

2 Article 35, point n of the Regulation on the Governance of the Energy Union (2018/1999/EU), hereinafter: the Governance Regulation. 

 
 
 
2022 was the first year that, as part of their integrated national energy and climate progress 
reports,  Member  States  had  to  report  on  the  progress  they  had  made  towards  phasing  out 
energy subsidies, in particular for fossil fuels. In addition, this report includes a new section 
assessing the environmental impact of fossil-fuel subsidies. 

This  report  relies  on  data  from  an  external  study3  conducted  for  the  Commission  using  an 
internationally accepted methodology. Some 2022 data were not fully available or validated 
at  the  time  the  study  was  completed  (August  2023),  so  2022  figures  may  rely  on  data  gap 
mitigation techniques4. As in previous editions, Member States were given the opportunity to 
provide feedback on the data used for the study. 

3 For previous editions: https://op.europa.eu/en/publication-detail/-/publication/34a55767-55a1-11ed-92ed-01aa75ed71a1 
4  For  missing  2022  values,  2021  data  were  taken  as  a  basis  for  an  estimate.  In  such  cases,  2022  data  are  referred  to  in  this  report  as 

‘estimated’ and on graphs, unconfirmed data are indicated on graphs by hatching. 

 
 
 
1.  Energy subsidy trends in the EU 

Subsidies in this report are defined following the methodology set forth by the World Trade 
Organization (WTO)5, which was used in the supporting Commission study6 and the previous 
editions  of  this  report.  This  methodology  defines  subsidies  as  government  measures  falling 
into one of the following four categories:  (i) direct transfers of funds; (ii) government  (tax) 
revenue  that  is  otherwise  foregone  (not  collected);  (iii)  governments  providing  goods  and 
services or purchasing goods; and (iv) price and income support. 

The  report  also  examines  various  characteristics  of  subsidies:  (i)  the  goal  they  seek  to 
promote (production, consumption/demand, infrastructure or energy efficiency); (ii) the fuel 
type  they  promote  (fossil  fuels,  renewables,  nuclear);  (iii)  economic  sectors  receiving  the 
subsidy (the energy sector, transport, industry, agriculture7, residential, services, etc.); or (iv) 
whether they are environmentally harmful or beneficial. 

1.1 Total energy subsidies in the EU 

The total amount of energy subsidies in the EU-27 (Figure 1) is estimated at EUR 390 billion 
in 2022 (+80% compared to the EUR 216 billion8 in 2021). 

The economic recovery in 2021 put upward pressure on energy prices and consequently on 
subsidies. Energy subsidies already rose from EUR 200 billion in 2020 to EUR 216 billion in 
2021. The estimated 2022 data shows that due to the impact of measures taken  by Member 
States, subsidies increased dramatically to reach EUR 390 billion in 2022. In response to the 
energy  price  crisis,  at  least  230  temporary  subsidy  measures  were  created  or  expanded  in 
Member States across the EU to alleviate the impact of high and volatile prices. 

Figure 1: Total energy subsidies in the EU-27 (2015-2022; EUR2022bn) 910 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimates are represented with hatching 

The subsidy  support  evolved differently across technologies  in  2022.  Electricity subsidies11 
increased threefold, while overall fossil fuel subsidies doubled in 2022 compared with 2021. 

5 The analysis is based on the methodological framework used in previous Commission studies, following the Agreement on Subsidies and 
Countervailing Measures (ASCM) framework developed by the World Trade Organization (WTO). 
6 See more on energy-subsidy methodology in Annex 1 of the 2023 Commission study. 
7 Also including subsidies for fishing. 
8 Due to data corrections in the subsidy inventory for the earlier years, and the change in the monetary basis (‘expressed in 2022 euros’ in 
the current report) total amounts on the charts of this report may differ from the last energy-subsidy report published in 2022 or earlier. 

9 In this report, all figures are expressed in EUR 2022 bn. Total figures for 2022 include ~EUR 44 billion still under validation. 
10 Data under the “To be confirmed” category amounted to 12% of the total amount included in the Subsidy inventory for the year 2022. 
11 In certain cases, it is not possible to separate subsidies given to electricity consumption by the source of generation (fossil, nuclear or 

renewable), therefore this chart shows electricity (energy carrier) subsidies alongside those given to energy sources. 

 
 
 
Subsidies supporting all energies12 (e.g. through income support13) were 2.4 times higher in 
2022 than in 2021. While renewable energy support remained broadly the same in 2022 as in 
2020-2021,  support  to  energy  efficiency  measures  increased  by  40%  in  this  period,  mainly 
due  to  the  support  for  energy  renovations  provided  as  part  of  the  Recovery  and  Resilience 
Facility (RRF). 

Figure 2: Subsidies by main energy source / energy carrier in the EU-27 (EUR2022bn) 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimates are represented with hatching 

Energy subsidies in 2022 were distributed (Figure 3) primarily through income/price support 
measures  (38%),  tax  reduction  measures  (35%)  and  direct  transfers  (25%).  In  2022  fossil 
fuels  accounted  for  the  largest  share  of  the  total  subsidies  (31%),  while  renewable  energy 
sources received only 22% of energy subsidies in 2022, down from 40% in 2021. 

Figure 3: Subsidy distribution by instrument (2022, %) 

Source: Enerdata, Trinomics, 2023 

12 The term “All energies” is used here to classify subsidy measures that apply to energy produced from a mix of both fossil fuel and low 

carbon sources or an unknown source. 

13  This  also includes various  types  of economic  mechanisms beyond income  support  for  more  than one  type  of energy,  such as  capacity 
payments,  biofuels  blending  mandates,  renewable  energy  quotas  with  tradable  certificates,  differentiated  grid  connection  charges, 
energy  efficiency  obligations,  interruptible  load  schemes,  contract  for  difference,  feed-in  premiums,  feed-in  tariffs,  consumer  price 
guarantees (cost support), consumer price guarantees (price regulation) and producer price guarantees (price regulation) 

Subsidy categoryAll energiesElectricityFossil fuelsNuclearRESTotalDirect transfers16%1%6%0%2%25%Tax measures9%7%15%0%4%35%Income or price support2%9%11%0%16%38%RD&D Budgets1%0%0%0%0%2%Total29%16%31%1%22%100% 
 
 
1.2 Subsidies by energy source 

In 2021, fossil fuel subsidies fell to EUR 56 billion, continuing the steady downward trend 
observed since 201814 (Figure 4). The fall was mainly due to a large decrease (EUR 2 billion) 
in  subsidies to the energy industry15. This  downward trend  has  been  disrupted in  2022 as a 
direct consequence of the European response to the energy crisis. Subsidy measures were one 
of the primary tools to counteract the effects of high energy prices on the cost of living and 
on the production costs of European industries.  

As a result, fossil subsidies are estimated to have more than doubled between 2021 and 2022 
(from EUR 56 billion to EUR 123 billion). This increase reflects: (i) the much larger support 
households  now  receive  (+500%);  (ii)  increased  subsidies  for  the  transport  sector  and  the 
energy  industry  (+150%  and  +280%  respectively);  and  (iii)  other  cross-sectoral  measures 
(+770% through, for example, lower VAT rates). Direct support to industry and agriculture 
remained stable or rose only very slightly between 2021 and 2022. 

Figure 4: Fossil fuel subsidies in the EU-27 by economic sector (EUR2022bn) 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimates are represented with hatching 

Most  of  the  fossil  fuel  subsidies  allocated  in  the  EU-27  since  2015  have  been  intended  to 
support consumers’ energy demand, for example by limiting the costs of energy consumption 
through lower tax rates on energy products. The share of these energy demand measures grew 
from 67% in 2015 to 74% by 2021 and estimates suggest that they will have grown to 83% of 
fossil  fuel  subsidies  in  2022.  Fossil  fuel  subsidies  have  aimed  at  supporting  electricity 
production ranged between 20% and 30% since 2015, and are estimated to have dropped to 
10%  of  all  fossil  fuel  subsidies  in  2022.  Subsidies  specifically  directed  to  fossil  fuel 
extraction  and  supporting  infrastructure  received  EUR  13  billion  and  EUR  6  billion, 
respectively;  while  energy  industry  restructuring  (such  as  support  for  closing  coal/lignite 

14 The EUR 3.5 billion increase in fossil fuel subsidies in 2018 is partly due to the change in classification of the degressive tariff structure 
for gas and electricity in the Netherlands, which was not reported by the Dutch government as a subsidy before that date and therefore 
not  included  in  the  database.  The  Netherlands  is  the  only  country  for  which  actual  amounts  linked  to  this  mechanism  have  been 
declared, but they certainly also exist in other countries without being declared as such. 

15 The term covers energy extraction, conversion, refining, infrastructure, transmission, distribution, storage, waste management and retail. 

In short, the energy industry. 

 
 
 
power  plants  or  mines)  represented  a  small  and  decreasing  share  of  the  total  fossil  fuel 
subsidies (3.4% or EUR 1.7 billion) in 2021. 

While most of the fossil fuel support went to oil and refined oil products (EUR 56 billion) in 
2022 (Figure 5), subsidies aimed at natural gas tripled from 2021 to 2022 and reached EUR 
46  billion.  Support  to  coal  and  lignite  remained  the  same  at  EUR  8  billion,  while  all  other 
types of fossil, including peat, received EUR 13 billion. 

Figure 5: Fossil subsidies by type of fuel 

Source: Enerdata, Trinomics, 2023. 

In 2021, subsidies for renewable energy sources decreased for the first time in several years 
(Figure 6) to EUR 86 billion (-EUR 1.3 billion or -1.5% compared with 2020). This decline 
was  mainly  due  to  the  increase  in  wholesale  electricity  market  prices,  which  has  led  to  a 
decrease  in  payments  of  support  instruments  that  provide  a  top-up  to  market  prices.  The 
decline in subsidies for renewable energy came also in spite of the increase in installed and 
supported  RES  generation  capacity.  In  2022,  RES  subsidies  rose  only  slightly  to  EUR  87 
billion, and were below the level of fossil fuel subsidies for the first time since 201516. 

In 2022, the typical instrument for providing subsidies to RES continued to be income/price 
support (EUR 57 billion, 65% of all RES subsidies) through, for example, measures such as 
feed-in  tariffs  and  feed-in  premiums  (FiT/FiP)  or  RES  quotas  with  tradable  certificates. 
Direct  transfers  (mainly  grants)  increased  significantly  to  reach  EUR  8  billion  in  2021 
(EUR 5 billion more than in 2020) and EUR 9 billion in 2022. This increase was largely due 
to  support  for  RES  production  and  electricity  infrastructure  included  in  Member  States’ 
recovery and resilience plans, as well as increased support for boosting renewable energy and 
energy efficiency in heating and cooling.  

16 Not all data were available for 2022, for example those related to FiP/FiT or RES quotas and the figures might be subject to revision. 

 
 
 
Figure 6: Renewable energy subsidies by instrument (2015-2022; EUR2022bn) 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimates are represented with hatching 

Support  for renewable technologies  varies significantly  across the EU (Figure  7), reflecting 
national priorities and RES potentials. Across all Member States, solar energy (both solar PV 
and concentrated solar) received the most subsidies in 2022 (EUR 25 billion), followed by 
wind  and  biomass  (EUR  15  billion  each).  Hydropower  received  the  least  financial  support 
(EUR  1.5  billion  in  2022).  Subsidies  not  targeted  at  any  particular  renewable  technology 
were also widely used (EUR 24 billion). 

Figure 7: Share of RES subsidies by technology for selected Member State (2021; EUR2022bn) 

Source: Enerdata, Trinomics, 2023 

Energy-efficiency subsidies (Figure 8) have increased since 2015 and by 2022 had reached 
EUR 30 billion (EUR 8 billion more than in 2021). Grants were particularly significant as a 
support  instrument,  accounting  for  over  50%  of  all  energy  efficiency  subsidies  in  2022.  In 
2021-2022,  energy  efficiency  grants  expanded  in  parallel  to  the  implementation  of  the 
investments in the Recovery and Resilience Facility, followed by tax expenditures, soft loans 
and  energy  efficiency  obligations  (23%,  20%  and  6%  of  energy  efficiency  subsidies, 
respectively). 

 
 
Figure 8: Support for energy efficiency instruments (2022; EUR2022bn) 

Source: Enerdata, Trinomics, 2023 

Subsidies for nuclear energy increased from EUR 4.3 billion in 2015 to EUR 7.6 billion in 
2021 and then dropped to EUR 4.2 billion in 2022. This sudden decrease was due to: (i) the 
drop in the volume of capacity market mechanisms (in France, Germany and Italy); (ii) the 
low availability of the nuclear fleet in France; as well as (iii) the payments associated with the 
German decision to close three nuclear plants at the end of 2021. In 2022, France (EUR 2.3 
billion)  and  Germany  (EUR  1.1  billion)  accounted  for  most  of  the  nuclear  subsidies  in  the 
EU. 

1.3 Subsidies by economic purpose 

Although  the  total  amount  of  energy  subsidies  for  the  year  2022  has  almost  doubled 
compared  with  2021, there  was  a significant difference in  the  categories that accounted  for 
this growth according to the economic purpose of the subsidy (Figure 9). 

Figure 9: Energy subsidies by economic purpose (2015-2022; EUR2022bn) 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimates are represented with hatching 

 
 
Financial  support  directed  to  energy  demand17  has  tripled  in  2022  compared  with  2021, 
reaching  EUR 247  billion.  In  the  same  period,  support  for  energy  efficiency  measures 
increased  by  50%  (from  EUR  21.8  to  EUR  32  billion),  subsidies  for  infrastructure 
development increased by 250% (from EUR 4.9 billion to EUR 12 billion), while support for 
energy  industry  restructuring  and  energy  production  have  decreased  by  33%  and  by  7%, 
respectively. 

Subsidies for energy demand include targeted or generic support measures aimed at limiting 
the  costs  of  energy  consumption  in  various  economic  sectors.  These  measures  can  be 
implemented  through  mechanisms  like  tax  reductions  or  refunds,  and  they  address  a  wide 
range  of  economic  sectors,  from  energy-intensive  industries  to  households.  These  kinds  of 
subsidies  target  all  types  of  energy  including  renewables,  fossil  fuels,  electricity,  and  heat, 
regardless of their origin. 

By  2020,  overall  subsidy  support  to  energy  demand  grew  to  EUR  70  billion  (Figure  10), 
increasing  by  17%  in  2021.  This  support  was  then  estimated  to  have  tripled  between  2021 
and 2022 to reach EUR 247 billion18. This was the direct consequence of the cost-of-living 
crisis and the Russian weaponisation of gas supplies and is mostly related to policy support 
measures  that  have  been  put  in  place  by  governments  since  the  end  of  2021  and  further 
strengthened in 2022. 

Figure 10 Subsidies supporting energy demand by instrument (2015-2022; EUR2022bn) 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimates are represented with hatching 

Before  2021,  direct  tax  measures  represented  more  than  90%  share  of  total  subsidies  for 
energy  demand.  However,  since  2021,  direct  transfers  and  consumer  price  guarantees 
(income or price supports) have been brought back as part of the policy measures, changing 
the  balance  between  these  instruments  for  promoting  energy  demand.  In  2022,  tax 
expenditures  represented  50%  (EUR  123  billion)  of  the  overall  support  to  energy  demand, 
followed by price supports and price guarantees (30%, EUR 74 billion), and direct transfers 
(20%, EUR 50 billion). 

17 E.g. supporting the use of energy through lowering its costs. 
18 As of July 2023, the estimate of demand-oriented subsidies included EUR 12.6 billion of yet-unconfirmed payments for 2022 (~5% of the 

total). 

 
 
 
1.4 Focus on subsidy measures related to the energy price crisis 

The  European  Commission  has  been  working  together  with  Member  States  to  tackle  the 
energy crisis. This has included working to: (i) secure alternative energy supplies; (ii) reduce 
energy demand to  compensate  for the shortfall of Russian gas deliveries;  (iii) make greater 
use  renewables;  and  (iv)  increase  energy  efficiency.  In  addition  to  implementing  measures 
introduced  at  Union  level  or  enabled  by  Union-level  frameworks,  Member  States  also 
adopted  their  nationally-tailored  measures  to  shield  their  citizens  and  their  economy  from 
damaging energy prices (Figure 11). 

Figure 11: Relevance of energy subsidies to the energy price crisis (2021-2023; EUR2022bn) 

Source: Enerdata, Trinomics, 2023 

Through these new national measures, Member States provided an estimated EUR 181 billion 
in subsidies in 2022 for this purpose, accounting for almost 50% of total energy subsidies in 
the EU-27 in that year. Initial figures for 2023 show a continuation of this support but only in 
the  medium  term:  almost  80%  of  the  payments  under  these  measures  are  planned  to  end 
before 2025, while 20% of payments have a planned end-date after 2025 or have no end-date 
at all. 

Subsidies  to  address  the  energy  crisis  measures  accounted  for  1.12%  of  the  EU’s  GDP  in 
2022.  Italy,  France,  and  Germany  accounted  for  almost  70%  of  this  total  spending  (Figure 
12). Relative to its GDP, Greece spent the most of any EU Member State in 2022 to address 
energy prices (5.3% of the GDP).  

Figure 12: Subsidies to address rising energy prices, by country, in 2022 (in EUR2022bn and % of GDP) 

Source: Enerdata, Trinomics, 2023 

 
 
Figure 13.a shows that, over 2021-2022, most of the targeted subsidies were aimed towards 
households  (EUR  58 billion,  30%  of  the  total  crisis  support),  followed  by  businesses  and 
industries  (EUR  34 billion,  18%),  and  the  transport  sector  (EUR  23  billion,  12%).  A 
significant amount (EUR 69 billion, 33% of total crisis support) was untargeted and covered 
multiple sectors. 

Figure 13: Distribution of subsidies addressing energy price increases in 2021-2022 (EUR2022bn) 

a) by economic sector 

b) by energy carrier 

Source: Enerdata, Trinomics, 2023 

Concerning  energy  carriers  (Figure  13.b),  electricity  was  the  main  beneficiary,  receiving 
more than a third (EUR 70 billion) of the financial support in 2021-2022. Subsidies for gas 
and  oil  accounted  for  EUR  60  billion,  while  EUR  62  billion  was  allocated  for  energy 
produced  from  a  mix  of  both  fossil  fuel  and  low  carbon  sources  or  from  unknown  sources 
(indicated as ‘All energies’). 

European  governments  have  taken  special  measures  in  response  to  the  crisis  to  provide 
substantial  support  directly  to  energy  companies.  For  instance,  in  Germany,  Uniper  was 
supported  through  capital  injection  (EUR  34  billion),  while  in  France,  EDF  was  re-
nationalised  (EUR  9.4  billion).  Since  the  ultimate  aim  of  these  measures  was  to  ensure 
security of supply as well as lower prices to customers or the wholesale market, they were not 
included in the subsidy database. 

1.5 Subsidies by beneficiary economic sector 

The energy industry was the most subsidised economic sector in 2021, receiving more than 
half (EUR 111 billion, 51%) of all energy subsidies that year, of which EUR 61 billion were 
feed-in-tariffs  /  feed-in-premiums19  (not  differentiated  in  Figure  14).  The  second  and  third 
largest recipients of energy subsidies were other industry sectors (EUR 32 billion, 15%) and 
households (EUR 27 billion, 13%)20.  

Data  for  2022  shows  a  significant  change  in  the  composition  of  subsidies.  Support  to 
households  increased  (rising  by 240% from  2021 to  EUR 94 billion  in 2022, or 24% of all 
energy  subsidies  in  that  year).  Cross-sectoral  subsidies  was  the  next  largest  category 
(EUR 75 billion, 20%), while industry only received a moderate increase in support between 

19  FiT,  FiP  and  RES  obligations  are  included  by  convention  in  the  energy  industry,  while  such  payments  may  confer  benefits  to  actors 

outside of this sector. 

20  Industry  excludes  Mining  &  Construction.  Business,  Construction,  Public  and  Services  sectors  have  been  regrouped  under  the 

denomination “Others” as their individual amount for 2020 is less than €1 billion.  

 
 
 
 
 
 
2021 and 2022 (EUR 53 billion, 13%). By contrast, the energy industry received slightly less 
in subsidies for 2022 (EUR 109 billion) than it did in 2021, and its share of total subsidies 
dropped from 50% to 28% between 2021 and 2022. 

Figure 14: Energy subsidies by economic sector in the EU-27 (2015-2022; EUR2022bn) 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimates are represented with hatching 

In  2022,  total  subsidies  to  the  transport  sector  (Figure  14)  grew  to  an  estimated 
EUR 38 billion (+155%  or +EUR 24 billion compared to  2021).  Road transport remains  by 
far  the  largest  recipient,  accounting  for  83%  of  transport  subsidies  (EUR  31  billion).  It  is 
followed by air transport (EUR 3.6 billion), water (EUR 1.8 billion) and rail transport (EUR 1 
billion). 

Figure 15: Energy subsidies by transport mode (2015-2021; EUR2021bn) 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimate are represented with hatching 

1.6 Subsidies by environmental impact 

The European Union, as party to the Global Biodiversity Framework (GBF)21, has agreed to 
“identify by 2025, and eliminate, phase out or reform incentives, including subsidies, harmful 
for  biodiversity.”  The  Commission  is  preparing  a  methodology  to  map  these  subsidies  and 
this  report  provides  the  first  attempt  to  assess  energy,  and  more  specifically  fossil  fuel, 
subsidies for their environmental impact. In this report, the assessment of energy-related and 

21 https://www.cbd.int/gbf/targets/ 

 
 
 
environmentally  harmful  subsidies  (EHS)  focuses  on  fossil  fuel  subsidies,  which  are 
identified  as  being  harmful  if  the  price  or  cost  reduction  that  they  cause  incentivises 
maintaining  or  increasing  the  availability  and/or  use  of  fossil  fuels,  regardless  of  whether 
these are unabated or abated. 

Figure 16: Fossil fuel subsidies in the EU-27 by environmental impact (2015-2022; EUR2022bn) 

Source: Enerdata, Trinomics, 2023. NB: 2022 estimate are represented with hatching 

Figure  16  shows  that  the  overwhelming  majority  of  fossil  fuel  subsidies  (98%  in  2022  or 
EUR  120  billion)  are  considered  environmentally  harmful.  The  amount  of  fossil  fuel 
subsidies considered as not environmentally harmful is around EUR 3 billion. Most of these 
non-harmful  subsidies  relate  to  compensation  to  companies  and  workers  for  curtailing  or 
closing  coal  mines  and  coal-fired  power  plants,  or  funding  for  rehabilitation  of  the  areas 
where such closures have taken place.  

Preliminary  data  show  (Figure  17)  that  most  of  the  fossil  fuel  subsidies  considered  not 
environmentally harmful in 2022 were provided by Germany (EUR 0.6 billion), followed by 
the  Netherlands  (EUR  0.5  billion),  France  and  Spain  (EUR  0.2  billion  each).  In  eighteen 
Member States, 100% of fossil fuel subsidies were assessed as environmentally harmful.  

Figure 17: Fossil fuel subsidies by MS and by environmental impact (EUR2022bn) 

Source: Enerdata, Trinomics, 2023 

                                                                                                                                            
 
1.7 National plans on subsidies 

This section focuses on the national plans to phase-out fossil fuel subsidies in Member States 
published as of August 202322. The general Union environment action program to 2030, also 
known  as  the  8th  environment  action  programme,  requires  the  Commission  and/or  Member 
States to phase out environmentally harmful subsidies, and fossil fuel subsides in particular, 
by ‘setting a deadline for the phasing out of fossil fuel subsidies consistent with the ambition 
of limiting global warming to 1.5°C23. 

According to 2022 data (Figure 18), 47% (EUR 58 billion) of total fossil fuel subsidies (EUR 
123 billion) had a planned end-date before 2025. Only about 1% (EUR 1.7 billion) of fossil 
fuel  subsidies  have  an  end-date  on  the  medium  term  (2025-2030).  For  the  remaining  52% 
(EUR 64 billion), there is  either no end-date yet  or the end-date has  been set  after the year 
2030. 

Figure 18: Fossil fuel subsidies by end-date and as a share of total energy subsidies (%) in 2021 

Source: Enerdata, Trinomics, 2023 

Almost  all  EU  Member  States  intend  to  move  away  from  fossil  fuels.  However,  in  most 
Member States this intention has yet to be translated into concrete plans. The power sector is 
where  Member  States  have  the  most  concrete  plans  to  reduce  their  reliance  on  fossil  fuels, 
especially  coal.  Eight  Member  States  have  also  set  dates  for  phasing  out  fossil  fuel-based 
heating in buildings. For the other economic sectors (industry, transport and agriculture), end-
dates for fossil fuel use are almost completely absent. 

Finally,  although  the  amount  of  fossil  fuel  subsidies  more  than  doubled  in  2022  compared 
with  2021  due  to  the  support  measures  in  response  to  the  energy  crisis,  the  overwhelming 
majority of these measures are temporary and have an end-date in the near-term. The energy 
crisis  is  unlikely  to  lead  to  a  reversal  of  the  efforts  Member  States  have  made  so  far  in 
reducing fossil subsidies.  

22 The analysis is based on the updated annexes VIII and XV of the draft National Energy and Climate Progress Reports. 
23  Article  3  (h)  (i)  of  Decision  (EU)  2022/591  of  the  European  Parliament  and  of  the  Council  of  6  April  2022  on  a  General  Union 

Environment Action Programme to 2030. 

 
 
 
However, it will be important to continue to monitor temporary fossil fuel subsidies to limit 
negative  impacts  that  could  reduce  incentives  for  investments  in  energy  efficiency  and 
renewable energy.  

More transparency over end-dates for fossil fuel subsidies from Member States is crucial in 
this respect. The absence of information on end-dates for these subsidies makes it difficult to 
assess  whether  the  EU  is  on  track  to  phase  out  fossil  fuel  subsidies  consistent  with  the 
ambition of limiting global warming to 1.5 °C.  

 
 
2.  Conclusions 

The recent extraordinarily high energy prices made it necessary to take bold policy initiatives 
in the European Union to mitigate the social impact of the energy crisis. The temporary and 
exceptional measures to address the energy crisis have greatly impacted the trends in energy 
subsidies. The recent spike in energy prices has also affected the types of measures used to 
provide  the  subsidies  and  technologies  promoted  by  subsidies,  leading  to  a  significantly 
increase  in  fossil  fuel  subsidies  since  2022  to  mitigate  the  high  energy  bills  among 
consumers. 

These increased energy subsidies did not lead to more energy consumption. Overall demand 
for  energy  decreased  in  2022  compared  with  pre-COVID-19  levels.  All  economic  actors 
reduced their gas demand by 17%24 with households and industry in the lead (reductions of 
50% and 43%, respectively), reacting to both higher prices and policy measures encouraging 
demand reduction. The EU continued its support for energy efficiency investments and took 
significant additional steps in the area with the recast of the Energy Efficiency Directive. 

The  end  of  the  long  downward  trend  in  energy  subsidies  was  justified  by  the  priority  of 
shielding EU consumers from the energy bills shock. But if temporary measures are extended 
in  the  medium  term,  this  could  have  a  long-lasting  negative  impact  by  reducing  market 
incentives  for  energy  efficiency  and  renewable  energy  investments  including  clean  heating 
solutions such as heat pumps. 

The  EU  has  decisively  embarked  on  an  energy  transition  to  achieve  climate  neutrality  by 
2050. Energy savings and reduced reliance on fossil fuels in the residential, power, transport 
and industrial sectors should help the EU in a variety of ways: (i) reducing imports of fossil 
fuels;  (ii)  speeding  up  the  clean-energy  transition;  and  (iii)  improving  the  EU’s  security  of 
energy supply. The energy transition  should therefore bring  about  a reduction in  fossil-fuel 
subsidies,  and  a  significant  redirection  in  subsidy  support  to  renewables  and  energy 
efficiency.  

Although  the  situation  on  global  and  European  energy  markets  has  stabilised  as  compared 
with the worst times of the energy crisis in 2022, the prices of some fuels (like natural gas) 
may remain volatile and at relative high level for some years compared with pre-crisis levels. 
This, together with the replacement of fossil fuel technologies by more sustainable solutions, 
should lead to a significant decline in the consumption of fossil fuels (and their subsidies) in 
the medium term. Policy considerations for affordability may justify temporary measures to 
support  households  and  industry.  However,  in  the  longer  term,  the  energy  transition  will 
enable  efficiency  and  renewable  technologies  to  increasingly  redirect  support  away  from 
environmentally harmful fossil fuel subsidies. 

24 Comparing gas consumption in the Aug. 2022 – June 2023 period with the 5-year average