Study on energy prices and costs : evaluating impacts on households and industry : 2023 edition.
Date: 2024-03-13
Institutions: Directorate-General for Energy
Subjects: EU energy policy, cost price, energy industry, foreign exchange market, household, industrial policy, price of energy, report

Final report 

Study on energy prices and costs: 
evaluating impacts on households and 
industry – 2023 edition 

Written by Trinomics et al. 

December 2022 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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EUROPEAN COMMISSION 
Directorate-General for Energy 
Directorate A — Energy policy: Strategy and Coordination 
Unit A4 — Chief Economist 
Contact:  Viktor HAUK (viktor.hauk@ec.europa.eu)  
European Commission 
B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contract details 

European Commission, DG ENER 

Specific contract: Study on energy prices and costs; evaluating impacts on households and industry’s 

costs – 2022 edition - ENER/A4/2021-329 

Under framework contract MOVE/ENER/SRD/2020/OP/0008 Lot-2: Socio-economic assistance in the 

field of energy 

Presented by 

Trinomics B.V. 

Westersingel 34 

3014 GS Rotterdam 

The Netherlands 

Contact person 

Koen Rademaekers 

Koen.rademaekers@trinomics.eu  

Pavla Cihlarova 

Pavla.cihlarova@trinomics.eu 

Date 
Rotterdam, 7 December 2022 

 
 
 
 
 
 
 
 
 
 
 
 
Rotterdam, 07 December 2022 

Client: DG ENER 

Authors: 
Matthew Smith, Henjo Jagtenberg, Long Lam, Perla Torres, Marine Gorner, 
Mohammad Ansarin, Luc van Nuffel (Trinomics) 
Ahmed Abbas, Thierry Badouard, Olivier de Carsalade, Maylis Casteleyn, 
Marie Rousselot, Estelle Payan, Baptiste Posseme (Enerdata) 
Katja Schumacher, Katja Hünecke, Viktoria Noka (Oeko) 
Dimitris Fragkiadakis, Konstantinos Fragkiadakis, Zoi Vrontisi, Leonidas 
Paroussos and Pantelis Capros (E3M) 
Matthias Altmann (Ludwig Bölkow Systemtechnik) 

In association with: 

5 

         
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONTENTS 

1 

Introduction ........................................................................................ 3 

2  Electricity prices .................................................................................. 5 

2.1  Wholesale prices ................................................................................... 5 

2.2 

Retail prices ....................................................................................... 24 

3  Prices of natural gas .............................................................................47 

3.1  Wholesale gas prices ............................................................................ 47 

3.2 

Retail prices ....................................................................................... 61 

4  Oil, coal and alternative fuel prices ..........................................................74 

4.1 

Crude oil and coal prices ....................................................................... 74 

4.2  Wholesale prices of oil-based fuel products ............................................... 77 

4.3 

4.4 

Retail prices of oil and fuel products ........................................................ 79 

Alternative fuels ................................................................................ 101 

5  Household energy expenditure .............................................................. 115 

5.1 

5.2 

5.3 

5.4 

5.5 

5.6 

5.7 

5.8 

5.9 

Data on household expenditures ............................................................ 116 

Share of energy fuels and use in households ............................................. 117 

Energy product expenditure in household budgets ..................................... 119 

Energy expenditure (excluding transport) in households with low income ....... 121 

Energy expenditure (excluding transport) in households with middle-income ... 124 

Share of energy in the household expenditure by income and Member States .. 128 

Energy expenditures in the transport sector ............................................. 132 

Change in energy expenditures in the Member States (2010-2020) ................ 136 

Impact of rising energy prices ............................................................... 138 

5.10  Rebound effects and elasticities ............................................................ 145 

6 

Industry energy costs .......................................................................... 149 

6.1 

6.2 

6.3 

6.4 

6.5 

6.6 

6.7 

Introduction ...................................................................................... 151 

Overview of selected Energy Intensive Industries (EIIs) ............................... 151 

Energy costs and their impact at macroeconomic level ............................... 173 

Energy costs for industry ...................................................................... 177 

Exploring energy intensities .................................................................. 197 

Energy costs drivers ............................................................................ 201 

International comparisons .................................................................... 221 

1 

 
 
 
 
 
 
 
6.8 

Introduction to PPAs ........................................................... 231 

7  The EU energy bill ............................................................................. 240 

7.1 

7.2 

7.3 

7.4 

7.5 

Introduction ...................................................................................... 241 

Methodology ...................................................................................... 242 

Drivers ............................................................................................. 245 

Import bill calculation ......................................................................... 249 

Comparison with other estimates of the EU energy import bill ...................... 253 

8  Role of energy for government revenues, taxes and levies ........................... 255 

8.1 

8.2 

8.3 

8.4 

8.5 

8.6 

8.7 

8.8 

Government revenues from the energy sector in the EU-27 ......................... 255 

Energy taxes ..................................................................................... 256 

Excise duties ..................................................................................... 260 

Value added tax ................................................................................. 265 

Tax revenues from oil products ............................................................. 268 

Energy taxes, prices and incentives ........................................................ 269 

International comparisons .................................................................... 282 

Annex: Taxes on energy consumption included in the analysis ...................... 290 

9  Analysis of energy prices ..................................................................... 293 

9.1 

9.2 

9.3 

9.4 

9.5 

9.6 

Introduction ...................................................................................... 293 

Methodology ...................................................................................... 293 

Impact on electricity prices .................................................................. 295 

Impact on natural gas prices ................................................................. 303 

Impact on oil prices ............................................................................ 307 

Conclusion ........................................................................................ 308 

10 

Impact of price developments on low-carbon emission technologies ............. 309 

10.1  Case study 1: Heat pumps vs. gas boilers ................................................. 309 

10.2  Case study 2: Electric vehicles vs. Gasoline internal combustion engine .......... 314 

2 

 
 
 
 
 
 
 
 
1  Introduction 

The 2023 edition1 of the energy prices and costs report, covering developments between 2020 and 2022, comes 

at  a  time  of  almost  unprecedented  upheavals  in  European  and  global  energy  markets;  a  time  of  great 

international  economic  and  political  instability.  The  changes  brought  by  the  energy  transition  were  already 

having  a  profound  impact  on  energy  markets,  which  were  hit  by  two  major  crises  in  succession.  First,  the 

Covid-19 pandemic in 2020 led to a sudden sharp reduction in energy demand and energy prices, as worldwide 

lockdown restrictions led to decreasing household consumption and industrial production. The gradual reopening 

of society in 2021 and the fast recovery of demand led to significant energy price increases - to higher price 

levels than ever seen before. 

The seeds of the second of these shocks, the gas supply crisis, were planted already in the summer of 2021. This 

was the time when Russian state-owned Gazprom did not refill its gas storages in Western Europe and refused 

to offer additional natural gas supplies on the European spot markets. The crisis was further amplified by Russia’s 

preparations  for  and  the  eventual  start  of  the  invasion  of  Ukraine  in  February  2022.  Sanctions  and 

countersanctions led to a sudden drop in Russian gas supplies to the EU, which could not be compensated in time 

with additional pipeline or LNG gas or other fuels. 

The confluence of these economic and geopolitical factors have driven European gas and electricity prices to 

peaks  no  one  could  have  predicted  before,  with  serious  implications  for  European  households,  industry,  the 

broader economy and public finances. Neither of these shocks could have been predicted at the time of the last 

report2. Together, these have focused an unprecedented level of attention on various aspects of energy policy, 

most  importantly  on  security  of  supply,  the  competitiveness  of  European  industry,  the  survival  of  small  and 

medium enterprises (SMEs), and the affordability of energy for European households. 

Even in these difficult times, the EU has not given up on its clean energy and climate ambitions. In fact, a green 

and digital energy system is seen by the EU as the foundation for a resilient European economy. European leaders 

agreed  in  March  2022  to  phase  out  the  EU’s  dependence  on  Russian  fossil  fuels,  which  is  the  basis  of  the 

REPowerEU Plan of the European Commission. This plan outlined the EU’s intention to end energy dependence 

on  Russia  through  saving  energy,  diversifying  supplies  and  accelerating  the  roll-out  of  low-carbon  energy 

technologies. 

At the same time and in preparation for the winter of 2022/23, the EU and its Member States took immediate 

steps to prevent energy (gas and electricity) supply disruptions. Member States reached an agreement on gas 

storage targets as well as savings targets. This has helped the EU to prepare for the winter and to bring down 

energy prices closer to their pre-war level. The reform of the electricity market was ongoing at the time this 

report  was  prepared  but  it  is  seen  as  essential  to  ensure  the  functioning  of  the  single market  and  European 

industrial competitiveness. 

1 Note from the editor: Due to the unprecedented turbulence in European and global energy markets, 
the publication of this study has been repeatedly delayed. All data in this report refers to the situation 
as of end-2022. 
2 Trinomics et al (2020). Study on energy prices, costs and their impact on industry and households 
2020. 

3 

 
 
 
 
 
 
 
 
 
 
                                                      
The main objective of the 2023 edition of the energy prices and costs report is to put these crises 

into context, and to help understanding their impact on energy prices and costs in the EU and globally, based 

on official data and statistics. The report provides analysis across the following sections: 

 

Part  I  of  the  report  provides  the  regular  review  of  developments  on  wholesale  and  retail  prices  for 

electricity (Chapter 2) and gas (Chapter 3). The analysis of the cost elements of retail energy prices provides 

the most extensive, currently available, breakdown of components affecting prices, in particular for taxes 

and levies. These chapters, together with the econometric analysis in Chapter 9, provide an insight into the 

evolution, composition and drivers of retail prices together with international comparisons of the prices for 

petroleum, gas and electricity products. 

 

Part II of the report provides the analysis of price developments for oil, coal and other fuels (Chapter 4); 

and looks at the evolution of households’ energy consumption and expenditure (Chapter 5), the drivers 

behind these changes and the impact on households’ budgets across income levels and energy poverty. 

 

Part III of the report addresses the impact of increasing energy costs on European industry (Chapter 6). 

The assessment of energy-related costs for manufacturing, agriculture and services sectors (more than 40 

economic  sectors)  focused  on  the  most  energy  intensive  industries,  these  sectors’  energy  costs  shares, 

energy intensities and energy prices and, where possible, comparisons with international partners.  

 

Part IV of the report addresses the EU’s energy import bill (Chapter 7), as well as the taxes imposed on 

energy products (Chapter 8), and assesses their impact on public finances and the retail prices of these 

products. 

 

Part  V  of  the  report  provides  an  econometric  analysis  of  the  energy  crisis,  its  drivers  and  impacts 

(Chapter 9),  followed  by  an  examination  of  the  impacts  of  the  price  increases  on  two  key  technologies 

necessary for the green transition: heat pumps and electric vehicles (Chapter 10).  

 

Part VI of this report is the Annexes that present factsheets of each Member State with detailed information 

about their energy prices and costs. 

4 

 
 
 
 
 
2  Electricity prices 

2.1 

Wholesale prices 

Main Findings 

 

 

Reduced economic activity due to Covid-19 lockdown measures led to historically low wholesale 

electricity prices in 2020, with an EU average day-ahead price of 36 EUR/MWh.  

Economic  recovery  following  the  relaxation  of  Covid-19  measures,  together  with  increasing 

tensions  with  Russia,  which  culminated  in  the  Russian  invasion  in  Ukraine,  led  to  increased 

wholesale  electricity  prices  reaching  unprecedented  levels  in  the  EU:  the  average  day-ahead 

price in the first half of 2022 (199 EUR/MWh) was 4 times higher than the average price between 

2010-2020.  

 

In the first half of 2021, global economic recovery was the main driver of wholesale prices, along 

with increasing carbon allowance costs in response to proposed plans to strengthen the EU ETS 

under  the  Commission’s  ‘Fit  for  55’  proposal.  Increasing  gas  prices  (see  Chapter  3),  caused 

partially by Russia’s preparations for war, have begun to drive electricity price increases from 

Q3  2021  onwards  (see  box  A).  The  limited  short-term  options  to  replace  gas-fired  electricity 

generation with other fuels, and shortfalls in hydropower (due to low water levels) and nuclear 

power (due to both unplanned maintenance and scheduled shutdowns) have also contributed to 

keeping prices high for a prolonged period.  

  Globally,  other  regions  have  also  seen  electricity  price  increases.  Japan  experienced  similar 

price increases as the EU given its large dependence on LNG imports for power generation.  A 

handful  of  other G20  countries  (South  Korea,  Türkiye,  India,  South  Africa)  showed  significant 

price increases in 2021 as well (which continued into 2022), but most other G20 countries did 

not. For example, prices in the US have stayed comparatively low and stable.  

 

Renewable  energy  continued  to  grow  within  the  EU  electricity  mix  to  36%  in  2021,  driven 

especially by increased wind and solar generation. Fossil fuel demand for electricity generation 

was slowly declining, but the current high gas prices have led to an increase in coal and lignite 

use for electricity generation and increased LNG imports to compensate for reduced pipeline gas 

supply from Russia. 

 

A decline in nuclear power output is also visible since 2021 and continues to be so in 2022 due 

to decommissioning of plants and unplanned maintenance outages (mainly in France), further 

contributing to the tightness of the electricity supply in the EU. 

 

Prices for future contracts have also steadily increased to very high levels. One-year ahead prices 

in June 2022  were on a  similarly high level as the  day-ahead price. Two-year and three-year 

ahead contracts  were also above  100 EUR/MWh in June 2022 and have been increasing every 

month, which indicates that the market increasingly expects high electricity prices to last. 

  Moderate price differences between European regions are visible, but prices in all regions show 

the  same  trend  of  very  high  prices.  The  Nordic  region  is  the  only  one  where  prices  are 

significantly lower, albeit still high, which is the result of hydropower often being the marginal 

technology  in  the  merit  order,  while  in  most  other  regions  expensive  fossil  fuel-fired  power 

plants  are  the  marginal  unit.  Since  2021,  regions  with  high  fossil  fuel  reliance  and  limited 

interconnection capacity, such as Italy (and the UK) consistently have slightly higher prices.  

5 

 
 
 
 
 
 
2.1.1 

Evolution of day-ahead wholesale electricity prices 

Since  2010,  electricity  prices  in  European  wholesale  day-ahead  markets  have  developed  in  cycles, 

influenced by the demand evolution, costs of the input fuels (coal and gas) and carbon allowances, as 

well as by the changing structure of the electricity generation park. From 2010 to early 2016, prices sank 

to levels not seen in more than a decade. A turnaround, driven by growing consumption and rising fuel 

and  carbon  allowance  prices  and  reinforced  by  the  occasional  technical  problems  at  the  supply  side, 

started in 2016 and culminated in late 2018 on the back of high coal and gas prices. After reaching a low 

average  of  43  €/MWh  in  2017,  the  European  Power  Benchmark3  (EPB)  rose  to  52  €/MWh  in  2018  and 

declined again in 2019 to 43 €/MWh (Figure 1). 

At the beginning of 2019, wholesale electricity prices fell and started to follow a downward trajectory 

again (43 EUR/MWh EPB average in 2019). This time, slowing  economic  activity, falling  fuel costs and 

rising renewable electricity penetration combined to drive prices down. The short-term consequences of 

the Covid-19 pandemic accentuated all these factors: widespread lockdown measures imposed in March 

2020 drastically reduced power demand, sent coal and gas prices to extremely low levels and favourable 

weather  significantly  increased  the  relative  share  of  renewable  energy  in the  power  mix.  As  a  result, 

average European wholesale prices on the spot market reached historically low levels in April 2020 and 

began to recover only slowly in the following months; the EPB benchmark in 2020 averaged 30 EUR/MWh. 

Beginning in 2021, prices started to recover and by the end of the year, reached extremely high levels. 

The increase was mostly due to the higher demand, linked to economic recovery. From mid-2021, several 

other factors contributed, including rising CO2 allowance and natural gas prices, unfavourable weather 

conditions and partial unavailability of the nuclear fleet of France. Electricity prices further increased 

after the summer to exceptionally high levels, mainly due to Russia already reducing gas flows to Europe. 

By December 2021 — two months before the Russian invasion of Ukraine — electricity spot prices averaged 

239 €/MWh in the EU27, driven by high gas prices. Following the Russian invasion, electricity spot prices 

stayed extremely high with average levels between 160 and 260 €/MWh in the 1st half of 2022. 

Figure 1: Evolution of monthly average wholesale day-ahead baseload electricity prices in Europe, showing the 
European Power Benchmark and the range of minimum and maximum prices across the main EU markets. 
Source: S&P Platts, ENTSO-E 

3 The EPB is a weighted average of day-ahead prices in nine representative markets, serving as a general European benchmark. 

6 

 
 
 
 
 
 
 
 
                                                      
Price convergence 

European electricity markets saw mixed developments in terms of price convergence between 2018 and 

2021, ranging from almost full convergence in the Baltic zone and significant increases in convergence 

between  Croatia  and  Slovenia  to  limited  increases  or  decreases  in  the  Nordic  region  and  the  Central 

Western European Zone. The first semester of 2022 also saw mixed developments.  

Figure  2  illustrates  the  degree  of  price  convergence  in  day-ahead  markets  within  selected  European 

regions expressed in percentages of hours in a given year. The price convergence provides an indication 

of the level of market integration, though full price convergence is not an objective in itself, as it would 

require overinvestment in network infrastructure4. Its longer-term drivers are market-coupling initiatives, 

expansion  of  cross-border  interconnection  capacity  and  improved  use  of  available  physical  capacity. 

Fluctuations  in  convergence  may  also  be  caused  by  changes  in  the  amount  of  cross-zonal  capacity 

designated by grid operators for commercial purposes, outages of transmission lines, shifts in the power 

generation mix or in consumption patterns.  

 

In  the  Central  Western  European  Region  (CWE),  where  flow-based  market  coupling  was 

implemented in 2015, full price convergence was 50% in 2021, very similar to the 49% level in 

2020.  

 

In the Central Eastern European Region (CEE) convergence increased significantly in 2021 to full 

price convergence in 54% of the hours. This primarily followed from the coupling of two market-

coupled regions – the 4M MC market (of Czechia, Slovakia, Hungary, and Romania) and the Multi 

Regional Coupling (of 19 European countries), leading to higher convergence despite the price 

escalations.  

 

Similar to previous years, price convergence between the Baltic states stayed very high at 88%. 

Even higher convergence rates have been reached between Slovenia and Croatia (99% in 2021). 

The launch of Flow-Based Market Coupling in the Core region (Nordics, CWE and CEE) in June 

2022 may further increase price convergence rates in the future. 

 

In  the  Nordic  region,  the  previously  observed  trend  of  decreasing  price  convergence  has 

continued, driven by growing trade imbalances of the four Scandinavian countries, which is not 

counterbalanced by an expansion of interconnection capacity. In 2021,  the reason behind the 

low convergence levels could be a combination of new extra-regional interconnections entering 

into  operation  (NO-DE  and  NO-UK)  and  structural  congestions  between  the  Norwegian  and 

Swedish grid.  

 

Between  Ireland  and  the  UK,  price  convergence  increased  up  to  2020,  mainly  resulting  from 

market coupling. However, post-Brexit, convergence has plummeted as market frameworks and 

relationships changed. The decoupling of the implicit system between Ireland and the UK was 

replaced by an explicit system of trading; consequently, British  day-ahead order books are no 

longer coupled with EU markets. Between the UK and France, price convergence was growing 

steadily until a similar drop appeared in 2021 for the same reason (from 27% in 2020 to 4% in 

2021).  A  mitigating  factor  is  the  new  interconnector  between  the  UK  and  France  that  is 

operational since January 2021.  

 

Full price convergence between Spain and France has stayed relatively stable since 2020 up until 

the first semester of 2022, while moderate price convergence (1-10 €/MWh diff.) has dropped 

significantly. This can be explained by the current tight gas market where Spain benefits from 

its large LNG import capacity, while gas interconnection to France is limited hence leading to 

higher gas (and consequently electricity) prices in France. Moreover, higher electricity output 

4 ACER (2022). Wholesale Electricity Markets Monitoring 2021. Key developments. 

7 

 
 
 
 
 
 
                                                      
from  renewable  sources  in  Spain  and  maintenance  issues  with  France’s  nuclear 

energy plants contribute to the divergence of prices. 

In most regions, electricity price convergence decreased in the second half of 2021 in a market with very 

high electricity prices and tight supply. This trend continued into 2022, with convergence dropping (e.g. 

CWE, CEE) or staying at overall low values (e.g. ES-FR, GB-IE) in almost all regions in the first semester.  

Thus, after gradual increases up to 2020, price convergence levels since 2021 show no clear trends and 

stay in most case between 5-60%, which underlines the potential for further investment in strengthening 

network capacities among and within Member States. 

Figure 2: Price convergence on day-ahead markets in selected regions as percentage of hours in a given year 
Source: ENTSO-E, OTE, Nord Pool, S&P Platts. The numbers in brackets refer to the number of bidding zones included. The CWE 
region comprises of BE, FR, NL and DE-LU-AT zones until October 2018, and separate DE-LU and AT zones since then. The CEE region 
includes CZ, SK, HU, RO bidding zones, which are coupled. The Baltic region includes EE, LV, LT bidding zones. The Nordic region 
includes 12 bidding zones of Norway, Sweden, Finland and Denmark. 

2.1.2 

Spot and wholesale futures price trends 

In order to obtain a comprehensive picture of how European wholesale electricity prices have developed 

since 2017, and their impact on the retail prices, a consumption-weighted baseload benchmark (EP5) of 

the five most advanced markets up to a three-year visibility into the future was created and compared 

to a day-ahead (spot) equivalent. This indicator, as shown in Figure 3, gives an indication whether the 

expectations on the future electricity price are higher or lower than the spot price (that is, EP5 spot), 

providing  a  view  on  whether  the  market  anticipates  increasing  or  decreasing  electricity  prices  in  the 

coming months and years.  

Typically,  the  developments  in  the  relation  of  these  prices  are  mixed:  from  2017  to  early  2019,  spot 

prices were higher than future prices anticipating price decreases resulting from higher renewable energy 

penetration and a better supply-demand balance in general. In contrast, for most of 2019 and in 2020, 

spot  prices  were  below  year-ahead  prices,  which  reflected  underlying  economic  conditions:  the 

anticipated  economic  recovery  and  increased  demand  after  the  lifting  of  lockdown  measures.  This 

8 

 
 
 
 
 
 
 
 
 
 
 
situation changed again in 2021, when spot markets diverged upwards from futures prices. 

Figure  3  also  shows  the  evolution  of  the  Dutch  TTF5  gas  price  index  overlaid  on  the  EP5  benchmark 

electricity  prices,  which  clearly  demonstrates  how  electricity  spot  prices  and  TTF  prices  moved  in 

tandem. 

Electricity prices have been increasing in 2021 and 2022 both at the spot market as well as at the forward 

market  for  (multiple)  year-ahead  contracts:  as  spot  prices  went  from  68  €/MWh  in  June  2021  to  194 

€/MWh  in  June  2022;  three-year  ahead  prices  from  44  €/MWh  to  112  €/MWh  in  the  same  period.  In 

addition, year ahead prices show that the market expects prices to stay at similarly high levels for at 

least up to June 2023 (one-year ahead prices up to June 2022 are similar to spot prices). After that, prices 

would decrease to a level that is still higher than electricity prices seen pre-2021 (three-year ahead still 

above 100 €/MWh in June 2022). Since the Russian invasion in February 2022, the two-year and three-

year ahead prices have increased significantly and the gap between spot and future prices has decreased. 

This gives an indication that in the past months (February-June 2022) the market expectation of how long 

high spot prices will remain has significantly increased. 

Figure 3: Monthly evolution of spot and forward wholesale electricity prices and the energy component of retail 
prices in Europe since 2017 in nominal prices. The right axis shows gas TTF future prices. 
Source: S&P Platts, VaasaETT. The average energy component of household retail prices is weighted using population figures of EU27 
capitals. Note: for households VaasaETT data is used instead of Eurostat, which leads to different prices since different 
methodologies are used. 

Figure 3 also illustrates that the interplay between spot and forward prices is not always straightforward. 

Market operators buy a significant part of the electricity supply to end-users on the forward market via 

one or more years-ahead contracts, so forward wholesale prices play a vital role in determining the energy 

component of retail prices for households and industry. This is one  reason why a change in wholesale 

prices is channelled into retail prices with some delay and usually in a non-linear fashion (as demonstrated 

in section 2.2.2 on retail prices and in Chapter 9 via the econometric analysis). Since wholesale prices 

5 TTF refers to the Dutch Title Transfer Facility (virtual) trading hub, the largest European gas hub in terms of traded volume of gas, 
hence becoming an important benchmark hub price for natural gas in Europe.  

9 

 
 
 
 
 
 
 
 
 
                                                      
increased in 2021, retail prices have started to increase as well but (as shown in Figure 3) 

the increase was not yet strongly visible in 2021. The retail energy price component normally lies above 

spot  and forward  wholesale  prices  to  cover  the  suppliers’ costs  and  profit  margin.  However,  since  Q3 

2021 retail prices have become lower than spot prices, mostly due to electricity being supplied to end-

users  at  contractually  fixed  or  regulated  prices,  as  well  as  energy  companies  having  already  bought 

electricity for lower prices before the price increases. Thus, there is a significant lag between changes 

in  wholesale  and  retail  prices,  and  retail  prices  could  continue  to  increase  well  into  2023  as  more 

contracts come up for renewal at higher prices - a trend already emerging in 2022 (see section 2.2).  

Figure  4  shows  the  regional  wholesale  electricity  prices  in  the  North  Western  Europe  (NWE)  market 

coupling  area,  including  Central  Western  Europe  (Germany,  France,  Austria  and  the  Benelux),  Great 

Britain and Ireland, the Nordic markets (Norway, Sweden, Denmark, Finland and the Baltic States) and 

the Iberian market (Spain and Portugal). This figure clearly shows the price increases since early 2021 in 

all markets, with baseload prices sharply increasing in all regions.  

Prices in the Nordpool market, despite sharp rises, remained lower than in other markets, clearing at 

roughly a 100€/MWh – 150€/MWh discount compared to the other markets. Nordpool generally has the 

lowest wholesale prices in Europe thanks to the prominent role of hydropower and increasing wind energy 

generation in the region. Prior to the energy crisis, Central Western Europe (CWE) prices moved closer to 

Nordpool  levels  between  2018  to  2020  on  the  back  of  the  rapidly  rising  share  of  renewable  energy 

(especially during periods of high wind generation) and stable nuclear power generation.  

Up until 2021, wholesale electricity prices in the Iberian region generally exceeded the EPB benchmark. 

However, since mid-June 2022 (when the so-called “Iberian exception” was implemented to subsidize gas 

used in electricity generation) prices in Iberia are lower than the EPB. The lower price is partially the 

result of the market intervention, but also due to the large LNG import capacity and subsequent lower 

gas  prices.  While  normally,  gas  pipeline  supply  is  cheaper,  after  Russia  restricted  pipeline  deliveries, 

long-term LNG contracts already in place in Iberia provide for cheaper supply than gas traded on European 

exchanges, such as TTF.  

Prices in Great Britain and Ireland (GB) were generally higher between 2018 and 2021 than the EPB; partly 

due to the carbon price support mechanism in the UK, which places additional costs on electricity from 

fossil fuels. In the current high price situation, this premium is still visible and GB baseload prices are 

often the highest in the NWE region, although they follow a very similar trend comparable to the EPB. 

However, it is worth noting that GB prices also decreased more sharply in the first half of 2022 due to 

less exposure to Russian energy commodities and higher LNG imports. 

10 

 
 
 
 
 
 
 
 
 
 
Figure 4: Regional average monthly day-ahead wholesale nominal prices in the North-Western Europe coupled area 
Source: S&P Platts, ENTSO-E. 

In the Central and Eastern European region (CEE – Poland, Czechia, Slovakia, Hungary, Romania, Croatia 

and Slovenia) prices followed the EPB closely in 2018 but slightly disconnected in 2019 and 2020 as higher 

carbon  emission  prices  imposed  additional  costs  on  coal  and  lignite-fuelled  power  generation,  which 

constitutes a large share of the regional power mix. As a result, in 2020, CEE prices were on average 30% 

or 10 €/MWh higher than the EPB. Since the electricity price increases that started in 2021, wholesale 

prices in the CEE have been at all-time highs and very closely tracking the EPB benchmark. As in other 

regional electricity markets, price increases were mainly triggered by spiking gas prices.  

While the average CEE prices converged with the EPB (1% lower average wholesale prices in 2021), prices 

in most CEE countries, except Poland, were still moderately higher than the EPB. The gas price spike was 

so strong that coal-fired power plants, despite extra carbon emission costs, were in some cases cheaper 

to  run  than  gas-fired  plants  and  Poland,  which  heavily  relies  on  coal/lignite  (68%  of  its  electricity 

generation in the first quarter of 2022) saw significantly lower wholesale prices compared to most other 

CEE countries. However, increasing coal prices (see section 4.1), coinciding with increasing gas prices, 

are also having some impact, at least in countries which import significant quantities.  

Four CEE day-ahead markets (Czechia, Slovakia, Hungary and Romania) are coupled, but the overall price 

convergence within the area remains lower than in the CWE region (see Figure 2). The Polish market is 

coupled with Sweden (and thus with the NWE region). The Croatian market is coupled with the Slovenian 

market, and, implicitly, with the Hungarian market; the latter two are in the process of coupling.  

11 

 
 
 
 
 
 
 
 
 
 
Figure 5: The Central Eastern Europe average day-ahead monthly wholesale price (nominal) and the EPB benchmark. 
Source: S&P Platts, ENTSO-E 

Italy  and  Greece  traditionally  display  higher  wholesale  electricity  prices  compared  to  the  EPB  due  to 

heavy reliance on fossil fuels, particularly gas, in their power generation mix and relatively high reliance 

on imports (Figure 6). Since 2021, Italy and Greece have — like all other EU Member States — seen all-

time high electricity prices.  

Prices  in  Greece  only  moderately  exceeded  the  EPB  in  2017  and  2018  but  this  price  differential 

significantly  increased  during  2019  and  2020.  This  can  generally  be  explained  by  the  fact  that  during 

periods of high electricity prices, Greece’s local lignite use for power generation has a mitigating effect 

on the electricity price while during periods of lower electricity prices the high carbon emission cost for 

lignite (compared with gas or even hard coal) results in a relatively higher electricity price. This lignite 

use  in  power  generation  in  Greece  is  gradually  being  reduced  since  2020,  which  also  reduces  this 

mitigating effect on high prices. Wholesale electricity prices in Italy were generally (until 2021) high as 

it is a large net importer of electricity (from CWE) and relies heavily on gas for power generation (59% of 

power generation in Q1 of 2022). Soaring gas prices, high reliance on gas for power, combined with tight 

supply margins made Italy the most expensive market in Europe in 2021 – H1 2022. A 44% reduction in 

hydropower  production  in  Q1  2022  compared  with  Q1  of  2021  was  also  an  important  factor,  as  this 

technology typically represents 15-20% of total power generation.  

Bulgarian wholesale prices in contrast have shifted from a slightly lower level compared to the EBP in 

2017 and 2018 to higher level in 2019 and 2020 as a result of lignite use and associated increased carbon 

(ETS) costs. Since 2021, Bulgarian prices saw similar increases as in the rest of Europe and were quite 

similar  to  the  EPB.  The  Bulgarian  and  Romanian  markets  are  coupled  since  October  2021,  which  has 

increased competition and price convergence with the rest of the zone. 

12 

 
 
 
 
 
 
 
 
 
 
Figure 6: Regional market prices in Italy and South Eastern Europe 
Source: S&P Platts, ENTSO-E 

2.1.3 

Factors impacting the evolution of wholesale electricity prices 

On  the  demand  side  of  the  electricity  market,  residential  consumption  (~30%  of  total  EU  electricity 

consumption in 20206) tends to be driven by the increasing number of households, the proliferation of 

electric appliances and the electrification of heating; while energy efficiency measures such as improved 

insulation,  LED  lightbulbs,  and  more  efficient  appliances  push  electricity  demand  lower.  Seasonal 

temperatures (e.g. cold or heat waves) play an important role too, by driving demand for heating and/or 

cooling  (more  info  on  gas  price  drivers  in  Chapter  3).  In  the  case  of  businesses,  the  consumption  of 

electricity is mainly influenced by two similarly countervailing factors: the level of economic activity on 

the  one  hand,  and  energy  efficiency  measures  on  the  other.  Whilst  the  short-term  price  elasticity  of 

electricity demand is quite low, the significant increases in prices since 2021 have nevertheless led to a 

renewed focus on energy efficiency and demand reduction.  

Figure 7 shows the trends in electricity consumption, economic activity, and population. The COVID-19 

pandemic and associated lockdowns greatly slowed down the EU27 economy, as represented by 6% dip in 

GDP in 2020. While electricity consumption was already observing a decoupling from population growth, 

indicating  the  strengthening  effect  of  efficiency  measures,  the  stark  reduction  in  economic  activity 

further  drove  down  electricity  consumption  between  2019  and  2020.  In  2021,  both  electricity 

consumption and GDP bounced back to pre-COVID levels.  

6 Source: Eurostat 

13 

 
 
 
 
 
 
 
 
 
                                                      
Figure 7: Electricity consumption, population and economic growth in the EU27 
Source: Eurostat 

On the supply side, the variable costs of the marginal power generation technology in the merit order 

(including  electricity  imports  as  a  competing  alternative)  of  a  particular  market  determine  wholesale 

prices – see Box A. Therefore, the structure of the electricity generation park and its changes can provide 

important  indications  about  drivers  of  price  trends.  Figure  9  shows  the  changes  in  EU27  electricity 

generation mix between 2010 and 2021. Between 2010 and 2019, the fossil fuel share decreased from 

46%  to  37%.  During  the  COVID-19  pandemic,  lower  overall  electricity  demand  led to  lower  production 

from  fossil  sources,  increasing  the  renewables  share  further  to  36%  in  2021.  In  2020-2021,  fossil  fuel 

shares  in  the  electricity  generation  mix  dropped  to  34%  and  29%,  respectively.  As  economic  activity 

recovered  as  pandemic  measures  eased  in  2021,  demand  and  fossil  generation  rebounded  towards 

previous levels.  

Box A – Relationship between wholesale electricity prices and gas prices 

Electricity wholesale auctions in Europe generally rely on a merit-order curve for price discovery and 

market  clearing.  The  merit  order  curve  orders  prices  for  generation  based  on  marginal  cost,  where 

renewable and nuclear options generally have low costs, with coal and gas turbine plants following, 

and ending with high-cost oil-burning or gas-fired ‘peaking’ plants. Due to the current market clearing 

mechanism, electricity  prices are determined by the  auction's clearing price driven  by the marginal 

technology.  This  technology  was  previously  coal,  whilst  in  a  few  timeslots  with  higher  demand  it 

became gas. Increased carbon emission costs in recent years have driven coal prices and their market 

prices higher, while lower gas prices led to lower market prices for gas plants. Consequently, marginal 

technologies  in  many  markets  have  slowly transitioned  to gas  generation. This  is  especially  true  for 

times of market scarcity, where gas plants have become the common high-cost "balancing" unit. 

This  relationship  between  electricity  prices  and  gas  prices  has  strengthened  in  the  past  years. 

Compared to prior years, most (80%) gas plants in the EU procure gas via futures contracts. Thus, the 

prices of gas futures, for example at the Dutch TTF hub, drive the price of electricity markets in many 

timeslots, and, often, average prices as well. The Russian invasion of Ukraine has demonstrated that a 

strong link exists between electricity prices and gas futures prices. We witness this connection very 

well  on  Figure  8,  which  shows  the  increase  in  gas  prices  followed  by  a  large  increase  in  European 

14 

 
 
 
 
 
 
 
 
 
  
electricity market prices. The economic recovery from the COVID-19 pandemic also drove up gas and 

electricity demand, placing further demand-side pressure on market-driven prices.  

Figure 8: Day-ahead gas prices (NL TTF hub futures), day-ahead electricity prices (European power 
benchmark) and average energy component of household retail prices development since 2020 (index 1 = 
average 2019 price) 

Note: Data from VaasaETT is used for the household retail prices, similar to Figure 15, which shows higher costs increases 
than Eurostat data. 

The connection between gas price and electricity price is not equal across Europe. By 2020, most gas 

(96%) in CWE was already purchased via futures contracts, and thus electricity prices have been heavily 

exposed  to  gas  price  fluctuations.  However,  in  Mediterranean  countries  (53%),  Scandinavia  and  the 

Baltics (66%), and Southeast Europe (84%), a larger (but minority) share is traded via indexes tied to oil 

prices (which have increased less than gas futures). Therefore, the exposure of electricity prices in 

these regions to gas price fluctuations has been weaker. 

LNG imports have historically been expensive compared to hub prices of gas in Europe, and therefore 

in  markets  with  good  pipeline  connections  they  have  played  a  relatively  small  role.  However,  LNG 

imports  have  become  both  a  necessity  (due  to  Russian  pipeline  supply  disruptions)  and  more 

economically competitive in recent years, reaching 40% of European imports in September 2022 (see 

Figure 51). In the past, global LNG delivery prices typically set an upper bound for gas futures, and thus 

indirectly an upper bound for electricity prices. However, this assumed secure gas supplies, with few 

disruptions. In the current  situation, the disruptions and uncertainties around  available gas  supplies 

have led to new ceilings being reached. 

Renewable electricity sources 

Various  EU  and  Member  States-level  policies  support  the  continuous  growth  in  renewable  energy 

generation  (Figure  9).  Various  instruments  such  as  certificate  schemes,  feed-in  tariffs  or  feed-in 

premiums have incentivised further deployment of wind and solar power generation sources. In addition, 

the falling investment costs of renewable technologies and higher carbon emission costs (due to EU ETS 

and other carbon pricing schemes) have also increased the amount of interest in new renewable energy 

projects, which come to  rely less and less on public financial support. Renewable energy projects are 

either set up by end-users to cover part of their consumption, or by utilities / project developers that 

hedge  their  price  risks  by  concluding  long-term  power  purchase  agreements  (PPAs).  PPAs  are  signed 

15 

 
 
 
 
 
 
 
 
  
 
typically  either  with  industrial  electricity  consumers  or  with  utilities  that  re-sell  the 

electricity to consumers (see also Section 6.8). 

While renewable energy is becoming cheaper, fossil fuel-based electricity has become more expensive, 

due to the increasing cost for carbon emissions and the recent price increases for fossil fuels. This means 

that  in  a  growing  number  of  markets,  renewable  energy  technologies  are  able  to  compete  with 

conventional technologies without any subsidies. As the subsidy levels in some national support policies 

are linked to the actual electricity market prices, such as the schemes in the Netherlands and Belgium, 

the public subsidies are now close to zero. The recent electricity price increases, whilst very harmful for 

consumers  and  businesses,  improved  the  business  case  of  renewable  energies  and  reinforced  their 

important role in reducing GHG emissions and energy import dependence, and increasing energy supply 

security on the medium and long term.  

Figure 9: Electricity generation mix in the EU27 
Source: Eurostat. Based on gross generation  

Coal 

With regard to the use of coal for power generation, the absolute consumption of coal in the electricity 

sector was lower in 2021 than in 2019. However, the relative share of coal/solid fuel use for electricity 

generation was increasing in 2021. Moreover, from January to May 2022, coal use increased in absolute 

volumes by 11% compared to the first 5 months of 2021, due to very high natural gas prices that made 

gas-to-coal switching attractive, even with the carbon emission surcharge. This price-led switching was 

reinforced by national policy changes, with a number of Member States providing temporary reprieves 

for  coal-fired  power  plants  that  would  normally  close  to  meet  the  climate  goals.  Amongst  others  the 

Netherlands, Germany, Austria and Italy delayed scheduled closures of coal-fired capacity and/or have 

temporarily allowed their use.  

Figure 10 provides a more detailed look at the power generation mix and its changes within the last 4 

years, including data from early 2022. Seasonal variations can be observed, with electricity use peaking 

in winter (additional lighting and electric heating demand). During the summer of 2020 and  2021, the 

share of renewable energy sources in the power generation mix showed a significant spike, while in the 

16 

 
 
 
 
 
 
 
 
 
 
winter months their share was lower: increase in wind energy production is accompanied 

by lower solar generation and higher absolute electricity demand. The harsh winter of 2021 led to higher 

electricity demand, mainly covered by a significant increase in fossil fuel shares. Lower power demand 

during  the  lockdown  saw  the  share  of  coal  diminishing  in  2020,  but  coal-fired  power  generation  has 

bounced  back,  and  is  increasing  into  2022.  Finally,  a  decline  in  nuclear  power  – both  in  absolute  and 

relative terms - can be observed from the end of 2021 into 2022 due to decommissioning of power plants 

(e.g. in Germany) as well as exceptionally high planned and unplanned unavailability, mainly in France 

where in September 2022, 32 of all 56 plants were off-line for maintenance or technical reasons.7 

Figure 10: Monthly electricity generation in the EU27 and the shares of renewables and fossil fuels 
Source: Eurostat 

The  variable  costs  of  each  generation  technology,  which  play  a  crucial  role  in  determining  wholesale 

prices, differ greatly. Wind energy farms, solar PV installations, nuclear and hydro power plants have low 

variable generation costs. Coal-, gas- and oil-fired generation technologies have much higher operational 

costs (due to their cost for primary energy use and carbon emissions – see Figure 12), therefore these are 

mostly used if the output of the plants with low variable costs is not sufficient to cover the demand. They 

usually provide ancillary services and flexibility to the electricity system and set the clearing price in the 

spot market when they are the marginal unit in the merit order. 

Increasing  electricity  generation  from  variable  renewable  energy  sources  (wind,  solar)  and  other  low 

marginal cost technologies started to push fossil fuel plants out of the merit order during an increasing 

number of hours. This dragged wholesale spot prices to lower and in some cases even to negative levels.  

In Figure 11, monthly coal, gas and emission allowance prices and the EPB are indexed to 2008 values so 

that relative changes can be seen compared to their 2008 level. The figure shows that up until 2020 the 

power and fuel price indices roughly halved compared to their 2008 levels, while CO2 emission prices also 

decreased significantly from 2008, but increased gradually from 2017. However, all indices have increased 

significantly since 2020.  

7 EDF(2022). List of outages. 

17 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 11: Monthly average day-ahead coal, natural gas and carbon price indexes, indexed to the 2008 average 
price 
Source: S&P Platts 

The staggering increases in the gas price since 2021 (up to 1100% in June 2022 compared to the  2020 

prices during the Covid-19 lockdown) were accompanied by similarly high increases in the electricity price 

(EPB). This indicates the role of gas as main driver for the recently increasing electricity prices.  Since 

around 2016, gas and electricity prices increasingly changed in parallel, indicating that gas became the 

main fuel driving electricity prices, following the large-scale coal-to-gas switching that took place most 

notably in the Netherlands, Greece, Germany, Portugal and Spain. From the summer of 2021, gas prices 

soared, also causing an increase of electricity prices, only somewhat dampened by the replacement of 

gas  with  coal  in  power  generation.  Following  the  Russian  invasion  of  Ukraine,  we  witnessed  an  even 

stronger correlation between gas and electricity prices. 

Figure 12: Monthly average EU ETS carbon prices in EUR/tCO2e 
Source: S&P Platts 

Emission allowances 

After  a  period  of  low  prices  between  2011  and  2016,  CO2  emission  allowance  prices  (Figure  12)  have 

embarked on a rising trajectory since 2017. Between 2018 and 2020, allowance prices fluctuated around 

18 

 
 
 
 
 
 
 
 
 
 
25 EUR/tCO2, which was already significantly higher than in the 2011-2017 period. Starting 

from Q1 of 2021 the emission allowance prices significantly increased in anticipation of tightening of the 

EU ETS cap as part of the ‘Fit for 55’ policy package presented in July 2021. In the second half of 2021, 

allowance prices continued to increase to all-time high levels and from December 2021 until June 2022, 

the allowance price fluctuated around a level of 80 EUR/tCO2. This carbon price increase also partially 

correlates  with  the  increasing  electricity  prices  especially  during  the  last  quarter  of  2020  and  a 

considerable part of 2021. 

The carbon price has a particular influence on the electricity generation mix and prices in countries and 

regions that heavily rely on lignite and/or coal generation.  The balance between the cost of emission 

allowances and the cost of gas was driving the switch from coal-to-gas for electricity generation in the 

years  before  2021.  However,  since  2021,  it  is  increasingly  the  gas  price  and  security  of  supply 

considerations that were driving this dynamic. 

Increased integration of European wholesale electricity markets, supported by EU and national policies, 

could help reduce EU electricity prices in the future. Initiatives such as European Single Intraday Coupling 

(SIDC), which since June 2022 links intraday markets of more than 23 countries8, should bring about more 

efficiencies thanks to improved liquidity and increased cross-border electricity trade. Other initiatives, 

such  as  flow--based  cross-border  capacity  allocation  and  enhanced  availability  of  cross-border 

transmission capacity for trading purposes, could also contribute to this objective. 

At  EU  level,  electricity  trade  with  third  countries  (except  Norway  as  it  is  integrated  already  in  the 

Nordpool  market,  and  Switzerland  as  a  neighbour  with  significant  interconnection)  does  not  influence 

significantly wholesale market prices as extra-EU electricity imports or exports are negligible compared 

to the total consumption of the EU27 (i.e. around 1.5%-2% of the total9). However, for some regions the 

situation is different (e.g. Baltic states and Italy), as they source significant amounts of their supply from 

abroad (see Figure 13), including from third countries.  

Figure 13 shows the net electricity flow positions in European regions. As electricity normally flows from 

areas with lower prices to higher-priced ones, net exporter regions have in general lower wholesale prices 

compared to net importers. 

 

Central Western Europe is normally the main exporting region thanks to its diverse generation 

capacities,  including  large  nuclear  generation  base,  competitive  prices  and  a  central 

geographical  position.  However,  due  to  the  high  planned and  unplanned  unavailability  of  the 

nuclear power plants in France, starting in the fourth quarter of 2021 and continuing into 2022, 

net exports of CWE dropped to around zero. 

 

The  Nordic  regions  are  generally  electricity  exporters,  following  a  seasonal  cycle  driven  by 

hydropower and seasonal refilling of reservoirs. Since 2021 there were consistent net exports in 

the Nordic region as other renewable generation has also increased, generating higher surpluses 

for export. 

  Up until June 2022 the Baltics, Italy and CEE remained net importers. 

 

SEE and Iberia shift regularly between net imports and exports, depending on the local power 

generation  circumstances.  Since  2022,  Iberia  is  consistently  a  net  exporter  to  France, due  to 

8 ENTSO-E (2022) SIDC Implementation  
9 Based on data from Eurostat [NRG_TI_EH]  

19 

 
 
 
 
 
 
 
 
 
                                                      
lower  electricity  prices  resulting  from  a  temporary  cap  on  gas  prices  in  the 

peninsula (‘Iberian exception’). 

 

A notable change, resulting from the  specific market conditions in 2022, was the British Isles 

becoming, for the first time in more than a decade, a net exporter during April to (at least) June 

2022.  This  can  be  explained  by  soaring  electricity  prices,  which  have  made  coal-fired  power 

generation competitive, and the UK able to fill part of the supply gap mainly in France left by 

(temporary) nuclear shutdowns. 

Figure 13: Net electricity flow positions of individual European regions 
Source: ENTSO-E 

2.1.4 

International comparisons 

Comparing the average electricity prices in the EU27 with wholesale prices of Europe’s most important 

trading partners can provide a useful insight into how energy cost differentials can have an impact on the 

competitiveness of European energy-intensive industries with a high international exposure. Electricity 

bills are one of the factors determining international competitiveness. 

Figure  14  below  shows  a  comparison  of  wholesale  electricity  prices  in  the  EU  with  key  global  trade 

partners (USA, UK, Japan and China) from 2008 up until 2022. The figure shows that: 

 

 

since 2008 wholesale electricity prices in the US have been mostly lower than in the EU27 (with 

a small exception in 2014 and then in early 2020) 

prices  in  Japan  increased  significantly  after  the  2011  nuclear  accident  at  Fukushima  and  the 

subsequent  national  nuclear  shutdown  and  remained  significantly  higher  than  in  the  EU  until 

2016. Between 2016 and 2020, the prices were somewhat comparable though prices remained 

higher in Japan, while there was a large peak in Japanese prices in Dec 2020/Jan 2021, due to 

cold  weather,  a  shortage  in  LNG  supplies  and  failures  in  the  market  mechanism10.  In  both 

markets, electricity prices were driven by global prices for LNG and have followed similar upward 

trajectories during 2022.  

  Wholesale  electricity  markets  are  still  being  developed  in  China,  but  proxy  prices  (for  large 

industrial consumers) have been relatively stable, with a slight continuous decline between 2017 

10 Koichiro (2021). The Price Surge in the Japanese Wholesale Electricity Market in January and the Lessons for Market Design  

20 

 
 
 
 
 
 
 
 
 
                                                      
and 2020. Data beyond 2020 is not available, although upwards price pressures in 

2021 and 2022 are understood to be strong as coal prices have increased11. 

 

Electricity prices in the UK have closely tracked the EU average over time, typically being a little 

higher than the EU average. Their similarity is unsurprising with most of the same market drivers 

at play as well as large interconnection capacity (both electricity and gas) between the EU and 

UK. 

Figure 14: Comparison of monthly average day-ahead wholesale electricity prices in the EU with global trade 
partners (USA, UK, Japan, and China)12 

Figure 15 below  shows wholesale electricity price trends in the other G20 countries:  Australia, Brazil, 

Canada,  India,  Indonesia,  Mexico,  Russia,  Saudi  Arabia,  South  Africa  and  Türkiye.  Consistently  low 

electricity prices have been observed in Canada and Russia between 2008 and 2022, the former driven by 

abundant hydropower and nuclear (these two combined provide more than 80% of the electricity mix), 

the latter by artificially low (subsidized) prices. Prices in Brazil and South Korea are very volatile, with 

high peaks between 2012 and 2015.  

The figure clearly shows that none of the countries has experienced a price spike as high as the EU27 in 

2021 – 2022. However, price spikes are evident in many (but not all) of the other G20 countries, most 

notably India, South Africa, Türkiye and South Korea. Prices in other countries have not spiked in similar 

ways, which mostly correlates with countries that are largely self-sufficient in their fuels for electricity 

production. 

11 Integral (2022). China Raises Cap on Electricity Price: What has Changed and Possible Impact for Business     
12 Note that price series for 2022 in this section are all presented in nominal prices, as deflators are not yet available. 

21 

 
 
 
 
 
 
 
 
 
                                                      
Figure 15: Comparison of average monthly day-ahead wholesale electricity prices in the EU27 with global trade 
partners (Australia, Brazil, Canada, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Türkiye). 

Box B: Most recent day-ahead wholesale electricity price developments in the EU and internationally 

Whilst standardised price data extending the series used in the rest of this section is not available yet for all 

countries  for  2022,  the  price  movements  in  2022  are  of  particular  interest  given  the  continuing  large 

movements.  Alternative  price  series  can  help  to  provide  insights  into  price  changes  in  the  EU  and 

internationally in this period. Extracts from the IEA Real-time electricity price tracker13 are presented below, 

which chart electricity price fluctuations over the last year 29th Aug 2021 to 29th Aug 2022.  

These provide data for all EU MS except Cyprus and Malta and show how prices first spiked in many Member 

States around Dec 2021-Jan 2022 and then again at the start of March as Russia invaded Ukraine. In many 

Member  States,  the  crisis  has  further  evolved  to  higher  peaks  in  July  and  August  2022,  with  prices  up  to 

600 EUR/MWh in some countries. Prices at the end of August 2022 were above 370 EUR/MWh in 18 MS, and 

lower only in Finland, Estonia, Poland, Ireland (as of June 2022), Portugal, Spain and Sweden. This is higher 

already than the 230 EUR/MWh wholesale price peak illustrated as the EU average at the end of 2021. 

The EU prices stand in significant contrast to prices in other G20 countries (except for the UK). Whilst prices 

in Japan, Australia and Argentina have also exceeded 200 EUR/MWh in 2021, prices in Australia have since 

then dropped below 100 EUR/MWh and in Japan below 200 EUR/MWh. Only in Argentina does it appear that 

prices may approach the levels of countries worst affected in the EU. Prices in the US and Mexico have more 

than doubled since February 2022, but they remain around 100 EUR/MWh, in stark contrast to most of the 

EU.  Prices  in  Türkiye  whilst  increasing,  also  remain  under  200  EUR/MWh,  though  also  a  consequence  of 

government intervention/subsidies on the gas market. 

13 IEA (2022). Real-time electricity price tracker. 

22 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 16: Extracts from the IEA Real-time electricity price tracker on August 29th 2022. 

23 

 
 
 
 
 
 
 
 
 
2.2 

Retail prices 

Main Findings 

 

Retail  electricity  prices  for  household  consumers  increased  between  2019  and  2021,  driven 

mainly by rising wholesale prices (as discussed above). In the case of households, the average 

EU27 retail price went up by 8% (+16 EUR/MWh) to 231 EUR/MWh in 2021.  

 

Data for the first half of 2022 suggests retail prices are following the wholesale price trend with 

a delay, with average household prices increasing to 311 EUR/MWh (+32%). Significant (43%) tax 

reductions have helped to mitigate this increase, with average taxes around 20 EUR/MWh lower 

by mid-2022 than in 2021. 

 

Fast developments in the wholesale electricity market led to household electricity prices being 

lower than the wholesale price in most EU markets. This deficit is an important factor in financial 

difficulties and bankruptcies of some electricity suppliers. 

  Mid-size  industrial  companies  (Band  ID)  experienced  a  15%  (+16  EUR/MWh)  increase  in  the 

average price to 124 EUR/MWh in 2019. Industrial retail prices jumped significantly in 2021, and 

have  continued  to  increase  sharply  from  an  average  price  of  124  EUR/MWh  in  2019  to  191 

EUR/MWh by June 2022. Industrial prices appear to respond more quickly than household prices 

to movements in wholesale markets (as discussed in 2.2.2). 

 

The spread of prices for EU households remains similar and significant, with the retail prices in 

2021 ranging from a high of 321 EUR/MWh (Germany) to a low of 100 EUR/MWh (Hungary). From 

late 2021 into the first half of 2022, this price spread has grown significantly. 

 

The amount of electricity taxes and levies paid by households in the EU27 per MWh has stabilized 

since  2017.  However,  for  industrial  enterprises  taxes  and  levies  have  increased  since  2010. 

Following a slight (4%) decrease in 2021, these stood at an average of 37.7 EUR/MWh. The role 

of the tax component remains important (at 30% of total costs) for industry. This is explored in 

more detail in Chapter 8.  

  On the international level, retail prices for households in the EU remain higher than almost all 

G20 countries. Only prices in Australia, the UK and Japan are at a similar level. 

 

Industrial  prices  are  increasing  as  well,  but  price  increases  are  limited  in  some  countries 

(especially  China  and  the  USA).  This  indicates  a  worsening  of  the  EU’s  global  industrial 

competitiveness, as EU prices were already amongst the highest before the energy crisis. 

2.2.1 

Household electricity prices 

This analysis of the prices paid by household electricity consumers is based on the weighted EU27 average 

for  the  DC  band (covering  an  annual  consumption  of  2  500  to  5  000  kWh),  available  from  Eurostat.  A 

comparison of reporting countries based on a most representative band is also included. In this case, all 

Member States (and selected non-EU countries) are represented by the consumption band, which accounts 

for the largest share in their total household consumption. Therefore, they are represented by the price 

of the consumption band in which the most electricity was sold, irrespective of the number of consumers 

in the band. 

Evolution of household electricity prices 

EU household electricity retail prices in the DC band increased by 22% between 2010 and 2021 (see Figure 

17  [left]),  with  recent  wholesale  price  increases  expected  to  drive  further  increases  in  2022  and 

potentially beyond. In absolute terms, the average EU27 retail price increased from 215 EUR/MWh in 2019 

to 231 EUR/MWh (+16 EUR/MWh) in 2021. The increase of end-user prices was driven by two components: 

in Energy and supply (+16 EUR/MWh) and Network costs (+3.6 EUR/MWh), whilst taxes and levies declined 

24 

 
 
 
 
 
 
 
during this period (-3.1 EUR/MWh). The increase in the energy and supply component shows 

that wholesale price increases were slowly being incorporated in retail prices since (the end of) 2021, 

which further continued in 2022 (see Figure 26). 

When looking at the retail price composition between the cost of the energy, network costs and taxes 

and levies (see Figure 17 [right]), the taxes and levies category saw its share in the total bill decrease 

from 40% in 2017 to 37%  in 2021. Further analysis  of this component is provided in the  following  sub-

section. As the energy prices were decreasing between 2010 and 2020, the share of energy and supply 

costs in the total bill was also decreasing. However, as the wholesale prices increased in 2021, the share 

of the energy component has increased to 37% of the total bill in 2021. Most importantly, the energy and 

supply cost levels in 2021 exceeded all recorded values since 2010. 

Figure 17: Evolution and composition (left) and relative composition (right) of the EU nominal household price 
(DC band) 
Source: DG ENER in-house data collection, Eurostat 

Composition of taxes, levies, fees and charges 

In order to understand how Member State policies and fiscal instruments impact household retail prices, 

the category of taxes, levies, fees and charges is broken down into six subcomponents: VAT, renewable 

energy taxes, capacity taxes, environmental taxes14, nuclear taxes and other. Note that only policies and 

mechanisms  that  directly  influence  retail  prices  are  considered,  and  not  all  tax  subcomponents  are 

applied in all EU Member States. The following chart displays an evolution of EU27 averages. More details 

about energy taxes are in chapter 8. 

Figure 18 shows that taxes and levies associated with renewable energy support policies have declined 

since 2019 from 26 EUR/MWh to 24 EUR/MWh in 2021, while the capacity taxes continued to gradually 

increase over time. Since 2010, capacity taxes have increased by 288% and reached 3.9 EUR/MWh in 2021 

(although  still  a  minor  part  of  the  tax  component).  Environmental  taxes  and  levies  have  followed  an 

increasing trend (+49%) since 2010, but their amount has slightly decreased to 17.9 EUR/MWh in 2021 

after  peaking  at  19  EUR/MWh  in  2019.  The  elimination  of  the  EEG  surcharge  in  Germany  in  202215  is 

expected to drive further reductions in the environmental taxes and levies component in the next few 

years. 

14 This category includes general energy taxes, which are typically classed as having an environmental purpose 
15 German Federal Government (2022). Renewables levy abolished 

25 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 18: Evolution of taxes, levies and charges in the electricity bill for EU households since 2010 (DC band) 
Source: DG ENER in-house data collection, Eurostat 

Between  2019  and  2021,  the  structure  of  the  taxes  and  levies  component  showed  minor  changes:  a 

downward shift in the environmental taxes and renewable energies contribution (both  -1%), while VAT 

and capacity tax increased (both +1%) (Figure 19). 

Figure 19: Composition of the taxes and levies component of household electricity prices in 2021 (DC band) 
Source: Eurostat 

This next section presents a brief description of the individual components. 

Value Added Tax 

VAT is applied on household electricity bills in all reporting countries. The EU VAT Directive explicitly 

allows Member States to apply reduced rates to electricity.  As a result, VAT rates range  from 5-6% in 

Greece  and  Malta  to  25-27%  in  Denmark,  Sweden  and  Hungary.  Most  common  rates  are  around  20%. 

However, since October 2021 and continuing in 2022 many countries use (temporarily) lower VAT rates 

as part of compensation measures for high energy prices. VAT accounted for 38% of the tax component, 

making it the largest subcomponent, and overall, it accounted to 16% of the total retail electricity bill 

for households. Since VAT is based on the value of all other elements in the bill, even if VAT rates decrease 

but other elements increase, the absolute amount of VAT revenues increase.  

26 

 
 
 
 
 
 
 
 
 
 
 
 
Environmental taxes 

This sub-component includes any manifestation of excise duty, environmental, greenhouse gas emission, 

transmission and distribution taxes, excluding VAT. Their common characteristic is that revenues from 

these  taxes  are  not  normally  earmarked  to  energy,  climate-  or  environment-related policies.  In  other 

words, revenues flow into the central state budget regardless of their source. Minimum excise duty levels 

on energy products are harmonised at EU level and are defined by the Council Directive 2003/96/EC22. 

Environmental taxes were collected by 20 Member States in 2021. They made up 21% of the taxes and 

levies component, representing the third largest item after VAT and renewable energy taxes. The average 

amount of environmental taxes paid by households in the EU27 rose by 39% in the period 2010-2021. 

Renewable energy and energy efficiency taxes 

This sub-component includes any support to renewable energy, energy efficiency and combined heat and 

power generation (CHP). Renewable energy taxes are not collected in five Member States. In Finland and 

Malta, the renewable energy support scheme is not financed through an explicit levy but from the state 

budget.  France  has  been  following  the  same  example  since  2016.  In  Hungary,  household  electricity 

consumers, unlike their industrial counterparts, are exempted from renewable energy surcharges, whilst 

no green levies are imposed on Bulgarian households. It is important to note that even in these cases, 

electricity  consumers  still  indirectly  contribute  to  the  support  of  renewable  energy  as  taxpayers.  In 

several countries, renewable energy is supported also from other sources than taxes on consumer bills. 

On average, EU27 household paid 24 EUR/MWh for renewable energy taxes in 2021. This figure is equal 

to 28% of the taxes and levies component and to 10% of the EU average total electricity bill. The average 

amount of renewable energy taxes paid by households in the EU27 rose significantly from 10 EUR/MWh in 

2010 to 26 EUR/MWh in 2014 because many countries implemented similar taxes to subsidize the fast 

growth of renewable energies; after 2014 these charges stayed more or less stable until 2021. 

Capacity taxes 

This  category  includes  taxes,  fees,  levies  or  charges  related  to  ensuring  adequate  capacity  for  the 

generation,  storage  and  demand  response,  taxes  on  electricity  distribution,  stranded  asset  costs  and 

levies for the financing of energy regulatory authorities or market operators, and taxes related to coal 

industry restructuring. Capacity taxes were imposed by 11 Member States in 2021. The impact of these 

charges  remains  limited,  at  around  an  average  1.7%  of  the  overall  electricity  retail  bill,  although  the 

impact is higher in the countries with the highest capacity taxes (up to 7.2% of retail bill in Slovakia and 

slightly lower in Germany and Poland). 

Nuclear taxes 

This  category  includes  taxes,  fees,  levies  or  charges  relating  to  the  nuclear  sector,  including  nuclear 

power plants’ decommissioning, inspections and fees for nuclear installations. Nuclear taxes are collected 

in Belgium, Italy (which closed its last nuclear power plant in 1990) and Slovakia. Their impact on the 

electricity retail bill is negligible at EU level. 

Other charges 

This category includes all other taxes, fees, levies or charges not covered by any of the  previous five 

categories, such as support for district heating, local or regional fiscal charges, island compensation or 

concession fees relating to licences and fees for the occupation of land and public or private property by 

27 

 
 
 
 
 
 
 
 
 
 
networks  or  other  devices.  At  6.4  EUR/MWh  in  2021,  the  absolute  value  if  this 

subcomponent decreased slightly compared to 2010. Its share in the total retail bill amounted to 3% in 

2021. 

Figure  20  presents  the  breakdown  of  the  taxes  alongside  the  energy  and  network  cost  components, 

providing additional detail compared to Figure 17. Network and tax components stay relatively stable in 

absolute terms and the largest variation has been the result of changing/rising energy component costs, 

especially in 2021 (and 2022, although no precise data is available yet).  

Figure 20: Breakdown of nominal household electricity prices (DC band), expanded tax component breakdown 
Source: DG ENER in-house data collection, Eurostat 

Situation in individual Member States 

Figure 21 below  presents household retail prices and their composition in individual Member States in 

2021. Germany reported the highest price of 326 EUR/MWh, overtaking Denmark (where prices declined 

from 295 EUR/MWh in 2019 to 260 EUR/MWh in 2021). Hungary (100 EUR/MWh) had in 2021 slightly lower 

prices than Bulgaria (105  EUR/MWh) which was previously the  Member State  with the lowest price. In 

total, 21 Member States reported prices lower than the EU27 weighted average in 2021, indicating the 

strong influence on the average of large Member States with high prices such as Germany and Spain.  

One notable element is the reduced share of energy taxation in the Netherlands in 2021, stemming from 

(temporary) tax measures to reduce energy costs for households. Other member states have since then 

taken similar temporary tax relief measures, but they have not been accounted for yet in the data.  

28 

0 €/MWh50 €/MWh100 €/MWh150 €/MWh200 €/MWh250 €/MWh201020122014201520162017201920202021OtherNuclear taxesEnvironmental taxesCapacity taxesRenewable taxesVATNetwork chargesEnergy component 
 
 
 
 
 
 
 
 
 
 
Figure 21: Household electricity prices in 2021 (most representative consumption band). 
Source: Eurostat. 

The composition of household prices in 2021 shows that the proportion of energy supply, network costs 

and taxes in the overall price is highly variable between Member States. Figure 22 shows that although 

energy and supply costs tend to represent the largest share of the overall price, the shares of the different 

components are highly variable. For example, in Germany and Denmark the costs of energy and supply 

are much lower than the costs of taxes, fees, levies and charges. In countries such as Malta and Greece, 

the cost of energy and supply represents more than 60% of the total bill. Network costs contribute the 

least in Bulgaria, Denmark, Portugal and Italy. In Belgium (105 EUR/MWh), Ireland (94 EUR/MWh) and 

Sweden (80 EUR/MWh) network costs were highest in 2021. The lowest taxes and fees component is seen 

in Malta. Across the EU27, the share of taxes and levies in the  overall household electricity price has 

decreased by 4%, while network costs increased by 6% and energy and supply increased by 23% between 

2019 and 2021. 

Figure 22: Composition of household electricity prices in 2021 (most representative consumption band, in % 
proportion of overall price) 
Source: Eurostat 

29 

-50 €/MWh0 €/MWh50 €/MWh100 €/MWh150 €/MWh200 €/MWh250 €/MWh300 €/MWh350 €/MWhDEDKIEBEESSEITATCYPTNOLUFRELCZFISISKEELVROPLLTNLHRMTBGHUEU27Energy and supplyNetwork costsTaxes, fees, levies and charges-20%0%20%40%60%80%100%DEDKIEBEESSEITATCYPTNOLUFRELCZFISISKEELVROPLLTNLHRMTBGHUEU27Energy and supplyNetwork costsTaxes, fees, levies and charges 
 
 
 
 
 
 
 
 
 
The costs of the energy component have seen remarkable increases and shifts in 2021 in 

comparison with 2019. Most notably, average EU27 energy costs have increased from 68 EUR/MWh to 85 

EUR/MWh  (and  have  risen  further  in  2022).  While  before  2021  energy  costs  in  island  systems  were 

generally the highest (Ireland, Cyprus, Malta), in 2021 the highest costs were found in Spain (where energy 

costs  almost  doubled  from  67  EUR/MWh  in  2019  to  130  EUR/MWh  in  2021),  Ireland  and  Greece  (118 

EUR/MWh). The very high retail prices in Spain are the result of rising wholesale prices leading to higher 

retail  prices  without  much  delay  for  consumers  with  a  so-called  Voluntary  Price  for  small  Consumers 

(PVPC) contract. In other Member States, the coupling between wholesale and retail prices is less direct 

as  most  retail  consumers  have  annual  contracts  with  variable  or  fixed  (wholesale  prices  based)  or 

regulated  prices.  Complete  data  for  2022  is  not  available  yet,  but  it  is  clear  that  the  recent  price 

developments on the wholesale markets will continue to increase the energy component and hence total 

retail prices.  

Figure  23  depicts  the  difference  between  the  energy  component  of  household  retail  prices  and  the 

average  day-ahead  baseload  price  in  the  wholesale  markets  of  the  respective  countries  in  2021.  This 

analysis provides us additional insights into how wholesale and retail prices correlate in Member States. 

In general, many factors besides the day-ahead electricity prices - shown in Section 2.1 - influence the 

cost of energy for energy suppliers, and therefore the retail prices they offer to households. These factors 

include the forward wholesale prices in the previous year(s), hedging strategies, consumption profiles, 

structure of customers, balancing costs, various forms of price regulation, exchange rates.  

In  2019,  the  energy  component  of  retail  prices  was  higher  than  day-ahead  wholesale  prices  in  all 

countries, which is explained by additional costs (e.g. balancing and administrative costs) and mark-up 

made by retailers. However, in 2021 this completely changed: retail prices were in 2021 lower than day-

ahead prices in all countries, except in Spain, Sweden and Greece. The largest differences between the 

retail and wholesale spot prices can be seen in markets with strong retail price regulation, most notably 

Hungary (-79 EUR/MWh) and Croatia (-56 EUR/MWh). 

Figure 23: Difference between the energy component of household retail prices and average day-ahead 
baseload prices in individual markets in 2021 (DC band) 
Source: Eurostat, S&P Platts, ENTSO-E 

The consequences of these negative gross margins will vary per energy supplier for the reasons noted 

above.  In  the  most  severe  cases,  the  negative  margins  have  led  to  bankruptcies  of  energy  suppliers. 

Particularly  vulnerable  are  small-  and  medium-sized  suppliers  that  have  limited  or  no  own  power 

30 

 
 
 
 
 
 
 
 
 
 
generation  assets,  and  that  did  not  (sufficiently)  hedge  their  price  risks  via  forward 

contracts. Retailers with sufficient liquidity are able to withstand (limited) periods with negative margins, 

although they have to raise their retail prices (taking into account national market regulation) to cover 

their  costs,  especially  for  new  contracts.  Therefore,  average  retail  prices  in  2022  have  been  further 

increasing as gradually more households have their contracts renewed at higher rates and this trend is 

expected to continue well into 2023. 

Box C – Definition of the most representative band 

Household electricity consumption is broken down into 5 bands in the Eurostat methodology. The most 

representative band is the band with the highest share in total consumption; in other words, the price 

at which most electricity is sold. While the DC band is used as main point of reference for comparative 

analyses,  a  few  Member  States  register  only  a  small  proportion  of  consumption  in  this  category. 

Household consumption varies across countries as it is determined by factors including household size, 

climatic  conditions  (availability  of  sunlight  and  need  of  light,  heating  and  cooling  needs),  and  the 

extent to which electrification is used for heating or the number of efficient electrical appliances in 

typical households. 

To  analyse  prices  in  a  comprehensive  manner,  reporting  in  the  most  representative  band  in  each 

market is also included. The selection of consumption bands is based on the previous iteration of this 

report where this concept was introduced. 

Figure 24 explores the household prices in the most representative bands, which in most but not all cases 

remains the DC band. In Ireland, the DD band is the most representative, and prices were 15% lower for 

the  DD  band  than  for  the  DC  band  in  2021.  Other  countries  with  notable  differences  in  their  most 

representative  band  compared  to  DC  bands  include  France,  Estonia,  Slovenia,  Bulgaria  (DD  band)  and 

Poland (DB band). The largest difference is observed in Norway, which had in 2021 significantly lower 

costs in its most representative DE band than in the DC band. Average household prices in Norway were 

in 2021 as low as 136 EUR/MWh. These observed differences between  the household prices for the DC 

band and the most representative band are in line with those reported in 2019 and indicate a consistent 

trend. 

31 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 24: Household electricity prices in 2021 (most representative band) 
Source: Eurostat 

Recent developments in household electricity prices 

More recent data is now starting to become available, for example in  Figure 25, which shows average 

prices for the first half of 2022. This figure shows a significant increase from 235 EUR/MWh in 2021 to 

311 EUR/MWh (+32%) in the first half of 2022. The increase is almost entirely caused by a doubling of the 

energy and supply component of the price. It is also notable that the energy tax component has decreased 

in  this  period  from  47  EUR  /MWh  to  27  EUR  /MWh  (-43%)  as  (temporary)  policy  measures  in  MS  have 

reduced tax levels to partially mitigate price increases of the energy component. 

Figure 25: Average household retail electricity prices for EU27 (excl. CY & MT) 
Source: VaasaETT for the latest retail prices. Other parts of the report rely on Eurostat, which can lead to (slightly) different results. 

32 

-50 €/MWh0 €/MWh50 €/MWh100 €/MWh150 €/MWh200 €/MWh250 €/MWh300 €/MWh350 €/MWhDEDKBEESIESEITATCYPTLUELCZFRFIPLEESKLVROSILTNLNOHRMTBGHUEnergy and supplyNetwork costsTaxes, fees, levies and charges 
 
 
 
 
 
 
 
 
Country level data is also available for the first semester of 2022 from Eurostat (see Figure 

20). Whilst the component level data is not yet available, the total price data already provides insights 

into the price developments in the first half of 2022. EU average electricity prices increased from 219 

EUR/MWh in June 2021 to 253 EUR/MWh in June 2022, an increase of 34 EUR/MWh (+15%). The figure also 

shows that prices have spiked in particular in Denmark, Belgium, Italy and Spain over the last 12 months. 

However, major increases can be observed across many more MS, which are pushing the EU average retail 

price  up.  There  is  some  divergence  in  the  EU  average  from  the  previous  figure,  which  was  based  on 

alternative data; however, the overall trend is clear. 

Figure 26: Average Household retail electricity prices in the EU27, Jan 2019-Jun 2022.16 
Source: Eurostat. 

2.2.2 

Industrial electricity prices 

The  following  section  analyses  prices  paid  by  non-household  electricity  consumers  at  EU  and  Member 

State  levels,  examining  prices  of  the  Eurostat  band17  ID  covering  annual  consumption  of  2 000  -

20 000 MWh. This band can be considered representative of mid-size businesses across many segments of 

the economy. Price trends in the IF band (annual electricity consumption between 70 000 - 150 000 MWh) 

are also analysed, which is more representative for the situation of large enterprises and energy-intensive 

industries. 

16 Note: Semester data of Eurostat is converted into monthly data using countries’ monthly HCIP data. This method is 
used for all monthly electricity and gas retail data in this report. A similar method is also used for data from Japan, 
UK and China in the ‘international comparisons’ sections. 
17 Bands refer to energy consumption levels. Band DC: household consumption between 2500 to 5000 kWh; Band ID: 
industrial consumption between 2 000 and 20 000 MWh; Band IF: 70 000 MWh to 150 000 MWh 

33 

 
 
 
 
 
 
 
 
 
                                                      
 
Box D – Sectoral split of electricity consumption 

Households accounted for 29% of the total EU27 electricity consumption in 2020, the most recent year 

for which data are available. This was slightly higher than observed in 2019, where they accounted for 

27%. This is linked to the COVID-19 pandemic and the lockdown measures, which obliged many people 

to work  from home for long periods. The share of electricity consumed by industrial users dropped 

from  37%  to  36%,  reflecting  the  reduced  production  volumes  due  to  the  pandemic.  Similar  to  2019 

observations, commercial establishments and public institutions kept their shares relatively unchanged 

at  27%.  The  same  applies  for  the  transport  sector,  which  continues  to  account  for  2%  of  the  total 

electricity consumption, primarily for rail transport, although it is unclear how electricity consumption 

for electric vehicle charging has been taken into account. 

Evolution and drivers of industrial electricity prices in the EU 

Figure 27 shows that industrial electricity prices in the ID band increased at an average annual rate of 2% 

during the last decade, overall showing an increase from 96 EUR/MWh in 2010 to 124 EUR/MWh in 2021. 

Since 2019, industrial electricity prices increased by 14%, from 108 EUR/MWh in 2019 to 124 EUR/MWh 

(+16 EUR/MWh) in 2021. This is the highest 2-year increase in prices observed within the past decade.  

Due to the exclusion of VAT and other factors related to tariff calculations, industrial electricity prices 

are  more  influenced  by  the  energy  component  compared  to  households  and  hence,  more  driven  by 

developments in the wholesale market. The energy component, despite a small dip in 2020, increased by 

24% (+12 EUR/MWh) in 2021 compared to 2019. Network charges also contributed to higher overall bills; 

they increased by 14% (+3 EUR/MWh) since 2019 and reached in 2021 their highest level since 2010 at 

23.3 EUR/MWh. The lowest increase was observed for the levies and taxes component, which only saw 

an increase of 1.6% (+0.6 EUR/MWh) between 2019 and 2021. This small increase is in contrast to the 

small decrease in taxes and levies (-3 EUR/MWh) identified for household retail consumers, as shown in 

Figure 17. 

In  2021,  the  energy  component  represented  51%  of  the  total  bill.  Network  charges’  share  remained 

relatively unchanged in 2021 at 19%. A substantial decline in the share of taxes and levies is observed, 

which in 2021 accounted for 30% of the total electricity price compared to 34% in 2019.  

34 

 
 
 
 
 
 
 
 
 
 
Figure 27: Evolution and composition of the EUR 27 industrial retail prices (ID band; medium-sized enterprises), 
absolute (left), share (right) 
Source: DG ENER in-house data collection, Eurostat 

Situation in individual Member States (Band ID) 

Overall, the industrial retail prices in the EU27 have converged, becoming less spread out over time. The 

driving  factors  behind this  convergence  include  increasing  wholesale  markets’  integration  and greater 

cross-border  competition  between  suppliers,  leading  to  lower  variations  in  the  energy  and  supply 

component  of  prices.  The  highest  overall  industrial  electricity  prices  in  2021  were  seen  in  Cyprus, 

Germany, Greece, Italy and Ireland, which all had prices exceeding 140 EUR/MWh (Figure 24). The price 

in Germany is heavily driven by the tax and levy price component. In Cyprus, Greece, Italy and Ireland 

the price is more driven by high energy and supply component costs.  

Total  retail  prices  increased  between  2019  and  2021  in  all  Member  States  except  Malta,  and  the  EU 

weighted  average  increased  by  15%  (+16  EUR/MWh).  The  largest  absolute  increases  were  observed  in 

Greece  (+56 EUR/MWh)  and  Sweden  (+50  EUR/MWh),  in  the  latter  country  this  represented  an  80% 

increase in the overall retail electricity price.  

As for network costs, the trends have changed significantly since 2019. While previously Slovakia, Ireland 

and Germany reported the highest values, in 2021 Sweden had the highest value at 55 EUR/MWh followed 

by Lithuania (32.5 EUR/MWh) and Germany (31 EUR/MWh). Greece continued to have the lowest network 

cost component (8 EUR/MWh). 

The highest  energy and supply components in 2021 were reported in Greece (123 EUR/MWh), Ireland 

(117 EUR/MWh) and Cyprus (108 EUR/MWh), which were similar levels to household prices18. Germany 

had some of the lowest energy and supply (commodity) costs, which partially helped mitigate the high 

amount of taxes and levies, which were in 2021 the highest in Europe (86 EUR/MWh) and contributed 

significantly to the retail price in absolute and relative terms (Figure 25). Prices in Poland and Cyprus 

also have a significant tax and levy component. Bulgaria is notable for having an effective negative tax 

and  levy  component.  In  addition,  many  other  countries  grant  tax  reductions  to  energy-intensive 

18 However, in household prices Spain had the largest energy component, followed by Ireland, Greece, 
Italy and then Cyprus. The relationship between industrial and household prices distribution is therefore 
not the same between Member States.  

35 

 
 
 
 
 
 
 
 
 
 
 
                                                      
industries. As energy intensity is not based on consumption volumes alone, but also on the 

share  of  the  energy  bill  in  the  total  production  cost,  the  ID  band  is  likely  to  include  enterprises  that 

benefit from such reduced tax rates. 

Figure 24 – Industrial retail electricity prices in 2021 (ID band; medium-sized enterprise) 
Source: Eurostat 

Figure 28 shows that the energy component plays a particularly significant role in energy prices in relative 

terms  in  Greece  and  Ireland,  along  with  Bulgaria.  Network  costs  play  a  particularly  significant  role  in 

Sweden.  

Figure 28: Relative composition of industrial retail electricity prices in 2019 (ID band; medium-sized 
enterprises) 
Source: Eurostat 

36 

-20 €/MWh0 €/MWh20 €/MWh40 €/MWh60 €/MWh80 €/MWh100 €/MWh120 €/MWh140 €/MWh160 €/MWh180 €/MWh200 €/MWhCYDEELITIESKMTNLBGESATSELTROPTBEEELVDKHRPLCZHUFRSILUFIEU27NOEnergy and supplyNetwork costsTaxes and levies excluding VAT-20%0%20%40%60%80%100%CYDEELITIESKMTNLBGESATSELTROPTBEEELVDKHRPLCZHUFRSILUFIEU27NOEnergy and supplyNetwork costsTaxes and levies excluding VAT 
 
 
 
 
 
 
 
 
 
 
Composition of tax levies, fees and charges 

The following section considers only policies that directly influence industrial retail prices for electricity. 

Figure 29 shows the changes in the composition of taxes, levies, fees and charges from 2019 to 2021. 

Similar to the overall trends in the retail prices, the tax component showed a small spike in 2020, which 

reduced in 2021. The tax component increased on average between 2019 and 2021, from 37.2 EUR/MWh 

to 38.2 EUR/MWh. However, the main drivers of this increase were increases in “other taxes and levies”, 

which increased by 150% (+2.1 EUR/MWh), and capacity charges, which showed a 36% (+0.7 EUR/MWh) 

increase  in  2021  compared  to  2019.  The  renewable  tax  (-0.9 EUR/MWh)  and  environmental  tax 

(-1 EUR/MWh) components declined in 2021 to 93% of their 2019 level. Therefore, increases in energy 

supply  costs  as  previously  observed  were  to  some  extent  counterbalanced  by  reduced  taxes.  In  some 

cases, this reflects a deliberate policy choice to mitigate total price increases. 

Figure 29: Comparison of taxes and levies between 2019, 2020 and 2021 (ID band) 
Source: Eurostat 

More than half of the tax component of industrial electricity prices was in 2021 related to support for 

renewable energies. However, the observed share has decreased since 2019, from 59% to 56%. Figure 30 

shows that environmental taxes remain the second largest item in the taxes and levies, however, their 

share  has  also  seen  a  significant  decrease:  in  2019  environmental  tax  made  up  for  31%  of  the  tax 

component, while in 2021 this was 27%. Notably, taxes classified as ‘others’ showed a significant increase 

in their overall share, increasing from 4% in 2019 to 9% in 2021. 

37 

0 €/MWh5 €/MWh10 €/MWh15 €/MWh20 €/MWh25 €/MWh30 €/MWh35 €/MWh40 €/MWh45 €/MWh201920202021Renewable taxesCapacity taxesEnvironmental taxesNuclear taxesOther 
 
 
 
 
 
 
 
 
Figure 30: Composition of taxes and levies in 2021 (ID band) 
Source: Eurostat 

Value added tax 

VAT  is  recoverable  for  industrial  consumers  in  all  reporting  countries.  Therefore,  this  report  analyses 

industrial prices excluding VAT. Other recoverable taxes are also excluded from the price. 

Environmental tax 

Environmental taxes decreased by 17% between 2019 and 2021 to 7.5 EUR/MWh at EU level. They were 

collected  in  some  form  in  all  Member  States  with  the  exception  of  Latvia  and  recently  also  Belgium, 

Finland and Lithuania.  

Renewable energies and energy efficiency tax 

Taxes financing the support of renewable energy, Combined Heat and Power (CHP) and energy efficiency 

measures increased by 17% between 2019 and 2021 to 14.5 EUR/MWh at EU level. Renewable energy taxes 

accounted for 14% of the total retail price in 2021. Renewable energy taxes were not imposed in Finland, 

France and Malta. In Finland and Malta, the renewable energy support scheme is not financed from a levy 

on  electricity  consumption  but  from  the  central  state  budget.  France  has  been  following  the  same 

example since 2016. Therefore, in these three countries, the direct cost of supporting renewable energy 

is  zero  for  industrial  consumers.  In  Hungary,  industrial  consumers  are  subject  to  a  renewable  energy 

surcharge, while households are exempted.  

Capacity tax 

Charges related to security of electricity supply or the financing of regulatory authorities were collected 

in 12 countries in 2021, up from six in 2008. The impact of security of supply related charges remained 

limited, below 2% of the average EU27 price. 

Nuclear tax 

Nuclear  taxes  are  collected  in  Belgium,  Italy  (which  closed  its  last  nuclear  power  plant  in  1990)  and 

Slovakia. Their impact on retail prices at EU level is negligible. 

Other charges 

The absolute value of the residual subcomponent increased on average from 0.7 EUR/MWh in 2019 to 1.5 

EUR/MWh in 2021. Its share in the total retail price amounted to 1% in 2019.  

38 

56%7%27%1%9%Renewable taxesCapacity taxesEnvironmentaltaxesNuclear taxesOther2021 
 
 
 
 
 
 
 
 
 
 
 
 
Situation of large enterprises and energy-intensive industries 

This  section  analyses  retail  prices  for  the  IF  band,  which  contains  consumption  levels  between  70  to 

150 GWh per  year, thereby capturing the  largest consumers of electricity found mainly in the energy-

intensive industry. Industrial electricity prices in the IF band have increased by 30% from 2020 to 2021. 

Figure 31 shows that the energy component is the largest contributor to the overall increase in the price: 

44%  increase  since  2019  from  46.7  EUR/MWh  to  67.5  EUR/MWh.  Unlike  in  past  years,  where  rising 

wholesale prices were compensated by falling taxes, 2021 showed an overall increase in all components 

of industrial prices. Taxes as well as network charges increased by 10% and 16%, respectively. As such, 

2021  showed  an  overall  increase  in  industrial  electricity  prices  as  a  result  of  significantly  increasing 

wholesale prices reaching the highest levels in more than a decade. 

Figure 31: Evolution and composition of the EU27 industrial retail prices (IF band) 
Source: DG ENER in-house data collection, Eurostat 

Situation in individual Member States (Band IF) 

Figure 32 shows the level of electricity prices in 2021 in different Member States, where the island of 

Cyprus  reports  the  highest  prices  (154  EUR/MWh),  followed  by  Ireland  (141  EUR/MWh),  Germany 

(139 EUR/MWh)  and  Italy  (123  EUR/MWh).  The  EU27  weighted  average  in  2021  was  106  EUR/MWh.  In 

total, 18 Member States reported prices below the EU average, indicating that the larger economies have 

higher  electricity  prices  and  therefore  significantly  drive  the  EU  average  price  to  a  higher  level.  The 

average price of the 18 Member States below the EU average amounts to 86 EUR/MWh. In comparison to 

band ID, the retail prices in the IF band are more spread out than in previous years, especially towards 

the higher price end.  

As  with  the  industry  prices  in  the  ID  band,  Germany  enjoyed  relatively  low  energy  component  prices 

(49 EUR/MWh),  but  because  of  the  high  tax  component  (77  EUR/MWh),  prices  for  industry  were  still 

relatively  high.  Denmark,  which  previously  had  the  highest  taxes  and  levies  (125 EUR/MWh  in  2019), 

showed  an  overall  reduction  in  rates  (4.3  EUR/MWh  reduction  in  2021).  The  lowest  tax  values  were 

recorded  in  Malta  (1.5  EUR/MWh)  and  Finland  (0.6  EUR/MWh).  As  for  the  network  costs,  Norway  (4.8 

EUR/MWh) reported the lowest values while Sweden reported the highest amount (58 EUR/MWh), which 

was double that of the second highest cost level reported in Denmark (27 EUR/MWh).  

39 

 
 
 
 
 
 
  
 
 
 
 
Figure 32: Industrial electricity retail prices in 2021 (IF band) 
Source: Eurostat. Data for Greece and Luxembourg are either unavailable or confidential 
Note: Bulgarian industrial consumers received a 55 EUR/MWh for two months in 2021, contributing in total to a negative tax 
component.19 

Figure 33 shows that similar to prices in the ID band, the main driver of recent retail price changes is the 

energy component, while the tax component had a limited impact (not taking into account announced 

support  measures  for  industry  in  2022,  which  in  some  cases  would  lower  taxes).  The  share  of  both 

components in the overall price ranges from 88% to 35% for energy (in Italy and Germany, respectively), 

and 55% to 2% for taxes (in Germany and Sweden, respectively). 

19 Euractiv (2021). Bulgaria to compensate companies for expensive electricity. 

40 

 
 
 
 
 
 
 
 
 
                                                      
Figure 33: Relative composition of industrial retail electricity prices in 2021 (IF band; energy-intensive 
industry) 
Source: Eurostat. Data for Greece and Luxembourg are either unavailable or confidential. 

Recent developments in industrial electricity prices 

Country  level  data  is  also  now  available  for  the  first  semester  of  2022  from  Eurostat  (see  Figure  34). 

Whilst the component level data is not yet available, the total price data already provides insights into 

the price developments in the first half of 2022. This shows that prices started to increase around July 

2021 and have spiked in particular in Italy, Romania, Greece, Ireland and Cyprus, where prices are above 

250 EUR/MWh. However, major increases can be observed across many more MS, which are pushing the 

EU average retail price up. Only in Finland, prices are notably flat. 

41 

 
 
 
 
 
 
 
 
 
 
 
Figure 34: Average industrial retail electricity prices in the EU27, Jan 2019-Jun 2022 
Source: Eurostat. 

2.2.3 

International comparisons 

Whilst in the past wholesale electricity prices in the EU were often comparable to those in G20 countries, 

this price convergence did not always translate into comparable retail prices. Typically, EU prices were 

higher than in all G20 trading partners as a result of relatively higher levels of taxes and levies which, 

among other things, provide financing for the development of renewable energy, for energy efficiency 

measures and for other climate-related policies. Higher taxes have brought about higher retail prices but 

have  also  enabled  the  EU  to  become  the  leading  force  in  combating  climate  change.  However,  as 

presented in section 2.2.3, EU wholesale electricity prices have now diverged from most of the G20 as 

the EU is, more than most other large economies, dependent on fossil fuel imports (especially gas), and 

therefore the energy crisis hits the EU particularly hard compared to its international trading partners. 

This section provides an overview of how the changes on the global energy markets have translated into 

retail electricity prices. 

Household electricity prices 

The two figures below show comparisons of household retail prices of EU27, China, Japan, the United 

Kingdom  and  the  US  as  well  other  G20  countries  (Australia,  Brazil,  Canada,  India,  Indonesia,  Mexico, 

Russia, Saudi Arabia, South Africa, South Korea and Türkiye). Both graphs show that EU27 average prices 

generally are significantly higher than in the majority of the other countries displayed, with the exception 

of Japan, the UK and Australia, which have comparable or higher prices. From the figures, it is apparent 

that the impact of the energy crisis on wholesale prices has not yet fully translated into an increase in 

average retail prices in the EU, although further price increases are likely to follow.20 Retail prices can 

also be seen to be increasing in Japan and the UK, following a similar, or in the case of the UK higher, 

trend than the EU.  In  2022, retail price increases can also be observed in the  US, Korea and  Türkiye, 

however prices in China have not changed, these being fixed by government. In the case of Türkiye, in 

addition to higher energy prices a further driver is the significant depreciation of the Turkish Lira in this 

period due to ongoing economic and currency crises in  Türkiye, which has resulted in increased prices 

being passed to Turkish households.  

20 Even though average prices have not yet increased significantly, for many individual households’ 
prices could have increased significantly. 

42 

 
 
 
 
 
 
 
 
                                                      
Figure 35: Household retail electricity prices in EU27, USA, UK, China and Japan and household retail prices in 
EU27 and other G20 countries, 2008-2022, EUR2021/MWh 
Source: Eurostat, US DoE, Enerdata (NBS, E-Stats, BEIS, KESIS), IEA 

As component level data is not available for the G20 trading partners, comparing household retail prices 

to wholesale prices can help as a proxy to understand the price drivers in these countries. The difference 

between wholesale and retail prices, or the impact of the regulated part of the retail price, is larger in 

the EU27 than in its G20 trading partners. Retail prices are below wholesale prices in some trading partner 

countries, indicating that prices are subsidized and regulated at low levels: consumers pay less than the 

actual cost of the electricity they use. 

In Figure 36, a comparison of wholesale and retail prices is presented. This highlights that the EU and UK 

have always had a much higher difference between retail and wholesale prices than the US and other 

G20 countries. Differences in taxation are understood to be a major explanatory factor. Many of the G20 

countries, particularly the industrializing economies, have retail prices fixed either very close to or below 

the wholesale price for electricity, for example in China and Mexico. The most evident change over the 

last  2  years  is  the  massive  decline  in  the  difference  with  the  EU27  average,  UK  and Japanese  prices, 

highlighting that the increases in wholesale prices have not yet fed through into increases in the household 

retail  prices,  and  that  as  noted  before,  negative  margins  emerge.  The  short  price  spike  in  Japan  in 

December 2020-January 2021 already turned this comparison negative for a very short period. The UK has 

also seen this indicator turn negative twice in the last 12 months; the strains this illustrates are reflected 

in the market, with multiple bankruptcies among small- and medium-size energy suppliers21. In Korea, 

this indicator has typically always been close to zero, and in the past sometimes negative, however, the 

current price crisis has turned it sharply negative in the first half of 2022 before recovering. Within the 

EU, recent data shows that retail prices for households in 2022 are increasing significantly, which may 

increase the difference, mitigating strains for suppliers but placing additional burdens on households. 

21 ICAEW (2022). Energy supplier collapses highlight bigger sector crisis 

43 

 
 
 
 
 
 
 
 
 
                                                      
Figure 36: Difference between household retail electricity prices and electricity wholesale prices, 2008-2022, 
EUR2021/MWh 
Source: Authors calculation based on data from S&P Platts, Eurostat, US DoE, Enerdata (NBS, E-Stats, BEIS, KESIS), IEA. 

Industrial prices 

The figures below show the trends in industrial retail prices for the EU27 and other G20 countries in the 

period between 2008 and 2020/2022 (depending on data availability). In contrast to the household retail 

prices, the gap between industrial retail prices in the EU27 and the other G20 countries is less striking. 

Australia has the highest prices overall since around 2014, whilst Japan, the UK and EU27 average prices 

are at a similarly high level. Prices in the US are significantly lower than in the EU, as are prices in most 

of the rest of the G20, particularly the industrialising economies; although India and Brazil have prices 

44 

 
 
 
 
 
 
 
 
only a little lower than the EU average. Since 2020, the upwards curve of EU average, UK 

and Japanese prices is clear. A similar trend is evident in Türkiye (as a result from both increasing energy 

prices, currency depreciation and inflation). In 2022, prices in the US have also started to trend upwards, 

as have prices in Korea, but these remain significantly below EU levels. In percentage terms, between 

January 2021 – June 2022 EU average prices (+231%) and US prices (+225%) have increased by very similar 

proportions,  while  in  China  —  though  detailed  data  is  not  available  —price  increases  have  been  very 

limited. 

Figure 37: Industrial retail electricity prices in EU27, USA, UK, China and Japan (top) and industrial retail prices 
in EU27 and other G20 countries (bottom), 2008-2022, EUR2021/MWh 
Source: S&P Platts, Eurostat, US DoE, Enerdata (NBS, E-Stats, BEIS, KESIS), IEA. 

A comparison of wholesale and retail prices for industry is presented below. This figure highlights that 

many of the G20 countries, particularly the industrializing economies, have retail prices fixed either very 

close  to  or  below  the  wholesale  price  for  electricity,  for  example  in  South  Africa.  The  most  evident 

45 

 
 
 
 
 
 
 
 
change over the last 2 years is the massive decline in the difference in the EU27 average, 

UK and Japanese prices, each of which switched from net positive to negative in 2021-2022 highlighting 

the faster increase of wholesale prices than industrial retail prices in the same period. The latest data 

suggests these may have moved more in balance around mid-2022, as industrial retail prices adjust. The 

indicator in Türkiye is distorted by exchange rate movements. There appears to be no significant change 

in the US situation, where the difference is usually positive but occasionally turns negative. 

Figure 38: Difference between industrial retail electricity prices and electricity wholesale prices in EU27, USA, 
UK, China22 and Japan (top) and other G20 countries (bottom), 2008-2022, EUR2018/MWh 
Source: Authors calculation from S&P Platts, Eurostat, US DoE, Enerdata (NBS, E-Stats, BEIS, KESIS), IEA 

22 Note: In China most electricity is sold via bilateral contracts between generators and consumers.  Hence, no real wholesale 
market exists and the average industrial retail price is used as a proxy for the wholesale price. As a result, in the figure retail and 
wholesale prices are the same in China. 

46 

 
 
 
 
 
 
 
 
                                                      
3 Prices of natural gas 

3.1 

Wholesale gas prices 

Main Findings 

 

In 2021, the wholesale gas price rose to historically high levels. First, prices rose mainly due to 

the  increasing  demand  in  relation  to  the  loosening  of  Covid-19  restrictions,  which  led  to  a 

recovery in economic activity. Since the summer of 2021, limited spot gas supplies from Russia 

and increasing risks for supply disruptions combined with rising gas demand further drove prices 

up. By December 2021, the Dutch TTF hub prices reached 113  EUR/MWh (monthly average of 

day-ahead price); more than 3.5 times higher than the previous highest price since 2010. 

 

In  early  2022,  in  response  to  further  tensions  with  Russia  following  its  invasion  of  Ukraine  in 

February, the Dutch TTF hub prices reached a peak of 127 EUR/MWh in March and stayed very 

high as the war exacerbated instabilities in the energy market and restraints on energy supplies 

from Russia to Europe. 

 

Following  the  Russian  invasion  of  Ukraine  and  significant  curtailment  of  Russian  pipeline  gas 

supply to Europe, LNG imports have both increased in volume and also as a % of total European 

gas imports, in September 2022 accounting for more than 40% of the total.  

  While very common in the past, oil-based gas price indexation is no longer common practice in 

Europe,  except  in  some  regions,  particularly  in  the  Mediterranean.  Alternatively,  hub  pricing 

gained  significant  ground  in  Central  Europe,  Scandinavia  and  the  Baltics:  wholesale  prices  in 

these regions are increasingly aligned with Northwest European hub prices (in particular TTF), 

rather than with oil-indexed prices. In Europe, on average, the share of hub priced contracts 

increased to 80% of the total gas consumption in 2020, up from 15% in 2005.  

 

Compared to the global market, European wholesale gas prices are well above those in major 

gas producing countries (Canada, Russia, US) but in general lower than in other G20 economies, 

especially those which solely or largely rely on LNG imports (e.g. China, Japan, South Korea). 

However,  the  Russian  invasion  in  Ukraine  has  led  to  an  exponential  increase  in  gas  prices  in 

Europe. This price trend is also experienced globally by other gas importing countries, especially 

those that are competing for the same LNG supplies. Strikingly high wholesale gas prices in 2022 

were  observed  in  China, Japan,  South  Korea  and  Mexico.  Even  prices  in  Canada  (a  major  gas 

producer) have increased significantly, but to a lesser extent than in Europe. 

3.1.1 

Evolution of wholesale gas prices 

From 2010 up until 2020, wholesale gas prices have remained close to 20 €/MWh. Extreme events (such 

as extreme weather conditions and supply disruptions) impacting specific regions have led to short periods 

of wider price ranges though.  

In 2020 gas prices declined, mainly due to the Covid-19 pandemic which led to a significant reduction in 

industrial demand for gas, accompanied with higher shares of renewable energy sources further reducing 

gas demand for electricity production. As a result, in May 2020, the wholesale gas price on the Dutch TTF 

hub dropped to 3.4-3.5 EUR/MWh, the lowest level since the hub started trading. 

Simultaneously,  the  crude  oil  market  (see  Chapter  7)  also  experienced  a  supply  and demand  shock  in 

2020,  as  the  major  oil  producers  in  the  OPEC+  bloc  could  not  come  to  an  agreement  on  production 

adjustment until April 2020. Coupled with the reduction in demand due to the Covid-19 pandemic, this 

47 

 
 
 
 
 
 
 
 
led  to  a  significant  oversupply  of  oil  and  a  considerable  drop  in  oil  prices,  which  also 

influenced the wholesale gas market. 

In 2021, the wholesale gas price rose considerably, partially due to increasing demand in relation to the 

post-Covid-19 economic recovery. Additionally, colder weather conditions in spring drove up demand and 

the uncertainty around the commissioning of the Nord Stream 2 pipeline drove gas prices up. In addition 

to  these  ‘visible’  factors,  Russian  state-controlled  Gazprom  created  ‘artificial  scarcity’  in  gas  supply, 

including  not  refilling  their  gas  storages  in  NWE  and  not  offering  spot  gas  deliveries  on  the  European 

market.  The  intention  behind  these  actions  was  to  push  up  European  gas  prices  and  to  influence  the 

permitting process for Nord Stream 223. 

In 2022, wholesale gas prices continued to increase, mainly reflecting the impact of the Russian invasion 

of Ukraine on natural gas trade. Russia’s responses to European sanctions (which are not directly targeting 

natural  gas)  are  a  significant  driving  factor  behind  the  price  increases.  Many  EU  countries  are  still 

dependent on Russian natural gas imports and Russia either directly cut natural gas supplies or imposed 

such conditions that led to gas export restrictions.  

It is important to note that long-term contracts, for example for Russian imports, have gradually been 

adapted  by  replacing  the  oil  indexation  clause  with  gas  hub-based  pricing,  which  resulted  in  more 

competitive prices for gas consumers, especially in Central and Eastern Europe. However, this effect has 
been reversed as a result of the gas price crisis. 

Regional wholesale price differences are largely explained by the different pricing mechanisms and the 

different  levels  of  competition.  In  general,  markets  with  multiple  import  sources  (e.g.  several  gas 

pipelines and access to LNG) and several importers show a lower price level than markets with only one 

supply source.  

23 IEA (2022). Gas Market Report Q3 2022.  

48 

 
 
 
 
 
 
 
 
 
 
                                                      
Figure 39: Selected wholesale gas prices in Europe, nominal prices. 
Source: S&P Platts, EnergyMarketPrice, BAFA, Eurostat Comext 

Figure 40 shows the difference between the S&P Platts North West Europe Gas Contract Indicator (GCI) 

and the Dutch Hub price (TTF). The GCI is a theoretical index showing a gas price linked 100% to oil. 

Therefore, it can help to compare gas prices on hubs with oil-indexed gas prices. From 2010 until 2020, 

GCI prices generally showed a premium compared with hub-based prices. Oil-indexed gas contracts were 

thus less favourable and helped spur a shift to hub-based prices within the EU (see Figure 41). However, 

since 2021 the premium of oil-indexed contracts turned into a huge discount, because of slower increase 

of oil-indexed contracts compared to gas hub prices. In the first 3 semesters of 2022, the average discount 

of oil-indexed contracts amounted to 93 EUR/MWh, with peaks up to 190 EUR/MWh in August. Typically, 

crude oil price changes appear in the oil-indexed contracts with a time lag of 6 months, while TTF hub 

prices react more instantly to market developments. This time lag is expanded by the slower and more 

moderate increase of oil prices compared with gas prices in 2021 and 2022. Therefore — as oil-indexed 

contracts  slowly  start  incorporating  recent  oil  price  hikes  —  it  is  expected  that  the  GCI  discount  will 

gradually decrease. 

49 

 
 
 
 
 
 
 
 
Figure 40: The difference between the S&P Platts Northwest Europe Gas Contract Indicator (GCI) and the Dutch 
hub price (TTF) 
Source: S&P Platts 

Figure 41 and Figure 42 provide an overview of the development of wholesale gas price formation over 

time and across regions. In Europe, the share of gas-on-gas competition rose from 15% to 80% between 

2005 and 2020, but this share varies from region to region. One main driver for this development is the 

continuously lower hub prices than the prices of oil-indexed contracts (oil-based escalation) until 2021. 

In North-Western Europe24, gas-to-gas competition has become the general practice, with 96% of the total 

gas contracts (measured by consumption) in 2020, compared to 27% in 2005. In other parts of Europe, 

gas-to-gas competition was very limited in 2005, whereas in 2020 its share was 84% in Central Europe25, 

66% in Scandinavia and the Baltics26 and 66% in Southeast Europe27. In the Mediterranean region28, gas-

to-gas competition had the lowest share in 2020, around 53%. 

Simultaneously to the gradual phasing out of oil-price indexed gas contracts since 2005, the use of other 

forms of price formation, such as bilateral monopolies or regulated contracts (e.g. regulation of costs of 

service, political and social regulation, etc.) has also declined. 

The world average share of gas-to-gas competition was 49% in 2020 and oil price indexation represented 

19%, whereas bilateral monopolies and diverse forms of price regulation had the remaining share (32%). 

With its share of gas-to-gas competition of 80%, following North America, Europe is the second region in 

the world in terms of the penetration of hub-based pricing. In Asia and Asia-Pacific, oil price escalation 

is still predominant, with a share of 63% in 2020. High shares of oil-price indexation impact the gas price 

differential between Europe and Asia, which can be a crucial factor determining if LNG will be supplied 

to Europe or Asia, depending on where the bid price is highest. In Russia and other countries of the former 

Soviet Union (FSU), Africa, Latin America and the Middle East, price regulation was still the dominant 

contract form in 2020. 

24 Belgium, Denmark, France, Germany, Ireland, Luxembourg, Netherlands, UK 
25 Austria, Czechia, Hungary, Poland, Slovakia, Switzerland 
26 Estonia, Finland, Latvia, Lithuania, Norway, Sweden 
27 Bosnia, Bulgaria, Croatia, North Macedonia, Romania, Serbia, Slovenia 
28 Greece, Italy, Portugal, Spain, Turkey 

50 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 41: Price formation in Europe 
Source: IGU Wholesale Gas Price Survey, 2020 Edition  
Northwest Europe: Belgium, Denmark, France, Germany, Ireland, Netherlands, UK  
Central Europe: Austria, Czechia, Hungary, Poland, Slovakia, Switzerland  
Mediterranean: Greece, Italy, Portugal, Spain, Türkiye  
Southeast Europe: Bosnia, Bulgaria, Croatia, FYROM, Romania, Serbia, Slovenia  
Scandinavia & Baltics: Estonia, Finland, Latvia, Lithuania, Norway, Sweden  
Other includes bilateral monopoly, netback from final product, regulated cost of service, regulated social and political, regulated 
below cost, no price available 

Figure 42: The role of different price formation methods in different regions in the world 
Note: FSU = Former Soviet Union 
Source: IGU Wholesale Gas Price Survey, 2020 Edition Other includes bilateral monopoly, netback from final product, regulated cost 
of service, regulated social and political, regulated below cost, no price available 

The monthly average prices depicted in Figure 39 hide a high degree of daily volatility. For short periods, 

daily prices can reach exceptionally high levels, typically when cold snaps sharply increase demand while 

supply is limited by infrastructure constraints or other factors. Figure 43 shows that a few such occasions 

occurred over the last twelve years. Cold spells occurred in February 2012, March 2013 and January 2017, 

resulting in rapidly increasing demand for heating needs. This was, on several occasions, combined with 

lower availability of other generation sources in the electricity sector (e.g. nuclear or renewable energy 

51 

 
 
 
 
 
 
 
 
 
sources).  Generally,  high  price  peaks  occur  more  often  at  the  end  of  winter,  when  gas 

storages are depleted. 

On the other hand, extreme low prices can also occur, when demand for gas falls unexpectedly: this was 

the case in the first half of 2009 and in the first half of 2020, when gas demand fell due to lower industrial 

activity.  In  these  periods  spot  prices  showed  abrupt  falls,  however,  looking  at  quarter-ahead  or  year-

ahead  contracts,  we  notice  that  the  forward  prices  fell  less  steeply,  showing  that  such  unexpected 

changes in demand are mainly affecting the spot market. Moreover, Figure 43 also shows that gas hubs 

in the EU show very similar price patterns (besides the local price spikes) and prices do not differ that 

much. 

Figure 43: Daily day-ahead prices at selected gas hubs from 2008 to 2022, with y-axis going to 100 EUR/MWh, 
thereby not displaying many higher price levels since 2021. 
Source: S&P Platts  

As  illustrated  at  the  right  hand  side  of  Figure  44,  price  developments  since  2021  are  of  a  different 

magnitude than those before. This figure illustrates that on all gas hubs gas prices rose considerably and 

showed similar price patterns, with comparable price peaks on all hubs in December 2021 and March 2022 

(after the Russian invasion of Ukraine). 

However, since April 2022, day-ahead prices have started to diverge between some gas hubs. Average 

day-ahead prices in the period April to September 2022 were comparable on the Dutch TTF, Italian PSV, 

German THE and Austrian Baumgarten (between 150 and 153 EUR/MWh). However, the Belgian Zeebrugge 

hub (114 EUR/MWh), French PEG Nord (109 EUR/MWh) and British NBP (83 EUR/MWh) showed significantly 

lower prices, which is a trend not seen in the previous 10 years. This can mainly be explained by increasing 

LNG  imports  to  substitute  gas  pipeline  imports  from  Russia.  Hubs  directly  connected  with  ample  LNG 

import capacity (e.g. France, Belgium, the UK, and Spain) show considerably lower prices than markets 

that do not have direct access to LNG terminals, because transport of regasified LNG to other markets is 

constrained by limited gas interconnectors. 

52 

 
 
 
 
 
 
 
 
 
 
 
Figure 44: Daily day-ahead prices at selected gas hubs from 2021 to 2022, zooming in on recent price 
developments. 
Source: S&P Platts  

3.1.2 

Factors impacting the evolution of wholesale gas prices 

The development of wholesale gas prices is influenced by factors such as gas demand for power generation 

and industry, heating-related needs, the filling level of gas storages, the amount of  pipeline and LNG 

imports etc. As the gas demand and prices are also affected by price developments of other fuels (in 

particular oil) and weather conditions, we look in this section into these impacts, and also present the 

latest developments of the European LNG imports. 

There  is  obviously  a  correlation  between  oil  and  gas  prices,  which  is  most  visible  in  periods  of  large 

volatility  of  energy  commodity  markets  (e.g.  steep  price  falls  or  hikes).  However,  as  it  was  already 

mentioned, the gas market is now less directly influenced by oil prices, owing to the increasing role of 

hub pricing and LNG imports. 

By definition, there is a strong correlation between oil and oil-indexed gas prices, as shown in Figure 45 

which depicts the evolution of the Brent oil price and the S&P Platts North West Europe Gas Contract 

Indicator (GCI), a theoretical index showing what a gas price linked 100% to oil would be. Typically, there 

is a 6-9 month time lag in the  pricing formulas used which means that oil-indexed gas prices react to 

changes in the oil price with a delay. For example, the steep fall in Brent crude oil prices in March-April 

2020 was only reflected in oil-indexed gas prices in August-September 2020. Similarly, oil-indexed gas 

prices  started  to  significantly  increase  again  only  since  March  2021  while  oil  prices  started  increasing 

already in August 2020. This is not to be  confused with  hub-based gas prices. Hub gas price increases 

were most likely also one of the drivers for the increase of oil prices, which subsequently also influenced 

the oil-indexed gas prices. 

53 

 
 
 
 
 
 
 
 
 
Figure 45: The monthly average price of oil (Brent) and oil-indexed gas contracts (S&P Platts GCI) 
Source: S&P Platts  

The correlation between oil and gas prices generally holds for European gas hub prices, as shown in Figure 

46 through the example of the Dutch TTF, Europe's most liquid hub. Therefore, whilst oil-indexed prices 

have a diminishing role in the European market (see section 3.1.1), hub prices typically continue to be 

impacted by the oil price, reflecting the close relationship between the gas market and the wider energy 

complex, also reflecting the macro-economic situation. However, this relationship has broken down in 

the context of the current energy price crisis, with gas prices surpassing oil prices since summer 2021 

when the current gas price crisis began. Oil prices have also trended upwards but not by nearly as much. 

It is unclear if the previous relationship will reassert itself in future or if the current crisis marks a more 

significant, permanent delinking of oil and gas prices. 

Figure 46: Daily spot prices of oil (Brent) and gas (at the Dutch TTF hub) 
Source: S&P Platts  

54 

 
 
 
 
 
 
 
 
 
 
Measured in energy  content, oil has traditionally been  more expensive  than natural gas, 

owing to higher energy transformation costs (and transformation losses) and lower combustion efficiency 

in power generation. This was the case since 2008, with some short period of exceptions when sudden 

falls in oil price resulted in comparable or lower costs in energy content compared to natural gas. Between 

the  beginning  of  2008  and  mid-2020,  the  price  of  Brent  (measured  in  EUR/MWh)  was  on  average  95% 

higher than the price of gas at the TTF hub. In 2019, the gas price fell significantly, and this ratio rose to 

peak at 4.2 in mid-2020. However, the gas price crisis has completely reversed this situation, with the 

steep increase in gas prices at the TTF hub quickly outpacing the more moderately rising Brent oil prices 

and  leading  to  oil  prices  being  about  half  the  price  of  gas  in  2022  (measured  in  EUR/MWh);  a  quite 

dramatic example of the extreme current situation. 

Figure 47: The monthly average price of oil (Brent) and gas (at the Dutch TTF hub), measured in €/MWh 
Source: S&P Platts  
Note: a conversion rate of 1.7 MWh/barrel was used for Brent 

As the next chart (Figure 48) shows, there has been an increase in liquefied natural gas (LNG) imports 

from 2014 to 2019, to cover the gas demand in the EU. In the early 2000s, LNG imports in the EU showed 

a significant increase due to LNG regasification terminal investments in many European countries (e.g. 

Spain, Italy, France, UK, Netherlands and Belgium). However, in 2011, in the  aftermath of Fukushima 

nuclear  incident  in  Japan,  increasing  gas  demand  for  power  generation  (in  replacement  of  nuclear 

generation) in Japan, led to substantially increased LNG demand and prices in East Asia, developing a 

considerable price premium to Europe and ensuring higher profitability for LNG producers to sell their 

gas  in  Asia,  rather  than  in  Europe.  Consequently,  between  2010  and  2015  LNG  imports  into  the  EU 

plummeted. As of 2016, as a result of the sharp production increase of shale gas, the US joined the LNG 

exporting countries, while Russia opened a major new LNG terminal at Yamal in 2017; both contributed 

to increasing LNG supply on the global market29. This increase in LNG supply outpaced the increase in 

LNG  demand,  which  resulted  in  decreasing  LNG  prices  and  re-convergence  of  different  regional  (US, 

European, Asian, South-American, etc.) price benchmarks.  

29 the key suppliers are Qatar, Australia, US and in recent years (until the invasion), Russia 

55 

 
 
 
 
 
 
 
 
 
                                                      
From 2019 to 2021, net LNG imports into the EU declined from 86 bcm to 73 bcm, with a 

consequential decline of the role of LNG in total gas imports/consumption within Europe. The decline in 

LNG  imports  in  2020  and  2021  is  partially  explained  by  the  decline  in  demand  due  to  the  Covid-19 

pandemic. Additionally, several LNG shipments to Europe were cancelled and re-routed to Asia where 

higher prices could be found.  

During  2021,  LNG  imports  increased  every  month  —  though  starting  from  a  very  low  level  during  the 

Covid-19 lockdowns — and this trend has continued in 2022 (not visible in graph), to partially compensate 

for the decreased Russian pipeline imports and to further fill up gas storages before the 2022/2023 winter. 

As a result, in Q1 2022 LNG imports were 72% higher than in Q1 2021 and this trend has continued until 

September 2022 (source: EC Gas market report Q1). 

Figure 48: LNG imports and their share in the EU-27 total gas imports and consumption 
Source: Eurostat 

Figure 49 provides an overview of the main extra-EU import sources of LNG. From 2011 to 2016, the main 

LNG exporters to the EU were Qatar, Algeria and Nigeria. However, from 2019 onwards, the United States 

and Russia have played an increasing role. 

56 

 
 
 
 
 
 
 
 
 
 
Figure 49: Main extra-EU import sources of LNG 
Source: Authors calculation with Eurostat data. 

The two biggest LNG importer countries in 2021 in the EU were Spain (25% of the total EU imports) and 

France  (20%).  LNG  imports  were  also  significant  in  the  Netherlands,  Italy  and  Belgium,  having  shares 

respectively of 13%, 12% and 11% of total EU imports. LNG imports could also be observed in Portugal 

(6%), Poland (5%), Greece (3%), Croatia (2%) and Lithuania (2%). 

Figure 50: Main EU LNG importer countries in 2021 
Source: Eurostat. 

With  declining  pipeline  imports  from  Russia,  increased  LNG  imports  are  one  of  the  main  supply 

alternatives to meet gas demand. Figure 51 shows total gas imports in the EU from 2020 until October 

2022. In 2022, imports from Russia have steadily declined which has also led to decreasing total imports.30 

However, the decreasing imports from Russia are (partially) compensated by a steadily increasing LNG 

supply during 2022. The share of LNG in total EU gas imports jumped from levels below 30% (from June 

2020  to  Dec-2021)  to  40  to  45%  in  September  2022. In  addition,  the  graph  shows  that LNG  supply  has 

30 Bear in mind that this graph only shows imports. Local production and re-export of gas is not 
included. 

57 

 
 
 
 
 
 
 
 
 
 
                                                      
increased  in  2022  compared  to  2021,  but  during  2022,  the  LNG  import  level  has  stayed 

steady. This is the result of most LNG import terminals currently operating at full capacity, making it 

impossible to further scale-up LNG imports in the short-term. 

Figure 51: Weekly natural gas imports to the EU from 2020 until September 2022 from the main pipeline export 
countries as well as LNG. 
Source: ENTSO-G, via Bruegel data extract.  

3.1.3 

International comparisons 

Comparing European gas wholesale prices with those in the EU's main trading partners provides insights 

into  how  energy  costs  can  influence  the  international  competitiveness  of  energy-intensive  industries, 

which are also trade-intensive. Even though energy prices are only one element of the energy costs of 

industries, besides consumption and efficiency data, they make an important part of such analysis.  

A comparison of EU, US and Japanese prices provides an insight into comparative developments in prices, 

the absolute prices and ratio between the prices is presented below in  Figure 52 and Figure 53. These 

show that the EU and Japanese prices typically move in close to tandem, with Japanese prices a fraction 

higher than EU prices. This is with the exception of one period from 2011 to 2014 where Japanese gas 

prices were significantly higher compared to the EU and US prices as a result of the Fukushima nuclear 

accident and the impact this had on power generation in Japan. US prices have consistently been lower 

than both since 2010 as a result of the US shale gas revolution resulting in abundant domestic gas supply 

and limited export capacity, leading to low prices in the US. As US LNG export capacity grew since 2018, 

the EU TTF price started to converge to the US Henry Hub, reaching parity around summer 2020 at the 

peak of the pandemic.  

However, since summer 2020 prices already began to diverge again and since summer 2021 this divergence 

accelerated as the EU (and Japanese) prices both increased rapidly for reasons discussed earlier. As a 

result, EU-US prices have diverged to their highest ever historic levels (in this timeframe) with US prices 

between 3-10 times less than EU prices. The ratio relationship with Japan has also been affected, from 

Japanese prices typically being higher than EU prices in the past, but since 2022 the reverse being true, 

with Japanese prices now being lower. Exchange rate movements are not an explanatory factor – as the 

yen has devalued more strongly against the US dollar than the Euro has in the last year – which would 

58 

 
 
 
 
 
 
 
 
 
 
actually support the opposite trend. The main explanation is the severe impact on European 

supplies of the Russian invasion leading to a supply squeeze, and a price premium willing to be paid in 

the EU compared to Japan to secure LNG supplies.  

Figure 52 - Comparison of European, US and Japanese day-ahead wholesale gas prices. 
Source: S&P Platts. 

Figure 53: The ratio of European, US and Japanese wholesale gas prices 
Source: S&P Platts. 

Figure 54 and Figure 55 provide a comparison of the EU27 weighted average wholesale gas prices with 

those of the EU’s major trade partners. The disparity in prices from 2011 to 2014 between the US and 

the other countries is due to the reduction in crude oil prices in 2014-2016 (as wholesale gas prices were 

more closely indexed to oil prices in many regions). Starting from 2021 onwards, gas prices have increased 

exponentially in many countries, in addition to the EU, also in China, Japan, the UK, South Korea, Mexico 

and Indonesia. Gas prices in the non-EU countries are closely tied to global LNG prices, and in the UK, 

the  gas  prices  are  very  closely  aligned  with  the  EU  prices  due  to  market  integration.  The  gas  price 

59 

 
 
 
 
 
 
 
 
 
increases  had  emerged  already  during  2021  and  continued  into  2022  with  the  Russian 

invasion of Ukraine. Wholesale prices in non-producing countries tend to be more volatile; this was also 

evident in 2021-2022. 

In countries where gas is produced at large scale, such as Canada, Russia, Australia and the US, wholesale 

gas prices are much lower than in non-producing countries. Amongst these major producers, prices in 

Australia  and  Canada  have  increased  in  2021,  and  have  also  increased  in  the  US  as  domestic  supplies 

tightened due to increased exports. Price increases in each of these countries are much lower than in the 

most affected countries. Price increases in Russia have been very limited.  

Figure 54: Day-ahead wholesale gas prices in the EU (weighted average), China, Japan, UK and the USA 
Source: S&P Platts, World Bank, Energymarketprices. 

60 

 
 
 
 
 
 
 
 
 
Figure 55: day-ahead wholesale gas prices in the EU (weighted average) and major G20 trading partners 
Source: S&P Platts, World Bank, Energymarketprices, IMF, Enerdata (SPIMEX, AER). 

3.2 

Retail prices 

Main Findings 

  Natural  gas  retail  prices  are  mainly  determined  by  the  development  of  wholesale  gas prices, 

albeit with a time lag (see also section 3.4). Thus, retail gas prices in 2021 did not (yet) increase 

with the same magnitude as wholesale prices, representing both the time lag before changes in 

wholesale prices are incorporated in retail prices as well as recent policies aimed at mitigating 

retail price increases for (lower income) households. 

  Households  on  average  pay  a  higher  price  for  gas  than  businesses:  retail  gas  prices  were 

68 EUR/MWh  on  average  in  2021  in  the  EU,  whereas  in  the  same  year,  medium  and  large 

industrial gas consumers had to pay 42 EUR/MWh and 41 EUR/MWh, respectively. 

 

Retail gas prices for household consumers increased by 1.8% annually from 2010 to 2021, whereas 

the price for medium-level industrial consumers increased by 2.6% annually and by 4.8% annually 

for large industrial consumers. The inflation rate in the EU, measured by the Harmonised Index 

of Consumer Prices, amounted to 1.5% annually in the same period. 

 

The energy component (i.e. commodity price) of household prices increased by 0.5% between 

2010  and  2021  annually,  whereas  for  industrial  consumers,  it  went  down  by  -0.4%  for  I3 

consumers and went up by 3.3% for I5 consumers annually. 

  Network charges increased for all the three consumer types: for households network charges 

went  up  by  2.0%  annually,  whereas  for  medium  and  large  industrial  customers  they  rose 

respectively by 2.3% and 1.0% annually between 2010 and 2021.  

 

The  tax  component  for  both  households  and  industrial  customers  increased  significantly,  by 

3.6% annually for households, while for medium and large industrial customers by 15.6% between 

2010 and 2021.  

 

The  impact  of  taxation  on  natural  gas  prices  is  gradually  increasing.  Taxes  made  up  34%  of 

household bills, 30% and 22% of the bills for medium and large industrial customers, respectively.  

61 

 
 
 
 
 
 
 
 

For  households  and  industrial  consumers,  the  share  of  VAT  and  environmental 

taxes  are  the  highest  within  the  total  taxation  elements.  Contrary  to  electricity,  renewable 

energy-related taxes have a much lower importance in the taxation of gas.  

 

In 2021, the ratio of the most expensive and the cheapest gas price within the EU27 was 3.5 for 

household customers31, whereas for medium and large industrial customers it amounted to 3.2 

and 2.6, respectively. This difference in household prices is further exacerbated by differences 

between countries in the speed with which changes in wholesale prices are incorporated in retail 

prices. In 2021, the impact of rising wholesale prices was still limited for households, but in 2022 

this will further lead to differences between Member States, also depending on the level and 

type of price regulation or temporary policies that aim to reduce household energy bills in 2022. 

 

Looking at the international comparison of retail gas prices, industrial prices follow wholesale 

prices more quickly and completely, whereas in the case of household customers, retail prices 

in  some  countries  are  lower  than  the  wholesale  prices,  reflecting  both  potential  lags  in 

adjustment, and also subsidies for household gas prices.  

Table 1: Key figures on the evolution and drivers of retail gas prices between 2010 and 2021 

Household (D2) 

Industrial (I3) 

Large industrial (I5) 

Consumer 
type 

Component 

Annual 
growth 

Share 
2021 

Energy 

+ 0.5% 

44% 

Network 

+ 2.0% 

23% 

+ 3.6% 

34% 

Taxes 

Total 

Δ 
Share 
- 6 
p.p. 
+ 0 
p.p. 
+ 6 
p.p. 

Annual 
growth 

Share 
2021 

Δ Share 

Annual 
growth 

Share 
2021 

Δ Share 

- 0.4% 

57% 

- 22 p.p. 

+ 3.3% 

74% 

- 12 p.p. 

+ 2.3% 

13% 

+ 0 p.p. 

+ 1.0% 

5% 

- 2 p.p. 

+ 15.6% 

30% 

+ 22 p.p. 

+ 15.6% 

22% 

+ 14 p.p. 

+ 1.8% 

100% 

- 

+ 2.6% 

100% 

- 

+ 4.8% 

100% 

- 

Source: Authors calculation from Eurostat. 
Note: table only shows data until 2021. Wholesale price increases in 2022 increase the energy component in the price. 

Scope of the chapter 

Following  the  Regulation  (EU)  2016/1952,  this  report  analyses  prices  of  natural gas  sold  to  consumers 

that purchase gas for their own use. Therefore, prices paid by consumers that purchase gas for electricity 

generation in power plants or for non-energy purposes (e.g. for use as feedstock in the chemicals industry) 

are not considered. 

Household  gas  prices  are  available  for  24  EU  Member  States  in  the  database  of  Eurostat.  Data  is  only 

lacking for 3 member states with no or very limited natural gas use: gas is not used in Malta and Cyprus, 

while in Finland the share of gas in final energy consumption of households is below 1.5%32.  

In the other 24 Member States, gas is an important energy carrier. In 2020, natural gas accounted for 32% 

of the final energy consumption of households33. The Netherlands has the highest share of natural gas for 

energy consumption in households (68% in 2020), followed by Italy (52%) and Hungary (51%). In contrast, 

residential  gas  use  in  several  Member  States  such  as  Poland  (18%),  Denmark  (14%)  and  Spain  (24%)  is 

significantly lower due either to alternative heating fuels, e.g. coal in Poland, or lower heating demand. 

31 Excluding Sweden where gas is very expensive, but hardly used. 
32 Regulation (EU) 2016/1952 lays down that reporting in such countries with negligible gas use is not 
required. However, some countries with low gas use, e.g. Sweden, still choose to report. 
33 Source: Eurostat 

62 

 
 
 
 
 
 
 
 
 
 
                                                      
3.2.1 

Household gas prices 

The following chapter compares natural gas prices paid by household consumers across the EU, whose 

annual consumption falls in the range of 20 to 200 GJ (5.56 to 55.56 MWh). This consumption band is 

defined by Eurostat as D2. This is the most representative consumption band in most of the EU countries.  

Evolution of household gas prices 

Household  retail  gas  prices  increased  by  1.8%  annually  from  2010  to  2021.  In  absolute  terms,  the  EU 

average price increased from 56 EUR/MWh to 68 EUR/MWh during this period. This increase is higher than 

the inflation rate, which averaged 1.5% annually during the same period. In 2021, Hungary reported the 

lowest (31 EUR/MWh) and Sweden the highest price (213 EUR/MWh, but household gas use in Sweden is 

negligible. The ratio of the highest to lowest price was 3.5 in 2021 (Denmark and Hungary) if we exclude 

Sweden because of its negligible gas use. 

Composition of household gas prices 

The composition of gas prices has gradually changed over time. In 2021, the energy component, which 

predominantly  consists  of  the  wholesale  price  (plus  a  mark-up),  accounted  for  44%  of  the  final  price, 

whereas in 2010, it accounted for 50% of the final price. In absolute terms, this component increased at 

an annual rate of 0.5% and reached almost 30 EUR/MWh. 

The share of the network component has remained relatively stable, only increasing from 22% (2010) to 

23% (2021). In absolute terms, the network part of the final price increased at an annual rate of 2.0% and 

added up to 15.4 EUR/MWh in 2021. 

The share of the taxes component increased from 28% in 2010 to 34% in 2021. In absolute terms, taxes on 

household use of natural gas increased at an annual rate of almost 4% and added up to about 23 EUR/MWh 

in 2021. 

Figure 56: Composition of the EU household gas price (D2) 
Source: Eurostat. 

On average in the EU, natural gas taxes made  up 34% of the  final gas price in 2021. Although VAT on 

natural  gas  used  for  household  purposes  has  remained  stable  from  2019  to  2021,  the  amount  of 

environmental taxes has increased, from 42% in 2019 to 46% in 2021. Support costs for renewable energy, 

which have a  relatively  limited impact  on household gas prices, make up 4% of the total taxes. Other 

taxes (i.e. capacity and other taxes) account for another 4% of the total taxes. Taking into account that 

63 

 
 
 
 
 
 
 
 
 
 
 
 
total  taxes  represent  34%  of  final  household  gas  prices,  VAT,  environmental  taxes, 

renewable taxes and other taxes make up 16%, 16%, 1% and <1%, respectively. From 2019 to 2021, taxes 

of household gas prices increased by 8% in the EU, mainly driven by the increase in environmental taxes. 

Figure 57: Change in the composition of EU taxes on household gas prices between 2019 and 2021 and the 
composition in 2021 
Source: Eurostat. 

Situation in individual Member States 

In 2021, the three highest household gas prices were in Sweden (213 EUR/MWh), Denmark (107 EUR/MWh) 

and the Netherlands (101  EUR/MWh). The high prices each of these are partially driven by higher tax 

components. In Sweden, this is attributed to a carbon tax that aims to reduce greenhouse gas emissions, 

and a very small gas network, which leads to a higher contribution of the network costs. High household 

gas prices in Denmark and the Netherlands are mainly due to high tax rates on household natural gas 

consumption. For the Netherlands, the high tax rate however is accompanied by a fixed tax refund on 

the energy bill, which lowers the total tax expenditure per household. In Denmark, taxes make up 50% of 

the gas price, and in the Netherlands, taxes make up 61% of the gas price. The lowest taxes are in Greece, 

making up only 6% of the total gas price and adding up to 4.6 EUR/MWh. 

The share of network costs is the highest in Spain (38%) and Slovakia (38%). In absolute terms, the highest 

network costs are in Sweden. The lowest network costs are in Czechia: 4.8 €/MWh and 9% of the final gas 

price.  

64 

 
 
 
 
 
 
 
 
 
 
Figure 58: Average household gas prices in 2021. 
Source: Eurostat. 

Figure 59: Average composition of household gas prices in 2021 
Source: Eurostat. 

Recent developments in household gas prices 

Country level data is also available for the first semester of 2022 from Eurostat (see  Figure 60). Whilst 

the component level data is not yet available, the total price data already provides insights into the price 

developments in the first half of 2022. EU average gas prices increased from 65 EUR/MWh in June 2021, 

to 88 EUR/MWh in June 2022, an increase  of 23 EUR/MWh (+35%). This proportional increase  is higher 

than the equivalent for electricity retail prices, although the price per MWh remains far lower for gas 

than  for  electricity.  The  figure  also  shows  that  prices  have  spiked  in  particular  in  Sweden,  Denmark, 

Estonia  and  the  Netherlands  over  the  last  12  months.  Prices  have  remained  relatively  flat  in  some 

countries, such as Hungary and Croatia, due to regulated prices. 

65 

 
 
 
 
 
 
 
 
 
 
Figure 60: Average Household retail gas prices in the EU27, Jan 2019-Jun 2022 
Source: Eurostat. 
Note: Prices in Sweden gradually increased to 250 EUR/MWh in June 2022. 

3.2.2 

Industrial natural gas prices 

This section compares gas prices paid by industrial consumers with medium and large annual consumption. 

Eurostat  defined  medium  industrial  consumption  as  band  I3,  covering  annual  consumption  volumes 

between 10,000 and 100,000 GJ (2,778 MWh and 27,778 MWh). Large consumption is defined as band I5 

covering annual consumption between 1 million and 4 million GJ (277,778 to 1,111,111 MWh). Medium 

industrial (I3) prices were available for 25 EU Member States (with the exception of Cyprus and Malta). 

Large industrial prices (I5) were reported by 19 EU Member States (in addition to Cyprus and Malta, no 

data was available for Greece, Croatia, Latvia, Lithuania, Luxembourg and Slovenia, primarily owing to 

data confidentiality reasons and/or limited consumption). 

Evolution of industrial gas prices 

For the I3 band, average prices fluctuated between 29 and 38 EUR/MWh between 2010 and 2020; average 

prices in the I5 band were lower at between 22 and 31 EUR/MWh. Looking at the price trend, industrial 

prices with medium consumption (I3) showed an annual increase (+2.6%), though lower than the average 

annual increase for large consumers (+4.8%). These high annual growth rates are mainly influenced by 

the recent increase in prices in 2021. Inflation during the same period averaged at 1.5% annually, implying 

that contrary to household customers, industries faced gas price changes greater than the inflation. In 

absolute terms, the I3 price gradually rose from 32.1 to 42.4 EUR/MWh by 2021. The I5 price increased 

from 25.1 to 41.9 EUR/MWh from 2010 to 2021.  

In 2021, Spain and Belgium reported the lowest I3 price (34  EUR/MWh) and Sweden the highest (106.5 

EUR/MWh). The ratio of the highest to the lowest price across the EU was 3.2 in 2021. The lowest price 

66 

 
 
 
 
 
 
 
 
 
for I5 consumption band was reported by Ireland (31  EUR/MWh), whereas the highest by 

Denmark (80.4 EUR/MWh), implying a highest-to-lowest price ratio of 2.6 in 2021. 

Composition of industrial gas prices 

Over time, the composition of industrial gas prices also changed, albeit to a different extent for the two 

consumer types. In 2010, the first year of our observation period, the energy component accounted for 

79% of medium (I3) and 86% of large industrial (I5) prices. The impact of network costs and taxes was 

limited.  By 2021, the share of the energy component decreased to 57% for medium and 74% for large 

industrial consumers1. 

The composition of I3 price has experienced some fluctuations in the last decade, as the share of the 

energy component has shrunk from 2012 to 2020. Although, the share of the energy component is still 

much  lower  than  in  2010,  a  decrease  of  22  percentage  points  to  57%  in  2021.  In  absolute  terms,  the 

energy  component  has  slightly  decreased  from  25.3  EUR/MWh  in  2010  to  24.2  EUR/MWh  in  2021.  The 

main  development  in  this  period  has  been  in  taxes  on  industrial  gas,  which  have  increased  from  3 

EUR/MWh to 13 EUR/MWh from 2010 to 2021. This is mainly driven by environmental taxes. 

The  composition  of  I5  prices  also  experienced  changes  in the  last  decade,  as  the  share  of  the  energy 

component declined from 2012 to 2020. However, the drastic increase in wholesale prices in 2021 led to 

an upward trend of the share of the energy component. However, the share of the energy component in 

2021 (74%) is still lower than in 2010 (86%). in absolute terms, the energy component has increased by 

9 EUR/MWh from 2010, reaching 31 EUR/MWh in 2021, increasing by 17 EUR/MWh between 2020 to 2021. 

This  suggests  that  wholesale  prices  are  passing  through  more  quickly  to  larger  industrial  energy 

consumers. Additionally, taxes on industrial gas have also increased significantly from 2 EUR/MWh in 2010 

to 9 EUR/MWh in 2021. This is mainly driven by an increase in environmental taxes. It is notable that 2021 

was the first year in which the difference in prices between I3 and I5 was reduced to almost parity, with 

a difference of only 0.5 EUR/MWh, compared to 6-13 EUR/MWh differences in other years. 

Figure 61: Composition of EU prices for medium (I3) industrial gas consumers 
Source: Eurostat 

67 

 
 
 
 
 
 
 
 
 
 
Figure 62: Composition of EU prices for large (I5) industrial gas consumers 
Source: Eurostat  

Natural gas generally enjoys lower tax rates (both absolute and as share of the final price) compared to 

electricity  prices.  In  addition,  industrial  consumers  benefit  from  exemptions  and  reduced  tax  rates  in 

most countries. However, since 2018, the rate and share of taxes on industrial gas use has increased. In 

2021, taxes constitute 30% and 22% of the total industrial gas price for medium (I3) and large (I5) industrial 

consumers, respectively. In comparison, taxes made up 34% of the household gas prices in the same year. 

Taxes imposed on industrial gas prices consist mostly of value added taxes, which represented 52% of 

band  I3  taxes  and  67%  of  band  I5  taxes.  Environmental  taxes  also  constitute  a  significant  portion  of 

industrial gas taxes: 42% of medium (I3) consumer gas taxes and 26% of larger (I5) consumer gas taxes. 

Renewable taxes, similarly to the other taxes (including capacity tax), represented 5-6% out of the total 

tax and about 1-2% out of the final retail price in 2021. 

Figure 63: Composition of the tax structure of the EU retail gas prices for medium (I3) and large (I5) consumers 
in 2019, 2020 and 2021 
Source: Eurostat  

Situation in individual Member States 

Industrial  gas  prices  are  mainly  comprised  of  the  energy  component,  which  mostly  comprises  of  the 

wholesale price. Consequently, industrial gas prices develop in parallel to the  wholesale gas markets, 

although  with  a  time  lag.  The  recent  decrease  in  2020  and  increase  in  2021  are  mainly  driven  by  the 

68 

 
 
 
 
 
 
 
 
 
 
 
changes in demand due to the Covid-19 pandemic, where restrictions on movement and 

industrial activity in 2020 first reduced demand and subsequently demand increased again in parallel with 

economic recovery in 2021 

In 2021, the ratio of the most expensive and the cheapest retail industrial gas prices for medium-level 

(I3) customers was 3.2, whereas for larger industrial consumers (I5), the ratio was 2.6. Over the last few 

years, for both consumer groups, a slight price convergence can be observed across the EU, albeit in some 

countries the difference is still large (e.g. Finland and Sweden). 

Figure 64: Comparison of Medium (I3) and larger (I5) consumer industrial gas prices in 2021 per Member State 
Source: Eurostat 

Figure 65: Composition of medium (I3) and large (I5) consumer industrial gas prices in 2021 per Member State. 
Source: Eurostat 

69 

 
 
 
 
 
 
 
 
 
 
 
Recent developments in industrial gas prices 

Country level data is also available for the first semester of 2022 from Eurostat (see  Figure 66). Whilst 

the component level data is not yet available, the total price data already provides insights into the price 

developments in the first half of 2022. EU average gas prices increased from 65 EUR/MWh in June 2021 

to  88  EUR/MWh  in  June  2022  (+35%).  This  increase  is  higher  than  the  equivalent  for  electricity  retail 

prices, although the price per MWh remains far lower for gas than for electricity. The figure also shows 

that prices have spiked in particular in Sweden, Denmark, Estonia and the Netherlands over the last 12 

months.  Prices  have  remained  relatively  flat  in  some  countries,  such  as  Hungary  and  Croatia,  due  to 

regulated prices. 

Figure 66: Average industrial retail gas prices (Band I3) in the EU27, Jan 2019-Jun 2022. 
Source: Eurostat. 

Figure 67 shows how both retail and wholesale prices increased since 2020 for both gas and electricity. 

In the figure, one can see several trends: 

 

Price  increases  for  gas  are  higher  than  for  electricity  for  all  price  categories  (wholesale  and 

retail). 

  Wholesale  price  increases  have  seen  the  largest  increases:  up  to  a  sixfold  increase  for  gas 

compared with the 2019 average and a 4 to 5 time increase for electricity. 

 

Industrial retail prices incorporate rising wholesale prices faster than household prices. Among 

others, this is the result of purchasing strategies of industrial consumers, but also because of a 

higher household tax component which mitigates relative price increases. 

70 

 
 
 
 
 
 
 
 
 
Figure 67: Indexed (2019 average = 1.0) price development since 2020 showing for electricity and gas the retail 
prices for households and industry, as well as the wholesale price. 
Source: Eurostat, S&P Platts. 

3.2.3 

International comparisons 

Household natural gas prices 

From 2008, the EU27 average household natural gas price has fluctuated between 60 EUR/MWh and 80 

EUR/MWh  (Figure  68).  Concurrently,  household  retail  natural  gas  prices  in  the  US  and  China  have 

remained significantly lower, ranging from 20-40 EUR/MWh. Although wholesale prices are high in China, 

household  prices  remain  low,  indicating  possible  subsidisation  for  households.  From  2008  to  2020, 

household prices in Japan have been higher than the EU27 average, whilst prices in the UK have been 

below the EU average, partially due to its own natural gas production. 

Notably,  although  wholesale  prices  have  starkly  increased  in  the  past  year  in  the  EU,  the  household 

increase  has  been  much  less  so  far,  due  to  the  lag  in  retail  contracts  and  price  regulation  in  some 

countries. Prices in  Japan, the US and the  UK have all trended upwards, Japan displaying the highest 

prices. In the UK, prices have started to move stepwise with changes in the recently introduced UK price 

cap.  

71 

 
 
 
 
 
 
 
 
 
 
 
Figure 68: Household gas retail prices in EUR2021/MWh in the EU, Japan, US, UK and China 
Source: Eurostat, US DoE, Enerdata (BEIS, NBS) 

Figure 69 shows a comparison of EU27 average household retail natural gas prices with other major G20 

trading  partners.  The  household  retail  gas  prices  of  Australia  are  the  highest  compared  to  the  other 

selected countries, despite Australia not having the highest wholesale prices. Of the prices which are the 

most up to date (EU27 average and Türkiye), there is an emerging upward trend of household prices in 

Türkiye in 2021, following the same trend as wholesale prices. 

Figure 69: Household retail natural gas prices in EUR2021/MWh in the EU27 and major G20 trading partners from 
2008 to 2022 
Source: Eurostat, US DoE, Enerdata (BEIS, NBS), IEA 

72 

 
 
 
 
 
 
 
 
 
 
Industrial natural gas prices 

From January 2021 to January 2022, the average retail industrial natural gas price has increased from 24 

EUR/MWh to 45 EUR/MWh (+85%) in the EU27, and have climbed even higher in 2022. Compared to other 

countries (Figure 70), industrial retail gas prices in the US are significantly lower, although these  also 

have seen an increase in 2021 and are trending upwards in 2022. Prices in the UK are very similar to the 

EU average although have diverged somewhat in 2022. 

Industrial gas prices in gas producing countries, such as Russia, US, Saudi Arabia and Canada (Figure 71), 

are  lower  compared  to  non-producing  countries.  They  are  also  lower  in  India  and  Mexico.  In  previous 

years, South Korea had the highest industrial gas prices, because of high wholesale prices and dependence 

on LNG. From Q3 2021 industrial gas prices have risen considerably for the EU27 average and Türkiye, 

similar to wholesale gas prices. This trend continued in 2022 in the EU and the US and in other countries. 

Figure 70: Retail industrial natural gas prices in EUR2021/MWh in the EU27, Japan, US, UK and China. 
Source: Eurostat, US DoE, Enerdata (BEIS, NBS) 

Figure 71: Retail industrial natural gas prices in EUR2021/MWh in the EU and major G20 trading partners. 
Source: Eurostat, US DoE, Enerdata (BEIS, NBS), IEA 

73 

 
 
 
 
 
 
 
 
 
4 Oil, coal and alternative fuel prices 

Main findings 

 

Since the pandemic-induced drastic price reduction to <$20/bbl in March 2020, crude oil prices 

have risen substantially, peaking at more than $130/bbl in March 2022 after the Russian invasion 

of Ukraine. Whilst prices recently have fallen to the $80-100/bbl range in Q3 2022, they remain 

at historically high levels for several reasons. Competing pressures exist for future prices, with 

on one hand on the demand side an economic slowdown and on the supply side production cuts 

by leading suppliers (OPEC+). Nevertheless, oil price increases have been less  significant than 

the increases for gas and electricity. 

 

Coal prices have also increased significantly since September 2020, from around 50 EUR/tonne 

to more than 250 EUR/tonne in September 2022, with price increases driven by increased post-

Covid demand from China and then increased gas to coal switching in electricity generation in 

Europe and elsewhere. 

 

European and international  retail prices  of oil-based fuels (gasoline, diesel, heating oil) have 

 

 

also followed an upward trend since mid-2020. The increases were driven by crude oil prices, 

and an increasing influence of VAT as total prices increase. Some fuels like diesel and jet fuel 

endured  price  hikes  as  markets  tightened  due  to  embargos  on  Russia.  Temporary  tax  breaks 

implemented in several Member States have slightly mitigated these rising prices.  

Alternative fuels followed the general trend with increases in prices for bioethanol and biodiesel, 

as well as for LPG fuels; the latter linked closely to the increasing gas price. 

Prices for electrical storage (estimated for the first time in this edition) show that Lithium-ion 

(Li-ion) batteries are in some use-cases now more competitive than pumped hydro storage for 

utility-scale  electricity  storage.  Prices  for  Li-ion  battery  storage  are  declining  with  declining 

battery unit costs through increased production scale and innovation, linked to the fast growth 

of electric vehicles. However, this positive trend is in danger of being reversed due to recently 

increasing (raw) material prices.  

 

Prices for hydrogen have been estimated for the first time in this edition too. These estimates 

show that the cheapest renewable hydrogen production achieves prices of around 3 EUR/tonne 

(onshore wind), or 4 EUR/tonne (solar). This compares to ‘normal’ prices for hydrogen from grid 

electricity of 2-8 EUR/tonne, and of less than 1.5 EUR/tonne from ‘grey’ hydrogen made using 

natural gas through the Steam Methane Reforming (SMR) process. However, prices of the latter 

have  spiked  along  with natural  gas  prices  to  more  than  7 EUR/tonne,  making  some  hydrogen 

from  green  technologies  cost  competitive  —  though  still  expensive  —under  the  current 

exceptional high energy price context 

4.1 

Crude oil and coal prices 

4.1.1 

Crude oil prices 

From a low point of 26 USD/bbl Brent on 20 January 2016, its lowest level since 2003, prices generally 

trended upwards until March 2020, largely driven by restricted production by OPEC and a few key non-

OPEC producers, and events such as US withdrawal from the Iran nuclear deal (which prevented Iranian 

oil to reach global markets).  

Oil prices crashed to 20 USD/bbl around March/April 2020 (the lowest since 2002) as COVID-19 lockdowns 

were imposed, first in China and subsequently in other countries. This led to an immediate decrease for 

74 

 
 
 
 
 
 
 
oil  demand  (for  transport  and  industry).  Negotiations  between  OPEC  members  and  non-

OPEC members including Russia led to production adjustments only in May 2020, after which oil prices 

recovered to around 40 USD/bbl.  

Oil prices stayed below 50 USD/bbl throughout 2020, though showing a moderate growth trend since the 

lowest point in March 2020. The gradual increase in prices was spurred by growing demand in regions, 

which reduced or lifted lockdown measures (mainly China in second half of 2020) and more optimistic 

outlooks on the future economic impacts of Covid-19. This even led to seven consecutive months of oil 

stock draws from September 2020 to March 2021 in which built-up reserves were sold. However, overall 

absolute  demand  stayed  low  with  continuing  lockdowns  in  the  EU  and  other  regions,  most  notably 

affecting demand for jet fuel. 

2021  also  saw  a  steady  price  increase  from  50  USD/bbl  to  nearly  80  USD/bbl  by  the  end  of  the  year. 

Though the trend was generally upwards, prices were relatively volatile. Increasing global demand on the 

back of post-Covid recovery, combined with slow OPEC+ negotiations on increasing supply contributed to 

higher prices in the middle of the year. Towards the end of 2021 oil demand increased  further as very 

high prices for other fuels (mainly gas and electricity) made switching to oil more attractive and economic 

recovery continued. Global oil supply increased in tandem as OPEC+ came to an agreement to unwind 

prior made cuts in supply, but not as fast as demand grew. As a result, crude oil prices in Q4 of 2021 

reached their highest level since 2014. 

At the start of 2022, oil prices increased further on the back of increasing global oil demand, increased 

demand forecasts and restricted supply, as OPEC+ production was consistently below their targets. Oil 

prices hit 100 USD/bbl in February 2022 already before the Russian invasion in Ukraine.  

After the Russian invasion in Ukraine, oil prices in March rose sharply to 133 USD/bbl on the day that the 

USA announced a ban on all Russian fossil fuel imports. In 2021, Russia produced on average 11.3 million 

barrel/day, about a tenth of global oil supply and was the largest global exporter of oil. In addition, the 

capacity to ramp up oil production quickly was and remains limited to a few key suppliers, mainly Saudi 

Arabia and the UAE that were reluctant to do so. Since June 2022, oil prices have been slowly decreasing 

due to reduced global demand as very high energy  prices  are slowly leading into an  overall economic 

slowdown in EU Member States and other OECD countries. Moreover, Chinese oil demand lagged behind 

expectations because of renewed lockdowns. Production cuts announced by OPEC+, to take effect from 

November 2022, are likely to put upwards pressure on prices again. 

75 

 
 
 
 
 
 
 
 
 
 
Figure 72: The Brent crude oil price (incl. Fuel Oil Barges/F.o.b.) from 2008 to October 2022, indicated by the 
Daily Europe Brent Spot Price FOB in $ per barrel (nominal prices). 

Source: S&P Platts 

4.1.2 

Wholesale coal prices 

Given the recent absolute increase in coal consumption in the EU, in response to very high gas prices, it 

is worthwhile to analyse coal prices in the EU. Figure 73 below shows the wholesale prices of coal from 

Australia  and  South  Africa,  which  are  generally  representative  for  global  coal  (import)  prices.  After 

consistently decreasing coal  prices  between 2012 and 2021, among others  due to decreasing demand, 

coal prices spiked significantly since the end of 2021 until at least September 2022. This can mainly be 

explained by very high natural gas prices and subsequently favourable conditions to switch (back) from 

gas  to  coal  power  generation  —mainly  in  the  EU  and  Asia  —,  though  in  the  EU  partially  mitigated  by 

simultaneously increasing carbon allowance prices making coal-fired generation less attractive compared 

with gas.  

Figure 73: Wholesale coal prices (FOB) from Australia and South Africa from 2008 to 2022 in nominal euros (for 
South Africa up to September 2022, Australia up to January 2022) 

Source: World Bank 

Figure 74 takes  a further look  at the import prices for main coal users in the EU  and its main trading 

partners. Coal prices (including taxes) in the EU27 are higher than in China and the US and comparable 

with prices in Japan. In recent years, the average EU coal price was between 80-120 EUR/tonne. Coal 

76 

 
 
 
 
 
 
 
 
 
 
prices  also  differ  within  the  EU:  prices  in  Czechia  and  France  are  above  the  European 

average, while prices in the two largest coal consuming and producing countries – Poland and Germany – 

are below the average. Coal prices follow similar trends despite some countries having structurally lower 

or higher price levels, due to differences in tax levels or transport costs. Figure 74 shows that wholesale 

prices of coal are very similar (at least for coal imported from Australia and South Africa) and thus price 

differences between coal using countries do not stem from differences in the wholesale prices. 

Figure 74: Imported coal prices including taxes in the EU27 and main trading partners from 2008 to 2021 in real 
EUR2021 prices. 

Source: COMEXT, Eurostat, World Bank. 

4.2 

Wholesale prices of oil-based fuel products 

Crude oil is the main feedstock to produce oil products, and oil product prices closely follow the 

development of the crude oil price. This is visible in the below Figure 75 if we compare the Brent oil 

price with the representative wholesale prices of the main oil products in Western Europe.  

Figure 75: Crude oil (Brent) and European wholesale gasoline, diesel and heating oil prices in nominal EUR/litre 
from 2008 to September 2022. 

Source: S&P Platts, ECB (for exchange rates).  
The following oil product prices were used: Gasoline Prem Unleaded 10ppmS FOB AR Barge (gasoline), ULSD 10ppmS FOB ARA Barge 
(diesel) and Gasoil 0.1%S FOB ARA Barge (heating oil) The following conversion rates were used: crude oil 159 litre/barrel, gasoline 
1350 litre/ton, diesel and heating oil 1186 litre/ton. 

77 

 
 
 
 
 
 
 
 
However,  when  looking  at  the  crack  spreads  (i.e.  the  difference  between  the  wholesale  prices  of  oil 

products vs. crude oil - Figure 76); these spreads were rather volatile, particularly in 2022. While diesel 

and heating oil follow similar paths, the spread for gasoline diverged more.  

Figure 76: Crack spreads of gasoline, diesel and heating oil from 2008 to September 2022 in nominal EUR/litre. 

Source: S&P Platts, ECB (for exchange rates)  
Crack spreads are calculated as the difference between the Brent crude oil price and the price of the following products: Gasoline 
Prem Unleaded 10ppmS FOB AR Barge (gasoline), ULSD 10ppmS FOB ARA Barge (diesel) and Gasoil 0.1%S FOB ARA Barge (heating oil) 
The following conversion rates were used: crude oil 159 litre/barrel, gasoline 1350 litre/ton, diesel and heating oil 1186 litre/ton 

The supply-demand conditions of the different products are different (both from crude oil and from each 

other), which affects their crack spreads. For example, the 2008 oil price rise was driven by industrial 

growth in China, leading to a big increase in the demand of middle distillates (e.g. diesel, heating oil), 

which was reflected in the high crack spreads of these products. There are also seasonal differences in 

demand, for example, gasoline demand is higher in the summer and typically resulting in a relatively high 

crack  spread  during  that  period;  in  times  of  low  demand  crack  spreads  can  even  turn  negative  (i.e. 

gasoline is cheaper than crude oil). In the summer of 2015, gasoline crack spreads reached unusually high 

levels as low crude oil prices boosted gasoline demand.  

Oil product supply can also fluctuate, for example as a result of refinery maintenance or natural disasters 

affecting  refinery  operations;  this  will  also  affect  crack  spreads.  Examples  of these  include  Hurricane 

Harvey in the US that triggered the spike of European gasoline crack spreads in late August 2017; low and 

negative crack spread of gasoline in end of 2018 and in beginning of 2019 reflecting the US leaving the 

Iranian deal and reduced production in Libya and Venezuela.  

In 2020, the pandemic first led to widening crack spreads in spring 2020 as a result of plunging crude oil 

prices, but afterwards spreads stayed low during the lockdown period as a result of ample refined supply 

and low demand. After lifting Covid restrictions, economic recovery led to crack spreads increasing during 

2021. In 2022, all crack spreads saw a huge increase to historically high levels on the back of increasing 

crude oil prices and tight supply.  In July 2022, crack spreads for gasoline tumbled however, while spreads 

for diesel and heating oil stayed high. 

78 

 
 
 
 
 
 
 
 
 
 
 
 
4.3 

Retail prices of oil and fuel products 

In addition to electricity and gas, oil products constitute an important part of the energy costs of both 

households  and  industry.  Oil  products  have  a  dominant  role  in  transport,  particularly  in  road  freight, 

maritime and air transport. Around 50% of all crude oil is converted and used in the road transport sector, 

9% is used in air transport and 7% in (international) maritime transport34. In the case of space heating, 

the  share  of  oil  products  is  declining  but  in  certain  Member  States,  it  still  plays  an  important  role. 

Globally, residential use constitutes 5% of all crude oil use. Lastly, about 25% of crude oil use in OECD 

countries is used in industry, of which two thirds is non-energetic use in the petrochemical sector. 

The retail price of oil products (presented in the following sections) depends on several factors. Variations 

in the price of crude oil will obviously have an impact on retail prices but crude oil costs often constitute 

a relatively small part of the final price. Crude oil is traded in US dollars but the finished products are 

sold in euros or other national currencies: variations in exchange rates will hence influence the cost of 

the crude oil component.  

A significant part of the retail price is taxes: excise duties, other indirect taxes and VAT. Differences in 

prices  between  fuels  and  countries  are  primarily  due  to  diverging  tax  rates.  These  taxes  make  an 

important contribution to the tax revenue of Member States (see Chapter 11). In the case of motor fuels 

(gasoline and diesel), taxes typically make up more than half of the final price.  

Excise duties are generally a fixed amount per quantity (usually litre or kg), i.e. not influenced by  the 

price of crude oil. VAT, on the other hand, is set as a percentage of the price (including the excise duty) 

and,  therefore,  changes  in  the  crude  oil  price  will  have  an  impact  on  the  absolute  value  of  the  VAT 

component.  

VAT rate regulation in the EU 

Rates of both the excise duty and VAT vary by product and by member state, resulting in significant 

price  differences  across  Europe.  Nevertheless,  Member  States  do  not  have  complete  freedom  when 

setting  the  tax  rates.  The  Energy  Tax  Directive  (2003/96/EC)  sets  minimum  excise  duty  rates  for 

gasoline, gasoil, kerosene, LPG and heavy fuel oil. The Directive is currently under revision as part of 

the European Green Deal process, which could lead to changes in fuel taxation, including minimum tax 

levels set on the basis of energy content (EUR/GJ) and allowances for the environmental impact of each 

fuel. 

In case of VAT, the VAT Directive (2006/112/EC) requires that the standard VAT rate must be at least 

15%; currently the standard VAT rates applied by Member States range from 17% (in Luxembourg) to 

27% (in Hungary). In case of oil products, Member States typically apply the standard VAT rate. Under 

certain conditions, however, Member States can set a lower VAT rate for specific products and services; 

for example, a few Member States apply a reduced rate for heating oil. 

The high share of fixed taxes in the price acts as a buffer: fluctuations in the retail price of oil products 

(particularly motor fuels) are significantly lower than the fluctuation of the crude oil price. Variations in 

the exchange rate have a similar effect: the oil price and the value of the US dollar usually move in the 

opposite direction: a strengthening dollar typically coincides with decreasing oil prices and vice versa. 

34 Source: OECD, 2019 

79 

 
 
 
 
 
 
 
 
 
 
 
 
                                                      
This means that changes in the oil price, whether upwards or downwards, are mitigated by 

the exchange rate and the volatility of the oil price expressed in euros is smaller than the volatility of 

the price expressed in dollar.  

Finally, although their share in total use is still relatively limited, alternative fuels provide an increasing 

share of the energy mix in transport and other sectors and their importance is expected to grow in the 

future. Therefore, in this report price data is also included for LPG, bioethanol and biodiesel. 

4.3.1 

Methodology 

The analysis in this section is based on the data of the weekly Oil Bulletin, published on the website of 

DG Energy.35 

The analysis covers the three main petroleum products sold in the retail sector: gasoline (Euro-super 95), 

diesel (automotive gas oil) and heating oil (heating gas oil). The time horizon is from 2005 to 2022. All 

Member States are covered but data for Bulgaria and Romania is available from 2008 and for Croatia from 

2013 when they joined the EU. In case of heating oil, Slovakia does not report prices since October 2011. 

Greece does not report prices for the summer period (from May to mid-October) when heating oil is not 

traded. 

Prices reported in currencies other than the euro were converted into euro, using the ECB exchange rate 

of  the  day  for  which  the  price  applies.  For  each  year  and  each  Member  State,  an  average  price  was 

calculated as an arithmetic average of the weekly prices and an EU average price was calculated as the 

weighted average of these with weights in the previous year’s consumption.36  

4.3.2 

General findings 

Figure 77 shows that the absolute prices of oil products are different but their evolutions closely mirror 

each other as they all reflect the development of crude oil prices, which in general is the most volatile 

component of retail prices.  

Figure 77: Average retail price of oil products in the EU in nominal EUR/litre. 

Source: Oil Bulletin, S&P Platts 

35 https://energy.ec.europa.eu/data-and-analysis/weekly-oil-bulletin_en  
36 For all 2022 tax data, average tax rates in July 2022 are used, instead of an average over the first semester. 

80 

 
 
 
 
 
 
 
 
 
 
 
 
                                                      
The  difference  in  the  average  absolute  price  of  the  three  products  can  be  mostly  attributed  to  the 

diverging tax rates between fuels. 

VAT rates in EU Member States 

All EU countries but Ireland and Luxembourg have the same VAT tax rates for all the fuels. Ireland and 

Luxembourg have the same VAT rates for gasoline and diesel, but lower for heating oil. In total, most 

of the price difference comes from excise taxes; the Energy Tax Directive also sets a higher minimum 

excise rate for gasoline (0.36 EUR/litre) compared to diesel (0.33 EUR/litre). In line with the minimum 

rates, most countries have higher excise tax rates for gasoline than for diesel, with heating oil rates 

being the lowest generally.  

Among EU Member States, Belgium is now the only state where the two motor fuels (gasoline and diesel) 

are taxed at the same excise tax level, with heating oil taxed less. In practically all Member States, the 

excise duty rate of gasoline is higher than that of diesel, which is higher than that for heating oil37. Few 

Member  States  (Bulgaria,  Czechia,  Hungary,  Netherlands  and  Romania)  apply  practically  the  same 

excise duty rates for diesel and heating oil, with excise for gasoline higher38. In most Member States, 

however, heating oil is taxed at a lower level. Czechia is the only country that has subsidies for heating 

oil. 

Several Member States increased the excise duty rate in recent years, resulting in a gradually increasing 

(weighted) average tax rate. According to the Energy Tax Directive, the minimum excise duty rate for 

diesel increased from 0.302 EUR/litre to 0.33 EUR/litre on 1 January 2010, which required some 

Member States to adjust their rates. 

Contrary to the general trend, the weighted average excise duty rate for gasoline fluctuated slightly from 

2014 to 2016 (Figure 78). While a few Member States indeed reduced the excise duty rate for gasoline in 

this  period,  the  decrease  was  driven  mainly  by  exchange  rate  developments,  in  particular  the 

depreciation  of  the  pound  sterling  which  made  the  UK  excise  duty  (unchanged  in  the  local  currency) 

significantly  lower  when  expressed  in  euros.  Austria  is  the  only  member  state  that  had  other  indirect 

taxes (mostly intended to curb pollution) on fuel throughout the period. Some Member States introduced 

them since 2010 or in the last eight years (CY, ES, GR, HU, IE, LV, NL, PT, SI, SK), but other Member 

States did not. Since indirect taxes are small compared to other taxes, we addressed them in our analysis 

of excise taxes. 

37 I.e. gasoline excise > diesel excise > heating oil excise 
38 I.e. gasoline excise > diesel excise = heating oil excise 

81 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 78: Average excise duty rates for oil products in the EU (nominal EUR/litre) 

Source: Oil Bulletin 

If  the  net  (excluding  excise  tax  &  VAT)  prices  of  the  three  products  are  compared,  the  difference  is 

significantly lower. In fact, during the whole period the net price of diesel is slightly higher than that of 

gasoline, while if we include taxes diesel prices are lower.  Figure 79 also depicts the evolution of the 

Brent crude oil price (recalculated into EUR/litre), showing that crude oil is the main component of the 

net price without taxes. Over the period, the crude oil price represented on average 65-70% of the net 

price of gasoline and diesel. 

Figure 79: Average annual retail price of oil products in the EU in nominal EUR/litre, without taxes (net price). 

Source: Oil Bulletin, World Bank 

4.3.3 

Gasoline / Petrol 

As shown in Figure 80, in most Member States, the evolution of gasoline prices clearly follows the trend 

of crude oil prices; differences in the absolute level are mainly due to diverging tax treatment. Average 

prices have moved in a relatively wide range, with the difference between the highest and lowest price 

82 

 
 
 
 
 
 
 
 
 
 
on average being about 0.55 EUR/litre. The range widened towards 0.83 EUR/litre in the 

first half of 2022.  

The highest prices in 2022 were found in the Netherlands (2.12 EUR/litre), the lowest in Hungary (1.29 

EUR/litre39). From 2019 to 2022, Germany had the largest increase of 39%, from 1.42 EUR/litre 2019 to 

1.97 EUR/litre in the first half of 2022 (all in nominal prices). Austria, Czechia, Estonia, Spain, Finland, 

Latvia, Lithuania, Luxembourg and Sweden all saw greater than 30% increases in this period. At the other 

end of the spectrum is Malta, where the price in the first half of 2022 was among the lowest in the EU at 

1.34 EUR/litre and was 3% lower than in 2019. This is the result of Malta freezing energy prices since the 

Covid-19 outbreak and continuing this measure during the recent market price increases.40 

Figure 80: Average retail price of gasoline in the EU27, France and Poland, including taxes and VAT. 

Source: Oil Bulletin, DG Energy  

Looking  at  net  prices,  excluding  taxes,  the  difference  between  the  highest  and  the  lowest  price  was 

smaller, typically between 0.10 and 0.20 EUR/litre. However, Covid-19 and the recent energy crisis have 

made wholesale prices fluctuate more in recent years, the result of which is an increasing difference in 

the retail price of gasoline between EU countries.  

Besides external economic factors, the net price depends on a number of variables, including the source 

of supply (local refinery or import), transport costs and constraints (e.g., low water levels have restricted 

inland waterway transport), industry structure and competition. In the first half of 2022, the lowest net 

price  was  reported  by  Malta  at  EUR  0.59/litre,  while  the  highest  was  reported  by  Germany  at  EUR 

1.00/litre. Average net prices follow the representative wholesale price41. 

39 Hungary introduced regulated retail prices for E95 and diesel in November 2021. 
40 Reuters (2022): https://www.reuters.com/business/energy/malta-maintain-energy-prices-pre-covid-levels-2022-10-24/     
41 S&P Platts Gasoline Premium Unleaded 10ppmS FOB AR Barge 

83 

 
 
 
 
 
 
 
 
 
                                                      
Figure 81: The retail price of gasoline on average in the EU27, in comparison with the wholesale price, in 
nominal EUR/litre, without taxes. 

Source: Oil Bulletin, DG Energy, S&P Platts  
The wholesale price is Gasoline Prem Unleaded 10ppmS FOB AR Barge reported by Platt 
Note: Range in 2022.S1 excludes Malta, which is a clear outlier in 2022 given its frozen gasoline prices and is therefore displayed 
separately. 

Excise duty is an important component of the retail gasoline price. The average level of excise duties in 

the EU have remained stable from 2012 (0.60 EUR/litre) to 2021 (0.59 EUR/litre) in nominal terms. In 

several Member States, excise duty rates increased significantly between 2008 and 2021, with the biggest 

increases in Greece (98%), Latvia (74%) and Malta (64%), while in some MS smaller increases came from 

inflation-indexation of the rate (such as the Netherlands). In other large Member States rates decreased 

in the period 2008-2021, such as Hungary (-18%) and Poland (-22%). 

The average duty rate has decreased in 2022 as several countries have implemented (temporarily) lower 

rates in light of the current energy crisis. These temporary cuts are discussed separately in Chapter 11. 

In some countries excise duty is indexed for inflation and thus increases every year in nominal terms (such 

as the Netherlands), while in others the  rate  is not indexed and thus stays  constant in nominal terms 

(such as Germany), until a rate adjustment is implemented. Although, in Germany, it should be noted 

that other taxes, e.g. related to CO2 emissions, are increasing. 

In Hungary and Poland, the excise duty rate in euros was lower in 2021 than in 2008, mainly because of 

exchange rate developments (in national currencies, the excise duty rates increased over this period). 

For most of the period, Bulgaria generally had the lowest rate, just above the minimum level prescribed 

by  the  Energy  Tax  Directive.  France  had  plans  to  further  increase  the  excise  duty  annually  via  an 

increasing ‘carbon’ component, but in response to political protests in 2018, further rate increases have 

been postponed. 

84 

 
 
 
 
 
 
 
 
 
 
 
Figure 82: The excise duty rate of gasoline in nominal EUR/litre, including rate changes up to July 2022. 

Source: Oil Bulletin, DG Energy.  

In a shift towards more consumption-based taxation in the EU, the average VAT rate steadily increased, 

from 19.3% in 2005 to 21.5% in 2014. However, since 2014, the VAT rate in the majority of Member States 

has not changed anymore and the average VAT rate in the EU has stayed at 21.5%. 

Although the VAT rate is fixed, the effective VAT tax level fluctuates based on the total change in the 

price excluding VAT. As a result, the VAT tax per litre was 0.24 EUR/litre in 2019 and decreased to 0.22 

EUR/litre in 2020 when oil product prices went down. After oil product prices increased again, in the first 

half of 2022 the average level reached 0.32 EUR/litre. 

The  total  average  EU  tax  component  in  2021  was  58%,  which  reflect  peaks  in  the  net  fuel  price.  In 

comparison,  when  oil  prices  were  down  in  2020  after  the  first  Covid-19  lockdown  measures,  the  tax 

component was at 65% – Figure 83 shows the changes in the composition of gasoline prices. 

Figure 83: Average retail price of gasoline in the EU in nominal EUR/litre by price component, includes most 
temporary tax reductions up to July 2022. 

Source: Oil Bulletin, DG Energy  

85 

 
 
 
 
 
 
 
 
 
 
 
The next graph shows the composition of the average gasoline price by Member State in the first half of 

2022. As one can see in Figure 84, net prices are very similar (except in Malta due to policy intervention) 

and price differences mostly are the result from different tax levels (mainly excise taxes). Hungary was 

the country with the lowest retail price at 1.29 EUR/litre, whilst the Netherlands saw the highest at 2.12 

EUR/litre.  

Figure 84: Average retail price of gasoline in the first semester of 2022 by Member State and price component. 

Source: Oil Bulletin, DG Energy 

4.3.4 

Diesel 

Similar  to  gasoline,  the  evolution  of  diesel  prices  followed  the  trend  of  the  crude  oil  price  and  with 

considerable differences in the absolute  level, mainly explained by the diverging excise  duty and VAT 

rates in Member States. In comparison to gasoline prices, average retail prices for diesel diverged more 

between Member States. The price range grew from 0.26 EUR/litre in 2009 to 0.44 EUR/litre in 2013. 

Between 2013 and 2021, the difference in diesel prices continued to stay in the same range.  

If the two most expensive countries (Italy, Sweden) were disregarded, the range would be considerably 

narrower. On the lower end of prices in 2021 were Bulgaria (1.06 EUR/litre), Lithuania (1.18 EUR/litre) 

and Poland (1.18 EUR/litre). 

86 

 
 
 
 
 
 
 
 
 
 
 
Figure 85: Average retail price of diesel in the EU, including taxes and VAT. 

Source: Oil Bulletin, DG Energy  

For diesel net prices (without taxes), the differences between EU countries are much smaller than when 

taxes are included (see Figure 86). This shows that diverging diesel retail prices in Europe are mostly the 

result of diverging tax rates. Malta— similar as with gasoline prices— is a clear outlier. In the first semester 

of 2022 net prices on average increased from 0.64 EUR/litre in 2021 to 1.00 EUR/litre, mainly reflecting 

crude oil price increases. Highest net prices in the first semester of 2022 were in Sweden (1.35 EUR/litre) 

and Finland (1.15 EUR/litre), lowest were in Hungary (0.81 EUR/litre) and Slovenia (0.83 EUR/litre).  

Figure 86: Average nominal retail price of diesel in the EU, without taxes  

Source: Oil Bulletin, DG Energy, S&P Platts. The wholesale price is Gasoline Prem Unleaded 10ppmS FOB AR Barge reported by S&P 
Platts  
Note: Range in 2022.S1 excludes Malta, which is a clear outlier in 2022 given its frozen gasoline prices is therefore displayed 
separately. 

87 

 
 
 
 
 
 
 
 
 
 
The  nominal  excise  duty  rate  of  diesel  has,  on  average,  stayed  close  to  0.45  EUR/litre 

between 2013 and 2022 (Figure 87), which in real terms means that excise duties are gradually reducing. 

The  average  shifted  upwards  from  2010-2013  when  Italy  increased  their  excise  duty  rate  by  +0.20 

EUR/litre  (40%  increase),  reaching  a  level  of  0.62  EUR/litre  in  2013  and  staying  constant  afterwards. 

Excise duties in France also substantially increased between 2014 and 2018 as a result of a new ‘carbon’ 

price component. At the lower end of the spectrum, Bulgaria imposes the minimum rate prescribed by 

the Energy Tax Directive.  

Most recently excise duty levels were falling, especially in the first half of 2022, when the average EU 

rate reduced by 6%. This is mainly the result from (temporary) reductions to compensate for increasing 

energy  prices.  For  example,  in  Hungary  the  average  duty  rate  decreased  from  0.33  EUR/litre  to  0.26 

EUR/litre — the lowest level in the EU (Hungary does have the highest VAT rate in the EU of 27%). 

Figure 87: The average EU27 excise duty rate of diesel in nominal EUR/litre, as well as in selected EU countries. 

Source: Oil Bulletin, DG Energy  

The average (unweighted EU27) VAT rate of diesel also gradually increased from 19.8% to 21.5% by 2016. 

From 2016 to 2021, VAT rates in all countries were unchanged. In 2021 and the first half of 2022 VAT 

rates were (temporarily) reduced in Poland (from 23% to 8%), Greece (24% to 20%) and Finland (24% to 

21%). Still, the VAT component per litre increased in the first half of 2022 to the highest level since 2012 

at 0.29 EUR/litre. 

88 

 
 
 
 
 
 
 
 
 
 
Figure 88: Average annual retail price of diesel in the EU by price component 

Source: Oil Bulletin, DG Energy 

The next graph (Figure 89) shows the composition of the average diesel price by Member State in the 

first semester of 2022. Sweden had the highest retail price at 2.23 EUR/litre, Malta the lowest at 1.21 

EUR/litre. The high net price component leads to price convergence between EU countries due to a 

lower absolute influence of taxes and VAT on the retail price. 20 member states have a diesel price 

between 1.50 EUR/litre and 2.00 EUR/litre, with an average EU price of 1.76 EUR/litre.  

Figure 89: Average retail price of diesel in first semester of 2022 in nominal EUR/litre by Member State and 
price component.

Source: Oil Bulletin, DG Energy 

4.3.5 

Gasoline vs diesel 

As illustrated in the former sections, gasoline has been typically taxed at a higher rate than diesel. These 

motor fuels have competed for market shares in the European transport sector, where a lower tax rate 

on diesel is viewed as  one of the key factors in the “dieselization” of Europe by keeping diesel retail 

prices lower than gasoline, even though the wholesale price of diesel is generally higher. Diesel has a 

higher air pollutants emission factor per litre consumed than gasoline. On the other hand, diesel engines 

have higher fuel efficiency and therefore lower CO2 emissions per km.  

89 

 
 
 
 
 
 
 
 
 
 
The price advantage of diesel, coupled with the improving fuel economy of diesel engines, made diesel 

cars increasingly popular in the passenger car and light duty vehicle segments in the EU, reaching shares 

of  up  to  70-80%  in  new  cars  sales  in  some  Member  States.  In  contrast,  in  other  regions  of  the  world, 

gasoline  engines  continue  to  have  a  dominant  role  in  the  passenger  car  fleet.  The  “dieselisation” 

significantly contributed to a gasoline/diesel imbalance: European refineries produce too much gasoline, 

which has to be exported while diesel output is insufficient to meet demand as Europe has to rely on 

imports. 

The  2015  diesel  emission  scandal  raised  renewed  questions  on  the  tax  advantage  of  diesel.  After 

unsuccessful attempts to revise the Energy Taxation Directive (ETD) in 2011, the current proposed revision 

of the ETD of July 202142 among others attempts to increase the minimum tax rates of (fossil) fuels and 

change the tax base from volume to energy content. Given diesel’s higher energy content per litre, this 

could lead to higher diesel taxes compared to gasoline. 

In the longer term, it is expected that electric vehicles will play an increasingly larger role in transport. 

This change is already apparent in new vehicle registrations. By 2021, fossil shares had decreased to 40% 

for  petrol,  20%  for  diesel  and  the  remaining  40%  being  battery  electric  vehicles  (9%),  plug-in  hybrid 

electric vehicles (9%), hybrid electric vehicles (20%) and alternative fuel vehicles (3%)43.  

Differences between gasoline and diesel 

Since 2005, the average retail price of gasoline has been consistently above the price of diesel, with a 

0.14 EUR/litre difference on average in the EU, widening when prices drop and converging when prices 

increase (Figure 90).  

Figure 90: Average retail price of gasoline and diesel in the EU, with taxes (in nominal EUR).  
Source: Oil Bulletin, DG Energy 

Comparing the prices without taxes (Figure 91), we can see that diesel wholesale prices are higher than 

gasoline prices over the full period. From 2005 to the first half of 2022, the net price of diesel was on 

average 0.04 EUR/litre higher than the net price of gasoline. 

42 European Commission (2021). Revision of Energy Taxation Directive. 
43 ACEA (2022). Fuel types of new passenger cars in the EU 

90 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                      
 
Figure 91: Average retail price of gasoline and diesel in the EU, without taxes (EUR per litre)  

Source: Oil Bulletin, DG Energy  

The  average  excise  duty  rate  for  gasoline  remained  around  0.60  EUR/litre  since  2012,  roughly 

0.15 EUR/litre more than diesel (Figure 92), and thereby compensating for the higher net price of diesel. 

Since 2019, the difference has grown slightly as the result of lower excise duty rates in several Member 

States. 

Figure 92: Average excise duty rates for gasoline and diesel in the EU (EUR/litre) 

Source: Oil Bulletin, DG Energy  

The relative difference between gasoline and diesel excise duty rate was constant from 2005 until 2010, 

but rates started converging after 2010. As a result, the relative difference reduced from 30% until 2010 

to ~22% in 2022. 

91 

 
 
 
 
 
 
 
 
 
 
 
Figure 93: The absolute difference (in EUR/litre) and relative difference (in %) between the average excise duty 
rate on gasoline and diesel. 

Source: Oil Bulletin, DG Energy; (absolute difference = gasoline - diesel) 

Figure 94 highlights excise duty changes per Member State. Some movements are highlighted in the figure, 

particularly the reduction in excise duties for both fuels in Poland and Hungary compared to 2005, and in 

Germany  the  significant  reduction  in  excise  tax  on  diesel  in  the  same  period.  Italy,  France  and  the 

Netherlands are amongst those that show the highest increase in petrol excise duties in this period. 

Figure 94: Nominal excise duty rates in individual Member States in 2005 (blue) and 2021 (red). 

Source: Oil Bulletin, DG Energy 

92 

 
 
 
 
 
 
 
 
 
 
 
At EU level (Figure 95), the difference between the average gasoline and diesel excise duty 

rates decreased from 0.16 EUR/litre in 2005 to 0.13 EUR/litre in 2021. The figure shows that while on 

average the difference only reduced slightly, there are differences between Member States. For example, 

in Greece the gasoline  excise duty rate more than doubled (+137%) in this period  while that of diesel 

grew by ‘only’ 68%. 

Figure 95: The change of the difference between the gasoline and diesel excise duty rates between 2005 and 
2021.  

Source: Oil Bulletin, DG Energy 
Note: For Bulgaria & Romania the figure shows the change between 2008 and 2021, for Croatia between 2013 and 2021. Example for 
the graph: In Belgium between 2005-2021 the difference between the gasoline and diesel excise rate reduced with -0.23 EUR from a 
0.23/litre difference (gasoline higher) to a 0.00 EUR/litre difference. 

Belgium  currently  is  the  only  MS  with  unified  tax  rates  for  petrol  and  diesel,  although  differentials 

between the two fuels are also very low in Slovenia (only MS with higher diesel than gasoline tax), Cyprus, 

Hungary, Bulgaria, Romania and Poland. Excise duties for both fuels in the latter four are amongst the 

lowest of all MS. 

4.3.6 

Heating Oil 

Heating oil delivered 15% of the total household heating demand in 2019.44 While the use of heating oil 

in most Member States is decreasing and relatively small, there are a couple of Member States in which 

the use of heating oil forms one of the primary heating sources for households (see Figure 96). The largest 

consumers of heating oil are Germany (37% of total EU27 consumption in 2020), Spain (13%), France (13%), 

Belgium (8%) and Italy (8%). 

44 Odysee-Mure (2020). Heating energy consumption per energy source. 

93 

 
 
 
 
 
 
 
 
 
 
                                                      
Figure 96: Annual heating oil consumption in 2020 in EU Member States, converted to TWh. 

Source: Eurostat 

In the first half of 2022, retail heating oil prices have seen a substantial increase throughout the EU: a 

50% increase from 0.86 EUR/litre average to 1.32/litre. Price differences between MS remain large due 

to different excise duty rates. The highest retail price is in Denmark (1.90 EUR/litre) and lowest in Malta 

(1.00 EUR/litre, due to the earlier mentioned price regulation). 

Most  of  the  countries with  high  heating  oil  prices  have  a  rather  low  level  of  heating  oil  consumption. 

Germany however is by far the biggest consumer of heating oil in the EU and its price has been consistently 

below the EU average (Figure 97). Due to most large consumers having low relative heating oil prices, 

the consumption-weighted average price in the EU is close to the lowest MS price level. 

Figure 97: The average retail price of heating oil in the EU, including Lithuania, Denmark and Luxemburg. 

Source: Oil Bulletin, DG Energy  

94 

 
 
 
 
 
 
 
 
 
 
The  price  differences  for  net  prices  (without  taxes)  are  smaller  but  substantial:  the  range  gradually 

increased  from  0.15EUR/litre  in  2005  to  around  0.30  EUR/litre  in  2022.  This  difference  is  moderately 

higher than for other motor fuels. Comparing the EU average net price with a representative wholesale 

price (Figure 98) shows that retail prices of heating oil have also closely followed the wholesale price. 

Figure 98: The retail net price of heating oil in the EU, without taxes, compared with the wholesale price of  

Brent crude oil.  

Source: Oil Bulletin, DG Energy, S&P Platts 
Note: Again, because of price regulations Malta’s price is very low and not included in the range. 
The wholesale price is Gasoline Prem Unleaded 10ppmS FOB AR Barge reported by S&P Platts. The heating oil price in the 
Netherlands is not included, due to low prices while only having minimal heating oil usage. 

The average excise duty rate of heating oil (Figure 99) has gradually increased in nominal terms since 

2005 from 0.10 EUR/litre to 0.15 EUR/litre in 2022. Although most Member States apply a higher rate, 

the  main  consuming  Member  States  of  heating  oil,  such  as  Germany  and  Spain,  have  excise  duties  of 

respectively 0.06 EUR/litre and 0.09 EUR/litre. In Germany, this is partially compensated by an additional 

CO2 tax (trading system) increasing the overall tax level on heating oil. 

The Netherlands raised their excise duty rates by a significant amount during the period 2005-2022, and 

are together with Sweden, Denmark, Portugal and Italy, the countries with highest excise tax rates in the 

EU as of 2022. The excise rate for heating oil in the Netherlands is equal to  the diesel excise tax rate 

(0.53 EUR/litre in 2021). After a gradual raise of the carbon tax component from 2014-2018 in France, 

France’s rate is now slightly above the EU average. Luxembourg, previously the country with the lowest 

excise duty rate, raised its rate from 0.01 to 0.06 EUR/litre in 2021, due to a new carbon tax component. 

The  excise  rates  of  Belgium  and  Lithuania  are  on  the  minimum  level  set  by  the  Energy  Tax  Directive 

(0.021 EUR/litre). 

95 

 
 
 
 
 
 
 
 
 
 
 
Figure 99: The nominal excise duty rate of heating oil in the EU27 (consumption-weighted average), as well as 
Bulgaria, Germany, France, Netherlands, Sweden and Luxemburg. 

Source: Oil Bulletin, DG Energy  

The average VAT rate of heating oil also increased between 2005 and 2021 (Figure 100) from 19% to 21%. 

Portugal is the sole Member State in 2022 to reduce (temporarily) its VAT rate (from 23% to 13%) in order 

to mitigate rising energy costs for households.  

The average retail price of heating oil follows the same pattern as seen previously for gasoline and diesel, 

trending upwards and downwards with changes in the wholesale crude oil price. The tax component (tax 

+ VAT) was 37% in 2020 and reduced to 28% in the first half of 2022, its share declining when retail prices 

increase  and  increasing  when  retail  prices  decrease.  In  2022,  the  average  price  was  1.32  EUR/litre, 

consisting of 0.95 EUR/litre net price (72%), 0.15 EUR/litre taxes (11%) and 0.23 EUR/litre VAT (17%). 

Figure 100: Average retail price of heating oil in the EU (consumption-weighted average) by price component 

96 

 
 
 
 
 
 
 
 
 
 
Source: Oil Bulletin, DG Energy 

The next graph (Figure 101) shows the composition of the average heating oil price by Member State in 

2022. It shows that Denmark has the highest retail price, followed by the Netherlands and Italy. Belgium, 

Luxemburg, Croatia, Lithuania and Malta all have comparably low prices between 1.00-1.10 EUR/litre. 

Figure 101: Average retail price of heating oil in the first semester of 2022 by Member State and price 
component.  

Source: Oil Bulletin, DG Energy 

4.3.7 

International comparison of oil product prices45 

Gasoline / petrol 

Retail prices in all G20 countries, except the UK, are lower than the EU average (Figure 102 and Figure 

103). Prices in the US have remained at around half the EU level, despite increasing oil price trend since 

the start of 2021. Tax is the main differentiator in prices between the EU and other regions. For example, 

where EU taxes have been on average about 0.85-0.95 EUR/litre since 2008, in the US, taxes (federal + 

state average) have been around 0.10-0.15 EUR/litre since 2015, and federal taxes have not changed in 

30 years.46  

Of the other G20 countries, retail prices including taxes in Turkey and South Korea used to be higher than 

the  EU  average  but  recently  fell  below  the  EU  average.47  Retail  prices  excluding  taxes  are  higher  in 

several G20 countries, although these prices may not exclude all relevant taxes. 

In  sum,  differences  in  tax  treatment  are  instrumental  in  explaining  the  price  differences  across  G20 

countries. As EU taxes on fuels are among the highest globally, it results in a high retail price compared 

to other G20 countries. Prices have increased significantly since 2020 following the increasing price of 

45 This section is based on price data collected by Enerdata and covers G20 economies. 
46 EIA (2022). Fuel tax overview.  
47 In Turkey lower retail prices are driven by a combination of regulated prices in Turkish Lira in combination with a 
high inflation rate resulting in devaluation of the exchange rate of the Lira with the Dollar/Euro. 

97 

 
 
 
 
 
 
 
 
 
 
 
 
                                                      
crude oil. Exchange rate effects have a strong influence on retail prices; most oil trade is 

still conducted in US dollars. 

Figure 102: International comparison of retail gasoline prices in EUR2021/litre (real prices), excluding taxes. 
For some countries, included data is up to May 2022.  

Source: Oil Bulletin, DG Energy; IEA; US DoE; Enerdata (METI, ANP, SAPIA) 
Note: prices are expressed in real (2021) euros; dotted line highlights that it is unclear if the excluding tax price actually excludes 
all relevant taxes. 

Figure 103: International comparison of retail gasoline prices in EUR2021/litre (real prices), including taxes. For 
some countries, included data is up to May 2022. 

Source: Oil Bulletin, DG Energy; IEA; US DoE; Enerdata (METI, ANP, SAPIA, PPAC) 
Note: prices are expressed in real (2021) euros; dotted line highlights that it is unclear if the excluding taxes price actually excludes 
relevant taxes 

Diesel 

The international price picture of diesel is similar to gasoline (Figure 104 and Figure 105). The EU average 

price is the highest among the G20 countries, which is explained by a high tax component - about 50% of 

the final price. Similar to gasoline, the US retail price for diesel has been roughly half of the EU average 

price throughout the period, due to much lower taxes in the US around 0.11 EUR- 0.16 EUR/litre. Diesel 

retail prices excluding taxes are very similar for the EU and US, whilst many other G20 countries have 

had higher net prices than the EU. Since 2021, prices in the EU and in several other G20 countries (e.g. 

South Africa, India, and Brazil) have increased significantly following the increasing price of crude oil. 

98 

 
 
 
 
 
 
 
 
 
 
 
 
Figure 104: International comparison of retail diesel prices excluding taxes in real EUR2021/litre prices, up to 
May 2022 for selected countries. 

Source: Oil Bulletin, DG Energy; IEA; IEA; US DoE; Enerdata (METI, ANP, SAPIA, PPAC) 
Note: prices are expressed in real (2021) euros; dotted line highlights that it is unclear if the excluding taxes price 
actually excludes relevant taxes 

Figure 105: International comparison of retail diesel prices including taxes in real EUR2021/litre prices, up to May 
2022 for selected countries. 

Source: Oil Bulletin, DG Energy; IEA; EIA; IEA; US DoE; Enerdata (METI, ANP, SAPIA, PPAC) 
Note: prices are expressed in real (2021) euros; dotted line highlights that it is unclear if the excluding taxes price actually excludes 
relevant taxes 

Heating oil 

EU average prices for heating oil are more similar to other G20 countries, due to the lower average tax 

rate (Figure 106). Heating oil prices have significantly increased since 2021, which can be seen in the 

figure for the EU; heating oil data after 2020 is not available for other countries, but a similar (net price) 

trend is expected in other countries in the period 2021-2022.  

99 

 
 
 
 
 
 
 
  
 
Figure  106:  International  comparison  of  heating  oil  prices  in  real  EUR2021/litre,  both  including  (right)  and 
excluding (left) taxes.  

Source: Oil Bulletin, IEA 

Heavy fuel oil 

Heavy fuel oil (with high sulphur content) is mainly used in marine  vessels, due to its lower cost as a 

residual oil. However, heavy fuel oil also has higher pollutant emissions than less polluting fuels such as 

diesel and gasoline. Global heavy fuel oil prices have  been comparable in the  EU, Canada and the US 

since 2008. Prices in South Korea and Japan are higher, while prices in Mexico on average were lower. 

Retail prices (including taxes) for heavy fuel oil are significantly lower (about half) of heating oil prices 

and even a smaller share when compared with diesel and gasoline. This is the result of lower wholesale 

prices (without tax) due to the low quality of heavy fuel oil and minimum tax levels applied to heavy fuel 

oil in most countries. 

Figure 107: International comparison of heavy fuel oil prices in real EUR2021/litre, both excluding (left) and 
including (right) taxes.  

Source: Oil Bulletin, IEA 

100 

 
 
 
 
 
 
 
 
 
 
  
 
 
4.4  Alternative fuels 

In this and the next section, we are analysing the consumption and prices of the  following alternative 

fuels48: liquefied petroleum gases (LPG), biogasoline (pure or blended), biodiesel (pure or blended), other 

liquid biofuels and biogases. 

4.4.1 

Consumption 

The  use  of  alternative  fuels  has  been  promoted  in  order  to  substitute  fossil  oil-based  fuels  and  their 

volume has more than tripled since 2005. However, they still represent only a small fraction the used 

energy in transport and together represented only 3.6% of final energy consumption in the EU in 2020 

(Figure 108).  

Figure 108: final energy consumption in all sectors combined for selected alternative fuels 

Source: Eurostat, all figures in GWh. 
Note: The consumption values of blended fuels refers only to the energy content of the biofuel. For example: in case 100 TWh of 
blended biodiesel with 5% pure biodiesel is used, blended biodiesel consumption is 5 TWh. 

About 61% of alternative fuels is consumed for transport (Figure 109). Blended fuels (biogasoline and 

biodiesels) account for the majority of alternative fuel consumption (73% of total consumption in 

transport). 

48 The proposed Regulation on the deployment of alternative Fuels Infrastructure defines alternative fuels as ”fuels or 
power sources which serve, at least partly, as a substitute for fossil oil sources in the energy supply to transport and 
which  have  the  potential  to  contribute  to  its  decarbonisation  and  enhance  the  environmental  performance  of  the 
transport sector, including a) alternative fuels for zero-emission vehicles (electricity, hydrogen, etc.), b) renewable 
fuels (bio and synthetic) and c) alternative fossil fuels for a transition phase (CNG, LNG, LPG)”. 

101 

 
 
 
 
 
 
 
 
                                                      
Figure 109: Transport Final Energy Consumption of selected alternative fuels 

Source: Eurostat, all figures in TWh. 

Household consumption is 29% of the total. LPG is the main alternative fuel used by households (Figure 

110), mostly used for heating and cooking as substitute for natural gas in homes not connected to the gas 

grid. In addition, biogas use was 20 TWh in 2020. 

Figure 110: Household (and other sectors) Final Energy Consumption of selected alternative fuels  

Source: Eurostat, all figures in GWh. 

Industrial  use  of  alternative  fuels  account  to  9%  of  the  total.  In  industry  LPG  is the  most  widely  used 

alternative fuel with small shares of biogas and blended biodiesels (Figure 111).  

102 

 
 
 
 
 
 
 
 
 
 
Figure 111: Industrial final energy consumption of selected alternative fuels. 

Source: Eurostat, all figures in TWh. 

4.4.2 

LPG 

In the case of Liquefied Petroleum Gas or LPG used for transport (Figure 112), EU average retail prices 

including taxes  fluctuated within a relatively small range between 2008 and 2020. Since  2021, the  EU 

average price has increased sharply, and a similar trend is expected in other countries, although this data 

is not available yet in the figure below. Price trends follow crude oil prices, the feedstock for most LPG 

production. 

Figure 112: International comparison of retail prices of LPG in real EUR2021/litre, both excluding taxes (left) 
and including taxes (right) 

Source: EU Oil Bulletin, IEA; US DoE; Enerdata (METI) 

4.4.3 

Biofuels 

Bioethanol  prices  (Figure  113)  in  the  two  main  global  producers  —  the  US  and  Brazil  —  are  relatively 

similar and have been around 400 EUR2021/Mt between 2015 and 2020. Since 2021, bioethanol prices in 

Brazil started increasing to 600 EUR2021/Mt on the back of higher global fuel prices. Although data is 

103 

 
 
 
 
 
 
 
 
 
 
 
 
lacking, a similar recent trend can be seen in the US (US ethanol Chicago pipeline price).49 

Prices  in  the  EU  (T2  Rotterdam  Barge)  are  in  general  50-150%  higher,  due  to  higher  local  production 

costs.50 Bioethanol E85 prices — a blend of 85% bioethanol with 15% gasoline — are primarily driven by 

gasoline prices and are therefore closely related to gasoline price movements. 

Figure 113: International comparison of bioethanol prices and Bioethanol E85 (bioethanol mixed with gasoline) 
in real EUR2021/litre. 

Source: S&P Platts, US AFDC, Enerdata (ANP) 

For biodiesel, wholesale prices (excl. taxes) in the EU are similar to the US, due to biodiesel prices being 

very much correlated with diesel and thus crude oil prices, as engines running on biodiesel can switch to 

diesel in case of high prices. Prices in Asia (Biodiesel FOB SE Asia) are in general 100-200 EUR2021/Mt 

lower than in the US and EU. Most recent price data from the US (Biodiesel B99, Figure 114) shows that, 

similar to bioethanol, prices have increased through 2021 and 2022, from around  8,008 EUR2021/Mt in 

2021 to around 12,002 EUR2021/Mt in 2022. While detailed data is not included, other regions have seen 

similar price increase trends. 

49 A (small) part of the price movement is explained by a decline in the EUR:USD exchange rate, increasing the EUR value of US 
prices. 
50 Mizik et al (2020). The Major Driving Forces of the EU and US Bioethanol Markets with Special Attention Paid to the COVID-19 
Pandemic 

104 

 
 
 
 
 
 
 
 
 
                                                      
Figure 114: International comparison of wholesale prices of biodiesel 

Source: S&P Platts 

4.4.4 

Electric mobility 

Home charging for households 

Households either have the choice to subscribe to a home EV charging  service (for which they will be 

provided a dedicated tariff for charging EVs) or to charge their vehicle using a “normal” electricity tariff 

(the tariff charged for all household activities). According to our survey, all countries investigated (EU27 

and non-EU27 countries), have off-peak tariffs (see Table 2). 

Table 2: Survey on off-peak tariffs (2022) 

  Country 
France 
Austria 
Belgium 
Germany 
Spain 
Sweden 
Denmark 
Finland 
Norway 
UK 
China 
Japan 
South Korea 
Canada (Ontario) 
USA 
Australia 

Off peak tariff 
YES 
YES 
YES 
YES 
YES 
YES* 
YES 
YES 
YES 
YES 
YES 
YES 
YES** 
YES 
YES 
YES 

EU27 

Non-EU 

*In Sweden, utilities propose time of use prices. Only few customers choose this rate (one of the reasons is arguably that customers 
do not fully understand this tariff and are concerned about losing control of their bills). 
**South Korea: Incremental prices, with seasonal prices. This is not really off-peak prices with differentiated prices during a day. 
Source: Author 

105 

 
 
 
 
 
 
 
 
 
Figure 115 depicts average off-peak and on-peak tariffs dedicated to EV charging at home. 

Values are given for EU countries (blue shade) and non-EU countries (dark shade). Orange diamonds mark 

the household average electricity price (a tariff used for all household activities not only EV charging).  

Average off-peak and on-peak tariffs dedicated to at home EV charging varies substantially throughout 

the world. The countries with the lowest off-peak tariffs are South Korea, Canada (Ontario) and Australia 

(New South Wales). Spain has the lowest off-peak tariffs in the EU. In almost every country, dedicated 

EV charging services seem attractive: off-peak and on-peak tariffs are lower than the average household 

average electricity price.  

In  addition,  in  some  countries  (e.g.  Canada,  the  USA  and  Norway),  subscribing  to  a  preferential  EV 

charging system “sanctions” households if they charge during on-peak period: in peak-hours they will pay 

more  than  if  they  were  using  a  “normal”  electricity  tariff.  Therefore,  the  cost  savings  of  using  such 

charging systems as a household depends not only on its consumption pattern for EV charging but also for 

other electricity use. 

Figure 115: EV charging price at home in 2021 for both on peak and off peak charging, as well as the 
household average electricity price. 

Source: Authors calculation based on Eurostat (2022) data and national sources 
Note on prices: China: average 2020 EV charging price at home; *Canada: Ontario Price; *USA: California Price; 
*Australia: New South Wales price 

Public charging stations 

Two types of public charging stations exist:  ‘normal’ Alternative Current (AC) and fast’ Direct Current 

(DC) charging stations.  

‘Normal’ AC charging is preferred for long-period parking (>20mins) and is most common currently on the 

market  due  to  their  low  costs  (including  production,  installation,  and  functioning  costs).  These  AC 

charging stations allow EV recharging within a few hours; it can provide up to 22 kW of charging power. 

106 

 
 
 
 
 
 
 
 
 
 
 
DC (fast) charging stations normally provide around 50 kW or more (and can reach an output 

of 250 kW) and are typically used for time periods of up to 30 minutes. 

Figure 116 shows the minimum-maximum prices found at different AC public charging stations in various 

countries. The orange diamond represents the average AC station price. The dark dotted line illustrates 

the  average  EU  household  electricity  price;  this  element  illustrates  the  tariff  difference  between  AC 

public charging and home charging. 

Slovakia,  Portugal,  Hungary  and  Czechia  have  the  lowest  public  AC  charging  prices.  The  differential 

between minimum and maximum prices can be quite significant (e.g. in the Netherlands, France, Austria 

and Belgium). In Slovakia and Portugal, the average AC public charging price is cheaper than the EU27 

average household electricity price. Other countries such as Czechia, Spain and Belgium also have several 

AC public chargers with lower prices than the EU average household electricity price. 

Figure 116: AC public charging price (EUR/MWh, 2022) 

*Excluding Romania and Estonia 
Source: Authors calculation from European Alternative Fuels Observatory; Eurostat; National sources 

Figure 117 shows the minimum-maximum prices found at different DC public charging stations in various 

countries.  The  orange  diamond  represents  the  average  DC  station  price.  The  dark  orange  dotted  line 

illustrates the average EU27 household electricity price. 

In  general,  DC  charging  prices  are  around  40%  higher  than  those  for  AC  charging.  Portugal,  Finland, 

Czechia,  and  Hungary  have  the  lowest  DC  charging  tariffs.  The  differential  between  minimum  and 

maximum prices can be quite significant (e.g. in France, Germany, the Netherlands or Belgium). Portugal 

107 

 
 
 
 
 
 
 
 
 
 
 
on average has lower DC charging prices than the EU27 household electricity price, while 

Czechia and Luxembourg also report minimum prices below this level. 

Figure 117: DC public charging price (EUR2021/MWh 

Source: Authors calculation from European Alternative Fuels Observatory; Eurostat; National sources 
*Excluding Romania 

4.4.5 

Electricity Storage 

The cost of electricity storage is a complex indicator depending on multiple factors. When comparing the 

storage  cost  at  country  level  in  Europe,  there  is  currently  no  structured  harmonized  data.  When 

comparing storage technological choices, many studies and articles focus on the investment cost only. As 

this does not cover all cost components, it is often misinterpreted. For instance, a cheaper battery pack 

(in EUR/kWh) does not always lead to lower storage costs. The considered application and the type of 

service determine the eventual storage cost.  

Whilst imperfect, the ‘Levelised Cost of Storage’ (LCOS)51 indicator offers a more complete overview of 

the cost of storage by including the type of application and several economic factors (such as the cost of 

capital). Depending on the storage functionality needed for the project, the LCOS can be estimated in 

EUR/MW or EUR/MWh. 

51 The LCOS quantifies the discounted cost per unit of discharged electricity for a specific storage technology and 
application. 

108 

 
 
 
 
 
 
 
 
 
 
                                                      
The cost of storage is less dependent on the country of installation, but more on the type 

of application it is installed for. The main factors influencing the cost of storage are: 

 

 

 

 

the technology (within which the important factors are CAPEX, OPEX, lifetime, self-discharge…), 

the frequency of use (number of cycles per year), 

the total capacity installed (in MW),  

the typical discharge duration (and thus the energy storage capacity in MWh).  

In addition, not all technologies are suitable for all applications. For instance, the slow response time of 

Pumped Hydro Energy Storage (PHES) makes this technology unsuitable for primary response applications.  

Different studies have estimated the LCOS. The most complete, a 2019 analysis by Schmidt et al. (Figure 

118) compared the cheapest energy source for various technologies using both the LCOS in power terms 

(i.e. annualized capacity cost) and in energy terms.  

Figure 118: Technology with the lowest LCOS in energy terms (US$/kWh) for various use cases52 

N.B: Circled numbers represent the requirements of 12 key applications53. Colours represent technologies. Shading 

indicates  how  much  higher  the  LCOS  of  the  second  most  cost-efficient  technology  is;  meaning  lighter  areas  are 

contested between at least two technologies, while darker areas indicate a strong cost advantage of the prevalent 

technology. White spaces mean LCOS of at least two technologies differ by less than 5%. The LCOS is estimated for 

an electricity price of 50 US$2018/MWh, a simulation made for a 500 US$/MWh price in 2030 gives a slightly higher 

advantage to Li-ion.  

Back  in  2015,  pumped  hydro  (PHES)  was  still  the  cheapest  storage  technology  for  most  applications 

(except seasonal storage, which is dominated by compressed air). Since then, Li-ion has gained strong 

traction  and  has  become  the  preferred  choice  for  three  applications  (Black  Start,  Power  Quality  and 

power reliability) and it is expected to become the lowest-cost technology for 9 out of 12 applications by 

2030. Batteries can support different applications (e.g., primary and tertiary responses) thus giving them 

an advantage over flywheels. Batteries have also no geographic limitation and can be installed almost 

anywhere. This is a strong advantage versus hydro and compressed air, which have a limited development 

potential in Europe due to a lack of relevant locations.  

52 Schmidt et al. Projecting the Future Levelized Cost of Electricity Storage Technologies 
53 1 - Energy Arbitrage ; 2 - Primary Response ; 3 - Secondary Response; 4 - Tertiary Response; 5 - Peaker 
Replacement; 6 - Black Start; 7 - Seasonal Storage; 8 - T&D Investment Deferral; 9 - Congestion Management; 10 - 
Bill Management; 11 - Power Quality; 12 - Power Reliability 

109 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 119: Mean LCOS of the most efficient technology for different applications ($US2018/MWh) 

N.B: We did not include Tertiary response, Black start, Seasonal storage, Power Quality and Power Reliability that 

have LCOS over 1000 US$2018/MWh 

Focus on Li-ion batteries 

The majority of li-ion battery applications are in electric vehicles (75% in 202256) in the short to medium 

term. However, in the smaller market of stationary storage, Li-ion is becoming a reference technology 

for two types of applications: 

 

 

Front of meter large-scale stationary storage. In particular for primary and secondary reserve 

applications (depending on countries’ legislations).  

Behind the meter residential storage. In particular in Germany (70% of newly installed storage 

capacity in 202054) and to a lesser extent in Italy. While Germany benefits from historical market 

penetration (thanks to past subsidies), a high rate of residential PV and a high electricity price, 

the Italian market is mainly driven by national subsidies.  

For primary reserve applications, the initial capital cost of the Li-ion battery represents 65 to 70% of the 

project’s total levelised costs.  

54 SolarPower Europe (2021). European Market Outlook for residential battery storage 2021-2025.  

110 

 
 
 
 
 
 
 
 
 
 
                                                      
Figure 120: Average pack price of lithium-ion batteries  

Source: IEA, 201855; AVICENNE, 201956 

According to IEA, the cost of Li-ion battery packs decreased sevenfold between 2011 and 202155. This is 

mostly due to the scale effects for production costs (per cell), energy and overhead costs. This is true 

both at the pack and cell level.  

Cathode material costs have been relatively stable in absolute  terms. They represented around 23% of 

the  battery  pack  costs  in  202055,57.  Battery  pack  prices  are  now  strongly  dependent  on  mineral  prices 

(e.g., Manganese, Cobalt and Nickel for NMC and Iron and Phosphate for LFP, and Aluminium for NCA). 

Since 2021, these prices have increased considerably, driven by high demand and only slowly increasing 

supply. The cost of materials for an LFP cathode have risen by 343% between June 2021 and May 2022 

(Figure 121).  

Figure 121: Estimated cathode active material cost (materials only), US$/kg (Fastmarket, 202257) 

In  conclusion,  stationary  storage  capacities  are  expected  to  keep  on  growing,  mostly  driven  by  the 

integration of intermittent  (renewable)  energy  into the grid. While pumped hydro  historically had the 

largest capacity, Li-ion batteries are expected to provide the majority of the future stationary (short-

term) storage market. Their prices have shown a strong decrease and are expected to keep decreasing in 

55 IEA (2022). Average pack price of lithium-ion batteries and share of cathode material cost, 2011-2021 
56 Avicenne (2019). The Rechargeable Battery Market and Main Trends 2018 – 2030 
57 Fastmarkets (2022). European Battery Raw Materials Conference 2022 – ten things we learned  

111 

 
 
 
 
 
 
 
 
 
 
                                                      
the coming years, mainly due to the development of large-scale factories for the EV market. 

However, the recent price spikes in raw materials and the transport congestion are risks to this trajectory. 

Despite a potential (but uncertain) decrease in the mid-term (with the rise of raw materials' production), 

those prices are expected to stay high (e.g., at least in the next three years for Lithium58).  

4.4.6 

Hydrogen 

Given its characteristics, storage for longer time periods using batteries is currently not efficient techno-

economically. For longer-term storage, such as seasonal storage, hydrogen could provide a more cost-

effective solution. 

Hydrogen cost by electrolysis - grid-connected  

The  cost  of  hydrogen  produced  by  electrolysers  connected  to the  grid  differs  a  lot  across  EU  Member 

States. As shown in  Figure  122, the main input to  the  final price is the  wholesale  price of electricity, 

while taxes, grid fees, CAPEX and maintenance also contribute to the final cost of hydrogen. To overcome 

the lack of price data for hydrogen, we use the concept of levelised cost of hydrogen (LCOH) to estimate 

the cost of production59. The lowest LCOH across the EU is recorded in Sweden at 2.0 EUR/kg, while the 

highest price is in Cyprus at 7.7 EUR/kg for 2022.60 

Figure 122: LCOH Grid-Connected Electrolysis with Cost Breakdown 

Source: FCHO 

Hydrogen cost by electrolysis - connected to renewables  

The LCOH in 2022 produced by electrolysers directly connected to solar and wind plants can be seen in 

the below graphs (Figure 123 and Figure 124). For solar, the lowest LCOH is in Portugal at 3.8 EUR/kg and 

the highest in Finland 11.7 EUR/kg, since the LCOE of solar PV is substantially lower in warmer climates. 

58 AVINCEE ENERGY 2022, Bloomberg, Macquarie, August 2022 
59 The annual average capacity factor used is 45%, using average wholesale electricity prices. In practice, this 
simplifies the balance between paying back the high CAPEX investment through high operational hours while using as 
low as possible electricity prices. 
60 FCHO (2022). Levelised Cost of Hydrogen 

112 

 
 
 
 
 
 
 
 
 
 
                                                      
Regarding  onshore  wind,  the  lowest  LCOH  is  recorded  in  Ireland  at  2.8 EUR/kg  and  the 

highest  in  Cyprus  at  7.5 EUR/kg.  Lowest  LCOH  for  offshore  wind  electrolysis  is  recorded  in  Ireland  at 

4.45 EUR/kg,  while  the  highest  LCOH  is  recorded  in  Cyprus  at  10.4 EUR/kg.  LCOH  reductions  are 

anticipated over time both based on a decreasing CAPEX and on further decreases of renewables LCOE. 

Figure 123:  LCOH - Electrolysers Directly Connected to Solar 

Source: FCHO  

Figure 124: LCOH - Electrolysers Directly Connected to Wind on-shore 

Source: FCHO 

Hydrogen prices for mobility - refuelling sales prices 

Hydrogen  prices  at  Refuelling  Stations  (HRS)  across  Europe  are  not  publicly  available.  However,  some 

operators publish prices that currently range from 9.99 EUR/kg in Belgium to as high as 24.95 EUR/kg in 

the Netherlands. In Germany, H2 refuelling sales prices are almost unified across the country, linked to 

H2 Mobility’s HRS network61. According to this operator, the unit price for hydrogen has remained stable 

around 9.5 EUR/kg for the past ten years before increasing to 12.85 EUR/kg in June 202262, representing 

61 https://h2-mobility.de/  
62  https://energynews.biz/hydrogen-price-goes-up-to-e12-85-kg/ 

113 

 
 
 
 
 
 
 
 
 
 
 
                                                      
the first significant price increase in ten years. In France, the price has fluctuated around 

10-12 EUR/kg in 202063 and 202164.  

It is likely that hydrogen prices remain high for the next years due to the high electricity and natural gas 

prices since 2021. While hydrogen in the future should be mainly produced using renewable electricity in 

order to contribute to a decarbonized energy system, most current hydrogen sites use grid electricity.  

Grey hydrogen by SMR Production Cost and Price 

Conventional hydrogen production using fossil fuels currently accounts for more than 95% of the hydrogen 

produced  in  the  EU,  mainly  through  steam  reforming  of  natural  gas  (SMR)  technology.  According  to 

Hydrogen  Europe,  the  hydrogen  production  cost  in  2020  through  SMR  stood  at  1.41 EUR/kg. The  sales 

price (Figure 125) is highly dependent on the traded volume where prices range from 1.31 EUR/kg for 

volumes over 5,000 tons to 9.5 EUR/kg for volumes between 1-10 tons. 

Figure 125: Average hydrogen production Cost through SMR and sales price in the EU in 2020 in EUR/kg 

Source: Hydrogen Europe 

In 2021, the situation has dramatically changed, with prices inflated due to the substantial natural gas 

price increases. As shown in Figure 126, prices of hydrogen through SMR increased from less than 2 EUR/kg 

in January to around 7 EUR/kg in December 2021 based on the month-forward market price.  

Figure 126: Hydrogen market prices using SMR, ATR and baseload electrolysis in January and December 2021. 

Source: ICIS 

63 https://twitter.com/infinergia/status/1218618688460509184 
64 https://www.largus.fr/actualite-automobile/hydrogene-le-plein-au-prix-du-gazole-en-2030-10527405.html 

114 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                      
5 Household energy expenditure  

Energy is a basic need for all households. As either their consumption or retail prices increase, households 

have  to  spend  more  of  their  income  on  energy  needs.  Examining  household  energy  expenditure  is 

important for understanding  the financial pressures households face to meet their basic energy  needs 

(including heating and transport) and give an indication of households’ ability to cover their energy needs. 

In  the  first  part  of  this  chapter,  the  importance  of  energy  products  and  transport  fuels  in  household 

expenditures  is  examined  across  the  EU  Member  States.  This  covers  energy  expenditures  related  to 

heating  and  transport65,  analyses  differences  across  income  groups,  and  examines  changes  in  energy 

expenditures over time.  

Taking a closer look at energy expenditures for households has become increasingly important in the last 

two  years. Rising  energy  prices,  particularly  during  2022, resulted  in  a growing  number  of  households 

facing higher than usual energy expenditures and struggling to cover their energy needs. In 2021, this had 

already prompted the European Commission to publish a toolbox of measures66 ranging from emergency 

income support to households and state aid for companies to targeted tax reductions to tackle surging 

energy  prices,  as  well  as  strengthening  the  Just  Transition  fund  to  ensure  that  Member  States  and 

vulnerable households were better supported. 

More  recently,  further  energy  price  increases  in  2022  disproportionally  affect  the  most  vulnerable 

households, SMEs, and energy—intensive economic sectors (more on that in Chapter 6). The EU has since 

responded with the REPowerEU Plan, which aims to support the transition to clean and affordable energy 

production and reduce the energy burden. Additionally, in the “Save Gas for a Safe Winter” plan the EU 

Commission  proposed  gas  demand  reduction  plans  for  the  EU,  while  an  inframarginal  price  cap  and  a 

‘solidarity contribution’ from oil and gas firms is intended to finance the support measures for European 

households and industry. 

The second part of this chapter therefore focuses on the effects that increased energy prices have on 

household expenditures, including a price elasticity analysis to examine how households across income 

groups will be affected by shifts in energy prices. 

Main findings:  

In 2020, the poorest households67 in the EU spent on average EUR 953 on energy products (electricity, 

gas, liquid and solid fuels, and heating), around 7.8% of their total expenditure68. Absolute expenditures 

and shares of total expenditures, however, vary greatly between Member States. For example, absolute 

energy expenditures for low-income households in 2020 varied between EUR 676 in Hungary and over 

EUR 1500 in Luxemburg, for example. Similarly,  the share of expenditure spent on energy (excluding 

transport  fuels)  in  2020  ranged  between  3%  in  Luxemburg  and  17%  in  Czechia.  Often,  high  absolute 

expenditures do not correspond to high shares of energy expenditures relative to total expenditures. 

65 Expenditures are differentiated by energy and transport. For energy expenditures these relate to electricity, gas, liquid fuels, solid 
fuels, and heat energy. For transport expenditures these relate to petrol, diesel, and other fuels.  
66 Tackling rising energy prices: A toolbox for action and support. October 2022 
67 In this report, the poorest households are defined as those in the first income decile or where no decile data is available as those in 
the first income quintile.  
68 This average is based on expenditure data from those Member States that reported for 2020 and where the number of surveyed 
households were reported. This includes Austria, Belgium, Bulgaria, Czechia, Hungary, Italy, and Luxemburg. The average was 
weighted according to the number of households. 

115 

 
 
 
 
 
 
 
 
 
 
                                                      
Middle-income  households  tend  to  have  higher  absolute  energy  expenditures,  but  the 

percentage share is lower in their household budgets. On average, in 2020, middle-income households 

spent  only  6.4%  of  their  total  expenditures  on  energy.  Expenditure  shares  among  income  groups  also 

varies geographically. While spending is higher in Central and Eastern Europe (at around 10-22%), it is 

significantly lower in North and Western Europe (between 3-8%).  

Expenditures on transport fuels represent on average in 2020 around EUR 352 for low-income households, 

equivalent  to  around  2.6%  of  total  expenditures.  By  comparison,  middle-income  households  spend 

EUR 887  or  3.8%  of  their  total  expenditures.  This  can  be  linked  to  higher  levels  of  motorized  private 

transport in higher income groups.  

Between 2010  and 2020, the share of energy  expenditure decreased slightly for all income groups, as 

seen  in  Table  3.  Particularly  for  low-income  households,  there  was  a  decrease  in  the  share  of  energy 

expenditures from almost 10% to just under 8%. For other income groups this decrease was marginal. The 

share of expenditures spent on transport fuels remained nearly unchanged for all income groups. 

Table 3: Overview of changes of share of expenditure on energy and transport across Member States (2010-
2020) 

2010 

2020 

2010-2020 

Share of expenditure on energy 

Low-income households 

Low middle-income households 

Middle-income households 

Share of expenditure on transport energy 

Low-income households 

Low middle-income households 

Middle-income households 

9.9% 

7.6% 

6.9% 

2.2% 

3.6% 

4.1% 

7.8% 

7.2% 

6.4% 

2.6% 

3.9% 

3.8% 

-2.1% 

-0.4% 

-0.5% 

0.3% 

0.3% 

-0.3% 

Source: DG ENER ad hoc data collection on household consumption expenditures69 

5.1  Data on household expenditures  

The  following  chapter  focuses  on  absolute  energy  expenditures  comparing  households  across  Member 

States, as well as putting expenditures in relation to total expenditures on products and services. This 

gives  a  good  indication  of  the  burden  households  face  to  cover  their  energy  costs.  Additionally,  the 

differences across Member States of households with different incomes are examined to analyse how this 

cost burden is experienced across income groups. Energy expenditure of the residential sector usually 

covers heating, lighting, cooking needs, cooling, and the operation of electrical appliances. Additionally, 

changes of energy and transport expenditures over a ten-year period (2010-2020) are analysed.  

This  chapter  draws  primarily  on  data  provided  by  national  statistical  authorities  on  expenditures  and 

further ad hoc data collection on household consumption  expenditures by the  Directorate General for 

Energy.  Members  of  the  Household  Budget  Survey  Working  Group (EU  Member  States) were  contacted 

requesting  data  collection  on  energy  expenditure.  This  additional  data  allows  for  more  disaggregated 

69 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 

116 

 
 
 
 
 
 
 
 
 
 
 
                                                      
information of energy expenditures across income groups and for improved evidence-based 

policy making by the Commission regarding affordability of energy services. 

In  order  to  show  differences  across  income  groups,  this  chapter  includes  data  on  consumption 

expenditures of three household groups: low-income, low-middle income, and middle income. In the 2020 

edition  of  the  Energy  prices  and  costs  report,  these  three  income  groups  were  defined  using  income 

deciles. With the exception of three Member States (Germany, Poland, and Denmark), all of the  data 

provided  are  reported  in  income  deciles  (one  tenth  of  the  population,  arranged  into  income  strata). 

Households in the first income decile are defined as low-income; low-middle income households are in 

the  third  income  decile;  and  the  fifth  income  decile  is  used  as  a  representation  of  middle-income 

households. For those Member States where only quintile data is available the first, second, and third 

income quintiles are used respectively70. 

It  should  be  noted  that  the  data  collected  is  not  harmonized  across  Member  States  and  data  is  not 

reported consistently for the year 2020. For the following figures, the most recent available data for each 

Member State is used.71 All data in this report is based on the data delivered by the Member States.  

5.2  Share of energy fuels and use in households 

To understand how consumption and expenditures on energy products evolve and are related to national 

contexts, it is important to examine how energy consumption in the residential sector differs between 

EU Member States, both in terms of types of fuels and their end-use. EUROSTAT publishes annual data on 

final  energy  consumption  of households  in  the  residential sector.  Figure  127  shows  the distribution  of 

energy products of households in 2020. Across the EU27, the majority of energy consumption is covered 

by electricity (25%) and natural gas (32%). Renewables and wastes account for another 19%, followed by 

petroleum products (12%), derived heat72 (8%), and solid fuels (3%).  

Around half of the EU Member States draw predominantly on electricity to meet their household needs, 

while the other half rely predominantly on gas. In seven Member States households use electricity as their 

main  source  of  energy.  Especially  in  Sweden  (51%),  Bulgaria  (41%),  Spain  (42%),  and  Cyprus  (42%) 

electricity plays a significant role in the residential sector. Natural gas plays an equally important role 

across the EU: Italy (52%), Luxemburg (52%), Hungary (64%), and the Netherlands (68%) are among those 

that rely predominantly on natural gas to meet their energy needs in the residential sector. 

It should also be noted that six Member States draw primarily from renewables and waste, notably Croatia 

(46%), Latvia (40%) and Slovenia (41%) are able to cover their household energy needs in this way. While 

many Member States are heavily reliant on one type of fuel source, most notably natural gas, in other 

Member States the share of fuels used to cover household energy consumption is more evenly distributed. 

This can be observed across the EU in Belgium, Germany, and France, for example, as well as in Czechia, 

Lithuania, Romania, Estonia, but also in Denmark, Finland, Greece, and Portugal. 

70 This is the case for Germany, Denmark, and Poland.  
71 Most recent data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2 018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available.  
72 Derived heat is heat delivered to households in the form of heat, e.g. through district heating systems. This heat may be produced 
from different sources such as natural gas, heating oil, coal, cogeneration using such fuels, geothermal, etc. 

117 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Two  Member  States  stand  out,  because  of  their  unusual  energy  mix:  Poland  relies 

predominantly on solid fuels (alongside derived heat and natural gas) and Ireland relies heavily on oil and 

petroleum products (43%). 

Figure 127: Share of fuels in final energy consumption in the residential sector of Member States in the EU27 
(2020) 

Source: Eurostat (nrg_bal_c) 

Additionally, the distribution of end-uses across EU Member States in the residential sector is also relevant 

for understanding consumption expenditures. In Figure 128, the share of final energy consumption in the 

residential sector by type of end-use in 2020 can be seen for all Member States. Across the EU, households 

require most of the energy for space heating (63%). Both water heating and energy required for lighting 

and appliances make up around 15-15% of household energy use. Cooking requires around 6% of total end 

use, while space cooling and other end-uses cover around 1.5%.  

Lighting and (active) space cooling in the EU are covered entirely by electricity. Around half of the energy 

used for cooking  is also covered by electricity. Natural gas use  is predominantly related to space and 

water  heating,  where  renewables  only  cover  around  one  quarter  of  energy  needs  for  space  heating. 

Derived heat only plays a significant role in relation to water and space heating, whereas oil products 

cover in equal portions energy used for space heating, cooking, and water heating.73 This however varies 

across Member States. The highest proportions of energy used for space heating among residential energy 

use can be seen in Luxemburg (81%), Belgium (73%), Slovakia (73%), Estonia (72%), and Austria (70%).  

In warmer climates, space heating is far less relevant, which can be observed in Spain, Portugal, Cyprus 

and Malta in particular. In Malta and Cyprus, this also coincides with much higher energy use for space 

cooling with 12% and 10% respectively. In several Member States, energy use for lighting and appliances 

lies significantly above the EU-27 average. In Bulgaria, France, Portugal, and Sweden this lies at around 

73 Based on data from: Eurostat (2022) 

118 

 
 
 
 
 
 
 
 
 
 
                                                      
20%, while in Spain and Malta this is particularly high at 32% and 29%, respectively. Finally, 

it should also be noted that for households in Portugal, a significant share of their energy use (31%) is 

related to cooking.   

Figure 128 Share of end-use energy consumption in the residential sector of Member States in the EU27 (2020) 

Source: Eurostat (nrg_bal_c) 

5.3  Energy product expenditure in household budgets 

Energy expenditures are only one part of total household expenditures. To assess the role that energy 

expenditures  play,  that  share  of  energy-related  expenditures  is  examined  in  relation  to  other 

consumption expenses. Next to energy, expenses covering basic needs such as food, housing and transport 

are  of  particular  importance  for  households.  Figure  129  shows  the  breakdown  of  annual  consumption 

expenditures of average households across the EU.  

In  almost  all  Member  States  expenditures  on  the  above  listed  basic  needs  range  between  40-60%. 

Expenditures for energy range from 5-10% of total expenditures. Particularly high spending on energy can 

be  observed  in  Central  and  Eastern  Europe  (i.e.,  Bulgaria,  Hungary,  Lithuania,  Poland,  Romania,  and 

Slovakia). Households in Slovakia and Bulgaria have the highest expenditures on energy at 12% of their 

total  consumption  expenditures.  By  comparison,  households  in  Luxemburg  have  the  lowest  energy 

expenditures in relation to total expenditure at only 2.5%. The average household in the EU in 2020 spent 

around 6% of their total expenditures on energy products.74  

Where  relative  energy  expenditures  are  generally  higher  in  Member  States  with  lower  GDP,  housing 

related expenditures were higher (and energy expenditures lower) in Member States with a higher GDP 

per  capita.  This  was  for  example  the  case  in  Germany  where  housing  expenditures  were  28%  of  total 

expenditure,  as  well  as  Spain  (26%),  Finland  (28%),  Ireland  (30%),  and  Luxemburg  (32%).  A  notable 

74 This average is based on expenditure data from those Member States that reported for 2020 and where the number of surveyed 
households were reported. This includes Austria, Belgium, Bulgaria, Czechia, Hungary, Italy, and Luxemburg. The average was 
weighted according to the number of households.  

119 

 
 
 
 
 
 
 
 
 
 
                                                      
exception  in  this  trend  is  Cyprus,  where  housing  expenditures  were  also  high  (22%)  and 

energy  expenditures  relatively  low  (below  4%).  Expenditures  for  both  energy  and  housing  were 

particularly low in Malta representing less than 10% of total expenditure in total. This may be due to high 

levels  of  homeownership,  governmental  housing  support  for  low-income  households,  and  low  overall 

energy prices.   

Expenditures  for  food  and  non-alcoholic  beverages  took  up  a  significant  portion  of  total  spending  for 

households  across  the  EU. The  shares  were  higher  in  Member  States with  lower  purchasing  power  per 

capita,  such  as  Bulgaria  (33%),  Lithuania  (31%),  and  Romania  (32%).  Transport  related  expenditures, 

including for mobility services and fuels, make up a significant portion of expenditures for households. 

These are also related to GDP and purchasing power per capita. In France and Slovenia, 18% and 21%, 

respectively,  of  total  expenditures  relate  to  transport.  The  majority  of  these  are  related  to  mobility 

services,  rather  than  fuels  for  personal  transport.  This  may  be  related  to  extensive  public  transport 

networks being used widely. Additionally, in Slovenia, high expenditure on  fuels for personal transport 

may  relate  to  the  high  percentage  of  the  rural  population  that  could  be  more  reliant  on  private 

automobile  transport  and  high  associated  costs.  By  comparison,  only  around  7%  and  8%  are  spent  by 

households in Romania and Bulgaria, respectively. In Romania, this could be related to low diesel and 

petrol prices in EU comparison, as well less dense public transport networks.  

Figure 129: Shares of consumer goods in household expenditure of Member States in the EU2775 

Source: DG ENER ad hoc data collection on household consumption expenditures 

While household energy expenditures make up only a small portion of total expenditures on average, this 

varies between income groups. This can be seen in Figure 130: the share of energy expenditure of total 

expenditures is shown for the three income groups defined above: low income, low-middle income, and 

middle income.  

75 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. Germany did not report any 
data on fuels for personal transport, meaning this data is not fully comparable.  

120 

 
 
 
 
 
 
 
 
 
                                                      
Overall,  relative  energy  consumption  expenditures  are  higher  for  low-income  households  than  for  the 

middle-income  group.  With  the  exception  of  Lithuania,  Poland  and  Bulgaria,  the  higher  the  average 

expenditures,  the  bigger the differences  between  the  income  groups.  In  some  countries, the  share  of 

energy expenditures is higher for low-middle or middle-income households. This is may be the case as 

some low-income households will self-regulate their energy use and lower their energy consumption (and 

associated expenditures) to cover other basic needs.  On the other end of the spectrum, in Member States 

such  as  Luxemburg,  Sweden  and  Finland,  where  average  energy  expenditures  are  below  5%,  the 

differences between the income groups are very small.  

Figure 130: Energy share in total consumption expenditure by income group of Member States in the EU2776 

Source: DG ENER ad hoc data collection on household consumption expenditures 

5.4  Energy expenditure (excluding transport) in households with low 

income 

This section focuses in particular on households with low income. On average, low-income  households 

spent EUR953 on energy in 2020, which represents 8% of their total consumption expenditures.77 This, 

however, varies greatly between Member States, both in terms of absolute expenditures and share of 

total expenditures (Figure 131). 

Absolute expenditures in Latvia and Romania are particularly low (below EUR500), while the majority of 

low-income households spend between EUR500-EUR1000 annually on energy. This may be related to very 

low energy prices. Highest absolute expenditures can be seen in Luxemburg and most notably in Denmark, 

76 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (201 8), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 
77 This average is based on expenditure data from those Member States that reported for 2020 and where the number of surveyed 
households were reported. This includes Austria, Belgium, Bulgaria, Czechia, Hungary, Italy, and Luxemburg. The average was 
weighted according to the number of households. The number of households taken into account for the calculation of this average is 
representative of around 23.5% of all households in the EU in 2020. 

121 

 
 
 
 
 
 
 
 
 
 
                                                      
where households with the lowest incomes spend over EUR 2500 on energy. Extremely high 

energy prices, that are due to high taxes on electricity for example, are key drivers of high expenditures. 

However,  revenues  of  energy  taxes  are  channelled  back  into  the  social  welfare  system  that  in  turn 

supports low-income households extensively. There is, generally speaking, a regional divide in the EU, 

where  in  countries  with  higher  GDP  absolute  expenditures  on  energy  are  higher,  also  for  low-income 

groups.  

Generally, even when absolute expenditures are relatively low, the share of total expenditures on energy 

is relatively high at around 15%. Inversely, the higher absolute expenditures tend to correspond to a lower 

share of energy expenditures (below 10% of total expenditures), most likely related to higher average 

household incomes, meaning that even high energy expenditures do not necessarily result in high energy 

cost burdens. Notable outliers are Cyprus, Sweden, and Finland where low  absolute expenditures also 

correspond  to  a  low  share  of  energy  expenditures.  This  may  be  related  to  low  energy  prices  and/or 

subsidies  and  social  tariffs  for  low-income  households.  Relatively  high  absolute  expenditures  (above 

EUR1000) in Slovakia, Czechia, and Slovenia on the other hand also require a large part of expenditures 

to be used for energy. This, too, can be related to average household incomes, which are lower in these 

countries  and  result  in  high  cost  burdens,  even  for  lower  absolute  expenditures.  In  some  instances, 

energy-related  expenditure  might  also  be  recorded  as  part  of  housing  expenditures,  especially  for 

households in the rental sector.78 

This  large  range  in  energy  expenditures  is  partially  related  to  the  differences  in  average  household 

income,  but  differences  in  household  energy  prices  also  play  a  role.  Additionally,  differences  in  the 

energy efficiency of the building stock play a key role in heating related expenditures. In Slovakia and 

Czechia, for example, poor energy efficiency standards in the building sector, particularly for low-income 

groups,  coupled  with  low  incomes  and  high  energy  prices  lead  to  a  high  cost  burden  (22%  and  17%, 

respectively)  for  low-income  households.  Extensive  social  welfare  systems  in  Denmark,  Germany,  and 

Luxemburg may also contribute to lowering overall cost burdens of energy expenditures.  

78 Since the data collected through the HBS Ad-hoc working group is not fully harmonized across EU Member States difference such as 
this may occur.  

122 

 
 
 
 
 
 
 
 
                                                      
Figure 131: Absolute energy expenditures and share of energy expenditures for low-income households for 
Member States in the EU2779 

Source: DG ENER ad hoc data collection on household consumption expenditures 

The share of household energy products in the total consumption expenditure of low-income households 

also varies across Member States (Figure 132). For the majority of these households, energy expenditures 

are related to electricity and gas. Expenditures on electricity are highest in Sweden (96%), while in the 

Netherlands, for example, over 70% of energy expenditures are related to gas. High shares of electricity 

expenditures in Cyprus, Sweden, and Finland may also be linked to the low energy cost burdens in these 

countries. In Hungary, solid fuels play a significant role (31%) for low-income households because they 

rely  more  on  wood  and  coal  for  heating  needs,  whereas  in  Denmark  the  majority  of  energy-related 

household  expenditures  is  related  to  heat  energy  (61%),  which  corresponds  to  an  extensive  district-

heating network. Higher shares of district heating expenditures can also be observed in Lithuania, Estonia, 

and  Latvia.  Liquid  fuels,  predominantly  in  the  form  of  heating  oil,  still  play  an  important  role  in  the 

household energy mix in Luxemburg, Ireland, and Greece. In Greece, for example, the use of natural gas 

is limited by the lack of an extensive natural gas distribution grid (partly also due to the large number of 

islands) and instead diesel oil is used more commonly. 

79 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 

123 

 
 
 
 
 
 
 
 
                                                      
Figure 132: Share of energy products in energy expenditures for low-income households of Member States in 
the EU2780 

Source: DG ENER ad hoc data collection on household consumption expenditures 

5.5  Energy expenditure (excluding transport) in households with 

middle-income  

Figure 133 and Figure 134 show the relationship between absolute expenditures and the share of energy 

expenditures in relation to total consumption expenditures, as well as the distribution energy products 

in expenditures across Member States for both middle-income groups.  

Absolute  expenditures  are  higher  for  households  with  higher  income.  Absolute  expenditures  increase 

proportional to income, although the higher the income, the less pronounced the increase. This can be 

observed  both  in  the  low-middle  and  middle-income  group,  where,  in  2020,  absolute  expenditures 

averaged at EUR 1199 and EUR 1310 per household, respectively, in comparison to the EUR 593 spent 

annually by the average low-income household in the EU. Across the income groups, the share of energy 

expenditures in 2020  is slightly lower for  low-middle and middle-income  households. In  comparison to 

low-income  households,  which  spend  around  8%  of  total  expenditures  of  energy,  low-middle  income 

households  spend  around  7%  and  middle-income  households  around  6%  on  average  of  their  total 

expenditures on energy. While regional differences in the share of energy expenditures can be seen across 

all income groups, these remain pronounced even for middle-income households. In Northern and Western 

Europe, the share usually ranges between 3-9%, while Central and Eastern European Member States see 

household energy expenditures around 11-15%. Across income groups, that for those households who have 

lower absolute expenditures, these correspond to higher relative expenditures and vice versa.  

80 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 

124 

 
 
 
 
 
 
 
 
 
                                                      
In Figure 133 and Figure 134, Member States were ranked according to their absolute energy 

expenditures.  Most  countries  remain  in  a  similar  position  relative  to  other  Member  States  across  the 

income groups. There are, however, notable exceptions. This can be seen in Ireland for example, where 

absolute  energy  expenditures  for  low-middle  income  households  are  relatively  low  by EU  comparison, 

whereas  for  low-income  groups  these  were  towards  the  middle.  Similarly,  in  Lithuania,  the  absolute 

expenditures rise across the income groups, but the absolute expenditures in relation to those in other 

Member States are much lower for middle-income  households. Inversely, where absolute expenditures 

for  low-income  households  in  Sweden  were  relatively  low  in  comparison  to  other  Member  States,  the 

expenditures for middle-income households are relatively high. This may be linked to the strong social 

welfare system that provides support to low-income households also in relation to housing and energy 

costs.    

Significantly  higher  energy  expenditure  in  low-middle  and  middle  groups  can  be  observed  in  several 

Member States. In Malta, for example, households in the first income decile spend only under EUR 1000 

annually on energy, while in the third decile these absolute expenditures increase significantly to around 

EUR 2800. The share of energy expenditures in relation to total expenditures is also much higher for low-

middle income households in Malta (16%) than low-income households or even middle-income households 

(both at 9%).81 For all other Member States there is generally a slight decrease in the share of energy 

expenditures of total consumption expenditures as income increases.  

Figure 133: Absolute energy expenditures and share of energy expenditures for low-middle income households 
for Member States in the EU2782 

Source: DG ENER ad hoc data collection on household consumption expenditures 

81 For Malta no data was delivered on expenditures for liquid fuels in the 1st and 2nd income quintile. Consequentially, expenditures 
will be lower for these income deciles and the low-income group as defined in this report and is not comparable to expenditure data 
for low-middle and middle-income group.  
82 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 

125 

 
 
 
 
 
 
 
 
 
                                                      
Figure 134: Absolute energy expenditures and share of energy expenditures for middle-income households for 
Member States in the EU2783 

Source: DG ENER ad hoc data collection on household consumption expenditures 

The share of expenditure on household energy products does not vary greatly in most Member States, 

although some shifts in energy product shares can be observed (see Figure 135 and Figure 136). In Estonia, 

Romania, and Malta the share of electricity spending is around 10% lower for middle-income households 

than  for  low-income  households.  This  may  be  related  to  the  housing  stock,  where  newer  and  more 

expensive housing will rely less on electricity for heating. In several Member States, the share of solid 

fuels was also significantly lower for middle-income households. In Lithuania and Hungary, the share was 

around 10% lower and in Croatia, it decreased from 45% to 27%. This, again, is linked to the housing stock, 

where  low-income  households  are  more  likely  to be  reliant  on  solid  fuels for  heating  needs  and  more 

expensive or modern housing will rely more on gas and other fuels for heating. The share of heat energy 

was around 10 percentage points higher for low-income households in Denmark and Latvia; for Lithuania 

even around 20% higher. In Bulgaria and Sweden, the share of heat energy for middle-income households 

was higher at 8-12% in comparison to 0-2%. 

83 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 

126 

 
 
 
 
 
 
 
 
                                                      
Figure 135: Share of energy products in energy expenditures for low-middle income households of Member 
States in the EU2784 

Source: DG ENER ad hoc data collection on household consumption expenditures 

Figure 136: Share of energy products in energy expenditures for middle-income households of Member States in 
the EU2785 

Source: DG ENER ad hoc data collection on household consumption expenditures 

84 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 
85 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 

127 

 
 
 
 
 
 
 
 
 
                                                      
5.6  Share of energy in the household expenditure by income 

and Member States  

This section focuses on a regional comparison of Member States, clustered according to their geographical 

location and comparability of expenditures. This analysis also compares the share of energy expenditures 

relative to the final expenditure across the three income groups (low, low-middle, and middle income).86  

Of the seven countries in North Western Europe (see Figure 137), German households spend the highest 

portion  of  their  total  expenditures  on  energy,  while  this  share  is  significantly  lower  for  households  in 

Luxemburg. In Germany, these high expenditures can be related to higher spending on gas for heating 

but may also be related to higher costs of energy. Overall, these shares are below the EU average. It is 

notable that in Ireland the share of energy-related expenditures is highest for middle-income households. 

This may be due to higher consumption levels that do not necessarily match the higher incomes or the 

lack of government subsidies that benefit low-income households benefit87. 

Figure 137: Share of energy expenditure in total expenditure by income groups for Germany, France, Ireland, 
Austria, Belgium, the Netherlands, and Luxemburg88 

Source: DG ENER ad hoc data collection on household consumption expenditures 

With the exception of Greece, the share of energy expenditures in South European and Mediterranean 

island countries (see Figure 138) is also below the EU average. This may be due to lower heating needs 

and lower overall electricity prices. In the lowest income group households spent between 9% and 4% on 

energy related expenditures. This share decreases for all Member States shown over the income groups. 

The higher share in Greece is particularly noticeable for the two lower income groups. Especially for the 

86 Due to the significant differences in years of reported data these regional analyses often cover a large time span. Additionally, the 
quintile data for Germany, Poland, and Denmark should be considered in the comparison between Member States.  
87 For example, low income households in Ireland are often eligible for electricity and gas lump-sum support payments. 
88 Year of data is as follows: Ireland (2015), the Netherlands (2015), France (2017), Germany (2018). For all others 2020 data w as 
available. 

128 

 
 
 
 
 
 
 
 
 
                                                      
low-income households this 12% share is above the EU average. This may be related to the 

high wholesale electricity prices in Greece.89 

Figure 138: Share of energy expenditure in total expenditure by income groups for Greece, Portugal, Italy, 
Spain, Cyprus, and Malta90 

Source: DG ENER ad hoc data collection on household consumption expenditures 

In  Central  and  Eastern  European  countries  (see  Figure  139),  the  share  of  energy  in  total  household 

expenditure is considerably higher than the EU average. This may be linked to lower energy efficiency in 

the  building  stock  and  thus  increased  spending  on  heating,  for  example,  as  well  as  lower  total 

expenditures due to lower income meaning that necessary expenditures such as those related to energy 

will take on a larger portion of total expenditures. This ranges from 10-22%, with the highest shares for 

low-income households in Slovakia. It should also be noted that the share of energy expenditures increases 

slightly across the income groups in Poland. This may be related to higher consumption in higher income 

deciles as lower income deciles have very low absolute expenditures as per the energy poverty indicators 

of the EU Energy Poverty Advisory Hub91.   

89 This may be linked to the lack of competitiveness of domestic lignite-fired power plants. High operational costs and the increase of 
emission allowances in the EU ETS play a significant role here.  
90 Year of data is as follows: Portugal (2010), Malta (2015), Cyprus (2016), Spain (2017). For all others 2020 data was available. 
91 For more information see: https://energy-poverty.ec.europa.eu/observing-energy-poverty/national-indicators_en.  

129 

 
 
 
 
 
 
 
 
 
                                                      
Figure 139: Share of energy expenditure in total expenditure by income groups for Slovakia, Czechia, Hungary, 
and Poland92 

Source: DG ENER ad hoc data collection on household consumption expenditures 

One of the lowest shares of energy expenditures in total consumption expenditure can be found in Sweden 

and Finland (see Figure 140). Both in Sweden and Finland, rental payments often include energy costs 

and it may therefore be difficult to capture energy costs accurately. The share of energy expenditures 

also does not vary greatly between income groups in these two countries. The higher energy expenditures 

in Denmark in comparison to the other Nordic countries can be explained by relatively high energy prices.  

By comparison, the share of energy expenditures in the Baltic countries is much higher (between 10-14%) 

and  above  the  EU  average  (Figure  141).  Again,  this  may  be  linked  to  low  energy  efficiency  in  the 

residential  building  sector,  particularly  for  low-income  groups.  Particularly  in  Lithuania  where  energy 

efficiency standards are relatively high, however, lower income and lower overall expenditures may be 

the main driver of the high share of energy expenditures. Although the retail electricity and gas prices 

are significantly lower in these countries this data reflects the different purchasing powers of households 

in these Member States.    

92 Year of data is as follows: Slovakia (2019). For all others 2020 data was available. 

130 

 
 
 
 
 
 
 
 
 
                                                      
Figure 140: Share of energy expenditure in total expenditure by income groups for Denmark, Finland, and 
Sweden93 

Source: DG ENER ad hoc data collection on household consumption expenditures 

Figure 141: Share of energy expenditure in total expenditure by income groups for Latvia, Estonia, and 
Lithuania94 

Source: DG ENER ad hoc data collection on household consumption expenditures 

A similar trend can be observed in South East Europe in Figure 142. The share of energy expenditures is 

relatively high in Romania, Slovenia, Bulgaria, and Croatia and higher than the EU average. Low levels of 

93 Year of data is as follows: Sweden (2012), Finland (2016), and Denmark (2018). 
94 Year of data is as follows: Estonia (2016), Lithuania (2016), Latvia (2019).  

131 

 
 
 
 
 
 
 
 
 
                                                      
energy  efficiency  as  well  as  lower  income  levels,  again,  play  a  significant  role  in  these 

Member States and contribute to higher costs for households. It should be noted that in Bulgaria the share 

of energy expenditures does not decrease across the income groups as with the other Member States and 

the cost burden of energy remains high even for middle-income households. This could be related to high 

levels of energy  poverty in Bulgaria across income groups  in comparison to the other countries shown 

here, particularly with regard to the self-assessed indicator that asks households whether they are able 

to keep their home adequately warm.95   

Figure 142: Share of energy expenditure in total expenditure by income groups for Romania, Slovenia, Bulgaria, 
and Croatia96 

Source: DG ENER ad hoc data collection on household consumption expenditures 

5.7  Energy expenditures in the transport sector  

The previous sections covered energy expenditures, but households also dedicate a significant portion of 

their expenditures to transport fuel related costs. Again, there  are significant differences in both the 

absolute expenditures and the share of transport expenditures across Member States. These differences 

are  related  to  mobility  shares  e.g.,  the  availability  of  public  transport,  transport  infrastructures,  car 

dependency, and so on, but also to the composition of fuel prices related to the level of taxation, for 

example. In 2020, low-income households spent an average of EUR 953 on transport fuel, accounting for 

2.5% of their total expenditures.  

For a number of Member States, particularly in Central and Eastern Europe, absolute expenditures for 

low-income  households  on  transport  fuel  are  very  low  (see  Figure  143).  This  corresponds  to  a  low 

percentage  share  of  total  expenditures  often  below  1%,  except  for  Latvia  where  even  absolute 

expenditures of only EUR 65 make up over 3% of total expenditures. High absolute expenditures can be 

seen in Luxemburg (EUR 585), Sweden (EUR 597), and France (EUR 666), but also in Cyprus (EUR 744) and 

95 Bulgaria records the highest portion of households in the EU that state that they are not able to keep their homes adequately warm 
with over 50% across all income groups. See: https://energy-poverty.ec.europa.eu/observing-energy-poverty/national-indicators_en. 
96 Year of data is as follows: Slovenia (2018), Croatia (2019), and Romania (2019). For all others 2020 data was available. 

132 

 
 
 
 
 
 
 
 
 
                                                      
Malta (EUR 1053). For the latter two Member States, this corresponds to a high share of 

total expenditure between 6-10%. In Cyprus, the share of rural population is relatively high, meaning that 

even low-income households are dependent on private transport and high costs associated with motorized 

private transport. Among the EU, Malta has the third highest share of car ownership, again meaning that 

low-income households will be more likely to also own cars and have high absolute expenditures. In those 

countries where incomes are generally higher, high expenditures do not make up more than 4% of total 

expenditures. Extremely low transport fuel expenditures in Romania and Greece may be related to low 

levels of car ownership in the lowest income deciles.  

Figure 143: Absolute transport expenditures and share of transport expenditures for low-income households for 
Member States in the EU2797 

Source: DG ENER ad hoc data collection on household consumption expenditures 

In the majority of Member States, petrol plays the most important role in transport expenditures, which 

can be seen in Figure 144. The share is particularly high in Greece, Slovakia, and Hungary, but also in 

Denmark  and  the  Netherlands.  High  diesel  shares  can  be  seen  in  France,  Romania,  and  Latvia.98  For 

Croatia and Finland, no disaggregated data were available.  

97 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Denmark (2018), Slovenia (2018), Croatia (2019 ), Latvia 
(2019), Romania (2019), Slovakia (2019). Germany did not deliver any transport related data. For all others 2020 data was available. 
98 The 100% share of diesel transport fuels in Portugal is likely due to an error in reporting.  

133 

 
 
 
 
 
 
 
 
 
                                                      
Figure 144: Share of transport fuels in transport expenditures for low-income households of Member States in 
the EU2799  

Source: DG ENER ad hoc data collection on household consumption expenditures 

By comparison, absolute transport expenditures for middle-income households were higher than for low-

income households (see Figure 145). In 2020, middle-income households spent an average of EUR 887 on 

transport, accounting for 6.4% of their total expenditures. This is related to the fact that the share of car 

ownership in low-income households tends to be much lower than in middle-income households that can 

afford motorized private mobility options. This leads to higher burdens for middle-income households in 

the transport sector. In particular, in Spain, Slovenia, and Italy the difference in absolute expenditures 

between  low-  and  middle-income  households  was  higher  than  in  other  Member  States.  These  higher 

expenditures corresponded with either a similar share of transport expenditures of total expenditure or 

an increase. In Croatia, the share of transport expenditures increases from 1% for low-income households 

to 4% for middle-income households. This is likely tied to higher car ownership in higher income groups. 

Malta is the only Member State where the share of expenditures dedicated to transport  decreases for 

middle-income households (from 9% to 7%). This could be related to that fact that car ownership is high 

overall and there are no significant jumps in ownership rates across income groups, meaning that higher 

income decreases the share of transport related expenditures.    

The  share  of  transport  fuels  is  also  slightly  different  for  middle-income  households  than  low-income 

groups (see Figure 146). Overall, the share of petrol fuels is higher. In Austria, for example the share of 

diesel  was  over  15%  higher  for  middle-income  households,  while  the  petrol  share  was  lower.  Slovenia 

demonstrates a similar trend of higher diesel shares and lower petrol shares in middle-income households. 

This may be related to diesel cars being generally more expensive, but also more economical, when taking 

long  or  frequent  journeys;  thus,  these  are  more  suited  to  middle-income  groups  that  travel  more 

frequently by car. In some Member States, the opposite can be observed. In Romania, a direct shift of 

99 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Denmark (2018), Slovenia (2018), Croatia (2019 ), Latvia 
(2019), Romania (2019), Slovakia (2019). Germany did not deliver any transport related data. For all others 2020 data was available. 

134 

 
 
 
 
 
 
 
 
                                                      
20% from diesel to petrol can be observed between the share of expenditures between low 

and middle-income households.100  

Figure 145: Absolute transport expenditures and share of transport expenditures for middle-income households 
for Member States in the EU27101 

Source: DG ENER ad hoc data collection on household consumption expenditures  

100 In Malta the share of petrol and diesel shares were both higher for middle income households as the share of other fuels was 
almost 55% lower. This does not reflect the national distribution of transport fuels and may thus be an error in reporting.  
101 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Denmark (2018), Slovenia (2018), Croatia (2019 ), Latvia 
(2019), Romania (2019), Slovakia (2019). Germany did not deliver any transport related data. For all others 2020 data was available. 

135 

 
 
 
 
 
 
 
 
                                                      
Figure 146: Share of transport fuels in transport expenditures for middle-income households of Member States 
in the EU27102 

Source: DG ENER ad hoc data collection on household consumption expenditures 

5.8  Change in energy expenditures in the Member States (2010-2020)  

Figure 147 shows how the share of energy and transport expenditures in the final household consumption 

expenditure has changed between 2010 and 2020. These changes over time are shown differentiated for 

low-,  low-middle,  and  middle-income  households,  respectively,  and  for  both  household  energy 

expenditures (electricity, gas, heating, and other fuels) and transport fuels (diesel, petrol, other fuels). 

The yearly averages here are calculated based on the data available per year and is weighted according 

to the number of households and the conclusions drawn here are subject to this data availability.103 

Within household energy expenditures (full lines), it is clear that across the ten-year timespan low-income 

households  consistently  spend  the  highest  (of  all  income  groups)  share  of  their  total  consumption 

expenditure  on  energy,  while  middle-income  households  spend  a  consistently  lower  share.  This 

relationship is inverted, when looking at transport expenditures, where middle-income households spend 

a higher share of their income on transport due to the factors mentioned above.  

Between 2015 and 2019, a slight upward trend can be noted for all income groups for energy expenditures 

and a stable trend for transport expenditures. The slight downward trend may be due to limited data in 

2020  and,  as  section  5.9  on  rising  energy  prices  shows,  rises  in  energy  prices  mean  spikes  in  energy 

consumption expenditures overall. 

102 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Denmark (2018), Slovenia (2018), Croatia (2019 ), Latvia 
(2019), Romania (2019), Slovakia (2019). Germany did not deliver any transport related data. For all others 2020 data was available. 
103 Data availability differs significantly across years and Member States.  

136 

 
 
 
 
 
 
 
 
 
 
                                                      
Figure 147: Expenditures on household energy (electricity, gas, heating, etc.) and transport energy (petrol, 
diesel, etc.) for the poorest, lower middle, and middle-income households by EU Member State 2010-2020104 

Source: DG ENER ad hoc data collection on household consumption expenditures 

Overall,  data  between  2010  and  2020  demonstrate  that  there  has  been  a  slight  decrease  in  energy 

expenditures across household income groups. Particularly for low-income groups this has decreased by 

2%.  However,  these  changes  are  linked  primarily  to  decreases  between  2010-2015,  as  consumption 

expenditure  changes  between  2015-2020  were  very  small.  For  low-middle  and  middle-income  groups 

there was almost no change in the share of energy related expenditures between 2010 and 2020. Changes 

in transport expenditures saw  a slight upward trend between 2010 and 2020 of around 0.3%. Between 

2015 and 2020, however, transport expenditure shares decreased again for all income groups. Only for 

middle-income  groups  was  there  a  steady  decrease  in  the  share  of  transport  expenditures  across  the 

entire period.  

Table 4: Changes of share of expenditure on energy across Member States (2010-2020) 

2010 

2015 

2020 

2010-2020 

2015-2020 

Low-income households 

Low middle-income households 

Middle-income households 

9.9% 

7.6% 

6.9% 

7.5% 

7.2% 

6.3% 

7.8% 

7.2% 

6.4% 

-2.1% 

-0.4% 

-0.5% 

0.3% 

0.0% 

0.1% 

Source: DG ENER ad hoc data collection on household consumption expenditures 

Table 5: Changes of share of expenditure on transport energy across Member States (2010-2020) 

2010 

2015 

2020 

2010-2020 

2015-2020 

Low-income households 

Low middle-income households 

Middle-income households 

2.2% 

3.6% 

4.1% 

3.4% 

4.2% 

4.7% 

2.6% 

3.9% 

3.8% 

0.3% 

0.3% 

-0.3% 

-0.8% 

-0.3% 

-0.9% 

104 Year of data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the Netherlands (2015), Cyprus (2016), 
Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (2018), Denmark (2018), Slovenia (2018), 
Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was available. 

137 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Source: DG ENER ad hoc data collection on household consumption expenditures 

5.9  Impact of rising energy prices  

Energy prices have increased substantially since early 2021 and skyrocketed following the Russian invasion 

of  Ukraine  in  February  2022.  This  chapter  focusses  on  the  impact  of  the  current  energy  prices  on 

household expenditures and tries to provide a comparison between the current and the before-the-crisis 

situation of households that has been outlined in the previous chapters. 

Due  to  the  unavailability  of  recent,  reliable  expenditure  data,  we  used  energy  expenditure  and  total 

consumption expenditure data for the year 2020 (or the most recent pre-crisis year) as a starting point105. 

The recent price increases of energy and other consumer goods (as captured in consumer inflation figures) 

lead to increased expenditures for these goods. Assuming that consumption patterns remain unchanged, 

increased  expenditures  for  energy  (including  and  excluding  transport)  as  well  as  total  consumption  in 

2022 can be estimated, using the harmonized index of consumer prices (HICP) for energy and for total 

consumption  (all  items)106  and  inflating  previous  values  to  the  year  2022  (more  specially  to  July  2022 

values). 

If  energy  (and  overall)  consumption  decrease  over  time  (in  response  to  price  changes),  the  price  and 

consumption effect in higher household expenditures would need to be disentangled. Unfortunately, no 

data is not available to allow for such a decomposition, especially by income group. Therefore, for the 

purposes of this analysis, we thus assumed that higher prices lead to increased expenditure. This presents 

a  limitation  to  the  approach  as  the  interrelation  of  energy  quantity  restrictions,  price  change,  and 

consumption reduction cannot be reflected.  

Nevertheless, and taking into account the limitations mentioned above, the following insights could 

be drawn: 

 

The  share  of  energy  expenditure  (including  and  excluding  transport)  in  total  consumption 

expenditure  has  substantially  increased,  linked  to  the  fact  that  energy  prices  have  increased 

more than the overall price level. 

 

The increase of inflation is mainly driven by an increase in the prices of natural gas, liquid fuels 

and  in  some  instances  electricity  (see  Table  6).  Which  of  the  energy  carriers  mainly  drive 

inflation  varies  by  Member  State,  as  does  the  extent  of  the  price  increase.  Greece,  Latvia, 

Estonia and Bulgaria experienced a more than fourfold increase in natural gas prices between 

July 2020 and July 2022. Electricity prices more than tripled in Estonia and more than doubled 

in the Netherlands, Italy and Cyprus. Liquid fuels were the main price driver in 12 Member States 

and increased by more than fifty percent in all Member States, except for Italy and Malta.   

 

For  energy  expenditure  without  transport  fuels,  higher  prices  present  a  substantially  higher 

burden for households with low income, i.e. they lead to a more regressive distribution of the 

expenditure burden. 

 

For expenditure on energy including transport fuels, the additional burden is highest for higher 

income groups as they more often own a car and drive more.  

105 Data was used from the Household Budget Survey, including data provided by the Household Budget Working Group. We included 
all Member States for which data was available for the year 2015 and later. For Sweden and Portugal, data was only available for the 
year 2012 and 2010 respectively. Most recent data is as follows: Portugal (2010), Sweden (2012), Ireland (2015), Malta (2015), the 
Netherlands (2015), Cyprus (2016), Estonia (2016), Finland (2016), Lithuania (2016), Spain (2017), France (2017), Germany (20 18), 
Denmark (2018), Slovenia (2018), Croatia (2019), Latvia (2019), Romania (2019), Slovakia (2019). For all others 2020 data was 
available. 
106 Eurostat (n.d.). Harmonised index of consumer prices (HICP).  

138 

 
 
 
 
 
 
 
 
 
                                                      
Table 6: Harmonized index of consumer prices (HICP) - Classification of individual consumption by energy 
expenditures (COICOP) July 2022 compared to July 2020 (i.e. 07/2020 = 100) 

Electricity 

Natural 

Liquid fuels 

Gas 

and fuels for 

transport  

Solid 

fuels 

District 

Transport 

All-items 

heating 

HICP 

Austria 

Belgium 

Bulgaria 

Croatia 

Cyprus 

Czechia 

115.99 

179.17 

166.85 

273.32 

107.96 

412.79 

110.83 

125.19 

216.40 

153.75 

129.04 

152.31 

Denmark 

179.00 

279.20 

Estonia 

Finland 

France 

373.08 

411.79 

140.72 

no data 

111.59 

181.90 

Germany 

120.00 

155.68 

Greece 

156.83 

480.52 

Hungary* 

105.75 

220.15 

Ireland 

Italy 

Latvia 

155.71 

168.26 

210.24 

195.29 

184.24 

440.82 

Lithuania 

177.64 

243.03 

Luxembourg 

102.42 

160.37 

Malta 

100.00 

no data 

Netherlands 

250.96 

239.91 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

EU27 

115.00 

138.30 

136.37 

141.00 

143.94 

205.04 

106.88 

107.91 

129.11 

158.34 

189.49 

128.97 

153.28 

107.17 

206.30 

180.34 

184.76 

175.19 

173.97 

170.69 

168.39 

176.52 

174.66 

164.04 

168.87 

170.40 

140.53 

177.07 

147.52 

178.54 

178.89 

190.03 

100.00 

147.18 

178.55 

151.25 

177.55 

164.46 

181.11 

164.72 

163.76 

162.10 

120.90 

130.70 

112.51 

113.63 

no data 

120.70 

111.90 

161.10 

137.46 

139.97 

117.45 

106.68 

94.29 

127.61 

115.72 

113.15 

no data 

132.07 

113.53 

143.96 

147.85 

179.93 

118.39 

134.73 

120.39 

100.74 

117.93 

111.50 

161.22 

142.47 

129.21 

no data 

105.96 

124.10 

110.01 

114.49 

153.52 

163.44 

118.52 

108.42 

136.83 

116.65 

111.84 

108.26 

no data 

122.91 

112.00 

153.83 

100 

135.75 

142.19 

137.14 

no data 

129.26 

111.94 

108.28 

no data 

119.86 

109.41 

205.11 

240.02 

138.97 

156.35 

137.73 

124.74 

230.51 

141.53 

126.08 

158.76 

139.83 

112.94 

no data 

no data 

107.57 

107.17 

no data 

126.11 

121.09 

113.21 

235.82 

116.32 

138.83 

119.52 

114.57 

no data 

118.52 

110.65 

126.38 

124.67 

140.22 

127.49 

133.45 

117.30 

114.77 

132.97 

116.10 

160.23 

133.80 

113.88 

no data 

no data 

125.32 

113.86 

121.93 

103.06 

115.75 

110.33 

average 

142.26 

173.49 

166.14 

168.19 

124.69 

122.49 

112.49 

Source: Source: Eurostat (2022), HICP - monthly data (index) [PRC_HICP_MIDX__custom_3462527]; *Note: Data for 

Hungary 08/2022 versus 07/2020. 

Notes: In blue = Maximum per Member State and consumption purpose 

The impact of price increases on the shares of energy expenditure in total household expenditure is shown 

in Figure 148 to Figure 152 excluding transport fuels and in Figure 153 to Figure 157 including transport 

fuels. The figures show expenditure shares for the pre-crisis year 2020 (or the last available pre-crisis 

year) as well as for the high price situation in 2022, each shown by income quintiles for a set of countries 

in each figure.  

139 

 
 
 
 
 
 
 
 
Impact of price increases on energy expenditure without transport fuels  

The  impact  of  price  increases  on  energy  expenditure  without  transport  fuels  can  be  summarized  as 

follows (compare Figure 148 to Figure 152). On average across EU Member States, the energy expenditure 

share  increases  by  more  than  one  third  (relative  change  of  34%)  due  to  the  price  spike,  comparing 

expenditure  shares  of  Member  States  for  2020  or  the  last  year  of  data  availability  with  expenditures 

shares  in  July  2022.  The  maximum  increase  is  almost  a  doubling  of  the  energy  expenditure  share  in 

Estonia. A few countries do not show any increase in the share of energy expenditure (Malta and Hungary), 

implying that prices for energy did not increase more than prices for overall consumption goods.   

In particular, Estonia, Belgium, Cyprus, Greece, the Netherlands and Lithuania show a higher than EU-

average  increase  in  the  expenditure  share  of  energy.  A  high  increase  in  energy  expenditure  is  a 

combination of the increase in prices for energy carriers and a high share of use of these energy carriers. 

Keeping in mind the share of final energy use as shown in Figure 128, we find such combinations of high 

share of energy use and high price increase:  

a) for electricity in particular for Estonia, Bulgaria, Spain, Sweden and Cyprus, 

b) for natural gas in particular for Belgium, Italy, Hungary and the Netherlands and 

c) for solid fuels in particular for Poland.  

The impact of price and expenditure increases differ by income group. Low-income households need to 

pay a higher share of their expenditure on energy and are substantially more affected than higher income 

groups.  

The increase in EU-average share of energy expenditure in total consumption expenditure between 2020 

(or latest year available) and year 2022 for different income groups is as follows: 

 

 

 

First income quintile: Increase by 2.9 percentage points (from 10% to 12%) 

Third income quintile: Increase by 2.2 percentage points (from 7% to 9%) 

Fifth income quintile: Increase by 1.6 percentage points (from 5% to 7%) 

This  implies  that  the  increase  is  highly  regressive  e.g.,  the  burden  for  low-income  households  is 

substantially higher. 

Figure 148: Share of energy expenditure (excluding transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – Austria, Belgium, Germany, France, Ireland, Luxembourg and Netherlands 

Source: Own calculation based on ad hoc data collection on household consumption expenditures 

140 

6%6%8%7%6%3%6%5%5%6%5%6%2%5%4%4%4%4%4%2%4%9%10%10%9%9%5%9%7%8%8%7%9%3%7%5%6%5%5%6%3%6%0%2%4%6%8%10%12% 2020 /lastavailableyear 2022energypricespike 2020 /lastavailableyear 2022energypricespike 2020 /lastavailableyear 2022energypricespike 2020 /lastavailableyear 2022energypricespike 2020 /lastavailableyear 2022energypricespike 2020 /lastavailableyear 2022energypricespike 2020 /lastavailableyear 2022energypricespike AT BEDEFRIELUNL Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households 
 
 
 
 
 
 
 
 
 
 
Figure 149: Share of energy expenditure (excluding transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – South European countries: Cyprus, Greece, Spain, Italy and Malta 

Source: Own calculation based on ad hoc data collection on household consumption expenditures 

Figure 150: Share of energy expenditure (excluding transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – Czechia, Hungary, Poland, and Slovakia 

Source: Own calculation based on ad hoc data collection on household consumption expenditures 

Figure 151: Share of energy expenditure (excluding transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – Nordic and Baltic countries: Denmark, Estonia, Finland, Lithuania and Latvia 

Source: Own calculation based on ad hoc data collection on household consumption expenditures 

141 

5%11%5%6%4%4%8%4%5%3%3%4%3%3%2%7%17%7%9%3%6%12%5%7%2%5%7%4%5%2%0%2%4%6%8%10%12%14%16%18% 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spikeCYELESITMT Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households14%14%11%21%10%11%12%13%8%9%9%10%17%14%13%21%12%11%15%14%10%9%12%10%0%5%10%15%20%25% 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spikeCZHUPLSK Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households10%13%4%11%13%8%8%4%9%8%6%6%3%6%4%14%23%6%15%18%10%14%5%12%11%8%10%5%8%6%0%5%10%15%20%25% 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spikeDKEEFILTLV Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households 
 
 
 
 
 
 
 
 
Figure 152: Share of energy expenditure (excluding transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – South East Europe: Bulgaria, Croatia, Romania and Slovenia 

Source: Own calculation based on ad hoc data collection on household consumption expenditures 

Impact of price increases on energy expenditure including transport fuels  

The picture is slightly different when transport fuels are included (compare  Figure 153 to Figure 157). 

Low-income households less often own or drive a car and thus have a lower share of transport fuel related 

costs.  On  average,  across  EU  Member  States,  low-income  households  spend  about  47% of  their energy 

expenditure  on  transport  fuels  (ranging  from  11%  in  Romania  to  79%  in  Luxembourg). Medium  income 

households spent about 63% of their energy expenditure on transport fuels (ranging from 31% in Romania 

to 90% in Luxembourg) and high-income households about 74% (ranging from 52% in Bulgaria to 88% in 

Malta).  

Including transport fuels, we see energy expenditure shares of mostly below or around 20% before the 

price increase and expenditure shares of 25% to almost 40% following the price increase. The combination 

of a high share of liquid fuel use and a high increase in the price for liquid fuels drives the increase in 

expenditures shares, in particular in Ireland, Luxembourg, Cyprus and Belgium, but also in other Member 

States.  Overall,  the  price  increase  for  liquid  fuels  is  between  50%  and  more  than  100%  in  almost  all 

Member States.  

 

  Considering different income groups, the increase in EU-average share of energy expenditure in total 

consumption expenditure between 2020 (or latest year available) and year 2022 is as follows: 

 

 

 

First income quintile: Increase by 5.6 percentage points (from 17% to 23%) 

Third income quintile: Increase by 6.4 percentage points (from 19% to 26%) 

Fifth income quintile: Increase by 6.7 percentage points (from 21% to 28%) 

The increase is more evenly distributed than for energy expenditure only and thus not regressive. This is 

because the share of transport fuel expenditure is substantially lower in lower income households.  

142 

14%11%16%12%13%8%13%8%10%6%9%6%18%12%19%15%16%8%16%10%12%6%11%7%0%5%10%15%20%25% 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spike 2020 / lastavailable year 2022 energyprice spikeBGHRROSI Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households 
 
 
 
 
 
 
 
 
 
 
 
Figure 153: Share of energy expenditure (including transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – Austria, Belgium, Germany, France, Ireland, Luxembourg and Netherlands 

Source: Own calculation based on ad hoc data collection on household consumption expenditures 

Figure 154: Share of energy expenditure (including transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – South European countries: Cyprus, Greece, Spain, Italy and Malta 

Source: Own calculation based on ad hoc data collection on household consumption expenditures 

Figure 155: Share of energy expenditure (including transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – Czechia, Hungary, Poland, Slovakia 

143 

16%14%16%20%16%16%13%19%14%18%23%16%23%16%21%14%21%25%18%14%20%23%23%20%27%24%24%21%28%23%23%30%24%35%26%31%23%27%33%27%21%32%0%5%10%15%20%25%30%35%40% 2020 orlastavailableyear 2022energypricespike 2020 orlastavailableyear 2022energypricespike 2020 orlastavailableyear 2022energypricespike 2020 orlastavailableyear 2022energypricespike 2020 orlastavailableyear 2022energypricespike 2020 orlastavailableyear 2022energypricespike 2020 orlastavailableyear 2022energypricespike AT BEDEFRIELUNL Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households15%13%13%11%13%16%14%17%14%17%16%17%17%15%19%23%20%18%17%11%25%21%23%22%14%25%25%24%22%16%0%5%10%15%20%25%30% 2020 or lastavailableyear 2022 energyprice spike 2020 or lastavailableyear 2022 energyprice spike 2020 or lastavailableyear 2022 energyprice spike 2020 or lastavailableyear 2022 energyprice spike 2020 or lastavailableyear 2022 energyprice spikeCYELESITMT Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households21%22%19%25%19%21%20%25%22%21%20%26%25%22%24%26%23%22%25%25%26%21%25%27%0%5%10%15%20%25%30% 2020 or lastavailable year 2022 energyprice spike 2020 or lastavailable year 2022 energyprice spike 2020 or lastavailable year 2022 energyprice spike 2020 or lastavailable year 2022 energyprice spikeCZHUPLSK Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households 
 
 
 
 
 
 
 
 
 
Source: Own calculation based on ad hoc data collection on household consumption expenditures 

Figure 156: Share of energy expenditure (including transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – Nordic and Baltic countries: Denmark, Estonia, Finland, Lithuania and Latvia 

Source: Own calculation based on ad hoc data collection on household consumption expenditures 

Figure 157: Share of energy expenditure (including transport fuels) in total consumption expenditure – pre-
crisis and crisis price levels – South East Europe: Bulgaria, Croatia, Romania and Slovenia 

Source: own calculation based on ad hoc data collection on household consumption expenditures 

144 

19%18%14%20%21%22%21%18%20%22%22%22%21%25%28%25%31%20%28%29%30%35%26%28%30%29%37%30%34%38%0%5%10%15%20%25%30%35%40%45% 2020 or lastavailableyear 2022 energyprice spike 2020 or lastavailableyear 2022 energyprice spike 2020 or lastavailableyear 2022 energyprice spike 2020 or lastavailableyear 2022 energyprice spike 2020 or lastavailableyear 2022 energyprice spikeDKEEFILTLV Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households19%15%17%24%20%20%19%30%21%23%19%31%24%16%22%29%26%22%23%36%26%25%23%38%0%5%10%15%20%25%30%35%40%45% 2020 or lastavailable year 2022 energyprice spike 2020 or lastavailable year 2022 energyprice spike 2020 or lastavailable year 2022 energyprice spike 2020 or lastavailable year 2022 energyprice spikeBGHRROSI Quintil 1 - low income householdsQuintil  3 - medium income householdsQuintil 5 - high income households 
 
 
 
 
 
 
 
 
5.10  Rebound effects and elasticities 

The term “rebound effect” has been used in the literature of energy  economics primarily to describe 

changes in households’ energy use behaviour, induced by energy-saving goods and services. A distinction 

is made between the direct and the indirect rebound effect: Households change their behaviour after 

implementing energy saving measures by expanding their energy consumption (direct rebound effect). 

The  additional  income  that  freed  up  by  energy  cost  savings  can  be  used  for  other  energy-intensive 

consumption (indirect rebound effect)107.  

The  following  analysis  provides  an  overview  of  household  consumption  expenditures,  broken  down  by 

different consumption groups and aggregated by region. For a more detailed analysis by Member States, 

see Chapters 5.2-5.8 above. Assuming that total expenditures remain at a fixed level as energy prices 

rise, for example because of household budget constraints, households have to save money to stay within 

budget.  Consumption  patterns  vary  between  the  EU  regions  and  therefore  the  opportunity  to  reduce 

consumptions costs varies as well. Figure 158shows expenditure patterns for four EU regions (for more 

detail on MS also see Figure 129). The share of energy expenditure is low compared to other consumption 

categories. Higher energy expenditure could be compensated by saving energy or by reducing expenditure 

on other consumer goods, e.g. purchase of clothing or furniture (summarized here by “others”). Other 

categories,  such  as  housing  costs  are  less  flexible,  and  expenditure  (and  consumption)  could  not  be 

reduced.  In  addition,  households  with  low  available  income  or  low  overall  budget  might  already  have 

limited their expenditure in various categories and are less flexible or not able to reduce expenditure 

further without compensating on their daily needs.  

Figure 158: Household expenditures of consumer goods in EU27 regions 

Source: own calculation based on ad hoc data collection on household consumption expenditures 

Notes: EU North = DK, FI, IE, SE; EU South = CY, ES, EL, IT, MT, PT; EU East = BG, CZ, EE, HR; HU, LT, LV, PL, RO, SI, 

SK; EU West = AT, BE, DE, FR, LU, NL 

107 IRGC (2013): The Rebound Effect: Implications of Consumer Behaviour for Robust Energy Policies. A review of the literature on the 
rebound effect in energy efficiency and report from expert workshops.  

145 

 
 
 
 
 
 
 
 
 
                                                      
Generally, changes in energy consumption patterns and behaviour (energy demand) due to 

an  increase  (or  spike)  in  energy  prices  can  be  calculated  through  price  elasticities.  Price  elasticities 

indicate how sensitive the demand for a particular good reacts to changes in the price of the same good. 

It  measures  the  percentage  change  in  demand  relative  to  the  percentage  change  in  price.  Demand  is 

considered to be elastic if a 1% price increase reduces demand by more than one percentage point. If the 

decrease in demand is less than one percent, demand is considered inelastic108,109. 

While short-term price elasticities lead to behavioural changes within a year, long-term price elasticities 

change demand over a period of five to ten or even more than ten years110. According to Huntington et 

al.111,  price  elasticities  differ  significantly  by  energy  source.  Held  (2017)112  and  DIW (2019)  show  that 

demand for fossil heating fuels is more price elastic than for electricity. Long-term price elasticities are 

larger than short-term ones.  

The following Table 7 provides an overview of the bandwidths of price elasticities of energy demand as 

discussed in the relevant literature. This overview only includes data from literature that compared EU 

Member  States  or  other  industrialized  countries.  Overall,  it  can  be  noted  that  price  elasticities  for 

electricity  are  low  (relatively  inelastic).  For  most  households,  electricity  provides  a  basic  good  that 

cannot  be  reduced  drastically  in  the  short  term.  In  the  longer  term,  investment  in  energy  efficient 

appliances  and  lighting  help  to  save  electricity.  The  difference  between  short  term  and  long-term 

elasticities is even more pronounced for natural gas use. Reducing natural gas use for heating requires 

installation of a new heating system or an energy retrofit of the building which most often is not possible 

in the short term but only in the longer term.  

Table 7: Bandwidths of price elasticity of demand estimates for electricity, heating, and fuels on household 
level 

Energy source 

Price elasticity of demand - short term 

Price elasticity of demand - long term 

Electricity 

Natural gas 

Transport fuels 

-0.2 to -0.4 

-0.1 

-0.1 to -0.7 

-0.32 to -0.66 

-0.7 

-0.3 to -0.6 

Source: Own compilation based on Pothen und Tovar Reanos (2018)113, Frondel and Vance (2018)114, Held (2017)115, 

Schulte and Heindl (2017)116, de Yong et al. (2010)117, Büchs et al. (2021)118, Douenne (2018)119, Prognos (2013)120, 

Edenhofer et al. (2019)121  

In light of the goals of European energy policy, which aims at increasing energy efficiency and switching 

to CO2-free energy sources, the distinction between own-price elasticity (energy efficiency) and cross-

108 DIW (2019): CO2 pricing in the heat and transport sectors: discussion of effects and alternative relief options.  
109 >1 relatively elastic; 0 neutral <1 relatively inelastic. 
110 DIW 2019 
111 Huntington et al. (2019): Review of key international demand elasticities for major industrializing economies. In: Energy Policy, Vol. 
133. https://doi.org/10.1016/j.enpol.2019.110878 
112 Held, B (2017): Impacts of internalizing external costs of consumption.  
113 Pothen, F.; Reanos, T. (2018): The Distribution of Material Footprints in Germany. In: Ecological Economics, Vol. 153, p. 237-251.  
114 Frondel, M. und Vance, C. (2018): Drivers’ response to fuel taxes and efficiency standards: evidence from Germany.  
115 S. Footnote 78 
116 Schulte, I.; Heindl, P. (2017): Price and income elasticities of residential energy demand in Germany. In: Energy Policy, Vol. 102, 
issue C, 512-528. 
117 de Yong et al. (2010): Price sensitivity of European road freight transport – towards a better understanding of existing results. 
118 Büchs, M., Ivanova, D., Schnepf, S. V. (2021): Fairness, effectiveness, and needs satisfaction: new options for designing climate 
policies. In: Environmental Research Letters. Jg. 16, Nr. 124026. 
119 Douenne, T. (2018): The vertical and horizontal distributive effects of energy taxes: A case study of a French policy.  
120 Prognos (2013): Endbericht: Endenergieeinsparziel gem. Art. 7 EED und Abschätzung der durch politische Maßnahmen erreichbaren 
Energieeinsparungen.  
121 Edenhofer, O; Flachsland, C.; Kalkuhl, M.; Knopf, B.; Pahle, M. (2019): Bewertung des Klimapakets und nächste Schritte CO2-Preis, 
sozialer Ausgleich, Europa, Monitoring.  

146 

 
 
 
 
 
 
 
 
 
                                                      
price  elasticity  (switching  to  renewables)  is  very  important.  In  terms  of  cross-price 

elasticities, a review of the literature provides little information, indicating that further research in this 

area should be conducted, while for (own-) price elasticities, comprehensive panel analyses and country 

comparisons are available. 

To ensure a reliable estimation of the effect of a change in behaviour, it would be useful to differentiate 

the observations for different household types in all Member States, since, for example, the change in 

heating energy consumption in response to a price increase depends on numerous factors.  

The following aspects are relevant: 

  Households can only react to a price change if they are aware of prices they pay and their own 

energy  consumption.  Awareness  could  be  raised  by  feedback  mechanisms  and  information 

campaigns  Price  elasticities  can  therefore  be  expected  to  be  higher  if  prices/costs  are 

communicated transparently. In addition, providing smart meters to European households could 

further raise their awareness of the amount of energy (electricity) consumed. 

 

Knowledge of future price developments: The likelihood that households will invest in energy-

efficient building retrofits due to price changes increases when a reliable and increasing price 

path is provided. Therefore, long-term price elasticities can be expected to be higher if a long-

term,  clearly  communicated  and  increasing  price  path,  including  information  on  long-term 

policies, characterizes the price development.  

 

In  tenant-occupied  households,  the  possibilities  to  change  the  energy  quality  of  the  building 

envelope as well as the heating system are usually very limited, so it can be expected that the 

long-term  price  elasticities  are  significantly  lower  than  in  owner-occupied  buildings,  unless 

targeted policies are adopted by Member States. 

 

Changes  in  heating  behaviour  due  to  price  changes  may  vary  depending  on  the  household's 

income:  On  the  one  hand,  low-income  households  often  already  keep  their  heating  energy 

consumption  low  and  thus  have  less  potential  for  further  reductions  (lower  price  elasticity). 

Without further adjustment possibilities, they will suffer in particular from additional costs and 

are increasingly at risk of energy poverty. On the other hand, households with higher incomes 

are likely to have more extensive opportunities to respond to price increases by investing in the 

energy quality of the building or reducing consumption (higher long term price elasticities). At 

the same time, they might simply absorb the additional expenditure, at least in the short term. 

However, these aspects have hardly been considered in the existing literature. 

 

There is a large number of studies on fuel price elasticities of (passenger) transport demand. 

These mostly find short-term elasticities, which are mostly concentrated in a range between -

0.2  and  -0.3,  and  higher  values  for  long  term  elasticities.  In  the  case  of  mobility  behaviour 

(passenger car use), consumers react more strongly to price changes caused by taxes than to 

price increases caused by the market122. One of the reasons for this is that consumers assume 

that price increases due to taxes will also increase the price level for fuels in the long run, and 

are thus more likely to respond by adjusting. In a study for Sweden, Andersson123 finds that the 

introduction of a CO2 price has had about three times the impact on fuel consumption than would 

122 Li, S.; Linn, J.; Muehlegger, E. (2012): Gasoline taxes and consumer behaviour.  
123 Andersson, J. (2019): Carbon Taxes and CO2 Emissions: Sweden as a Case Study. In: American Economic Journal: Economic Policy, 
Vol. 11, no. 4, DOI: 10.1257/pol.20170144 

147 

 
 
 
 
 
 
 
                                                      
have  been  expected  with  the  corresponding  increase  in  fuel  costs.  Bajo-

Buenestado124 also finds, based on Spanish data, that tax increases have a larger impact than 

market price fluctuations. 

124 Bajo-Buenestado, R. (2016): Evidence of asymmetric behavioral responses to changes in gasoline prices and taxes for different fuel 
types. In: Energy Policy, 2016, vol. 96, issue C, 119-130. DOI: 10.1016/j.enpol.2016.05.028 

148 

 
 
 
 
 
 
                                                      
6 Industry energy costs 

Summary of main findings 

At  the  time  of  writing  (October  2022),  complete  and  reliable  data  on  energy  prices  and  costs  for  EU 

industry is only available up to 2019, while partial data is available for 2020 and 2021. Therefore, publicly 

available  statistics  do  not  fully  capture  neither  the  effects  of  the  COVID-19  pandemic  nor  the  energy 

crisis starting in 2021. We have therefore tried to collect data directly from energy-intensive industries 

(EIIs), supplemented with publicly available sources, to try to draw general conclusions on the impacts 

of these significant events on European industries.  

Impact of COVID-19 pandemic and the war in Ukraine 

 

The  pandemic  initially  led  to  demand  reductions  and  staff  shortages  because  of  widespread 

lockdowns. However, industrial production and trade initially rebounded in 2021 to levels higher 

than  pre-COVID  times.  The  overall  sentiment  was  that  while  Covid-19  was  challenging,  the 

challenges faced by industry in the current energy crisis as a result of the Russian invasion of 

Ukraine is more severe.  

 

Prices for natural gas increased by 2-3 times in Q1 2022 as compared to 2021 across six industrial 

sectors  surveyed:  Aluminium,  Ferro-alloys  and  silicon,  Zinc,  Ceramics,  Container  glass  and 

Fertilisers. Electricity prices also soared and almost tripled for Primary aluminium by Q1 2022. 

 

The  full  effect  of  the  energy  crisis  is  currently  partially  cushioned  by  the  fact  that  some 

companies still have running fixed-price energy contracts or other hedging strategies in place.  

Whether or not fixed contracts were negotiated prior to the crises, the ability to secure longer-

term  energy  contracts,  and  the  ability  to  hedge  energy  costs  at  more  favourable  conditions 

largely determine the differences in energy prices paid by European companies.  

  Higher energy prices have translated in higher absolute and relative energy costs in the total 

production costs; average energy cost share has increased by 20-55% between 2021 and Q1 2022.  

 

The energy crisis demonstrated that energy prices still play a decisive role in several sectors’ 

competitiveness. As a direct result of soaring energy prices, production curtailment and plant 

shutdowns have been widespread in the Aluminium, Ferro-alloys and silicon, Zinc, Fertilisers, 

Iron and steel, and Chemical (chlorine production) sectors.  

 

In some sectors, it has been possible to pass on, at least partially, the increase in energy costs 

to consumers. The  Container glass sector has been able to avoid close downs and production 

curtailments by partially passing on the increase in energy costs in their product prices. Several 

plants in the Ceramics and Pulp and paper sectors, despite increases of product prices in the 

sector, were not able to avoid production curtailments or shutdowns.  

  Other  measures  taken  by  the  industry  to  cope  with  the  impacts  resulting  from  the  Russian 

invasion of Ukraine include the shifting of production hours to coincide with the lower electricity 

prices  on  the  spot  market,  personnel  lay-offs,  or  implementing  mandatory  unpaid  leave  or 

downtime (with reduced salary), and optimisation of processes and logistics. 

 

There are many hedging strategies available to the industry against energy price volatility, with 

power  purchase  agreements  (PPAs)  for  electricity  from  renewable  (RES)  power  plants  are 

emerging as a significant tool for further developing investment in renewables and securing long 

term price stability for industries. 

 

EU located industries are steadily increase the use of RES-PPAs over the last 7 years, the EU RES 

PPA market has grown from 0.5GW in 2014 to 24W in 2021. In 2021, the PPA market grew by 8.8 

149 

 
 
 
 
 
 
GW. The key regions of RES PPA in EU are: i) Iberia (Solar), ii) Germany (Solar and 

Wind), Belgium and Luxembourg (Wind) and Nordics (Wind). 

Long-term trends in energy costs in EU industry 

 

The average share of energy in production costs of EU27 industry sectors decreased from 2.3% 

in  2010  to  1.7%  in  2016,  followed  by  a  period  of  stagnation  up  to  2019.  Luxembourg  has  the 

highest share, which ranges from 7% to 11% and Ireland the lowest share of around 0.5% since 

2015. 

 

Energy cost shares fell in almost every manufacturing sector between 2010 and 2019, including 

EIIs; the largest decline can be observed in the Cement, lime and plaster sector — from close to 

19% in 2010 to 13.6% in 2019. 

 

Among non-manufacturing sectors, energy cost shares were highest in Land transport (39%), Air 

transport (27%), Electricity, gas and steam (20%), Mining of metal ores (18%), and Other mining 

(8%). 

  Overall,  industrial  energy  purchases  within  EU27  reduced  by  1%  over  2015-2019,  despite  an 

increase of production output. The decomposition analysis showed that this was mainly due to 

an improvement in energy intensity.  

 

The most energy intensive sectors reduced, while the least energy intensive sectors increased 

their energy costs. The increase in the latter is due to higher energy prices, mainly as a result 

of changes in energy mix and changes in energy prices, particularly for electricity. 

 

The  decomposition  analysis  also  showed  that  changes  in  energy  costs  only  have  a  small 

contribution to the changes of total production costs of the EU industry. In addition, the share 

of  energy  costs  to  total  production  costs  decreased  in  2019  compared  to  2015  for  almost  all 

analysed sectors.  

  Most EU sectors studied maintained an average gross operation surplus (GOS) share between 5-

15%, as observed in previous editions of this study. The highest GOSs as shares of production 

costs between 2010-2019 recorded were Pharmaceuticals (22%) and Cement (23%); the lowest 

were recorded in Non-ferrous metals (7.6%), Iron, and steel (4%).  

  Generally,  the  GOSs  for  between  manufacturing  and  non-manufacturing  sectors  are  on  par, 

averaging between 5-20%, with the outliers being Oil and gas (up to 140%) and Mining of metal 

ores sectors (up to 90%). 

 

The  average  EU27  profitability  of  between  10%  and  15%  is  lower  than  most  of  the  EU’s  main 

trading partners, which have an average GOS share between 15% and 25%, although it is largely 

similar to that of Switzerland and Norway, both of which have direct  access to the  EU Single 

Market. 

150 

 
 
 
 
 
 
 
 
 
6.1 

Introduction 

Chapter 6.2 presents the results from the analysis of data received from 60 plants across six industrial 

sectors up to Q1 2022. The sectors are Aluminium, Ferro-alloys and silicon, Zinc, Ceramics, Container 

glass and Fertilisers. This section is followed by the outcome of the analysis on the energy prices and 

costs for industry using highly aggregated statistical information (top-down approach), similar to previous 

editions of the report. Chapter 6.3 presents the overall impact of energy costs on the economy of the EU 

and  its  Member  States. Chapter  6.4  analyses  energy  costs of  the  industry  sector  with  respect  to  total 

operational production costs using data received from both bottom-up and top-down approaches. Chapter 

6.5 consider the energy intensity of industries and Chapter 6.6 examines the drivers of energy costs of 

industries. Chapter 6.7 compares indicators that can influence the international competitiveness of EU 

industry with regards to energy costs in relation to non-EU G20 countries plus Switzerland, Norway and 

Iceland. Finally, Chapter 6.8 discusses the benefits of price hedging arrangements for companies from a 

broader perspective, with a focus on PPAs for renewable energy sources.  

6.2 

Overview of selected Energy Intensive Industries (EIIs) 

The evolution of energy prices and costs and the impact on the competitiveness of selected EIIs is analysed 

in detail with data collected at plant level via a dedicated questionnaire. In  addition, we used public 

statistics and/or input from industry associations to analyse these sectors’ trade situations and to provide 

context on their relative exposure to international trade dynamics. Finally, specific input was requested 

from industry associations on the impacts of COVID-19 and the Russian invasion of Ukraine, complemented 

with public information on the impacts of these two events. The bottom-up analysis covers the entire EU 

with a focus on the period 2016 – 2021; up to Q1 2022 if data was available. 

While we sent the questionnaire to 14 energy-intensive sectors and their industry association, only three 

sectors provided sufficient data for a representative analysis of their energy costs:  Aluminium, Ferro-

alloys and silicon, and Zinc. For Aluminium, sufficient data was even available to analyse the sectors in 

three  value  chain  segments  that  have  distinct  different  energy  structures:  primary,  secondary  and 

downstream. For three other sectors, sufficient responses were received to show findings in a confidential 

and anonymous manner but not enough to be representative of the sector: Ceramics, container glass and 

Fertilisers.  

The responses (from 60 plants across six industrial sectors) cover various aspects of EU energy-intensive 

industries: 

  Natural  gas-intensive  sectors  (e.g.  Fertilisers),  electricity-intensive  sectors  (e.g.  Primary 

aluminium, Ferro-alloys and silicon, Zinc) and sectors where both natural gas and electricity are 

significant in the production costs (e.g Ceramics, Container glass); 

 

Sectors concentrated in European regions (e.g. Zinc is mainly located in North Western Europe and 

Southern  Europe)  or  geographically  dispersed  in  Europe  (e.g.  Ferro-alloys  and  silicon  and 

Downstream aluminium); 

  Net  importer  sectors  (e.g.  aluminium,  Ferro-alloys  and  silicon)  and  net  exporter  sectors  (e.g. 

Zinc) with different levels of exposure to international competition. 

151 

 
 
 
 
 
 
 
 
 
Table 8 shows the representativeness and geographical scope of the responses over three 

European regions125. The EU representativeness of the surveyed plants samples in the Primary aluminium, 

Secondary aluminium, Downstream aluminium, Ferro-alloys and silicon and Zinc sectors ranges from 25% 

to  64%  of  their  sector’s  production  output.  For  these  sectors,  the  combination  of  the  results  of  the 

surveyed plants can be considered to be presentative of an average installation in the EU.  

Table 8: Overview of plants participating in the study 

Sector 

Primary aluminium 
Secondary 
aluminium 
Downstream 
aluminium 
Ferro-alloys and 
silicon 
Zinc(3) 
Ceramics(3) 
Container glass(3) 
Fertilisers(3) 

Number of plants by geographical region(1) 

Central Eastern 
Europe 
1 

North Western 
Europe 
3 

Southern 
Europe 
2 

1 

7 

2 

- 
- 
- 
2 

2 

17 

2 

5 
- 
- 
1 

2 

4 

2 

3 
4 
- 

Representativeness 

in 2021(2) 
Share of output (O) or 
turnover (T) 
54% (O) 

25% (O) 

27% (O) 

64% (O) 

50% (O) 
<5% (T) 
<5% (O) 
N/A 

Total  

6 

5 

28 

6 

5 
3 
4 
3 

(1) Central-Eastern Europe: Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, 

Slovak Republic, Slovenia; North-Western Europe: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, 

Luxembourg, the Netherlands, Sweden, the UK; Southern Europe: Cyprus, Greece, Italy, Malta, Portugal, Spain. Non-EU. 

(2) For illustrative purpose, figures are shown for 2021. Estimates of the representativeness may vary from year to 

year although with a similar order of magnitude. For Fertilisers, the representativeness could not be shown to maintain 

anonymity of the respondents.   

(3) For the Zinc sector, data for two more plants were received in a different region than North Western Europe – 

one in SE and one in a non-EU NWE country. However, these have not been included in the analysis due to an insufficient 

sample size to maintain data confidentiality. 

(4) For the sectors in italic, only a very limited number of companies were willing to provide data, sufficient to 

show findings in a confidential and anonymous manner but not to be representative of the sector. 

Note: for some sectors, data was also received for 1 or 2 plants in non-EU North Western Europe (UK, Norway, 

Iceland). These have not been included in the analysis due to an insufficient sample size to maintain data confidentiality. 

Results  

Cross-sectorial findings 

Figure 1 shows the average and range in electricity price paid by the surveyed plants per selected sector 

and their average and range in electricity intensity for 2021 on a logarithmic scale. In the previous editions 

of  this  study,  the  inverse  correlation  between  a  high  electricity  intensity  (and  thus  generally  high 

electricity consumption) and low average prices identified still holds true in 2021 to a certain degree. 

These could be attributed to various factors: 

i) larger consumers of electricity are directly connected to the  grids and thus do not have to pay the 

distribution grid fees 

ii) larger consumer have more bargaining power to negotiate their prices and employ hedging strategies 

125 Sectorial results are aggregated at a regional level to respect data confidentiality and 
anonymity. For some sectors, data was also received for 1 or 2 plants in non-EU North-
western Europe (UK, Norway, Iceland). These have not been included in the analysis due to 
an insufficient sample size to maintain data confidentiality. 

152 

 
 
 
 
 
 
 
 
                                                      
iii) larger consumers of electricity are sometimes exempted from specific taxes and levies 

on electricity prices and 

iv)  larger  consumers  of  some  industries  can  adapt  their  manufacturing  processes  to  better  exploit 

cheaper, baseload electricity (e.g. produce at night when prices are lower). 

However, as electricity prices have been rapidly rising since 2021, Ferro-alloys and silicon already show 

a deviation from this inverse correlation. This is even more visible with the electricity prices that the 

surveyed plants paid in Q1 2022. Overall, electricity prices paid by plants soared and almost tripled 

for Primary aluminium, while that sector is the most electricity-intensive of the surveyed sectors. 

For Zinc, another electricity-intensive sector, the increase in electricity prices between 2021 and Q1 2022 

is more limited. Some of differences between sectors in electricity price development and deviation 

from the inverse correlation can be explained by the presence of fixed electricity contracts or other 

hedging strategies such as PPAs. This translates into a widening of the range in electricity prices paid 

by the surveyed companies for the sectors for which sufficient data was collected (see sector reports in 

Annex B for more detail).  

Generally,  plants  that  pay  electricity  prices  at  the  upper  range  in  a  sector  have  a  variable  contract, 

whereas plants that pay relatively low electricity prices have a fixed electricity contract. For example, 

Primary aluminium plants paid a significantly lower electricity price than plants of the  secondary and 

downstream Aluminium segments. As an electro-intensive industry, for Primary Aluminium plants it is 

crucial to secure electricity supply at a low cost. Consequently, the majority of the Primary Aluminium 

plants  have  fixed  electricity  contracts,  while  most  of  the  plants  in  the  secondary  and  downstream 

Aluminium  sectors  have  short-term  contracts  of  variable  rates,  exposing  them  more  to  market  price 

fluctuations. However, this does not hold true for all plants as the price paid also depends on when the 

fixed contract was formed126. In the Zinc sector, the difference in electricity prices paid by individual 

plants reflects the degree to which they have secured longer-term contracts or hedged the price of 

electricity at more favourable conditions than the electricity spot market. 

126 The surveyed plants were only asked about their electricity contract status as of June 
2022, not their contract status during 2021. If these contracts were only formed close to June 
2022 and did not have fixed contracts before or their fixed contract expired after the current 
energy crisis has started, they would show similar prices in 2021 as plants without a fixed 
contract. 

153 

 
 
 
 
 
 
 
 
 
 
                                                      
Figure 159: Electricity prices (above) and electricity intensity (below) per sector based on collected plant data 
for 2021 and Q1 2022; ranges for 2021 only 

Source: Own elaboration based on data from industrial plant operators. 

*For the sectors Ceramics, Container glass and Fertilisers, only average values of EU plants can be shown to ensure 

data confidentiality due to the limited number of responses received. 

The results for the natural gas prices paid by the surveyed plants per sector and natural gas intensity in 

Figure  2  show  similar  results  as  for  electricity.  Surveyed  plants  in  sectors  with  a  high  natural  gas 

intensity  paid  a  relatively  lower  price  for  natural  gas  compared  to  sectors  with  relatively  low 

intensities. This can also be due to gas intensive sectors having secured fixed price contracts before the 

war in Ukraine. Notably, sectors that paid lower electricity prices in 2021 on average also paid higher 

natural gas prices. 

Figure 2 further shows that the average natural gas price increase reached 2-3 times in every sector 

in Q1 2022 compared to 2021. Similar to electricity, many plants with natural gas prices at the lower 

end of the range have fixed natural gas contracts; those at the higher end have variable contracts. Some 

sector-specific observations include the following: 

 

During 2021 and 2022Q1, Primary aluminium experienced prices significantly higher than those 

of Secondary aluminium do. Some of the Secondary aluminium plants with the lowest natural 

gas prices had fixed or combined contracts with durations of more than a year, onsite gas storage 

154 

 
 
 
 
 
 
 
 
 
or  invested  in  demand  flexibility  for  gas.  On  the  other  hand,  from  the  Primary 

aluminium sample, only one plant benefited from onsite gas storage and combined contracts for 

natural gas, which was reflected in having lower prices than the rest of the plants in the sample. 

 

In  the  case  of  Downstream  Aluminium  plants,  the  increase  of  natural  gas  prices  of  Q1  2022 

compared to the previous year was different depending on the location of the plants: plants in 

the NWE region had a lower price increase than those  in the  CE and SE regions, even though 

there were no significant differences in their types of contracts. 

 

For fertiliser plants, although we could not gather sufficient data to display results in this report, 

the gas prices that could be determined for the surveyed plants do fall within the same range as 

the other sectors. Furthermore, a similar rate of increase that is experienced across the other 

sectors can also be observed between 2021 and Q1 2022.  

Figure 160: Natural gas prices (above) and natural gas intensity (below) per sector based on collected plant data 
for 2021 and the first quarter of 2022, and ranges for 2021 only 

Source: Own elaboration based on data from industrial plant operators. 

*For the sectors Ceramics and Container glass, only average values of EU plants can be shown to ensure data 

confidentiality due to the limited number of responses received.  

Value for the sectors Ferro-alloys and Silicon and Fertilisers could not be shown due to insufficient responses to 

ensure data confidentility. 

The much higher prices for electricity and natural gas in Q1 2022 across all sectors as displayed in Figure 

1 and Figure 2 show that companies are directly experiencing the result of the current energy crisis. A 

few surveyed plants with lower prices indicated that they still have fixed contracts as of June 2022, but 

with a remaining duration of a year or less. With electricity and natural prices having increased further 

155 

 
 
 
 
 
 
 
 
 
since Q1 2022 as shown in the previous chapters, and fixed contracts with lower prices set 

to expire within a year, the average electricity and natural prices in the selected energy-intensive sectors 

would increase further. 

Overview of the results of selected EU EIIs 

Table 9 shows the average electricity prices and costs as well as electricity costs shares in production 

costs of the surveyed plants in the selected EIIs in the EU. Table 10shows the same for natural gas.  

Table 9: Electricity prices & costs in selected EII sectors – simple EU averages, 2021 and Q1 2022 

Electricity prices 
(€/MWh) 

Electricity costs 
per production 
quantity (€/tonne) 

Electricity costs as 
a share of 
production costs 

Electricity 
intensity 
(MWh/tonne) 

Sector 

2021 

Q1 2022 

2021 

Q1 2022 

2021 

Primary aluminium 

56.79 

153.68 

753 

1396 

32.2% 

Q1 2022 
49.1%  

2021 

Q1 2022 

13.97 

13.03 

117.32 

204.81 

16 

26 

N/A 

N/A 

0.14 

0.13 

119.20 

171.68 

90.38 

152.02 

3.1% 

4.2% 

0.88 

0.92 

85.41 

156.77 

634.45 

1086.28 

37.9% 

49.4% 

8.13 

8.18 

49.60 

95.21 

67.30 

195.14 

277.63 

20.3% 

27.4% 

158.51 

63.23 

N/A 

N/A 

10% 

6.4% 

N/A 

10.5% 

N/A 

3.96 

0.94 

0.91 

0.15 

4.21 

N/A 

0.86 

N/A 

Container glass 

138.41 

208.24 

152.96 

222.10 

Fertilisers 

109.91 

193.76 

16.95 

N/A 

Source: Own elaboration based on data from industrial plant operators. Values for some sectors cannot be 

presented due to insufficient responses to ensure data confidentiality. The indicators that are calculated using the simple 

averages of the plants for which the information is available. Hwever, the questionnaire replies available per sector for 

the calculation of electricity prices, electricity costs per production quantity, and the electricity costs as a share of 

production costs not the same. As a consequence, the electricity price times the electricity intensity does not necessarily 

match the electricity costs per production quantity. 

Table 10: Natural gas or fuel prices & costs in selected EII sectors – simple EU averages, 2021 and Q1 2022 

Natural gas prices 
(€/MWh) 

Natural gas costs 
per production 
quantity (€/tonne) 

Natural gas costs as 
a share of 
production costs 

Natural gas 
intensity 
(MWh/tonne) 

Sector 

2021 

Q1 2022 

2021 

Q1 2022 

2021 

Q1 2022 

2021 

Q1 2022 

Primary aluminium 

39.17 

80.19 

26.33 

52.19 

68 

32 

214 

2.1% 

4.0% 

2.04 

3.44 

62 

N/A 

N/A 

1.20 

1.19 

32.38 

66.72 

39.54 

93.32 

1.4% 

2.6% 

1.27 

1.40 

N/A 

N/A 

0.45 

0.70 

0.02% 

0.02% 

0.01 

0.01 

16.70 

26.55 

42.45 

33.95 

16.70 

33.95 

1.9% 

61.33 

1,142.86 

N/A 

37.1% 

N/A 

N/A 

95.06 

92.50 

254.48 

12.9% 

17.2% 

0.34 

9.13 

2.43 

0.36 

N/A 

2.35 

Not available due to insufficient responses 

156 

Secondary 

aluminium 

Downstream 

aluminium 

Ferro-alloys and 

silicon 

Zinc 

Ceramics 

Secondary 

aluminium 

Downstream 

aluminium 

Ferro-alloys and 

silicon 

Zinc 

Ceramics 

Container glass 

Fertiliser 

 
 
 
 
 
 
 
 
Source: Own elaboration based on data from industrial plant operators. Value for the sectors Ferro-

alloys and Silicon and Fertilisers could not be shown due to insufficient responses to ensure data confidentility. The 

indicators that are calculated using the simple averages of the plants for which the information is available. Hwever, the 

questionnaire replies available per sector for the calculation of natural gas prices, natural gas costs per production 

quantity, and the natural gas costs as a share of production costs not the same. As a consequence, the natural gas price 

times the natural gas intensity does not necessarily match the natural gas costs per production quantity. 

The tables show that: 

 

The higher energy prices paid by the surveyed companies on average have also translated in 

higher absolute and  relative energy costs in production  costs. Notably, the energy costs in 

2021 are already higher than the previous years (see sector reports in Annex B). An analysis of 

the energy costs in iron and steel producers based on publicly available information in Box 6-1 

shows the same trend as the selected sectors with surveyed plants. 

 

Plants operating in electricity-intensive sectors paid lower electricity prices than for plants 

in  less-electricity  intensive  sectors.  In  2021,  the  average  electricity  prices  for  plants  in 

electricity-intensive sectors (Primary aluminium, Ferro-alloys and silicon, Zinc) ranged from 50-

85 EUR/MWh. This is lower than the average electricity prices of 95-140 EUR/MWh for plants in 

less  electricity-intensive  (Ceramics,  Secondary  and  Downstream  aluminium,  Fertilisers, 

Container glass).  

 

Electricity prices soared for all sectors in Q1 2022. The average electricity price increased to 

a  range  of  153-208  EUR/MWh  for  all  sectors  except  for  Zinc,  which  showed  an  average  of  67 

EUR/MWh. The lower average price of electricity experienced by the surveyed zinc plants in Q1 

2022 could perhaps be explained by the fact that the majority of them have  power purchase 

agreements in place.  

  Generally, plants operating in gas-intensive sector for e.g. Ceramics paid lower gas prices 

than for plants in less-gas intensive sectors. Ceramics plants paid around 27 EUR/MWh, which 

is  lower  than  most  other  sectors  that  had  prices  around  30-45  EUR/MWh  in  2021.  This  could 

perhaps  be  explained  by  the fact  that  two  out  of three  sampled  Ceramics  plants  still  had  an 

existing gas contract as of June 2022, although they indicated that these would be expiring in 

less than a year. 

 

Average natural gas price paid by the surveyed plants more or less doubled in every sector 

to 52-95 EUR/MWh in Q1 2022.  

The energy costs shares in production costs vary widely across sectors:  

 

The  highest energy cost share (electricity and natural gas costs combined) was found in the 

electro intensive sectors such as Ferro-alloys and silicon (37.9%), Primary aluminium (34.3%), 

and  in  the  gas  intensive  sector  Ceramics  (37.1%),  based  on  available  data  for  2021  across 

studied sectors.  

 

 

These are followed by the electro-intensive sector Zinc (22.2%) and the sector Container glass 

(22.9%) that has both a relative high gas and electricity intensity.  

Between 2021 and Q1 2022, the average energy costs shares in these sectors increased by 

20-55%, increasing the importance of energy costs in the total production costs.  However, 

this  increase  was  less  than  the  increase  in  the  energy  costs  per  production  quantity  in  some 

sectors  such  as  Primary  aluminium  and  Ferro-alloys  and  silicon.  In  these  sectors,  the  raw 

material costs also increased, dampening the relative increase of energy cost share in the 

total production costs. 

157 

 
 
 
 
 
 
 
 

The 2020 edition of this study showed that Fertilisers had the highest energy cost 

shares (71%) in 2018. This considers the cost shares of natural gas (as both feedstock and fuel) 

and  electricity  combined.  While  there  is  insufficient  data to  show  the  energy  cost  shares  for 

Fertilisers plants in this edition, the industry association FertilizerEurope indicated that the 

record high gas prices have resulted in the natural gas cost shares rising to up to 90% of the 

production costs127. With gas and electricity prices having increased further, the trend among 

the other energy-intensive sectors would imply that the average energy cost share in Fertilisers 

has also increased in Q1 2022.  

In addition to energy costs, the exposure to international trade is also an important determinant of a 

sector’s competitiveness. The higher the exposure to imports from and/or exports to outside the EU, 

the larger the impact of changes in energy costs could have on the competitiveness of EU plants.   

 

Table 4 shows the exposure of the studied energy-intensive sectors to the EU market (import 

exposure) and market outside the EU (export exposure). This is based on the average of 2019 to 

2021  to  balances  out  the  impacts  of  COVID-19.  Overall,  international  trade  experienced  a 

downturn in 2020 but rebounded in 2021 to levels higher than 2019128.  

 

Table  4  indicates  that  the  exposure  of  most  of  the  sectors  studied  is  high  or  very  high, 

highlighting the potential significance of energy costs for affecting the competitiveness and 

profitability of these sectors. 

Table 11: Exposure of EU selected energy-intensive industries to international trade – average of 2019-2021 

Sector 

Unwrought 

aluminium 

(primary 

and 

secondary 

aluminium) 

Downstream 

aluminium 

Ferro-alloys 

and silicon 

Gross 
exports 
(M€) 

Gross 
imports 
(M€) 

Production 
value (M€) 

Internal 
consumption 
(M€) 

Import 
exposure(1) 

Export 
exposure(2) 

Exposure to 
international 
trade(3) 

1,609 

18,786 

12,139 

29,316 

64% 

13% 

High 

3,361 

2,737 

2,741 

2,117 

129% 

123% 

Very high 

1,399 

7,668 

947 

7,216 

106% 

148% 

Very high 

Zinc 

1,313 

926 

1,774 

Ceramics 

9,546 

1,730 

17,378 

1,387 

9,562 

Container 

glass 

2,573 

1,664 

8,936 

8,027 

67% 

18% 

21% 

74% 

55% 

29% 

Very high 

High 

Medium 

Fertilisers 

2,899 

4,784 

823 

2,707 

177% 

352% 

Very high 

Source: Own elaboration based on Eurostat Comext and/or Europroms 

(1) Share of internal consumption served by extra-EU imports 

(2) Share of production dedicated to extra-EU exports 

(3) The exposure to international trade are assessed as follows: medium = import and export < 30%, high = import 

or export > 30%, very high = import and export > 60%. The 30% threshold is based on the trade intensity criteria used by the 

127 Based on bilateral exchanges with FertilizerEurope and https://www.fertilizerseurope.com/wp-
content/uploads/2022/08/Fertilizers-Europe-Press-release_Europe-fert-industry-victim-of-EU-energy-chaos-1.pdf.  
128 https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Impact_of_COVID-
19_on_international_trade_by_product_group 

158 

 
 
 
 
 
 
 
                                                      
European Commission in the assessment of sectors at significant risk of carbon leakage in the EU ETS Phase 

3 (2013-2020). The 60% threshold is twice the 30% threshold as an indicator for a very high trade exposure.  

Note: the values shown in this table may be different from the ones in Annex B as the ones in this table are based 

on Eurostat Comext and/or Europroms, whereas the values in Annex B are sometimes based on data from the industry 

association. 

Besides  energy  costs  and  exposure  to  international  trade,  other  aspects  such  as  raw  material  and 

personnel  costs,  market  concentration,  and  product  differentiation  are  also  key  factors  that 

determine the competitiveness of a company:  

 

Specifically  on  production  costs,  it  is  the  relative  costs  changes  compared  to  non-EU 

competitors that determine the competitive position of EU firms. For example, if energy costs 

of EU plants increase at the same rate as their non-EU competitors, there would be no change 

in competitiveness.  

 

A detailed analysis of energy costs and the sectors’ market and trade developments is included 

in  Annex  B  for  the  three  sectors  where  detailed  data  could  be  collected:  Aluminium,  Ferro-

alloys and  silicon and Zinc. The analysis shows that, overall, energy  costs played a decisive 

role  in  decreasing  competitiveness  in  the  most  recent  years.  Sharp  increases  in  electricity 

prices  and  costs  for  Primary  aluminium,  and  Ferro-alloys  and  silicon  since  2020  reduced  the 

sectors’ profitability, despite a simultaneous rise in selling prices. Data for Q1 2022 show that 

electricity  costs  almost  doubled  as  compared  to  2021,  which  paired  with  decreasing  market 

prices, led to production costs being higher than market prices.  

 

For  other  sectors  (e.g.  Zinc),  trading  prices  are  mainly  based  on  the  London  Metal  Exchange 

(LME),  i.e.  all  zinc  is  sold  roughly  at  the  same  price  internationally.  The  profitability  and 

competitiveness of these plants is therefore determined by the internal cost structure of 

these plants.  

 

Further,  there  are  other  identified  factors  which  could  influence  a  sector’s  profitability  and 

competitiveness,  for  example,  in  Downstream  aluminium,  operating  costs  are  dominated  by 

unwrought aluminium purchases, accounting for at least half of downstream transformer’s total 

production costs. 

 

Since the start of the energy crisis in 2021, energy cost developments did play a decisive role in 

the  actual  competitiveness  of  sectors  based  on  the  analysis  of  the  development  of  the  trade 

balance. Representatives from a wide range of energy-intensive industries have indicated that 

the impact of the volatility and extremely high levels of gas and electricity prices cannot be 

sustained and threaten the competitiveness of European companies129. This edition of the report 

therefore particularly focuses on the impact of the Russian invasion of Ukraine on the various 

sectors in the next section. 

Box 6-1 Energy costs in the iron and steel sector 

Steelmaking is a carbon- and energy-intensive process. In the EU, steel is manufactured via two main 

production routes:130  

 

Primary  steelmaking  —  using  blast  furnaces  (which  run  on  coal  or  coke)  and  basic  oxygen 

furnaces (BF-BOF) to turn iron ore into steel  — is an energy- and carbon-intensive process, 

which accounts for about 60% of EU steel production. 

129 CEFIC (2022). Statement by the Energy Intensive Industries ahead of the Extraordinary Energy Council of 30 September 2022. 
130 Eurofer (2020). What is steel and how is steel made?  

159 

 
 
 
 
 
 
 
                                                      
 

Secondary steelmaking using  electric arc furnace (EAF) to  produce steel mainly from steel 

scrap, which is characterised by a high electricity consumption and account for the remaining 

40% of EU steel production.  

A 2020 study by the Joint Research Centre showed that steel plants in the EU27 have, on average, the 

highest  or  second  highest  production  costs  compared  to  major  non-EU  competitors131.  Energy  costs 

were found to play a potentially significant role in determining competitiveness, usually representing 

between 11% and 20% of total production costs.  

However, with the rapidly rising energy prices since 2021, energy costs have become a key determining 

factor in competitiveness. Figure 3 shows the average share of energy costs in production costs for 

both steelmaking routes. This is based on German and Italian plants, the only EU plants for which data 

is  available  in  the  Global  Steel  Cost  Tracker  of  TransitionZero132.  Overall,  the  energy  cost  share  in 

steelmaking has been relatively stable until 2020, when it fell to a 7-year minimum. This is followed 

by  an  increase  in  2021  to  peak  levels  of  20%  for  BF-BOF-based  steelmaking  and  25%  for  EAF-based 

steelmaking (see Annex B for more details). As a result of this increase in energy costs, the cost of 

steelmaking is now the highest in Germany and Italy compared to all major steel producing countries 

outside the EU such as Japan, the United States, China, India and Russia133. The energy prices increase 

in 2022 further deteriorated the competitiveness of the steel plants in Germany and Italy. 

Figure 161: Energy costs as a share of production costs by type of steelmaking, simple average of German and 
Italian plants134 

Source: Own elaboration based on data from TransitionZero 

6.2.1 

Impact of COVID-19 and the Russian invasion of Ukraine on the selected 

EIIs 

The 2020 edition of this study already gathered informal feedback on the possible impact of COVID-19 on 

energy  costs  and  their  economic  consequences  for  industry.  At  that  time,  European  industries 

experienced a significantly lower demand for products, reducing sales revenues and triggering reductions 

of  production  output.  However,  the  2020  edition  also  found  that  COVID-19  lockdowns  led  to  a  very 

131 Medarac et al., (2020). Production costs from iron and steel industry in the EU and third countries. Doi:10.2760/705636. 
132 TransitionZero (n.d.). Global Steel Cost Tracker.  
133 The Global Steel Cost Tracker of TransisionZero is not based on data collected directly from companies, but models the production 
costs of steelmaking plants based on publicly available data on iron and steel plants and from international statistics. Energy costs of 
individual plants may therefore be lower in practice if they have long-term contracts for energy and/or materials. Nonetheless, the 
average costs do provide valuable insights in the impact of energy costs in the iron and steel sector. (TransitionZero and Global 
Efficiency Intelligence, 2022. Global steel production costs.) 
134 Differences between the German and Italian plants are minimal and therefore not analysed separately. 

160 

 
 
 
 
 
 
 
 
 
                                                      
significant fall in energy prices during the first half of 2020, which is also reflected in the 

decreasing  share  of  energy  costs  versus  production  costs  of  the  selected  EIIs.  In  many  of  the  sectors 

covered, the energy cost shares reached a record low point in 2020 (see Annex B for more details), except 

downstream aluminium.  

As the European economy recovered from the COVID-19 pandemic, both industrial production and trade 

rebounded in 2021 to levels higher than pre-COVID135. Therefore, most surveyed plants and informal 

feedback from the industry associations indicated that, while COVID-19 was challenging, particularly at 

the start of the pandemic with demand dropping and staff shortages, these difficulties pale in comparison 

with the challenges plants are currently facing due to the energy crisis. The soaring prices for electricity 

and gas since 2021 have resulted in production curtailment and (temporary) shutdowns of plants in 

various energy-intensive sectors. Others have been able to pass on some of the cost increases so far, 

but in light of international competition are facing challenges to further do so.   

This section provides a snapshot of the impact of these two crises for various energy-intensive sectors, 

primarily  based  on  publicly  available  information,  complemented  with  feedback  from  the  sector 

associations and insights from the surveyed plants. The findings are presented in the following order: 

 

 

Selected energy-intensive sectors for which a detailed analysis could be conducted based on the 

surveyed plants: Aluminium, Ferro-alloys and silicon, Zinc; 

Selected  energy-intensive  sectors  with  information  from  only  3-4  surveyed  plants:  Container 

glass, Ceramics, Fertilisers; and 

  Other energy-intensive sectors for which public information could be found on the impact of the 

energy crisis: Chemicals, Iron and steel, Paper and cardboard. 

Aluminium 

Key takeaways:  

 

To  cope  with  the  rising  energy  prices,  surveyed  aluminium  plants  have  adopted 
various  measures,  such  as  the  reduction  or  a  complete  halt  of  their  electrolytic 
aluminium furnaces (in the case of Primary aluminium), and raising the sales prices 
of their products (in the case of Secondary aluminium and Downstream aluminium 
segments).  

  Other  measures  implemented  by  aluminium  plants  include  personnel  lay-offs  or 
mandatory  unpaid  leave,  reducing  planned  investments  to  a  minimum,  and 
optimisation of processes and logistics to reduce costs.  

The majority of the aluminium plants participating in the survey reported that the COVID-19 crisis had a 

negative impact due to increased energy prices (both electricity and natural gas). This mainly occurred 

towards the end of the COVID-19 crisis, when some surveyed plants reported that they were starting to 

recover their activities. After February 2022, the price of energy products rose even further; increased 

tensions in the supply chain of raw materials caused shortages and inflation of prices of raw materials, 

transport and logistics costs.  

135 Eurostat (2022). Impact of Covid-19 crisis on industrial production.; Eurostat (2022). Impact of Covid-19 crisis on 
international trade by product group.  

161 

 
 
 
 
 
 
 
 
 
 
 
                                                      
The aluminium plants participating in the survey have adopted different measures. Primary 

aluminium  plants  reported  reducing  or  completely  halting  their  electrolytic  aluminium  furnaces  since 

September 2021 to reduce their levels of electricity consumption. Some  of these plants also reported 

relying on scrap to continue their casthouse operations. Without the heat coming from the liquid primary 

aluminium  (from  the  electrolysis  department),  plants  now  use  more  natural  gas  for  smelting  in  the 

casthouses. Companies from Secondary aluminium and Downstream aluminium segments reported raising 

their product prices as a measure to deal with the increased prices of energy, raw material, transport 

and logistics. For Downstream aluminium plants, this has further reduced demand for their product. 

Overall, the surveyed companies in all segments of aluminium’s value chain reported lay-offs of personnel 

or introducing mandatory unpaid leave to reduce personnel costs. Aluminium companies also reported a 

reduction of planned investments to minimum levels, optimization of processes and logistics to reduce 

costs and expenses at all levels of the plants. 

Ferro-alloys and silicon 

  Key takeaways:  
 

The  impact  of the  Russian  invasion  in  Ukraine  on  the  sector  was  harder than the 
COVID-19  crisis.  The  sector  facing  an  increase  in  energy  prices,  as  well  as 
experiencing raw material shortages and price inflation as both Ukraine and Russia 
were sources for raw materials and ferro-alloy products. 
By  Q1  2022,  the  situation  on  raw  materials  stabilised,  although  ferro-alloy  prices 
began  to  plummet,  reaching  a  point  below  production  costs.  Concurrently,  the 
energy prices continued to soar, leading to drastic reductions in production output 
for some of the surveyed plants. 
At the beginning of September 2022, 27% of the ferro-alloys and silicon production 
capacities in EU27 have been curtailed, which has consequently led to a closure of 
40% of the furnaces. Curtailments have since increased further.  

 

 

The majority plants of the Ferro-alloys and silicon sector participating in the survey reported that the 

COVID-19 crisis impacted them negatively due to increased electricity prices. They indicated that this 

mainly occurred towards the end of the COVID-19 crisis when global demand rebounded. However, some 

plants indicated that they were able to continue their production output at their usual levels during the 

pandemic. However, since the start of the Russian invasion in Ukraine, the price of energy products rose 

even further, together with increased tensions in the supply chain of raw materials causing shortages and 

inflation of prices.  

Ukraine  and  Russia  are  direct  or  indirect  sources  of  raw  materials  and  ferro-alloy  products.  Since  the 

start  of  the  war,  ferro-alloy  prices  skyrocketed  due  to  concerns  of  supply  chain  disruptions  for  these 

materials. Some plants reported increasing their stock of raw materials and searching for alternatives in 

case of future material shortages. By Q1 2022, the situation on raw materials stabilised and ferro-alloy 

prices began to plummet, reaching a point below production costs. At the same time, the energy prices 

continued to soar, causing drastic reductions in production output for some of the surveyed plants. 

162 

 
 
 
 
 
 
 
 
 
 
 
According to the industry association Euroalliages, the consequences of 2022 energy prices 

have been dramatic. A survey conducted with Euroalliages members in September 2022 indicated that 

27% of the silicon and ferro-alloys production capacities have been curtailed in the EU27. In terms of the 

number of furnaces having fully closed down, these curtailments have affected 40% of the furnaces in 

the  EU.  Euroalliages  indicated  that  since  the  completion  of  the  survey,  curtailments  have  increased 

further. 

Zinc 

  Key takeaways:  
 

Demand for zinc reduced during COVID-19, leading to an increase in zinc stockpiles. 
Zinc plants have also been severely impacted by increase in energy prices triggered 
by the Russian invasion of Ukraine, and they are coupling production with electricity 
spot prices throughout the day.  
In  the  longer  term,  the  production  volume  for  zinc  remains  uncertain  as  it  will 
depend on energy prices and zinc demand. 
Three primary smelters  have closed, i.e. placed on care-and-maintenance, since 1 
September  2022,  namely  Nrystar  Budel  (NL),  Glencore  Porto  Vesme  (IT)  and 
Glencore (DE). 

 

 

The surveyed zinc companies indicated that they were able to continue their operations during COVID-

19,  despite  experiencing  some  staffing  problems.  However,  zinc  consumers  did  stop  their  operations, 

resulting in depressed demand and large stockpiles of zinc. Some surveyed zinc companies also indicated 

that the COVID-19 crisis also led to an increase of their energy costs. Zinc prices are globally traded based 

on the prices from the London Metal Exchange. This means that there is a possibility that any increase in 

energy costs may have to be partially or fully absorbed by the zinc plants, as they are not able to pass on 

these costs to zinc consumers.  

The Russian invasion of Ukraine had severe impact on the zinc companies. Some surveyed plants have 

reported an uncertainty in the planning of the production volume in the long term, which would hinge on 

the developments in the energy prices as well as the demand for zinc products in the market.  

The International Zinc Association indicated that some plants have been applying daily peak shaving to 

manage the rising energy costs, i.e. temporarily stopping production when electricity spot price increases 

during  the  day.  Plants  have been  reducing  their  running capacity  by  about  15%  this  way,  with  output 

losses amounting to an estimated range of 60-240 thousand tonnes (kt) so far. Further reduction of output 

would lead to longer-term closures. Typically, zinc plants can lower the output to 25-35% of the nominal 

capacity without causing reversal of the electrolysis, which would create hydrogen gas release and the 

risk of explosions. Any further reduction of output would require the emptying of electrolyte from the 

whole  circuit  —  a  process  that  would  take  several  weeks.  Restarting  this  process  after  a  complete 

shutdown would also take several weeks and in addition, negatively affect the yield of electrolysis for 

several months. Therefore, a complete shutdown is only considered if the duration of the shutdown is 

expected to last for at least 4-6 months.  

163 

 
 
 
 
 
 
 
 
 
 
 
At the point of writing this report, there are two primary smelters that are currently closed, 

i.e.  placed  on  care-and-maintenance.  Nyrstar  Budel  in  the  Netherlands  with  an  annual  production 

capacity of 270 kt136 has been closed since 1 September 2022 and Glencore’s Porto Vesme plant in Italy 

with an annual production capacity of 150 kt since Q4 2021137. As of 1 November 2022, Glencore is closing 

its zinc plant in Germany with an annual production capacity of 165 kt.138  

Container glass 

  Key takeaways:  
 

Production costs increased for the container glass sector as a result of increases in 
the cost of raw materials, packaging, transportation, inflation and the high gas prices, 
which is 14-16 times higher than pre-crises levels. Gas prices currently make up 24% 
of the production costs for the sector. 

  Nonetheless, none of the 162 factories in Europe have closed down (as of October 

2022). 

Despite the market challenges posed by COVID-19 and rising energy prices, the container glass industry 

experienced a record growth in its production in 2021, driven by high market demand.139 Based on data 

released  by  the  industry  association  European  Container  Glass  Federation  (FEVE),  the  container  glass 

industry is continuing its recovery from a 2020 decline, and has recorded a highest-ever production growth 

of  5%  for  food  and  beverage  glass  packaging  in  2021,  as  compared  to  2020  figures140.  However,  the 

industry  is  worried  that  the  increase  in  demand  may  not  be  sufficient  to  compensate  for  the  rise  in 

production costs. 

Figure 162: Production data of the container glass industry in Europe from 2012 – 2021 

Source: FEVE141 

Glass container manufacturers have expressed their worries regarding the continuously increasing energy 

costs,  as  their  gas  prices  in  September  2022  came  to  be  14-15  times  higher  than  pre-crisis  levels.142 

According to FEVE, the energy costs in the sector make up 24% of the production costs. This corresponds 

136 Nyrstar (2022). Nyrstar Budel’s zinksmeltactiviteiten worden op care and maintenance gezet. 
137 Desai (2021). Glencore's Portovesme zinc operation to enter care and maintenance. 
138 Reuters (2022). Glencore to place Nordenham zinc smelter on care and maintenance from Nov 1. 
139 Feve (2022). EU Container glass industry records highest ever growth in production. 
140 Feve (2022). EU Container glass industry records highest ever growth in production. 
141 Feve (2022). Press release: EU container glass industry records highest ever growth in production. 
142 Areni Global (2022). How the energy crisis threatens the future of the glass bottle.  

164 

 
 
 
 
 
 
 
 
 
 
 
                                                      
to the data received from the surveyed plants located in Southern Europe, where the share 

of the energy costs in production costs increased even further in Q1 2022. In an attempt to prevent the 

disruptive option of shutting down their furnaces, glass container manufacturers have chosen to raise the 

price of their products. For example, the German Brewers’ Association indicated in May 2022 that some 

breweries have to pay 80% more for new glass bottles than a year ago143. Half of the surveyed plants in 

this  study  also  indicated that  there  was  an  increase  in  the  market price  of  container  glass  during  the 

period of the COVID-19 crisis and the Russian invasion of Ukraine. The main factors are attributed to the 

general increase in production costs resulting from the rising costs of energy, raw materials, packaging, 

transportation as well as inflation. 

Nonetheless,  none  of  the  162  factories  in  Europe  has  been  closed  down  as  of  October  2022144.  Glass 

containers are produced in furnaces that work permanently for 10-15 years as glass needs to remain in 

liquid  form  at  around  1400°C  during  the  production  stages.  Shutting  down  the  glass  furnaces,  which 

primarily run on natural gas, even for a single day in this long-term process, would lead to the complete 

destruction of glass and irreversible damage to the furnace installation145. 

Ceramics 

  Key takeaways:  
 

The ceramics sector has experienced a tripling of energy bills as compared to pre-
crises levels. 
To cope with the increase in energy costs, some plants have shifted their production 
to  hours  with  lower  energy  tariffs  and  more  favourable  temperature  conditions, 
while others have passed on some of the costs to the consumer.  
Production  curtailments  and  temporary  shutdowns  have  occurred  in  several  EU 
countries. 

 

 

The ceramics industry has indicated that the current energy crisis has an extremely dramatic impact on 

its sector. According to the European Ceramic Industry Association (Cerame-unie), the energy bill of an 

average ceramics producer has tripled within a year and a half, from around 20-30% of its production 

costs to about 60%-70%146. Some companies have been able to reduce their energy costs by shifting their 

production to hours with lower energy tariffs and more favourable temperature conditions, while others 

are planning to invest in new ovens147. Some companies did pass on some of the energy price increase to 

their  customers.  For  example,  The  Iris  Ceramica  Group—one  of  the  leading  Italian  companies  in  the 

sector—introduced an energy surcharge of 3% on invoices due to the increase in gas prices148. However, 

not all companies have been able to mitigate the increase in energy costs. Cerame-unie indicated that 

the curtailment of production and even temporary shutdowns have taken place in several countries149. 

For example, the Portuguese tile company CINCA was forced to shut down for a month and a half in 2022 

because gas bills went from 300 000 euro to almost 1.5 million euro per month150. The industry association 

143 Schwertheim (2022). Glass bottle prices soar 80% for German beer brewers amid production and transport crises. 
144 Areni Global (2022). How the energy crisis threatens the future of the glass bottle. 
145 Feve (2022). FEVE paper addressing the risk of energy shortages in the container glass industry.  
146 https://cerameunie.eu/media/5imjwnj2/22-09-08-press-release-energy-crisis.pdf 
147 Berlenga and Sterling (2022). Early starts, new ovens as ceramics industry feels energy pinch. 
148 Jewkes et al. (2021). Gas price surge pushes Europe's ceramics industry to breaking point. 
149 Cerame Unie (2022, 8 September). Press release.  
150 Soares (2022). Portuguese ceramic industry takes a dent as energy crisis looms. 

165 

 
 
 
 
 
 
 
 
 
                                                      
has indicated that the actions that the sector can take are insufficient to cope with the 

rising energy costs151.  

Fertilisers 

  Key takeaways:  
 

The increase in energy prices, especially in gas prices, have resulted in energy costs 
making up 60-80% of the total production cost of fertiliser plants. This has led to a 
70% curtailment of European production capacity. 
There  has  been  a  negative  impact  on  personnel,  with  staff  sent  into  technical 
unemployment, lay-offs, and to be up on downtime where they receive 40% of their 
average salary.  
Fertilisers  have  been  reducing  ammonia  production  and  importing  them  from 
outside  the  EU  due  to  the  rising  cost  of  ammonia,  a  key  material  for  the 
manufacturing of fertilisers.  

 

 

Ammonia  is  produced  from  nitrogen  as  well  as  hydrogen  which  is  typically  produced  from  natural  gas 

today; although hydrogen can also be produced from renewable energy — an option that is currently being 

explored  commercially.  However,  for  the  time  being,  natural  gas  remains  as  a  main  raw  material  to 

produce ammonia — the basic component for all mineral nitrogen fertilisers. An increase in the natural 

gas prices therefore affects both energy and material costs of fertiliser plants, making up about 60-80% 

of total production cost152.   

Based on the responses of the sampled plants as well as market reports, the current energy crisis has 

forced  many  plants  to  reduce,  suspend  or  to  permanently  cease  production153,  which  has  a  negative 

impact  on  their  personnel  as  well.  Fertilizers  Europe  —  the  association  representing  the  majority  of 

European  fertiliser  producers  —  indicated  that  as  of  August  2022,  around  70%  of  European  production 

capacity has been curtailed154. Production stops of fertilisers have taken place across the whole of Europe 

as  shown  in  Figure  5.  For  example,  Azomures  —  the  largest  natural  gas  consumer  in  Romania  —  has 

suspended its ammonia production since June 2022 and announced in September 2022 that they would 

reallocate  or  send  200  of  its  1000  employees  into  technical  unemployment155.  Similarly,  Achema  — 

Lithuania’s largest fertiliser producer — has stopped its fertiliser production as of September 2022 with 

5% of its 1250 employees expected to be laid off and some other employees to be on downtime with 40% 

of  their  average  salary156.  The  significant  curtailment  in  European  fertiliser  production  shows  that 

producers have very limited means to mitigate the soaring gas prices in the current energy crisis; one 

respondent also mentioned that it was not possible to pass on the entire energy price increase to the 

consumers.  This  is  why  Fertilizers  Europe  has  called  for  crisis  management  policies  for  the  European 

fertiliser industry157. 

151 Cerame Unie (2022, 8 September). Press release. 
152 Fertilizers Europe (2019). Energy costs.  
153 Hodges (2022). Food costs and interest rates rise as energy and fertilizer supplies are hit by the invasion.  
154 Fertilizers Europe (2022). Europe’s fertilizer industry victim of EU’s energy chaos.  
155 Chirileasa (2022). Romanian fertilizers maker Azomures reduces its activity again.  
156 Achema (2020). „Achemos“ sunkūs sprendimai yra privalomi.  
157 Fertilizers Europe (2022). Europe’s fertilizer industry victim of EU’s energy chaos.  

166 

 
 
 
 
 
 
 
 
 
 
                                                      
Since then, some plants have reduced ammonia production and resorted to importing it in 

order to meet the demand of their customers. For example, BASF — one of the world’s largest chemicals 

producer — has significantly reduced its own ammonia production and purchase ammonia from others for 

their  fertiliser  production158.  Yara  —  one  of  the  world’s  largest  fertiliser  producers  —  stated  that, 

following the curtailment of their European production due to the higher gas prices, they are importing 

ammonia to meet European demand159.

158 Burger (2022). BASF readies more ammonia production cuts in gas supply crunch.  
159 Rasmussen and Solsvik (2022). Yara cuts cast doubt on Europe's fertiliser production.  

167 

 
 
 
 
 
                                                      
Figure 163: Overview of production curtailment of fertilisers across Europe as of October 2022 

Source: ICIS, Map of shut capacities, October 2022. 

168 

 
 
 
 
 
 
Chemicals 

  Key takeaways:  
 
 
 

Europe is now the region with the highest costs for producing many chemicals.  
EU is now a net importer of chemicals rather than being a net exporter.  
Curtailments in the production of chemicals have been observed in various sub-
sectors such as inorganic chemicals and chlorine; production curtailment or 
shutdowns in the petrochemical sector have not been reported, although market 
analysts reported that considerations to do so are underway.  

According  to  the  chemical  industry,  the  costs  of  fuels  and  power  consumption  are  major  factors  that 

determine the competitiveness of the EU chemical industries in the global market.160 The chemical sector 

does  not  only  consume  fuels  for  energy  but  also  uses  it  as  key  raw  materials.  Cefic  —  the  European 

Chemical Industry Council — has therefore indicated that the high gas and electricity prices are a threat 

to the competitiveness of the chemical industry.  

Market  analysts  have  observed  that  in  the  first  half  of  2022,  imports  of  inorganic  chemicals  (a  major 

chemical subsector) by Germany were 40% higher in volume compared to the same period in 2021, which 

includes imports from outside the EU161. This coincided with a drop in the German production of inorganic 

chemicals. This situation can largely be attributed to ammonia production curtailments across the EU as 

described above in the section on fertilisers. A part of this increase in chemical imports is also due to 

reduction  in  chlorine  production.  Euro  Chlor  —  a  sector  group  of  Cefic  —  indicated  that  chlorine 

production has decreased significantly in 2022 compared to 2021, with the average capacity utilisation 

of European plants down to 66% as of August 2022 compared to 80-89% over 2021162.  

In  the  petrochemical  sector  (another  major  chemical  subsector),  there  have  been  no  reports  of  the 

production curtailment or shutdowns in the EU as of July 2022163. However, market analysts reported that 

petrochemical  producers  have  been  making  detailed  plans  for  rationing  and  considering  temporary 

shutdowns. 

Because  of  European  energy  costs  rising  much  faster  than  elsewhere  in  the  world,  market  analysts 

indicate  that  Europe  is  now  the  region  with  the  highest  costs  for  producing  many  chemicals164, 

jeopardising  the  competitive  position  of  European  chemical  plants  and  leading  to  more  imports  from 

outside the EU. Cefic observed this trend in the trade  of chemicals, with  the EU  changing from a net 

exporter of chemicals to a net importer as of March 2022.165 

160 cefic (n.d.). Energy consumption.  
161 Wilkes (2022). Germany cranks up chemical imports as energy crisis hikes costs.  
162 Euro Chlor (2022). August 2022 Chlorine production.  
163 Richardson (2022). Europe’s gas crisis: the implications for global chemicals. 
164 Davis (2022). EPCA ’22: Europe highest cost chemicals producing region, shutdowns encourage imports – ICIS.  
165 Based on Cefic’s analysis of Eurostat data obtained via bilateral communication.  

170 

 
 
 
 
 
 
 
 
 
 
 
 
                                                      
Iron and steel 

  Key takeaways:  
 

Steel production has dropped between 7-10% across the EU between May 2021 
and May 2022; decline in steel production has been driven by a sharp demand 
reduction for steel products, high energy costs and high raw material prices. 
High energy costs have reduced competitiveness of the European steelmakers, with 
more steel being imported from outside Europe.  
As of September 2022, at least 18 steel plants have announced measures to reduce 
production, while others are shutting down some units, temporarily ceasing 
production and reducing staff working hours.  

 

 

The  current  energy  crisis  prompted  widespread  steel  output  cuts  as  European  steelmakers  announce 

planned outages and reduce steel output166. Market analysts indicated that between May 2021 and May 

2022, steel production dropped by 6.8% in the EU, while production declined by more than 10% in France, 

Croatia, Germany, Finland, Netherlands and Spain167. 

According to ArcelorMittal, the largest producer of flat steel in Europe168, the main reasons for the decline 

in steel production are the sharp slowdown in demand for steel products from key sectors (including the 

automotive industry), high energy costs and high raw material prices. ArcelorMittal also indicated that 

the rise in energy costs especially degraded their competitiveness and led to an increase in imports from 

outside Europe169. Market analysts indicated that flat steel prices in Europe have been pushed down in 

recent months due to low end-user demand and overstocking from earlier panic buying170,171. The Russian 

invasion of Ukraine has led to a shortage of essential raw materials, which are mostly from Russia and 

Ukraine resulting in a major global supply shock for the steel value chain172.  

Due to the deteriorating market conditions for European steel producers, as of September 2022, at least 

18 steel plants across the EU have announced measures to reduce their production as shown  Figure 6. 

The  figure  shows  that  factories  are  shutting  down  some  units  or  temporarily  stopping  production  all 

together, as well as reducing working hours of their staff.  

166 Burgess (2022). European energy woes unlikely to significantly boost US steel exports.  
167 Eurometal (2022). EU decreased steel production by 6.8% y/y in May 2022.  
168 ArcelorMittal (n.d.). Who we are.  
169 Eurometal (2022). ArcelorMittal shuts down one more BF in Europe.  
170 Eurometal (2022). Weak demand, cheaper imports put pressure on European flat steel prices. 
171 Novokreshchenova et al. (2022). Six months of war: How has it changed the global steel market?  
172 CRU Webinar (2022). War in Ukraine – The impact on commodity markets.   

171 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 164: Overview of production stops in European steelmaking sites as of September 2022 

Source: Fastmarkets MB173 

Paper and cardboard 

  Key takeaways:  
 

Energy prices have risen up to eight times higher in 2022 than the previous years’ 
average, resulting in some plants having to temporarily or permanently reduce 
production. 
To cope with the increase in energy prices, some paper plants have switched from 
natural gas to using alternative fuels to mitigate the increase in gas prices, while 
others have passed some of the costs to their consumers. 

 

The paper and cardboard industry has indicated that the current energy crisis has a major impact on the 

sector. According to CEPI — the European association representing the paper industry — the sector has 

witnessed energy prices rising up to 8 times more than previous year's average174. Some paper plants have 

been switching from natural gas to alternative fuels as a way to mitigate the costs. For example, the 

German  papermaker  Feldmuehle  is  changing  its  steam  generation  from  gas  to  light  heating  oil,  which 

173 Eurometal (2022). Dunaferr effectively halts steelmaking in Hungary with closure of second BF.  
174 Cepi (2022). Options for ensuring security of energy supply and tackling high energy prices.  

172 

 
 
 
 
 
 
 
 
 
 
                                                      
requires a €2.6 million investment175. The Norwegian pulp and paper company Norske  Skog installed a 

new boiler in its Austrian paper mill to reduce its gas consumption176. Other plants have been increasing 

the prices of their products to manage the rising energy costs such as the paper producer Sappi Europe177 

and Europe’s leading corrugated packing company Smurfit Kappa178. There are also various plants across 

the EU that have not been able to cope with the sharply increasing energy prices, resulting in temporary 

production  stops  or  permanent  closures.  For  example,  the  German  cardboard  company  Delkeskamp 

announced  the  closure  of  its  Nortup  paper  mill,  which  employs  70  people,  in  August  2022  due  to  the 

increase  in  energy  costs179.  In  September  2022,  Sappi  Europe  announced  the  temporary  production 

reduction  at  its  Carmignano  paper  mill  in  Italy  due  to  the  continuing  and  sharp  escalation  of  energy 

costs180. 

6.3 

Energy costs and their impact at macroeconomic level  

This section provides an overview of the overall impact of energy costs on the economy of the EU and its 

Member States, by calculating the shares of energy costs in the total production costs in each Member 

State. Measuring the share of energy costs in production can shed light on the impact of energy costs 

changes on the production costs of industries, and more broadly, on EU economies.  

6.3.1 

Methodology 

The  calculations  of  energy  cost  shares  rely  on  three  variables,  based  on  parameters  available  from 

Eurostat:  

1) Purchases of energy products as a proxy for total energy costs, and  

2) the sum of personnel costs and purchases of goods and services serves as proxy for production costs.  

Box 6-2: Description of parameters for calculating the share of energy costs in production costs 

Expressed as a formula: 

𝐸𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑠𝑡𝑠 𝑎𝑠 % 𝑜𝑓 𝑡𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑐𝑜𝑠𝑡𝑠 =  

𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 𝑜𝑓 𝑒𝑛𝑒𝑟𝑔𝑦 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠
(𝑃𝑒𝑟𝑠𝑜𝑛𝑛𝑒𝑙 𝑐𝑜𝑠𝑡𝑠  + 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑎𝑛𝑑 𝑠𝑒𝑟𝑣𝑖𝑐𝑒𝑠)

Purchases of goods and services, based on Eurostat’s definition, include the value of all goods and 

services purchased during the accounting period for resale or consumption in the production process, 

including  purchases  of  energy  products  but  excluding  capital  goods,  the  consumption  of  which  is 

registered as consumption of fixed capital. 

Personnel costs are defined as the total remuneration, in cash or in kind, payable by an employer to 

an employee (regular and temporary employees as well as home workers) in return for work done by 

the  latter  during  the  reference  period.  Personnel  costs  are  made  up  of  wages  and  salaries  and 

employers'  social  security  costs,  which  include  taxes  and  employees'  social  security  contributions 

retained by the unit as well as the employer's compulsory and voluntary social contributions. 

Purchases of energy products (based on the definition of the Commission Implementing Regulation 

(EU) 2020/1197) the structural business statistics (SBS) 240105 includes only energy products, which 

175 Feldmuehle GmbH (2022). Feldmuehle is switching steam generation, away from Gas.  
176 Norske Skog (2022). High energy prices necessitate temporary downtime at the Bruck paper mil.  
177 Sappi (2022). Sappi Europe announces further price increases for its Speciality Paper Portfolio. 
178 Smurfit Kappa (2022). SKG Full Year 2021 Results .  
179 EUWID (2022). Delkeskamp to close Nortrup paper mill after all.  
180 Sappi (2022). Sappi Europe temporarily reduces capacity at Carmignano Mill.  

173 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                      
are purchased to be used as a fuel. Energy products purchased as a raw material or for resale without 

transformation (such as crude oil) are excluded. Self-consumption of energy is also not captured. 

For the majority of data on energy costs, including data from Eurostat, the latest available year is 2019. 

The  results  for  the  indicators  with  figures  are  therefore  shown  from  2010  until  2019.  The  impacts  of 

COVID-19 and the current energy crisis are therefore not captured in the results based on aggregated 

statistical data.  

Data available from Eurostat only allows the energy cost shares to be calculated for the NACE sectors B, 

C, D, E and F, which can be grouped under industry and construction. Industry is here defined as the 

combination of Sections B (Mining and quarrying), C (Manufacturing), D (Electricity, gas, steam and air 

conditioning  supply)  and  E  (Water  supply,  sewerage,  waste  management  and  remediation  activities), 

while sector F encompasses Construction.181 

6.3.2 

Results 

Key takeaways:  

 

 

The average share of energy in production costs of EU27 industry sectors 
decreased by 35.3%, from 2.3% in 2010 to 1.7% in 2016, followed by a period of 
stagnation up to 2019.  
Luxembourg has the highest share, which ranges from 7% to 11% and Ireland the 
lowest share of around 0.5% since 2015. 

Figure 7 shows the evolution of the share of energy costs in production costs for the above-mentioned 

sectors182. While the available values in the figure vary significantly across the Member States, overall, 

most Member States show a decreasing trend over time. The countries with the most consistent and sharp 

decrease in the share of energy costs include Estonia (from 6.2% to 4.3%), Ireland (from 2.4% to 0.6%), 

Hungary (3.6% to 2.2%), Finland (from 3.2% to 2.3%) and Romania (from 4.9% to 3.4%, although with a 

slight increase in between 2018 and 2019). Some less marked decreases are observed in Netherlands (from 

1.6% to 1.3%). 

A few Member States also had a decreasing trend in the early years, but this trend has reversed in the 

recent years. Most notably is Czechia, which experienced a steady decrease between 2011 and 2015 (from 

12.5 to 8%), followed by a period of stagnation and then a sharp increase  in 2018 (to 11.4%), with an 

ongoing increasing trend in the following  year. Czechia also shows  relative higher energy costs shares 

compared to other Member States. This is explained by their high energy cost shares in NACE Sector D 

(Electricity,  gas  and  air  conditioning  supply)  and  the  relative  smaller  size  of  their  other  industry  and 

construction sectors compared to other Member States. The available data further shows that Greece has 

experienced a sharp decrease in energy cost shares between 2013 and 2014; followed a steady increase, 

reaching 5.5% in 2019.  

181 Energy cost shares could not be calculated for the services sectors (NACE sectors G to N) because Eurostat does not provide any 
data on the purchases of energy products for these sectors. According to Commission Implementing Regulation 2020/1197, EU 
Member States are only required to collect and share data on purchases of energy products for NACE sectors B, C, D, E and F. For this 
reason, only qualitative insights of energy costs of the services sector are provided at the end of this chapter. Moreover, the 
limitations inherent to the chosen approach and data sources are listed as specific annotations attached to the data presented in the 
figures. 
182 To allow an equal comparison between countries and years, values are only shown if sufficient data was available for the sector. 
This has significantly reduced the values that can be shown in the figure, primarily due to the lack of data on Purchases of energy 
products in the NACE sectors D and E. 

174 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 165: Evolution of energy costs shares in production costs, industry and construction 

Note : Data gaps and unavailability of information constitutes the greatest limitation in this graph. To ensure 

consistency and comparability across countries and years, values are only shown if sufficient data was available for the 

entire industry and construction sector for a specific year and Member States in Eurostat, resulting in a large number of data 

gaps. Particularly, data on purchases of energy products lacks for a significant share of the Member States in the NACE 

sectors D and E. This resulted in some MS not being included at all (BG, DE, ES, FR, IT, CY, LV, LT, MT, AT, PL, PT, SI, SK. 

Because of the substantial lack of data, a EU27 average of the energy cost shares has also not been calculated.  

Data is also analysed separately for NACE sector C  Manufacturing where most of the relevant industry 

sectors are included (as shown in Figure 8). The overall trends are in line with the trend for the entire 

industry and construction sector: the EU average energy cost shares have decreased from 2.3% in 2010 to 

1.7% in 2016, followed by a period of stagnation. This trend is consistent when looking at most Member 

States individually. Significantly higher shares of energy costs for manufacturing, compared to all sectors, 

are observed for Cyprus (reaching 6.7% in 2012), Latvia (showing a decreasing trend from 8.8 to 7.8% over 

the time period) and Luxemburg, with the highest figure available of 10.8% in 2011, decreasing to 7.9% 

in 2019. On the other hand, the lowest figures are observed in Ireland, stagnating around 0.5% from 2015 

onwards, and in Italy, though with a slight increase in 2019.  

The  main  difference  in  values  for  the  manufacturing  sector  compared  to  the  entire  industry  and 

construction  sector  are  visible  for  Czechia,  Estonia  and  partly  Greece.  These  Member  states  show 

significantly lower shares of energy costs when looking at manufacturing only. The main reason is that 

these countries have relatively higher shares of energy costs in particularly NACE sector D183.  

183 Electricity, gas, steam and air conditioning supply 

175 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Figure 166: Evolution of energy costs shares in production costs for manufacturing 

Note: The energy costs shares for Malta, Poland and Slovenia could not be calculated for several years primarily due 

to the lack of data on the Purchases of energy costs in Eurostat. 

As  mentioned  above,  energy  cost  shares  could  not  be  calculated  for  the  service  sectors  due  to  the 

absence of relevant data. In 2020, Eurostat reported that out of the total energy demand of the EU, 9.1% 

went to the service sector, therefore representing a significant share of all EU energy demand184. Eurostat 

statistics  also  shows  that  final  energy  consumption  by  services  has  decreased  over  the  years,  by  3.9% 

between  2007  and  2020.  This  might  indicate  a  decreasing trend  in  energy  costs  shares,  similar  to  the 

industry  and  construction  sectors,  in  the  services  sector  although  many  other  factors  need  to  be 

considered before such conclusion can be drawn, such as energy prices and production costs other than 

energy cost.  

184 Based on Eurostat (2022). Energy statistics – an overview.  

176 

 
 
 
 
 
 
 
 
 
 
 
                                                      
6.4 

Energy costs for industry  

In this section, results of the analysis on energy cost shares across sectors is presented, followed by the 

share of gross operating surpluses (GOSs) with respect to the total operational production costs. 

6.4.1 

Methodology 

Energy costs are analysed with respect to total operational production costs. A top-down approach using 

aggregated  statistical  data  is  combined  with  a  bottom-up  approach  collecting  plant  data  with 

questionnaires to provide a comprehensive idea of the importance of energy prices and costs for the EU 

industries. The aggregated statistical data is useful for understanding long-term trends, although it fails 

to  capture  the  diversity  of  the  subsectors  contained  in  it,  with  different  products  and  production 

processes. Plant-level data better captures the characteristics of their subsectors even if it is difficult to 

obtain, especially a sufficiently representative sample that properly replicates the structure and general 

characteristics of a subsector.  

The  analysis  of  energy  costs focuses  on  manufacturing  sectors  but  also  includes  relevant  sectors  from 

agriculture, extractive industries and services. Table 5 provides an overview of the manufacturing sectors 

(NACE code C) covered in the analysis and Table 6 provides an overview of the other relevant sectors. In 

total, 43 sectors were analysed with aggregated statistical data185. The current report focused on the 

EU energy intensive industry sectors with the highest energy costs shares and levels of international 

competitiveness pressure. Table 5 also shows which subsectors were analysed with plant-level data in 

Section 6.2: the sectors Aluminium, Ferro-alloys, and Zinc provided data for a representative plant level 

analysis; while the Ceramics, Fertiliser, and Hollow/container glass provided data for a limited analysis, 

but insufficient to be representative of their sectors. The sectors Basic chemicals, Cement, Copper, Flat 

glass, Iron and steel, Mineral wool, Paper and Refineries were also contacted but did not provide any 

data. 

Table 12: Coverage of sectors in the manufacturing sector 

Sectors analysed with aggregated statistical data 
NACE 
code 

Sector description 

Sectors analysed with plant level data 
NACE 
code 

Sector description 

C103 

C106  

C11 
C132  
C161  
C171  

C172 

C192  

C201  

C206  

C21 

C222 

Processing and preserving of fruit and 
vegetables 
Manufacture of grain mill products, 
starches and starch products 
Manufacture of beverages 
Weaving of textiles 
Sawmilling and planning of wood 
Manufacture of pulp, paper and paperboard 
Manufacture of articles of paper and 
paperboard 
Manufacture of refined petroleum products 
Manufacture of basic chemicals, fertilisers 
and nitrogen compounds, plastics and 
synthetic rubber in primary forms 
Manufacture of man-made fibres 
Manufacture of basic pharmaceutical 
products and pharmaceutical preparations 
Manufacture of plastics products 

C2015 

Manufacture of fertilisers and nitrogen 
compounds* 

185 These sectors are in line with those analysed in the 2020 and 2018 editions of the report, which were selected based on the 
importance of energy costs, their energy intensities, levels of trade exposure and economic relevance. 

177 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                      
Sectors analysed with plant level data 
Manufacture of hollow glass 
C2313 

C232, 
C233, 
C234 

Manufacture of Ceramics  

C2410 

C2442 
C2443 

Manufacture of basic iron and steel and of 
ferro-alloys* 
Aluminium production 
Lead, Zinc and tin production* 

C239 

C244  

C234  

C241  

C235  
C237  

Sectors analysed with aggregated statistical data 
Manufacture of glass and glass products 
C231  
Manufacture of refractory products 
C232  
Manufacture of clay building materials 
C233  
Manufacture of other porcelain and 
ceramic products 
Manufacture of cement, lime and plaster 
Cutting, shaping and finishing of stone 
Manufacture of abrasive products and non-
metallic mineral products n.e.c. 
Manufacture of basic iron and steel and of 
ferro-alloys 
Manufacture of basic precious and other 
non-ferrous metals 
Casting of metals 
Manufacture of fabricated metal products, 
except machinery and equipment 
Manufacture of computer, electronic and 
optical products 
Manufacture of electrical equipment 
Manufacture of machinery and equipment 
n.e.c. 
Manufacture of motor vehicles, trailers and 
semi-trailers 
Manufacture of other transport equipment 
Other manufacturing 
Repair and installation of machinery and 
equipment 

C30 
C32 

C245 

C29 

C27 

C33 

C28 

C26 

C25 

*The sectors analysed are a subsector of the NACE code mentioned. This is fertilisers for C2015, ferroalloys for 

C2410, and Zinc for C2443.  

Note: For the sectors listed in italics, i.e. hollow glass (container glass), fertilisers and Ceramics, only 3-4 plants 

responded to the questionnaire and only a limited analysis could be conducted. Results for Ceramics have even been 

grouped across several NACE 3-digit codes to be able to show some results while maintaining data confidentiality. The 

sectors Cement, Copper, Flat glass, Iron and steel, Mineral wool, Paper, and Refineries were also contacted but unable to 

provide data primarily due to circumstances related to the current energy crisis. Shaded sectors are the most energy-

intensive ones. 

Table 13: Coverage of non-manufacturing sectors 

NACE code 

Sector 

A 

B 

B06 

B07 

B08 

D35 

E38 

F 

G 

H49 

H51 

I 

J 

Agriculture, forestry and fishing 

Mining and quarrying 

Extraction of crude petroleum and natural gas 

Mining of metal ores 

Other mining and quarrying 

Electricity, gas, steam and air conditioning supply 

Waste collection, treatment and disposal activities; materials recovery 

Construction 

Wholesale and retail trade 

Land transport and transport via pipelines 

Air transport 

Accommodation and food service activities 

Information and communication 

178 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The main data source for the top-down analysis of the energy costs was Eurostat; other databases from 

international institutions and national statistics, as well as data from industry associations or paid sources 

have been used to complement it. 

Box 6-3 Overview of the data sources used for the analysis with aggregated statistical data  

The following data from Eurostat and other international institutions have been extracted for the 

analysis:186  

 

Eurostat SBS provides data on Number of Companies, Turnover, Production Value, Value 

added, Gross Operating Surplus, Total Purchases of Goods and Services, Personnel Costs, 

and Purchases of Energy products for EU countries, Norway, Switzerland, Iceland, Turkey; 

 

Eurostat Energy Balances provides data on Energy Consumption per fuel types in the sector 

of Agriculture, forestry and fishing, Construction, Mining and quarrying, Land transport and 

transport via pipelines and 2 manufacturing sectors (Manufacture of basic precious and 

other non-ferrous metals, Manufacture of machinery and equipment n.e.c.) for EU 

countries, Norway and Turkey; 

 

IEA World Energy Balances provides data on Energy Consumption per fuel types across 

several non-EU G20 countries; 

  Odyssee (by Enerdata) provides data on Energy Consumption per fuel types and on Value 

Added for several EU countries and Norway; 

  OECD’s SDBS database provides data on Number of Companies, Value Added, Gross 

Operating Surplus, Total Purchases of Goods and Services, Personnel Costs for several EU 

and non-EU G20 countries. 

The data from Eurostat and other international institutions have been complemented with data from 

the following national databases:187 

 

 

The US Bureau of Economic Analysis (BEA) provides data on Turnover, Value added and 

Personnel Costs for the United States; 

The National Institute of Statistics and Geography (INEGI) provides data on Number of 

companies, Personnel costs, Production value, Purchases of energy products, Purchases of 

goods and services and value added for Mexico; 

 

The Portal Site of Official Statistics of Japan (METI) provides data on Number of 

companies, Production value, Purchases of goods and services and Value added; 

  Other sources, such as the UK Department for Business, Energy and Industrial Strategy 

(BEIS), Statistics Netherlands (CBS Statline), the Federal Statistical Office of Germany 

(DESTATIS), the US Energy Information Administration (EIA), the National Bureau of 

Statistics of China (NBS), Energy information system – Mexico (SENER), Statistics Canada 

(STATCAN), the Statistical Office of Slovenia (SiStat), The Statistical Database STATcube 

of Statistics Austria, Statistics Finland, Statistics Estonia and Statistics Norway provide 

data on Energy Consumption per fuel types. 

Data from publicly available sources have been further complemented with the following sources: 

 

Data received from the Confederation of European Paper Industries (CEPI) provides data 

on Energy Consumption per fuel types in the Pulp and paper sector (NACE 3 level) of several 

EU Member States; 

186 Energy units have been converted to tonnes of oil equivalent (toe) using conversion coefficients from the Eurostat Energy Statistics 
Manual and calorific values from Commission Regulation No 601/2012. 
187 Where necessary, monetary values have been converted to Euros with the exchange rates of the European Central Bank  

179 

 
 
 
 
 
 
 
 
 
                                                      
 

IHS Markit’s database provides data on Turnover, Total Purchases of Goods and Services, 

Gross Operating Surplus, and Value Added for non-EU G20 countries, Norway, and 

Switzerland. 

In addition, we used the following assumptions: 

  Where energy costs (purchases of energy) data are unavailable, but energy consumption and 

price  data  are  available,  energy  costs  (purchases  of  energy)  are  calculated  as  energy 

consumption multiplied by prices. 

 

EU electricity and gas prices for each sector are estimated based on the prices per type of 

consumer  and  an  estimation  of  the  average  electricity  and  gas  consumption  for  a  typical 

consumer. The estimation of the average electricity and gas consumption is calculated as the 

ratio of the average energy consumption of a sector in the country and the average number of 

companies with more than 20 employees in a sector in that country. Based on the resulting 

average consumption, the sector is allocated to one of the consumption bands from Eurostat 

and the corresponding electricity and gas price. This is in line with the methodology from the 

previous iteration of this study. For coal prices, only prices including taxes have been updated. 

Updated coal prices excluding taxes were not available. 

 

Energy  consumption  is  calculated  by  dividing  the  energy  costs  with  energy  prices  per  fuel 

type. Where the energy cost per energy carrier type is not available, the historical average 

energy  mix  is  used  to  determine  the  weighted  average  energy  price  to  estimate  the  total 

energy consumption. 

6.4.2 

Energy cost shares 

The share of energy costs in the total production cost serves as an indicator of the impact that energy 

costs can have on the competitiveness of a sector. As explained in Section 6.3, energy cost shares are 

calculated by dividing the purchases of energy by total production costs.  

It  is  therefore  important  to  keep  in  mind  that  results  may  be  an  underestimation  of  the  impact  of 

energy costs, especially in industrial segments where there is a significant amount of consumption of 

self-produced  energy  and  use  of  waste  products  for  energy.  This  is  particularly  the  case  for  energy-

intensive  industries  such  as  chemicals,  non-ferrous  metals,  paper,  refineries  and  steel  sectors.  In 

addition,  the  aggregated  data  only  shows  the  sectoral  average;  with  highly  energy-intensive  primary 

producers are grouped together with producers of low energy-intensive secondary products. The analysis 

of  plant-level  data  in  Section  6.2  and  previous  editions  of  this  study  should  therefore  be  seen  as 

complementary to this analysis with aggregated statistical data for a more detailed insight in the impact 

of energy costs in highly energy-intensive industrial segments. 

Results 

Key takeaways:  

  Between  2010-2019,  energy  costs  for  the  selected  manufacturing  sectors  typically 
constituted between 1-10% of total production costs; although for several sectors the 
costs exceeded 10% (e.g. Cement, lime and plaster in all years, and for Pulp and paper 
and Clay building materials for some years). 

180 

 
 
 
 
 
 
 
 
 
 
 
  Between  2010-2019,  energy  cost  shares  fell  in  almost  every  manufacturing  sector, 
including energy intensive industries such as Iron and Steel, Cement, Lime and Plaster, 
and Clay Building Materials.  

  The  largest  percentage  point  decline  in  cost  share  can  be  observed  in the  Cement, 
Limes and plaster  sector, in which costs  fell from close  to 19%  in 2010 to 13.6%  in 
2019. For some sectors, such as Man-made fibres and Refractory products, there was 
a temporary increase in the energy costs share in 2016.  

  Of the non-manufacturing sectors studied, energy cost shares are particularly high in 
five  sectors, at  levels  comparable  to  or  even  higher than  the  cost  shares  of  energy 
intensive  manufacturing  sectors.  These  sectors  include  Land  transport  (39%),  Air 
transport  (27%),  Electricity,  gas  and  steam  (20%),  Mining  of  metal  ores  (18%),  and 
Other mining (8%).  

  Energy  cost  shares  declined  for  the  majority of  non-manufacturing sectors  studied, 

except Mining, Electricity, gas and steam generation, and Air transport. 

Table 7 summarises energy cost shares over time for all the sectors of the study. The table presents the 

changes over the period 2010-2019, 2010-2017, 2017-2019, as well as the average rate, and the maximum 

and minimum levels reached, to show the variability of cost shares over years. 

The results from Table 7 are depicted in Figure 9 for manufacturing sectors in the EU, which illustrates 

energy costs as a share of total production costs for the subsectors in NACE code C Manufacturing from 

2010 to 2019. The figure shows that: 

 

Energy  costs  typically  constituted  between  1-10%  of  total  (operational)  production  costs, 

although for several sectors, the costs exceeded 10% (e.g. Cement, Lime and plaster, as well as 

Pulp and paper and Clay building materials in some years); 

 

Energy costs for several energy intensive sectors exceeded 7% of their total production costs 

in at least one year. This applies to sectors including Pulp and Paper, Refineries,188 Man-made 

fibres,  Glass,  Clay  building  materials,  Cement,  Lime  and  plaster,  and  Iron  and  steel.  This 

indicates  that  these  sectors  are  most  sensitive  to  energy  prices,  and  cost  changes  and 

differentials; 

 

Energy costs typically constitute less than 3% of production costs among less energy intensive 

sectors,  and  are  therefore  a  relatively  minor  cost  component  for  most  businesses  in  these 

sectors.  Sectors  such  as  Fruit  and  vegetables,  Plastics  products,  Beverages,  Pharmaceutical 

products, and Fabricated metal products have energy cost shares between 1 and 3%. In several 

manufacturing sectors—Computer and electronics, Machinery and equipment, Motor Vehicles, 

Other Transport Equipment, Repair of machinery—energy costs do not exceed 1% of production 

costs; 

 

During  this  period,  energy  cost  shares  fell  in  almost  every  manufacturing  sector,  including 

energy intensive industries. The largest percentage point decline in cost share can be observed 

in  Cement,  limes  and  plaster,  in which  costs  fell from  18.9%  share  in  2010  to  13.6%  share  in 

2019. In some sectors, such as Man-made fibres and Refractory products, there was a temporary 

increase in the energy costs share in 2016.  

188 In contrast to the other manufacturing sectors with much better data availability, the value for Refineries is based on the average 
across four EU27 countries only. A large increase energy cost share in Greece in 2019 therefore leads to a large increase in the 
presented EU27 average value.  

181 

 
 
 
 
 
 
 
 
                                                      
 

In  several  manufacturing  sectors,  the  energy  cost  shares  started to  rise  from  2017  onwards 

after a continuous decline between 2010 and 2017. This is visible for the sectors such as Grain 

products, Articles of paper, Man-made fibres, Clay building materials, Porcelain and Ceramics, 

Cement, Lime and plaster, and Stone. 

 

For a few manufacturing sectors the energy cost shares increased between 2010 and 2019. 

The  highest  increase  was  observed  in  the  sector  of  Refineries,  where  the  energy  costs  share 

increased from 2.5% in 2010 to 7.9% in 2019189. In two sectors, Porcelain and Ceramics and Stone, 

the share of energy costs increased by less than 1%.  

The results of this analysis for non-manufacturing sectors are depicted in Figure 10. Energy cost shares 

are particularly high in five non-manufacturing sectors, at levels comparable to or even higher than 

the  cost  shares  of  energy  intensive  manufacturing  sectors.  These  sectors  include  Land  transport 

(39%), Air transport (27%), Electricity, gas and steam (20%), Mining of metal ores (18%), and Other 

mining  (8%).  Fuel  costs  are  clearly  important  drivers  of  production  costs  in  the  transport  and  energy 

generation  sectors,  and  mining  is  an  inherently  energy  intensive  activity.  Notably,  energy  cost  shares 

decreased in Land transport (-10%) and Mining of metal ores (-5%), but increased in Air transport (+2%) 

and Electricity, gas and steam (+2%). 

189 However, until 2018, the share of energy costs ranged between 2% and 4.3%. The significant jump in 2019 can be caused by the 
small data sample, as data were available for only four EU27 countries and the average value was driven by a large increase in energy 
costs in Greece. 

182 

 
 
 
 
 
 
 
 
                                                      
Table 14: Energy costs as shares of total production costs for all sectors studied, averaged across the EU27  

Manufacturing sectors  

(NACE C) 

2010  2011  2012  2013  2014  2015  2016  2017  2018  2019  Average  Max. level 

change  

change  

change  

change  

Absolute 

Absolute 

Absolute 

Relative 

2010-2019 

2010-2017 

2017-2019 

2010-2019 

C103 - Fruit and vegetables 

2.8% 

2.7% 

2.9% 

2.8% 

2.9%  2.5%  2.5%  2.3%  2.3%  2.3% 

2.6% 

C106 - Grain products 

4.1% 

3.9% 

3.9% 

3.9% 

4.0%  3.6%  3.1%  2.6%  2.9%  2.7% 

3.5% 

C132 - Textiles 

C161 - Sawmills 

3.4% 

2.5% 

2.6% 

2.3% 

2.2%  2.0%  2.1%  2.2%  1.9%  1.9% 

2.3% 

3.2% 

3.8% 

3.4% 

3.3% 

3.2%  3.0%  3.0%  2.9%  2.9%  2.9% 

3.2% 

2.9% 

4.1% 

3.4% 

3.8% 

C171 - Pulp and paper 

11.1%  11.1%  10.7%  10.0%  9.3%  8.6%  7.1%  6.8%  6.8%  6.7% 

8.8% 

11.1% 

C172 - Articles of paper 

2.9% 

2.6% 

2.8% 

2.9% 

2.5%  2.4%  2.1%  2.2%  2.8%  2.5% 

2.6% 

C192 - Refineries 

2.5% 

2.0% 

3.0% 

3.3% 

3.5%  3.4%  4.3%  3.6%  3.4%  8.1% 

3.7% 

C201 - Basic chemicals 

6.3% 

6.5% 

6.1% 

6.3% 

5.9%  5.8%  5.4%  4.7%  5.1%  4.5% 

5.7% 

C206 - Man-made fibres 

6.5% 

6.6% 

5.8% 

7.9% 

6.0%  5.9%  7.3%  5.1%  5.5%  5.0% 

6.2% 

C222 - Plastics products 

2.7% 

2.7% 

2.7% 

2.8% 

2.7%  2.5%  2.3%  2.2%  2.2%  2.2% 

2.5% 

C231 - Glass 

8.3% 

8.1% 

9.5% 

9.5% 

8.7%  8.1%  6.9%  6.4%  6.6%  5.9% 

7.8% 

C232 - Refractory products 

6.2% 

6.0% 

6.7% 

6.9% 

5.6%  5.7%  5.9%  4.9%  3.1%  4.6% 

5.6% 

2.9% 

8.1% 

6.5% 

7.9% 

2.8% 

9.5% 

6.9% 

C233 - Clay building materials 

12.2%  11.2%  12.5%  12.6%  11.7%  11.4%  9.9%  8.8%  8.6%  9.0% 

10.8% 

12.6% 

C234 - Porcelain and Ceramics  

4.9% 

5.3% 

5.6% 

5.6% 

4.9%  4.8%  4.7%  4.3%  4.7%  4.8% 

5.0% 

5.6% 

C235 - Cement, lime and plaster 

18.9%  20.1%  17.9%  17.7%  17.5%  16.0%  13.9%  12.8%  13.7%  13.4% 

16.2% 

20.1% 

C237 - Stone 

3.2% 

3.9% 

3.3% 

4.8% 

3.1%  3.7%  2.9%  3.5%  3.6%  3.7% 

3.6% 

C239 - Abrasive products 

4.5% 

4.4% 

4.7% 

4.6% 

5.3%  4.9%  4.9%  4.5%  4.2%  4.3% 

4.6% 

C241 - Iron and steel 

8.7% 

7.2% 

7.8% 

7.9% 

6.8%  7.1%  6.8%  6.2%  5.9%  6.1% 

7.1% 

C244 - Non-ferrous metals 

4.0% 

3.9% 

3.8% 

3.9% 

3.7%  3.7%  3.0%  3.1%  3.1%  3.0% 

3.5% 

C245 - Casting of metal 

6.0% 

5.5% 

5.6% 

5.5% 

5.5%  5.2%  5.0%  4.5%  4.3%  4.4% 

5.2% 

C11 - Beverages 

1.9% 

1.9% 

1.9% 

1.9% 

1.8%  1.8%  1.7%  1.4%  1.6%  1.7% 

1.8% 

C21 - Pharmaceutical products 

1.1% 

1.1% 

1.1% 

1.2% 

1.1%  1.1%  1.0%  0.9%  0.8%  0.9% 

1.0% 

C25 - Fabricated metal products 

2.0% 

1.8% 

1.9% 

2.0% 

1.9%  1.8%  1.7%  1.6%  1.6%  1.6% 

1.8% 

C26 - Computer and electronics 

0.6% 

0.7% 

0.7% 

0.7% 

0.6%  0.6%  0.6%  0.5%  0.6%  0.6% 

0.6% 

C27 - Electrical equipment 

1.0% 

1.0% 

1.0% 

1.0% 

1.1%  0.9%  0.8%  0.7%  0.7%  0.8% 

0.9% 

4.8% 

5.3% 

8.7% 

4.0% 

6.0% 

1.9% 

1.2% 

2.0% 

0.7% 

1.1% 

-0.5% 

-1.4% 

-1.6% 

-0.4% 

-4.4% 

-0.3% 

-0.5% 

-1.6% 

-1.3% 

-0.3% 

-4.4% 

-0.7% 

+5.5% 

+1.1% 

-1.9% 

-1.5% 

-0.5% 

-2.4% 

-1.6% 

-3.2% 

-0.1% 

-5.5% 

+0.5% 

-0.2% 

-2.6% 

-1.0% 

-1.6% 

-0.2% 

-0.3% 

-0.5% 

-0.1% 

-0.3% 

-1.6% 

-1.4% 

-0.5% 

-1.9% 

-1.3% 

-3.4% 

-0.6% 

-6.1% 

+0.3% 

+0.0% 

-2.5% 

-0.9% 

-1.5% 

-0.5% 

-0.2% 

-0.4% 

-0.1% 

-0.3% 

-0.0% 

+0.2% 

-0.3% 

-0.0% 

-0.1% 

+0.4% 

+4.4% 

-0.3% 

-0.1% 

+0.1% 

-0.5% 

-0.2% 

+0.2% 

+0.5% 

+0.6% 

+0.1% 

-0.2% 

-0.1% 

-0.1% 

-0.1% 

+0.3% 

-0.1% 

-0.0% 

+0.0% 

+0.0% 

-18.3% 

-34.1% 

-45.7% 

-11.5% 

-39.9% 

-12.0% 

+217.3% 

-29.8% 

-23.4% 

-16.9% 

-29.3% 

-25.2% 

-26.1% 

-2.0% 

-29.1% 

+15.0% 

-4.6% 

-29.9% 

-24.0% 

-26.4% 

-11.6% 

-24.0% 

-22.4% 

-8.2% 

-25.2% 

183 

 
 
 
 
 
 
Manufacturing sectors  

(NACE C) 

2010  2011  2012  2013  2014  2015  2016  2017  2018  2019  Average  Max. level 

change  

change  

change  

change  

Absolute 

Absolute 

Absolute 

Relative 

2010-2019 

2010-2017 

2017-2019 

2010-2019 

C28 - Machinery and equipment 

0.9% 

0.9% 

0.9% 

0.9% 

0.9%  0.8%  0.8%  0.7%  0.7%  0.7% 

0.8% 

C29 - Motor vehicles 

0.8% 

0.7% 

0.8% 

0.8% 

0.7%  0.7%  0.6%  0.6%  0.6%  0.6% 

0.7% 

C30 - Other transport equipment 

0.8% 

0.7% 

0.7% 

0.7% 

0.6%  0.6%  0.4%  0.4%  0.4%  0.4% 

0.6% 

C32 - Other manufacturing 

1.0% 

1.0% 

1.0% 

1.0% 

1.0%  0.9%  0.9%  0.8%  0.7%  0.7% 

0.9% 

C33 - Repair of machinery 

0.8% 

0.9% 

0.8% 

0.8% 

0.9%  0.8%  0.7%  0.7%  0.7%  0.7% 

0.8% 

Non-manufacturing sectors 

B - Mining and quarrying 

2.9% 

2.8% 

2.8% 

2.9% 

2.9%  3.0%  3.1%  5.1%  4.2%  4.7% 

3.4% 

B06 - Oil and gas 

0.1% 

0.1% 

0.1% 

0.1% 

0.1%  0.2%  0.2%  0.7%  0.5%  0.7% 

0.3% 

0.9% 

0.8% 

0.8% 

1.0% 

0.9% 

5.1% 

0.7% 

B07 - Mining of metal ores 

19.8%  20.7%  20.1%  19.7%  17.8%  18.4%  16.8%  17.1%  17.4%  15.3% 

18.3% 

20.7% 

B08 - Other mining 

7.7% 

8.5% 

8.7% 

8.9% 

8.1%  8.1%  7.3%  8.2%  8.3%  7.6% 

8.1% 

8.9% 

D35 - Electricity, gas and steam 

20.4%  22.2%  18.7%  17.5%  17.0%  17.0%  18.3%  18.7%  22.3%  22.6% 

19.5% 

22.6% 

E38 - Waste management 

1.6% 

1.6% 

1.8% 

2.0% 

2.1%  1.8%  1.5%  1.5%  1.5%  1.6% 

1.7% 

F - Construction 

1.2% 

1.3% 

1.2% 

1.2% 

1.2%  1.1%  1.1%  1.0%  1.0%  1.0% 

1.1% 

G - Wholesale and retail trade 

0.2% 

0.2% 

0.2% 

0.3% 

0.3%  0.3%  0.3%  0.2%  0.2%  0.2% 

0.2% 

2.1% 

1.3% 

0.3% 

H49 - Land transport 

43.8%  42.0%  39.5%  40.1%  41.0%  40.2%  38.9%  37.6%  35.2%  34.1% 

39.3% 

43.8% 

H51 - Air transport 

27.2%  26.9%  25.3%  24.6%  24.4%  24.9%  27.4%  29.6%  30.5%  29.2% 

27.0% 

30.5% 

I - Accommodation and restaurants 

J – Information and communication 

3.5% 

3.4% 

3.3% 

3.1% 

2.7%  2.5%  2.1%  2.2%  2.1%  2.1% 

2.7% 

0.3% 

0.4% 

0.5% 

0.5% 

0.5%  0.4%  0.3%  0.4%  0.4%  0.4% 

0.4% 

3.5% 

0.5% 

-0.3% 

-0.2% 

-0.4% 

-0.3% 

-0.1% 

+1.8% 

+0.6% 

-4.5% 

-0.1% 

+2.2% 

+0.0% 

-0.1% 

+0.0% 

-9.7% 

+2.0% 

-1.4% 

+0.1% 

-0.2% 

-0.2% 

-0.4% 

-0.3% 

-0.0% 

+2.2% 

+0.7% 

-2.7% 

+0.5% 

-1.7% 

-0.1% 

-0.2% 

-0.0% 

-6.1% 

+2.5% 

-1.3% 

+0.1% 

-0.0% 

+0.0% 

+0.0% 

-0.0% 

-0.0% 

-0.3% 

-0.0% 

-1.7% 

-0.7% 

+3.9% 

+0.1% 

+0.1% 

+0.0% 

-3.5% 

-0.4% 

-0.1% 

+0.0% 

-27.3% 

-28.7% 

-50.4% 

-29.0% 

-10.3% 

+64.3% 

+965.9% 

-22.6% 

-1.7% 

+10.5% 

+0.4% 

-12.5% 

+4.6% 

-22.1% 

+7.5% 

-40.4% 

+55.0% 

Note: Energy cost shares in total production costs are calculated as the average across EU27 countries for which data is available for all years between 2010 and 2019 to ensure 

comparability between years for each sector. Values may therefore deviate from the previous editions of this study if 2018 and/or 2019 data is not available for an EU27 country and 

therefore not included in the EU27 average value for that sector anymore. Data is available for at least half of the EU27 countries for all relevant sectors except Refineries (C192), Waste 

management (E38) and the service sectors (G, I and J), which is based on data and estimations for less than five EU27 countries. Agriculture (A) is not included in the table due to a lack of 

data. 

184 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 167: Average energy costs (as shares of production costs) for manufacturing sectors, averaged across the EU27 

Source: Own calculations based on data from Eurostat SBS 

185 

 
 
 
 
 
 
 
 
Figure 168: Average energy costs (as shares of production costs) for non-manufacturing sectors, averaged across the EU27 

Source: Own calculations based on data from Eurostat SBS and estimations based on national statistics 

186 

 
 
 
 
 
 
 
 
Energy costs and energy consumption mix in manufacturing sectors 

Energy costs are determined by energy prices and quantities of energy consumed for the production of 

products. In the short term, variations in energy prices are a strong driver for changes in energy costs in 

a sector. On the other hand, energy consumption tends to be more stable as it depends on more factors 

than just energy  prices, including consumption patterns, competitive  position, the  economic situation 

and energy efficiency. The energy consumption mix of a sector therefore serves as a good indicator 

on how price changes of each energy product could affect the energy costs of a sector. 

Figure 11 presents the average mix in type of energy carrier for each manufacturing sector in this study. 

This  figure  shows  the  relevance  of  different  energy  carriers  per  sector,  given  their  proportional 

contribution to total energy consumption, on average. The figure shows that: 

 

Electricity  and  natural  gas  are  the  most  consumed  energy  products  for  most  manufacturing 

sectors.  This  means  that  the  fluctuations  in  the  prices  of  these  energy  carriers  have  a  bigger 

influence on total energy costs than others; 

  Natural  gas  consumption  drives  energy  costs  in  particular  for  the  sectors  where  gas 

consumption ranges from 50% to more than 80% of total energy consumption; including Fruit 

and vegetables, Grain products, Beverages, Glass, Refractory Products, Clay Building Materials, 

and Porcelain and Ceramics; 

 

Electricity  consumption  is  particularly  dominant  in  the  sectors  Textiles,  Plastics  products, 

Stone, Non-ferrous metals, Computers and electronics, Electrical equipment, Motor vehicles 

and Other manufacturing, where electricity consumption represents at least 50% of total energy 

consumption;  

 

Coal  still  plays  a  major  role  in  the  manufacturing  of  Cement,  Lime  and  plaster,  Abrasive 

products, Iron and steel, and Casting of metals. In the case of the Iron and steel sector, coal is 

also used as a feedstock in iron ore reduction, not solely as an energy carrier; 

  Oil  plays  a  substantial  role  in  Refineries  and  in  the  manufacturing  of  Basic  chemicals  and 

Cement, Lime and plaster. In the Refineries and Basic chemicals sector, oil is largely used as a 

feedstock in the manufacturing of products, with waste and by-products being used for energy;  

 

“Other” energy carriers, particularly biomass, contribute significantly to energy consumption 

for select sectors including Sawmills (where it comprises 86% of the energy consumed), Pulp and 

paper (with 45%), Machinery and equipment (44%) and Stone (with 37%).  

It  is  important  to  note  that  the  mix  of  energy  carriers  can  vary  significantly  between  subsectors 

within each sector. For example, the natural gas consumption in Basic chemicals does not exceed 50% 

of the total energy consumption on average. However, the fertiliser sector, which is a subsector of basic 

chemicals, uses natural gas as its main fuel as well as feedstock for the production of ammonia. Price 

changes of natural gas would therefore have a large impact on the fertiliser sector. For a few energy-

intensive sectors for which data could be collected at plant level, this is further unpacked in Section 6.2. 

187 

 
 
 
 
 
 
 
 
Figure 169: Breakdown of consumption per energy carrier for manufacturing sectors, averages across available EU27 countries, 2010-2019 

Source: Own calculations based on data from Eurostat energy statistics and estimations based on national statistics 

Note: “other” mainly covers biomass and heat consumption 

188 

 
 
 
 
 
 
 
Dynamics of the energy costs shares in total production costs 

Changes in the shares of energy costs in production costs are the result of relative changes in energy costs 

and production costs. For instance, energy costs shares fall if energy costs decrease more than production 

costs  over  the  same  period.  Energy  costs  shares  also  drop  if  energy  costs  increase  less  than  total 

production costs.  

Table 8 shows the change of each of these two variables for each sector. The absolute values shown are 

not for the EU27 as a whole (as this data is unavailable), but only the sum of the EU27 countries for which 

energy and production cost data are available per sector. These sectors have been grouped in  Table 9 

based on the observed changes in energy and production in absolute terms (i.e. in million euros) between 

2010 and 2019. Note that energy and production costs vary on an annual basis, which is not captured in 

the two tables as it only compares 2019 with 2010. These annual variations for the energy and production 

costs combined can be observed in Table 7. 

The two tables show that the drop in energy cost shares in production costs observed in most sectors 

is strongly driven by the increase in production costs. For about half of the sectors (16 out of 33) with 

decreasing energy cost shares between 2010 and 2019, this is driven by the production costs increasing 

more than the energy costs. In four sectors, the decrease in energy cost shares is caused by energy costs 

dropping more than production costs. The decrease in energy cost shares in the remaining 13 sectors is 

the  result  of  an  increase  in  production  costs  accompanied  by  a  decrease  in  energy  costs,  which  by 

definition leads to a drop in energy cost shares.  

The tables further show that of the six of the nine sectors that experience a rise in energy cost shares 

is  caused  by  a  stronger  rise  in  energy  costs  compared  to  production  costs.  These  six  sectors  are 

Refineries, Electricity, gas and steam, Waste management, Wholesale and retail trade,  Air transport 

and Information and communication. For two sectors (Stone and Mining and quarrying), the energy costs 

fell less than the production costs.  The remaining sector (Oil and gas) shows an increase in energy 

costs combined with a decrease in production costs. 

189 

 
 
 
 
 
 
 
 
 
 
Table 15: Drivers of energy costs shares in total production costs, manufacturing and non-manufacturing sectors, averages across available EU27 countries, 2010-2019  

Manufacturing sectors 

C103 – Fruit and vegetables 

C106 – Grain products 

C132 – Textiles 

C161 – Sawmills 

C171 – Pulp and paper 

C172 – Articles of paper 

C192 – Refineries 

C201 – Basic chemicals 

C206 – Man-made fibres 

C222 – Plastics products 

C231 – Glass 

C232 – Refractory products 

C233 – Clay building materials 

C234 – Porcelain and Ceramics  

C235 – Cement, lime and plaster 

C237 – Stone 

C239 – Abrasive products 

C241 – Iron and steel 

C244 – Non-ferrous metals 

C245 – Casting of metal 

C11 – Beverages 

C21 – Pharmaceutical products 

C25 – Fabricated metal products 

C26 – Computer and electronics 

Changes in total values across the EU27 2010-2019 

Absolute Δ 

Relative Δ Energy 

Absolute Δ Total 

Relative Δ Total 

Energy costs (M€) 

costs (%) 

production costs (M€) 

production costs (%) 

Change in energy cost share 2010-2019  

(simple average) 

Absolute Δ energy costs vs. 

total production costs (% 

point) 

Relative Δ energy costs vs. 

total production costs (%) 

+130 

-38 

-209 

+108 

-2510 

+201 

+1430 

-2874 

-102 

+172 

-146 

-67 

-219 

+12 

-808 

-3 

-10 

-2440 

+310 

-389 

+288 

+66 

-237 

+55 

+10.6% 

-3.4% 

-48.1% 

+12.3% 

-34.7% 

+9.9% 

+253.6% 

-18.0% 

-25.8% 

+4.1% 

-5.1% 

-26.1% 

-12.7% 

+3.5% 

-28.3% 

-0.8% 

-1.2% 

-23.4% 

+10.2% 

-21.6% 

+17.1% 

+5.1% 

-3.3% 

+4.0% 

+35.5% 

+46.5% 

-4.4% 

+26.8% 

+8.7% 

+24.8% 

+11.5% 

+16.8% 

-3.1% 

+25.2% 

+34.1% 

-1.3% 

+18.0% 

+5.7% 

+1.2% 

-13.7% 

+3.6% 

+9.2% 

+44.9% 

+6.5% 

+32.4% 

+38.3% 

+24.6% 

+13.3% 

+15713 

+12668 

-551 

+7262 

+5656 

+17475 

+2536 

+42432 

-188 

+39454 

+11653 

-53 

+2539 

+382 

+187 

-1797 

+666 

+11065 

+34359 

+1948 

+29039 

+44428 

+85624 

+29371 

190 

-0.5% 

-1.4% 

-1.6% 

-0.4% 

-4.4% 

-0.3% 

+5.5% 

-1.9% 

-1.5% 

-0.5% 

-2.4% 

-1.6% 

-3.2% 

-0.1% 

-5.5% 

+0.5% 

-0.2% 

-2.6% 

-1.0% 

-1.6% 

-0.2% 

-0.3% 

-0.5% 

-0.1% 

-18.3% 

-34.1% 

-45.7% 

-11.5% 

-39.9% 

-12.0% 

+217.3% 

-29.8% 

-23.4% 

-16.9% 

-29.3% 

-25.2% 

-26.1% 

-2.0% 

-29.1% 

+15.0% 

-4.6% 

-29.9% 

-24.0% 

-26.4% 

-11.6% 

-24.0% 

-22.4% 

-8.2% 

 
 
 
 
 
 
Manufacturing sectors 

C27 – Electrical equipment 

C28 – Machinery and equipment 

C29 – Motor vehicles 

C30 – Other transport equipment 

C32 – Other manufacturing 

C33 – Repair of machinery 

Non-manufacturing sectors 

B – Mining and quarrying 

B06 – Oil and gas 

B07 – Mining of metal ores 

B08 – Other mining 

D35 – Electricity, gas and steam 

E38 – Waste management 

F – Construction 

G – Wholesale and retail trade 

H49 – Land transport 

H51 – Air transport 

I – Accommodation and 

restaurants 

J – Information and 

communication 

Changes in total values across the EU27 2010-2019 

Absolute Δ 

Relative Δ Energy 

Absolute Δ Total 

Relative Δ Total 

Energy costs (M€) 

costs (%) 

production costs (M€) 

production costs (%) 

Change in energy cost share 2010-2019  

(simple average) 

Absolute Δ energy costs vs. 

total production costs (% 

point) 

Relative Δ energy costs vs. 

total production costs (%) 

-160 

+310 

+834 

+5 

+20 

+65 

-505 

+62 

-9 

-121 

+7183 

+36 

+1155 

+15 

+5927 

+5735 

-36 

-6.9% 

+7.2% 

+16.9% 

+0.6% 

+2.7% 

+7.3% 

-15.5% 

+144.3% 

-11.5% 

-9.9% 

+24.8% 

+18.8% 

+8.8% 

+6.0% 

+3.6% 

+26.2% 

-8.2% 

+56491 

+216884 

+399994 

+121752 

+32967 

+22430 

-54972 

-50259 

+54 

-1329 

+18263 

+2125 

+267167 

+1474 

+123318 

+14062 

+24.5% 

+47.5% 

+63.9% 

+102.8% 

+44.7% 

+19.6% 

-48.6% 

-77.1% 

+14.4% 

-8.4% 

+12.9% 

+18.3% 

+24.3% 

+1.3% 

+32.9% 

+17.4% 

+6691 

+54.0% 

+95 

+116.6% 

+11948 

+39.8% 

-0.3% 

-0.3% 

-0.2% 

-0.4% 

-0.3% 

-0.1% 

+1.8% 

+0.6% 

-4.5% 

-0.1% 

+2.2% 

+0.0% 

-0.1% 

+0.0% 

-9.7% 

+2.0% 

-1.4% 

+0.1% 

-25.2% 

-27.3% 

-28.7% 

-50.4% 

-29.0% 

-10.3% 

+64.3% 

+965.9% 

-22.6% 

-1.7% 

+10.5% 

+0.4% 

-12.5% 

+4.6% 

-22.1% 

+7.5% 

-40.4% 

+55.0% 

Note: Agriculture (A) is not included in the table due to a lack of data. The absolute Δ energy costs as a share of total production costs (% point) shows the change in the energy cost 

shares between 2010 and 2019 as presented in Table 7. The relative Δ energy costs as a share of total production costs (%) is the percentage change in the energy cost share as presented in 

Table 7 in 2019 compared to 2010.  

191 

 
 
 
 
 
 
 
 
 
 
 
 
 
Table 16: Categorisation of sectors according to changes in energy and production costs, 2010–2019 

Reduced energy costs  

Increased energy costs 

(2010-2019) 

(2010-2019)  

Reduced production costs 

(2010-2019) 

Increased production costs 

(2010-2019) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C132 – Textiles 

C206 – Man-made fibres 

C232 – Refractory products 

C237 – Stone 

B – Mining and quarrying 

B08 – Other mining 

C106 – Grain products 

C171 – Pulp and paper 

C201 – Basic chemicals 

C231 – Glass 

C233 – Clay building materials 

C235 – Cement, lime and 

plaster 

C239 – Abrasive products 

C241 – Iron and steel 

C245 – Casting of metal 

C25 – Fabricated metal 

products 

C27 – Electrical equipment 

B07 – Mining of metal ores 

I – Accommodation and 

restaurants 

 

B06 – Oil and gas 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C103 – Fruit and vegetables 

C161 – Sawmills 

C172 – Articles of paper 

C192 – Refineries 

C222 – Plastics products 

C234 – Porcelain and Ceramics  

C244 – Non-ferrous metals 

C11 – Beverages 

C21 – Pharmaceutical products 

C26 – Computer and electronics 

C28 – Machinery and equipment 

C29 – Motor vehicles 

C30 – Other transport equipment 

C32 – Other manufacturing 

C33 – Repair of machinery 

D35 – Electricity, gas and steam 

E38 – Waste management 

F – Construction 

G – Wholesale and retail trade 

H49 – Land transport 

H51 – Air transport 

J – Information and 

communication 

Note: sectors in bold and italic show an increase in the share of energy costs in production costs between 2010 and 

2019. The other sectors show a decrease in energy cost shares. In combination with the quadrant that they are a part of, 

this provides an indication of the drivers for the change in energy costs. For example, in the Refineries sector, the energy 

cost rose more than production costs, resulting in an increase in the share of energy costs in production costs. For the 

Cement, lime and plaster sector, the decrease in energy costs was more than the decrease in production costs, resulting in 

an overall decrease of the share of energy costs in production costs.  

6.4.3 

Gross Operating Surpluses shares  

The profit margins that can be achieved drive the competitiveness of industries. In the short term, profit 

margins determine the flexibility companies have in their pricing strategy and their competitive position. 

In the long term, achievable profit margins are fundamental in attracting investment.  

192 

 
 
 
 
 
 
 
 
 
Statistics for profit margins are not publicly available. Therefore, data on Gross Operating Surplus (GOS), 

which can be found in Eurostat, is used as a proxy for profit.190 The GOS of the sectors in this study 

are analysed with respect to total operational production costs, using the following formula: 

𝐺𝑂𝑆 𝑎𝑠 𝑎 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑡𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑐𝑜𝑠𝑡𝑠 =  

𝐺𝑟𝑜𝑠𝑠 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑆𝑢𝑟𝑝𝑙𝑢𝑠
𝑃𝑒𝑟𝑠𝑜𝑛𝑛𝑒𝑙 𝑐𝑜𝑠𝑡𝑠 +  𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑎𝑛𝑑 𝑠𝑒𝑟𝑣𝑖𝑐𝑒𝑠

Results 

Key takeaways:  

  Most EU sectors studied maintained an average gross operation surplus (GOS) share 

between 5-15%, similar as observed in the previous editions of this study. 

  The Pharmaceuticals and Cement sectors maintained the highest GOSs as shares of 
production costs, on average 22% and 23% respectively. The Non-ferrous metals and 
Iron and steel sectors maintained the lowest GOSs as shares of production costs, on 
average 7.6% and 4% respectively over 2010–2019. Notably, the GOS share of the Iron 
and steel sector was even close to 0% in 2011-2012. 
In the recent years, increasing numbers of sectors show a decrease in their GOS. Since 
2017, the GOS declined for most of the sectors (23), while in the period of 2010-2017 
only 10 sectors recorded a fall in their GOS. The largest decline in the GOS between 
2017 and 2019 can be  found in the  Iron and steel  sector (-90%), followed by Man-
made fibres (-29%) and Basic chemicals (-22%). 

 

  The  non-manufacturing  sectors  studied  maintain  their  GOS  on  par  with  their 
manufacturing counterparts, on average between 5-20%. The only exceptions are Oil 
and gas (up to 140%) and Mining of metal ores sectors (up to 90%), which maintained 
much higher GOSs than manufacturing sectors on average. 

Figure 12 presents the average GOS as a share of total production costs across EU27 countries for which 

data for all years between 2010 and 2019 is available. The analysis indicates that:   

  Most EU sectors maintained an average GOS share between 5-15%, similar as observed in the 

previous editions of this study; 

 

 

The Pharmaceuticals and Cement sectors maintained the highest GOSs as shares of production 

costs, on average 22% and 23% respectively; 

The Non-ferrous metals and Iron and steel sectors maintained the lowest GOSs as shares of 

production costs, on average 7.6% and 4% respectively over 2010–2019. Notably, the GOS share 

of the Iron and steel sector was even close to 0% in 2011-2012; 

 

Between 2010-2019, the GOS increased in 13 sectors, especially in Clay building materials (47%); 

Textiles (40%) and Casting of metal (34%); 

  On the other hand, the GOS decreased significantly during the same period in Man-made fibres 

(-59%) and Iron and steel (-80%); in both cases, this trend can be explained by the decrease in 

the absolute values of the GOS; 

 

In  the  recent  years,  the  numbers  of  sectors  that  show  a  decrease  in  their  GOS  have 

increased.  Since  2017, the GOS  declined  for  most  of the sectors  (23), while  in the period  of 

2010-2017 only 10 sectors recorded a fall in their GOS. The largest decline in the GOS between 

190 The key difference is that the GOS does not take costs other than production costs, such as depreciation of capital, into account.  

193 

 
 
 
 
 
 
 
 
 
 
 
                                                      
2017 and 2019 can be found in Iron and steel (-90%), followed by Man-made fibres (-29%) 

and Basic chemicals (-22%). 

Figure 13 shows the GOS trends across non-manufacturing sectors, averaged across EU27 countries with 

available data between 2010 and 2019. The Oil and gas and Mining of metal ores sectors maintained 

much higher GOSs than manufacturing sectors on average. The GOS of the Mining sectors do show a 

decreasing trend until 2017 when the GOS start to rise again. This is the exact opposite trend that the 

energy-intensive  sectors  downstream  of  the  Oil  and  gas  and  Mining  sectors  exhibit,  which  include 

Refineries,  Basic  Chemicals,  Glass,  Iron  and  steel,  and  Non-ferrous  metals.  Other  non-manufacturing 

sectors maintain a GOS on par with their manufacturing counterparts, on average between 5-20%. 

194 

 
 
 
 
 
 
 
Figure 170: Gross operating surpluses as a percentage of total production costs for EU manufacturing sectors, averaged across EU27 countries with available data for 2010-2019 

Source: Own calculations based on Eurostat SBS 

Note: GOS shares in total production costs are calculated as the average across EU27 countries for which data is available for all years between 2010 and 2019 to ensure comparability 

between years for each sector. Values may therefore deviate from the previous editions of this study if 2018 and/or 2019 data is not available for an EU27 country and therefore not included 

in the EU27 average value for that sector anymore.  

195 

 
 
 
 
 
 
 
Figure 171: Gross operating surpluses as a percentage of total production costs for EU non-manufacturing sectors, averaged across EU27 countries with available data for 2010-
2019 

Source: Own calculations based on Eurostat SBS. 

Note: Agriculture (A) is not included in the graph due to a lack of data.  

196 

 
 
 
 
 
 
 
In the EU27, the average GOS of the manufacturing sectors in this study is approximately in the range of 

10-12% per year. However, there are large differences in the GOS as a percentage of production costs 

between Member States.  Figure 14 shows the  2010–2019 average  GOS broken down per EU27 country. 

Cyprus, Bulgaria, Ireland, Malta, Poland, Denmark, Latvia and Hungary have the highest GOSs with over 

14%.  Romania,  Czechia,  Slovenia  and  Lithuania  closely  follow  these.  The  lowest  GOSs  are  found  in 

Germany and France, both below 10%.  

Figure 172: Gross operating surplus as % of total production costs, average across all manufacturing sectors at 
Member State levels 

Source: Own calculations based on Eurostat SBS 

6.5 

Exploring energy intensities 

6.5.1 

Methodology 

The energy efficiency of production is another key indicator of the impact changes in energy prices and 

costs can have on sectors. This is generally expressed as the energy consumption divided by the volume 

of production. However, production volume data is recorded in different units, which does not allow for 

a direct comparison between sectors and comparable production volume data is not easily available. In 

this  study (and  its  previous  iterations),  the  energy  intensity  of  a  sector  expressed  as  a share  of  value 

added at factor costs (Gross Value Added — GVA) is therefore used as a proxy, i.e.: 

𝐸𝑛𝑒𝑟𝑔𝑦 𝑖𝑛𝑡𝑒𝑛𝑠𝑖𝑡𝑦 =  

𝐸𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 (𝑇𝑜𝑡𝑎𝑙)
𝑉𝑎𝑙𝑢𝑒 𝑎𝑑𝑑𝑒𝑑 (𝑎𝑡 𝑓𝑎𝑐𝑡𝑜𝑟 𝑐𝑜𝑠𝑡)

The energy intensity is not a direct measure of the physical energy efficiency of production, since the 

value added is subject to price effects and other factors. Changes in product prices due to a change in 

demand or exchange rates, or a change in personnel costs could affect the value added without these 

changes  necessarily  being  proportional  to  changes  in  production  volumes.  Nonetheless,  it  is  a 

commonly used approximation as production volume data is not comparable across sectors. 

6.5.2 

Results 

197 

 
 
 
 
 
 
 
 
 
 
 
 
 
Key takeaways:  

  Energy intensity (energy consumption/GVA191) varies considerably across the sectors 
studied, with the sectors Refineries, Iron and steel, Pulp and paper, Cement, Lime and 
plaster, and Basic chemicals among the most energy intensive sectors.  

  Of the most energy-intensive sectors studied, Iron and steel, Pulp and paper, Cement, 
Lime and plaster all show decreasing trend in energy intensity over the years. For Basic 
chemicals,  the  energy-intensity  has  been  relatively  stable.  The  energy  intensity  of 
Refineries is highly volatile with an increasing trend in the recent years. 

  The energy intensities of the sectors Refineries, Clay building materials and Iron and 
steel  are  most  volatile.  They  experienced  relative  large  changes  in  energy  intensity 
between 2014-2016 as their value added (at factor cost) periodically rose and fell. 
In  non-manufacturing,  energy  intensity  decreased  in  Land  transport,  but  remained 
relatively stable in Air transport and Electricity-gas. Amongst those with lower energy 
intensity, the results are mixed. 

 

Figure 15 presents the energy intensities of industrial manufacturing sectors in the EU. The figure shows 

that:  

 

The energy intensity varies considerably across sectors: 

o  Refineries, the Iron and steel sector, the Pulp and paper sector and the Cement, lime 

and plaster sector are the  most energy  intensive sectors. They  typically require more 

than 2 toe192 of energy consumption per thousand Euros of GVA; 

o  These are followed by the Basic chemicals sectors, which require around 1 toe of energy 

consumption per thousand Euros of GVA. 

o  Out of the 30 manufacturing sectors in this study, 12 have an energy intensity of <0.1 toe 

of energy consumption per thousand Euros GVA. 

 

The energy  intensities of the  Refineries, Clay building materials and Iron  and steel are most 

volatile. They experienced relatively large changes in energy intensity over the years as their 

value added (at factor cost) periodically rose and fell while the variation in energy consumption 

relatively limited; 

 

Fluctuations in value added that caused energy intensity volatility in these sectors can be 

attributed  to  multiple  causes:  in  the  Refineries  sector,  value  added  was  linked  to  unstable 

international oil price dynamics, particularly in 2014 with the sector in some countries having a 

negative GVA. In other sectors, value added was linked to decreased economic activity levels 

following the 2014 crisis in the EU.  

Figure 16 presents the energy intensities of non-manufacturing sectors in the EU. The highest intensities 

are consistently observed in Air transport, Electricity, gas and steam, and Land transport, reaching 

levels similar to the most energy-intensive manufacturing sectors with an energy intensity around 1 to 2 

toe of energy consumption per thousand Euros GVA. The energy intensity of Air transport and Electricity, 

gas and steam are relatively stable for most years, whereas the energy intensity in  Land transport has 

been constantly decreasing. The other sectors show a much lower energy intensity of <0.2 toe of energy 

consumption per thousand Euros GVA with a mixed trend.

191 Gross Value Added 
192 Toe = tons of oil equivalent. According to the international conventions, one ton of oil equivalent amounts for example in 1 616 kg 
of coal, 1 069 m³ of gas or 954 kg of gasoline. For electricity, 1 toe is worth 11.6 MWh. 

198 

 
 
 
 
 
 
 
 
                                                      
Figure 173: Energy intensities of manufacturing sectors, 2010-2019, averages over limited number of EU Member States with available data 

Source: Own calculations based on Eurostat SBS and national sources 

Note: the energy intensity for the sector C206 Man-made fibres could not be estimated for 2018 and 2019 due to a lack of data. Values deviate from the previous editions of this study 

due to improvements to the underlying statistical data and a correction to the data where values in the same graph in the previous edition of the study were shown for the wrong year. 

199 

 
 
 
 
 
 
 
 
Figure 174: Energy intensities of non-manufacturing sectors, 2010-2019, averages over limited number of EU Member States with available data 

Source: Own calculations based on Eurostat SBS, national sources 

Note: the energy intensity for the sector Mining of metal ores could not be estimated due to a lack of data. 

200 

 
 
 
 
 
 
 
6.6 

Energy costs drivers  

This section analyses the drivers of energy  cost changes in the EU27 and selected G20 countries via a 

decomposition  analysis  (LMDI  approach).  Furthermore,  the  section  discusses  how  energy  costs  shape 

industrial  production  costs  and  how  domestic  demand,  exports  and  imports  shape  trends  in  industrial 

output. 

Key takeaways:  

  Total industrial energy purchases in EU27 dropped by 1% between 2015 and 2019. The 
main  driver  was  the  improvement  in  energy  intensity  (-17%)  in  the  industries 
considered. While industrial output rose (12%) energy prices dropped (-1%). The total 
net  effect  of  these  changes  on  energy  costs  was  a  reduction  of  1%.  The  residual 
(unexplained) component of energy cost evolution amounts to 4%. 

  Energy costs vary across Member States and rise for various reasons, the most common 
being the rise in output. The level of energy costs improves for most energy-intensive 
sectors while non-energy intensive manufacturing sectors face higher energy costs in 
2015-2019. 

  Energy intensity  decreases  in  almost  all countries  and  is  the  main  driver of  overall 
energy cost reduction. Sectors facing rising energy prices are incentivized to increase 
the  electrification  of  their  final  energy  demand  and  to  achieve  greater  energy 
efficiency. 

  The  energy intensity of the  examined countries  improves,  but  not  to an extent  that 
would counterbalance the effect of rising energy prices and related industrial output.  
  The different impact of the price effect across industries is attributed to the (different) 
structure of the fuel mix, the changes in the fuel mix and/or the differentiated energy 
price policies implemented by each Member State for the different sectors. Moreover, 
the EU27 average energy price depends on how much each Member State contributes 
to total EU production. 

  The residual effect is found to be linked with different trends in energy cost evolution 
in different sectors: the highest reduction of energy costs was found in a non-energy 
intensive sector (Refractory products); and the doubling of energy costs in an energy-
intensive sector (Refineries). 

  Specifically  in  Greece,  the  residual  effect  plays  a  dominant  role.  Greece  faces  the 
highest energy cost increase in the EU27, together with Ireland and Portugal. This is 
indicative  of  important  data  discrepancies  and/or  fuel  switching  in  the  specific 
countries. 
In  selected  G20  countries,  namely  Brazil,  Canada,  China,  Russia,  Turkey,  the  United 
Kingdom, and the United States an increase in energy costs is recorded due to changes 
in price and output, while energy intensity improves slightly. 

 

 

  76% of total purchase of energy products for the sectors accessed come from China, 
which also registered the highest increase in energy costs due to rising energy prices 
and industrial output growth. 
In the EU27, the contribution of energy costs to total production costs is very small; it 
is  other  costs  that  bring  about  this  increase  in  energy  costs.  The  only  sector  where 
energy  costs  have  significant  contribution  to  total  production  costs  are  Refineries 
through the important increase in energy costs in 2015-2019. 

201 

 
 
 
 
 
 
 
 

In the EU27, Canada, Japan and the UK, output increases due to a surge in domestic 
demand while in the US output decreases due to higher imports.  

  Beverages, Pharmaceutical, Computer and electronic equipment and Other transport 
equipment  show  the  highest  increase  in  total  output  while  the  largest  decrease  in 
output  is  recorded  in  the  Textiles  and  in  the  Refineries  sectors,  driven  by  a  drop  in 
domestic demand (textiles) and in domestic and export demand (refineries). 

6.6.1 

Methodology  

First, we show how changes in energy prices, production, and energy intensity affect energy costs in key 

industries during the period 2015-2019 in the EU27 and selected G20 countries. We use the Logarithmic 

Mean Divisia index (LMDI) method to decompose the industrial energy costs and determine the drivers of 

energy costs. The decomposition of the energy costs concerns: 

1.  Output effect: Shows how changes in production levels affect the purchases of energy products 

for a given industry.  

2.  Energy intensity effect: Shows how changes in energy consumed per unit of output affects the 

purchases of energy products for a given industry.  

3.  Energy price effect: Shows how changes in cost per unit of energy affect the purchases of energy 

products for a given industry. 

4.  Residual effect: Shows the gap between the estimated energy cost of the industry (from the 

three  components  above)  and  the  purchases  of  energy  products  as  per  the  EUROSTAT  SBS 

database. 

In algebraic formulation, these are expressed as: 

𝐸𝑛𝑒𝑟𝑔𝑦 𝐶𝑜𝑠𝑡𝑖,𝑐 = 𝑂𝑢𝑡𝑝𝑢𝑡(𝑐2015)𝑖,𝑐 ∗

𝑇𝑜𝑡𝑎𝑙 𝑒𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛𝑖,𝑐
𝑂𝑢𝑡𝑝𝑢𝑡(𝑐2015)𝑖,𝑐

∗   𝐸𝑛𝑒𝑟𝑔𝑦 𝑃𝑟𝑖𝑐𝑒𝑖,𝑐 

Or 

𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 𝑜𝑓 𝑒𝑛𝑒𝑟𝑔𝑦 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠𝑖,𝑐

=   𝑂𝑢𝑡𝑝𝑢𝑡(𝑐2015)𝑖,𝑐 ∗

𝑇𝑜𝑡𝑎𝑙 𝑒𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛𝑖,𝑐
𝑂𝑢𝑡𝑝𝑢𝑡(𝑐2015)𝑖,𝑐

∗   𝐸𝑛𝑒𝑟𝑔𝑦 𝑃𝑟𝑖𝑐𝑒𝑖,𝑐 ∗ 𝑅𝑒𝑠𝑖𝑑𝑢𝑎𝑙𝑖,𝑐 

With 

𝐷(𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 𝑜𝑓 𝑒𝑛𝑒𝑟𝑔𝑦 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠𝑖,𝑐)

= 𝑂𝑢𝑡𝑝𝑢𝑡 𝑒𝑓𝑓𝑒𝑐𝑡𝑖,𝑐 + 𝐸𝑛𝑒𝑟𝑔𝑦 𝑖𝑛𝑡𝑒𝑛𝑠𝑖𝑡𝑦 𝑒𝑓𝑓𝑒𝑐𝑡𝑖,𝑐 + 𝐸𝑛𝑒𝑟𝑔𝑦 𝑝𝑟𝑖𝑐𝑒 𝑒𝑓𝑓𝑒𝑐𝑡𝑖,𝑐
+ 𝑅𝑒𝑠𝑖𝑑𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖,𝑐  

In particular, for energy consumption by sector and energy carrier, various methods were used to fill the 

data gaps. Table 10 shows data availability before and after filling the gaps. We note that data for Malta 

was largely not available, especially with regards to the purchase of energy products; thus no assessment 

for the factors shaping the energy costs in Malta was conducted. 

202 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 17: Data availability before and after filling techniques 

Total data points 

Data points with no gaps identified 

Data points assessed after filling techniques 

6.6.2 

Key assumptions 

# 

810 

76 

631 

Share 

100% 

9% 

78% 

The following section discusses the key assumptions taken for each of the four main components used in 

the decomposition analysis.  

Output effect  

We converted the industrial production into constant prices so as to proxy the physical output and remove 

price effects and in this way capture the output effect. To this end, we used the sectoral output deflators 

by  Eurostat  ([nama_10_a64]).  When  these  were  not  available,  we  used  the  GDP  deflator  growth  rate 

[nama_10_gdp].  For  countries  that  EUROSTAT  does  not  cover,  the  GDP  deflator  from  the  World  Bank 

({NY.GDP.DEFL. ZS}) was used. The sectoral output deflators from EUROSTAT were available in NACE 2-

digit level. In NACE 3-digit, the corresponding deflator of the aggregate sector (NACE-2 digit) was used. 

Energy intensity effect 

To  calculate  energy  intensity  we  divided  total  energy  consumption  (by  industry)  by  its  production  in 

constant 2015 prices. When the energy intensity of a Member State (and for all years) was not available, 

we used the EU27 average energy intensity. We estimated the average EU27 intensity using the energy 

intensities of the EU27 countries for which data was available. For non-EU27 countries, we did not use 

any filling technique, except for the UK, where we used the same methodology as in the EU27. To fill in 

data that was missing for total energy consumption, we estimated energy intensities, where possible. 

Table 18 Sectors and countries used for the calculation of the EU27 average energy intensity 

Code 

Description 

Countries 

Number of 

Member States 

Grain products 

AT, BE, DE, DK, FR, IT, PT, SE 

C106 

C132 

C161 

C201 

C206 

C232 

C233 

C234 

C235 

C237 

Textiles 

Sawmills 

C171 

Pulp and paper 

Basic chemicals 

Man-made fibres 

AT, BE, DE, FR, IT, PT, SE 

AT, BE, DE, DK, FR, IT, NL, PT, SE 

AT, BE, CZ, DE, DK, ES, FI, FR, IT, NL, PL, PT, 

SE, SK 

AT, BE, DE, DK, FR, IT, PT, SE 

AT, BE, DE, FR, IT, NL, PT, SE 

Refractory products 

AT, DE, FR, IT, PT, SE 

Clay building materials 

AT, BE, DE, DK, FR, IT, PT, SE 

Porcelain and ceramics 

AT, DE, DK, FR, IT, NL, PT, SE 

Cement, lime and plaster 

AT, BE, CY, DE, EL, ES, FR, HR, IT, PL, PT, SE 

Stone 

AT, BE, DE, DK, FR, IT, NL, PT, SE 

C241 

Iron and steel 

C244 

Non-ferrous metals 

AT, BE, BG, CZ, DE, EL, ES, FI, FR, HU, IE, IT, 

PL, PT, RO, SE, SI 

AT, BE, BG, CZ, DE, DK, EE, EL, ES, FI, FR, HU, 

IE, IT, NL, PL, PT, RO, SE, SI, SK 

203 

8 

7 

9 

14 

8 

8 

6 

8 

8 

12 

9 

17 

21 

 
 
 
 
 
 
 
 
 
 
 
Code 

Description 

Countries 

Number of 

Member States 

C192 

C231 

C103 

C11 

Refineries 

Glass 

BE, EL, HU, PL, PT 

AT, BE, DE, DK, FR, HR, IT, PL, PT, SE 

Fruit and vegetables 

AT, BE, DE, DK, FR, IT, PT, SE 

Beverages 

AT, BE, DE, DK, FI, FR, IT, NL, PT, SE, SI 

C172 

Articles of paper 

AT, BE, DE, DK, FR, IT, NL, PT, SE 

C21 

C222 

C239 

C245 

C25 

C26 

C27 

Pharmaceutical products 

AT, DE, DK, FI, FR, IT, PT, SI 

Plastics products 

Abrasive products 

Casting of metal 

AT, BE, DE, DK, FR, IT, NL, PT, SE 

AT, BE, DE, DK, FR, IT, NL, PT, SE 

AT, BE, DE, DK, FR, IT, NL, PT, SE 

Fabricated metal products 

AT, BE, DE, DK, FI, FR, IT, NL, PT, SE, SI 

Computer and electronics 

AT, BE, DE, DK, FI, FR, IT, NL, PT, SE, SI 

Electrical equipment 

AT, BE, DE, DK, FI, FR, IT, NL, PT, SE, SI 

C28 

Machinery and equipment 

AT, BE, BG, CY, DE, DK, EE, EL, ES, FI, FR, HR, 

HU, IE, IT, LT, NL, PL, PT, RO, SE, SI 

C29 

C30 

C32 

C33 

Motor vehicles 

AT, BE, DE, DK, FI, FR, IT, NL, PT, SE, SI 

Other transport equipment 

AT, BE, DE, DK, FI, FR, IT, NL, PT, SE 

Other manufacturing 

AT, BE, DE, DK, FI, FR, IT, PT, SE, SI 

Repair of machinery 

AT, BE, DE, DK, FI, FR, IT, PT, SE, SI 

5 

10 

8 

11 

9 

8 

9 

9 

9 

11 

11 

11 

22 

11 

10 

10 

10 

Energy price effect 

The average energy price for each sector within a given country was estimated based on the fuel mix and 

the price of fuels. For the latter we considered coal, light sulphur fuel oil, gas, and electricity. For missing 

data  on  fuel  mix  shares,  we  used  data  from  the  previous  or  following  year.  When  data  was  missing 

between years, we carried out a linear extrapolation of the fuel mix evolution. In case the fuel mix of a 

sector was missing in all years, we used the EU27 fuel mix of the corresponding sector. In the analysis, 

we used energy carrier prices including taxes and levies. For missing data points, the EU27 growth rate 

of the respective sectors was used. For the non-EU countries where prices including taxes and levies were 

not available, prices excluding taxes and levies were used. 

Residual effect 

The methodology for filling the data gaps uses a number of assumptions, which creates inconsistencies 

between the estimated and the actual energy costs. The data that serves as point of comparison against 

the estimated energy costs is EUROSTAT SBS data “purchases of energy products” ([sbs_na_ind_r2]). The 

residual effect is estimated as the difference between the estimated energy costs and the SBS data.  

In more detail, the residual effect captures: 

1. 

Inconsistencies between the SBS database and other databases used for the estimation of energy 

costs. (If no data was missing, this will be the only effect in the residual component); 

2.  Missing data, which leads to filling gap techniques, most notably the use of the EU27 averages; 

3.  Consideration of limited energy carriers for the energy price calculation, which also limits the 

ability to fully capture the fuel switching effect (e.g., towards bioenergy or other renewables). 

6.6.3 

Results  

204 

 
 
 
 
 
 
 
 
 
 
The following section first presents the result of the decomposition analysis of identified sectors at the 

EU27 and Member State level and the sector level. Analysis on G20 countries have also been carried out, 

but due to limited data availability, only few sectors have been included in the aggregate total industry 

sector. This is followed by the analysis on each of the four main components used in the decomposition 

analysis, in order to understand their impact on energy costs within EU27.  

Thereafter,  the  impact  of  energy  costs  on  total  production  cost  of  the  industries  within  EU27  is  also 

presented.  

Decomposition analysis of identified sectors 

EU27 and Member State results 

Figure  17  shows  how  the  output,  price,  energy  intensity  and  residual  effect  have  changed the  energy 

costs  in  a  total  of  selected  manufacturing  sectors  in  the  EU27  between  2015  and  2019.  The  total  EU 

industrial energy  purchases was reduced by 1% in 2019 from 2015 levels, despite the rise in industrial 

production.  The  energy  efficiency  effect  is  the  key  driver  of  energy  cost  reduction,  while  prices 

contribute  only  marginally.  The  residual  effect,  namely  the  unexplained  drivers,  plays  an  important, 

although not dominant role. 

Figure 175: Decomposition of the Total industry (sum of selected manufacturing sectors) energy costs in EU27 

between 2015-2019 

Table 12 presents the decomposition analysis in the aggregate industrial sector for each Member State. 

There is strong divergence in the energy cost evolution across Member States: energy costs decreased 

in  several  countries  such  as  Croatia,  Denmark,  Italy  and  Luxemburg,  while  increased  in  others,  like 

Greece, Cyprus, Romania and Lithuania. Energy intensity decreases across countries and is the main 

driver of overall energy cost reduction in most EU27 countries. Exceptions are Finland and Italy, where 

the  key  driver  of  energy  cost  reduction  are  falling  energy  prices,  as  well  as  Croatia,  Luxemburg  and 

Slovakia, where the key driver is the residual effect.  

205 

 
 
 
 
 
 
 
 
 
 
 
 
Energy costs are rising for various reasons in the different EU27 Member States. The most common reason 

is the output effect, which has increased between 2015-2019 for the sectors examined. In Bulgaria, the 

price  effect  is  the  key  driver,  while  in  Cyprus  and  Slovenia  the  price  and  output  effect  are  equally 

important.  

In Greece, the residual effect plays a dominant role. Greece faces the highest energy cost increase in 

the EU27, together with Ireland and Portugal, which is not explained by neither the price nor the output 

or energy efficiency effects. This is indicative of important data discrepancies and/or fuel switching in 

the specific countries. 

Table 19: Decomposition of the energy costs for Total industries (those available) by EU27 MS  

Price effect 

Output effect 

Energy intensity 

effect 

Residual effect 

Total effect 

(2015-2019) 

EU27 

AT 

BE 

BG 

CY 

CZ 

DE 

DK 

EE 

EL 

ES 

FI 

FR 

HR 

HU 

IE 

IT 

LT 

LU 

LV 

NL 

PL 

PT 

RO 

SE 

SI 

SK 

-1% 

-2% 

-4% 

18% 

52% 

9% 

4% 

-12% 

9% 

25% 

0% 

-20% 

1% 

3% 

9% 

-13% 

-21% 

4% 

28% 

-1% 

8% 

17% 

-24% 

20% 

4% 

20% 

5% 

12% 

14% 

7% 

11% 

53% 

19% 

10% 

11% 

13% 

20% 

14% 

3% 

18% 

10% 

11% 

14% 

11% 

22% 

8% 

25% 

6% 

19% 

16% 

23% 

13% 

19% 

13% 

-17% 

-4% 

-18% 

-14% 

-23% 

-10% 

-23% 

-14% 

-10% 

-28% 

-12% 

1% 

-21% 

-5% 

-20% 

-23% 

-14% 

-20% 

-14% 

-13% 

-4% 

-6% 

-17% 

-15% 

-12% 

-11% 

-3% 

4% 

-5% 

2% 

-12% 

-43% 

-11% 

8% 

-6% 

-5% 

69% 

3% 

3% 

-17% 

-34% 

-1% 

36% 

6% 

18% 

-40% 

6% 

-10% 

-13% 

26% 

7% 

-5% 

-18% 

-23% 

-1% 

3% 

-13% 

4% 

40% 

7% 

-1% 

-21% 

7% 

87% 

4% 

-13% 

-18% 

-26% 

-2% 

14% 

-19% 

23% 

-18% 

18% 

0% 

17% 

1% 

35% 

0% 

10% 

-8% 

Sector level results 

Table 13 presents the decomposition analysis for the assessed industrial sectors in the order of sectoral 

energy intensity. From the table, it is observed that: 

206 

 
 
 
 
 
 
 
 
  
 
 

The top five energy intensity sectors register a reduction in energy costs, i.e. in Manufacture 

of cement, Pulp and paper, Iron and steel, Plastics and Clay building materials sectors. This is 

driven by the price effect (Metals, Cement) and energy efficiency improvements (Manufacture 

of Basic chemicals, Fertilizers, Plastics sector). In non-energy intensive sectors, while energy 

intensity improves for most of them, the price and output effects push energy costs up. 

 

The different impact of the price effect across industries is attributed to the structure of the 

fuel mix, the changes in the fuel mix and/or the differentiated energy price policies by sector 

implemented by each Member State, especially since the analysis considers the energy prices 

after taxes and subsidies.  

 

Changes in the fuel mix affect the energy costs: the Stone sector mainly uses electricity whose 

price increases over the 2015-2019 period, while the Glass and glass products sector primarily 

consumes natural gas whose price falls. The share of coal increased in the fuel mix of the Basic 

iron and steel sector, which brings down the average energy price, since coal was cheaper than 

gas, electricity, and light fuel oil during this period.  

  Overall,  the  level  of  energy  costs  improves  for  most  energy-intensive  sectors  while  non-

energy intensive manufacturing sectors face higher energy costs in the 2015-2019 period.  

 

The residual effect is found to be linked to different trends in energy cost evolution for different 

sectors. 

o  The  Manufacturing  of  refractory  products,  a  non-energy  intensive  sector,  faces  the 

highest reduction in energy costs, attributed to the (unexplained) residual effect. This 

is attributed mainly to the results of Austria and Germany, the two countries with the 

largest sectoral share in the EU27. 

o 

Energy  costs  double  in  Refined  petroleum  products,  an  energy-intensive  sector. 

Likewise,  this  cannot  be  attributed  to  price,  output  or  energy  efficiency  effects. 

Rather, it is the residual effect that is driving this surge in energy costs, with a large 

number of missing data (for example the EU27 average is only assessed with data for 

AT, PT, EL, EE) or data inconsistencies.  

o  At the Member State level, the highest residual for this sector is recorded in Greece, 

which produces 48% of the Refinery products among the four producing Member States 

where data was available. This high residual is the outcome of the filling gap technique 

we applied, where we: i) kept the 2015 fuel mix stable to 2019 and ii) assumed that 

the energy intensity of the sector grows in line with the average EU27 energy intensity. 

Table 20: Decomposition analysis in energy costs in EU27 by sector (2015-2019) 

NACE Label 

Price 
effect 

Output 
effect 

Energy 
intensit
y effect 

Residual 
effect 

Total 
effect 
(2015-
2019) 

Energy 
Intensity 
(toe/ 
mn.€) 

-8% 

591.5 

-19% 

528.3 

-7% 

-16% 

-29% 

1% 

-5% 

5% 

-6% 

6% 

4% 

-4% 

-12% 

35% 

0% 

311.0 

NACE 
Code 

C235 

C171 

C241 

C201 

C233 

C231 

Manufacture of cement, lime 
and plaster 
Manufacture of pulp, paper and 
paperboard 
Manufacture of basic iron and 
steel and of ferro-alloys 
Manufacture of basic chemicals, 
fertilisers and nitrogen 
compounds, plastics and 
synthetic rubber in primary 
forms 
Manufacture of clay building 
materials 
Manufacture of glass and glass 
products 

5% 

6% 

-18% 

-5% 

-12% 

161.0 

-15% 

-8% 

15% 

21% 

-6% 

-11% 

2% 

-7% 

-4% 

-5% 

153.7 

121.1 

207 

 
 
 
 
 
 
 
NACE 
Code 

NACE Label 

C206 

C192 

C244 

C239 

C232 

C245 

C234 

C161 

C106 

C172 

C103 

C222 

C132 

C28 

C11 

C237 

C25 

C29 

C21 

C27 

C32 

C26 

C30 

C33 

T 

Manufacture of man-made 
fibres 
Manufacture of refined 
petroleum products 
Manufacture of basic precious 
and other non-ferrous metals 
Manufacture of abrasive 
products and non-metallic 
mineral products n.e.c. 
Manufacture of refractory 
products 
Casting of metals 
Manufacture of other porcelain 
and ceramic products 
Sawmilling and planing of wood 
Manufacture of grain mill 
products, starches and starch 
products 
Manufacture of articles of paper 
and paperboard 
Processing and preserving of 
Fruit and vegetables 
Manufacture of plastics 
products 
Weaving of textiles 
Manufacture of machinery and 
equipment n.e.c. 
Manufacture of Beverages 
Cutting, shaping and finishing of 
stone 
Manufacture of fabricated 
metal products, except 
machinery and equipment 
Manufacture of motor vehicles, 
trailers and semi-trailers 
Manufacture of basic 
pharmaceutical products and 
pharmaceutical preparations 
Manufacture of electrical 
equipment 
Other manufacturing 
Manufacture of computer, 
electronic and optical products 
Manufacture of other transport 
equipment 
Repair and installation of 
machinery and equipment 
Total 

Price 
effect 

Output 
effect 

Energy 
intensit
y effect 

Residual 
effect 

Total 
effect 
(2015-
2019) 

Energy 
Intensity 
(toe/ 
mn.€) 

-6% 

24% 

-9% 

19% 

-1% 

6% 

-9% 

107.2 

-19% 

177% 

200% 

106.4 

-34% 

5% 

0% 

30% 

-13% 

-4% 

-11% 

0% 

0% 

6% 

9% 

23% 

2% 

0% 

48% 

19% 

6% 

3% 

11% 

57% 

-3% 

-9% 

-5% 

-2% 

6% 

5% 

12% 

9% 

12% 

-2% 

15% 

13% 

10% 

-8% 

4% 

1% 

5% 

-1% 

1% 

-19% 

-13% 

-8% 

-23% 

4% 

-9% 

-7% 

-5% 

-30% 

-4% 

3% 

6% 

-46% 

-19% 

-7% 

15% 

-12% 

-59% 

30% 

11% 

-13% 

-24% 

4% 

13% 

12% 

-30% 

30% 

25% 

-62% 

10% 

26% 

29% 

32% 

11% 

47% 

-1% 

10% 

16% 

11% 

38% 

4% 

12% 

-27% 

-17% 

-30% 

-7% 

-27% 

-9% 

-23% 

-33% 

-21% 

-17% 

-27% 

4% 

1% 

-9% 

-24% 

-11% 

4% 

4% 

22% 

2% 

4% 

-7% 

3% 

9% 

11% 

4% 

0% 

3% 

2% 

1% 

4% 

-6% 

3% 

-1% 

78.5 

69.1 

66.1 

58.8 

56.6 

54.4 

47.3 

31.6 

31.3 

18.3 

18.2 

15.9 

13.9 

12.4 

11.0 

8.1 

5.6 

5.5 

5.4 

4.1 

4.0 

3.3 

42.4 

Energy intensity effect 

The  energy  intensity  effect  shows  the  effect  of  changes in  energy  consumed  per  unit of  output  into 

changes in purchases of energy products for a given industry.  

Energy intensity improves in all sectors except the following  sectors:  Manufacture of pulp and paper, 

Refractory,  and  Ceramic  products,  Casting  of  metals  and  Manufacture  of  motor  vehicles.  Energy 

intensity improvements are most notable for sectors that face higher energy price increases in the 

2015-2019 period. These are indeed the sectors that achieve a higher electrification of their final energy 

demand,  thus  moving  to  more  efficient  uses  of  energy.  The  results  shown  in  Figure  18  are  calculated 

using the change in energy intensity weighted with 2015 production for both for the years 2015 and 2019 

(no weights option) and the change in energy intensity weighted with actual production of the respective 

208 

 
 
 
 
 
 
 
 
years (with weight option). Changes in the location of production within the EU27 have only a marginal 

impact on the energy intensity effect by sector.  

Figure 176: The change in energy intensity for EU27 with and without weight options against actual production 

Energy price effect 

The energy price effect shows the effect of changes in cost per unit of energy into changes in purchases 

of energy products for a given industry. The average energy price effect depends on the change in the 

fuel mix and the fuel prices in each sector. Fuel prices incorporate differentiated taxes, subsidies and 

levies. In 2015-2019, the price of coal increased but remained significantly lower than the rest of 

the  energy  carriers  assessed.  In  the  same  period,  the  price  of  gas  decreased  while  that  of  fuel  oil 

increased. The price of electricity evolves differently across sectors in the Member States. In addition, 

sectoral prices differ because some sectors face higher electricity prices while others lower electricity 

prices due to dedicated policies for taxes and levies (electricity prices are after taxes and levies).  

On a sectoral level, the price effect is positive for non-energy intensive manufacturing industries and 

negative for energy intensive ones. The upward trend in the energy costs facing energy intensive sectors 

is not only the outcome of change in energy carrier prices, but also in the fuel mix.  Electrification of 

final energy demand is growing with the share of natural gas declining. This fuel shift is significant in 

the sectors that register the highest price effect (i.e., Processing of fruits and vegetables, Repair and 

installation  of  machinery).  Sectors  that  experience  a  decreasing  price  effect  are  consuming  less 

electricity, as for example the Manufacture of basic precious and other non-ferrous metals. However, 

the main driver in this specific sector is the decline in electricity prices in the 2015-2019 period, which 

is close to -7% for the average EU27. 

209 

 
 
 
 
 
 
 
 
 
 
Finally, the EU27 average energy price depends on how much each Member State contributes to total EU 

production.  To  capture  this,  we  calculated  the  average  energy  price  changes  weighted  with  2015 

production both for the years 2015 and 2019 (no weights option) and the average energy price growth 

weighted with the actual production of the respective years (with weight option). Figure 19 shows that, 

in fact, changes in the contribution of each Member State to the total EU production levels have little 

impact on the average energy prices. 

Figure 177: The change in energy price for EU27 with and without weight options against actual production 

Residual effect 

The residual effect captures the difference between the estimated energy costs and the data collected 

from  EUROSTAT  SBS  database. To better  understand  the  residual  term,  we  undertook  an  econometric 

estimation with panel data across sectors and Member States to determine the level of contribution of 

each component/coefficient to the estimated residual.  

Equation:  

𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒆 𝒐𝒇 𝒆𝒏𝒆𝒓𝒈𝒚 𝒑𝒓𝒐𝒅𝒖𝒄𝒕𝒔

=   𝑪𝟎 + 𝑪𝟏 ∗ 𝑬𝒏𝒆𝒓𝒈𝒚 𝑰𝒏𝒕𝒆𝒏𝒔𝒊𝒕𝒚 + 𝑪𝟐 ∗ 𝑬𝒏𝒆𝒓𝒈𝒚 𝑷𝒓𝒊𝒄𝒆 + 𝑪𝟑 ∗ 𝑷𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒐𝒏 + 𝑹𝒆𝒔𝒊𝒅𝒖𝒂𝒍 

The coefficients of the analysis can be interpreted as follows: 

 

 

𝑪𝟏: the % change of the purchase of the energy products driven from 1% change in energy 
intensity (ceteris paribus) 

𝑪𝟐: the % change of the purchase of the energy products driven from 1% change in energy price 
(ceteris paribus) 

210 

 
 
 
 
 
 
 
 
 
 
 
 
 

𝑪𝟑: the % change of the purchase of the energy products driven from 1% change in production 
(ceteris paribus) 

All variables are expressed in natural logarithms.  

Based on the difference between the estimated energy costs and the purchase  of energy products we 

expect that the coefficients of the regression will be <1. Full consistency between the estimated energy 

costs and the purchase of energy products from SBS would mean that all coefficients = 1.  

Overall, the estimated coefficient of the regression shows that 54% of the energy intensity, 34% of the 

energy  price,  and  77%  of  the  production  are  depicted  in  the  purchase  of  energy  products  from  SBS 

statistics (Table 14). For example, a 100% increase in the energy intensity (ceteris paribus) leads to a 54% 

increase in the purchase of energy products, so there is a 46% that remains unexplained. As expected, 

the production is the coefficient with the highest value – there was little need to apply filling techniques 

- followed by energy intensity and energy price. Energy price accounts for the largest deviation between 

the estimated energy costs and the purchase of energy products. 

Table 21: Results of the regression analysis with panel data across sectors and EU member states 

Energy Intensity 

Energy price 

Production 

G20 countries results 

Estimated Coefficient 

0.54 

0.34 

0.77 

95% statistically 

significant Interval 

(0.51, 0.57) 

(0.28, 0.39) 

(0.73, 0.80) 

Out  of  the  G20  countries,  the  analysis  focuses  on  Brazil,  Canada,  China,  Russia,  Turkey,  the  United 

Kingdom, and the United States. Only few sectors were included in the total industry sector, given the 

limited data availability. No filling techniques were used for the G20 country analysis, thus only sectors 

and  countries  with  complete datasets  were  considered.  To  this  end,  only  one  sector  was  assessed  for 

Brazil, Turkey and the United States, and two sectors for Russia.  

Overall,  an  increase  in  energy  costs  is  recorded,  driven by  the  price  and  output  effects.  The  energy 

intensity of the examined countries improves, but not to an extent that would counterbalance the effect 

of rising energy prices and related industrial output.  

211 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 178: Decomposition analysis of energy costs for G20 countries 

As shown in Table 15, trends in China are shaping the results given the country’s large contribution to 

the total assessed energy costs (China comprises 76% of total purchase of energy products for the sectors 

accessed). Moreover, China registered the highest increase in energy costs between 2015-2019, owing 

to rising energy prices and industrial output growth.  

Similarly, in the UK, output increase drives higher energy costs up. In the US, increasing energy intensity 

result in rising energy costs. Nevertheless, we note that due to the very limited data availability, results 

for the US (and Brazil) refer only to the  Manufacture of non-metallic minerals and Abrasive products. 

Finally, almost all assessed countries register an increase in output except Brazil and Russia (limited 

data availability). 

Table 22: Decomposition analysis for G20 countries (for those with available data) 

Country 

Price effect 

Output effect 

Brazil 

Canada 

China 

Russia 

Turkey 

United Kingdom 

United States 

-18% 

-10% 

55% 

10% 

-11% 

6% 

-4% 

-20% 

12% 

43% 

-6% 

23% 

17% 

4% 

Energy intensity 

Total effect (2015-

effect 

9% 

-4% 

-36% 

-10% 

-33% 

-13% 

8% 

2019) 

-29% 

-3% 

61% 

-6% 

-22% 

10% 

8% 

At sector level, all the Chinese industries assessed register an increase in energy purchases due to higher 

output and prices; in some cases, e.g., in the Manufacture of electrical equipment sector, energy costs 

doubled.  In  Canada,  most  assessed  sectors  register  lower  energy  purchases,  except  Plastics  and 

212 

 
 
 
 
 
 
 
 
 
 
 
Pharmaceuticals, which register important increases due the energy intensity effect and the energy price 

effect respectively.  

In  the  UK,  a  few  sectors  record  lower  energy  costs,  due to  energy  intensity  improvements,  while  the 

majority faces increased energy  costs due to an increase  in output coupled in some cases with higher 

energy prices. 

Table 23: Decomposition analysis for G20 countries by sector 

Country 

NACE code 

Price effect 

Output effect 

Energy intensity 

Total effect 

effect 

(2015-2019) 

Brazil 

Canada 

China 

Russia 

Turkey 

United Kingdom 

C239 

C192 

C11 

C21 

C222 

C239 

C25 

C26 

C27 

C28 

C30 

T 

C206 

C11 

C21 

C239 

C25 

C26 

C27 

C28 

C29 

T 

C239 

C28 

T 

C28 

C231 

C11 

C21 

C25 

C26 

C27 

C28 

C29 

C30 

-20% 

20% 

9% 

13% 

-2% 

14% 

6% 

-4% 

-4% 

13% 

13% 

12% 

44% 

38% 

56% 

32% 

36% 

42% 

55% 

43% 

44% 

43% 

4% 

-18% 

-6% 

23% 

45% 

11% 

18% 

16% 

26% 

8% 

8% 

10% 

31% 

-18% 

-20% 

-42% 

27% 

53% 

-14% 

-29% 

7% 

-17% 

-30% 

-12% 

-10% 

7% 

74% 

66% 

43% 

40% 

8% 

93% 

36% 

51% 

55% 

10% 

13% 

10% 

-11% 

-12% 

6% 

-3% 

0% 

15% 

10% 

-9% 

18% 

33% 

213 

9% 

-16% 

-10% 

-6% 

141% 

-27% 

-4% 

-22% 

-4% 

-25% 

-19% 

-4% 

-16% 

-55% 

-60% 

-48% 

12% 

20% 

-41% 

-15% 

-26% 

-36% 

-20% 

-1% 

-10% 

-33% 

-7% 

-5% 

-51% 

-12% 

-25% 

-34% 

-24% 

7% 

-21% 

-29% 

-15% 

-43% 

34% 

192% 

-26% 

-28% 

-19% 

-25% 

-43% 

-17% 

-3% 

35% 

57% 

62% 

27% 

89% 

69% 

106% 

64% 

70% 

61% 

-5% 

-6% 

-6% 

-22% 

26% 

13% 

-36% 

5% 

16% 

-15% 

-24% 

35% 

43% 

 
 
 
 
 
 
 
 
Country 

NACE code 

Price effect 

Output effect 

Energy intensity 

Total effect 

effect 

(2015-2019) 

C32 

T 

C239 

20% 

6% 

-4% 

16% 

17% 

4% 

-21% 

-13% 

8% 

15% 

10% 

8% 

United States 

6.6.4 

Impact of energy costs on total production costs  

This section presents the decomposition analysis for: 

1.   Total production costs of the EU27 industries, split in energy costs and other costs (labour and capital 

costs and purchases of intermediate products except energy); 

2.  Output using three main components of domestic demand, exports and/or imports. 

Decomposition analysis of total production costs 

Methodology 

This section focuses on the decomposition analysis of the production costs driven  by energy costs and 

other costs such as purchase of products (except energy), capital and labour costs.  

𝑇𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑐𝑜𝑠𝑡𝑠 = 𝑒𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑠𝑡𝑠 + 𝑜𝑡ℎ𝑒𝑟 𝑐𝑜𝑠𝑡𝑠 => 

∆(𝑡𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑐𝑜𝑠𝑡𝑠) =   ∆(𝑒𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑠𝑡𝑠) +   ∆(𝑜𝑡ℎ𝑒𝑟 𝑐𝑜𝑠𝑡𝑠) 

We used the EUROSTAT SBS to collect “Total purchases of products”, “purchases of energy products”, 

“personnel costs” and “gross operation surplus” data. Other costs comprise the “personnel costs”, “gross 

operation surplus” and “Total purchases of products” minus the “purchases of energy products”, while 

“purchases of energy products” data is used to represent energy costs. Total production costs are the 

summation  of  energy  costs  and  other  costs.  The  sector  level  that  has  been  used  for  the  analysis  are 

presented in Table 17. 

Table 24: Sector level of the production cost decomposition analysis in EU-27 (sorted by energy intensity) 

NACE 

code 

C17 

C24 

C20 

C23 

C19 

C16 

C10 

C22 

C13 

C28 

C11 

C25 

C29 

C21 

C27 

Description: 

Energy intensity (toe/M€) 

Pulp and Paper products 

Basic metals 

Chemical 

Non-metallic minerals 

Refineries 

Wood products 

Food products 

Rubber and plastic products 

Textiles 

Machinery and equipment n.e.c. 

Beverages 

Fabricated metal products 

Motor vehicles 

Pharmaceutical 

Electrical equipment 

214 

242 

199 

192 

175 

118 

55 

42 

21 

20 

19 

14 

12 

10 

7 

7 

 
 
 
 
 
 
 
 
 
 
 
NACE 

code 

C32 

C26 

C30 

C33 

T 

Description: 

Energy intensity (toe/M€) 

Other manufacturing 

Computer, electronic and optical equipment 

Other transport equipment 

Repair and installation of machinery and equipment 

Total Industries 

6 

6 

5 

4 

42 

Results 

The total industries results in Figure 21 shows that the contribution of energy costs to total 

production costs is very small and the increase is driven from other costs.  

Figure 179: Decomposition of total production costs for total industries in EU-27 

Figure 22 and Figure 23 show the share of energy costs in total production costs by industry. Figure 22 

shows the shares for the more disaggregated sectors analysed earlier in this section, whereas Figure 23 

shows the results in a more aggregated form for the sectors listed in Table 17. The analysis shows that: 

 

 

 

 

All  sectors  (except  Refineries)  show  a  decline  in  the  contribution  of  energy  costs  to  total 

production costs in the 2015 to 2019 period. 

The decline in the share of 2019 compared to 2015 is associated primarily with energy intensity 

improvements  and  secondly  with  the  decline  in  energy  prices.  The  Refineries  sector  is  an 

exception due to the doubling of energy costs in the 2015-2019 period. 

It is noteworthy that in energy intensive sectors the decline in the energy cost share is stronger 

than in non-energy intensive sectors. 

Among energy-intensive sectors, the Cement, lime, and plaster sector faces the highest energy 

costs.  

215 

 
 
 
 
 
 
 
 
 
 
 
 
Figure 180: Share of energy costs in total production costs in EU27 by the analysed NACE 2- and 3-digit sector 
(sorted by share 2019) 

Figure 181: Share of energy costs in total production costs in EU27 by NACE 2-digit sectors (sorted by share 
2019) 

216 

 
 
 
 
 
 
 
 
 
Table 18 presents the results from decomposition analysis of total production costs in EU27 by sector. For 

all sectors, the other cost effects dominate the energy costs effect. The only sector that energy costs 

have significant contribution to total production costs are Refineries through the significant increase in 

energy costs in the 2015-2019 period. 

Table 25: Results of the decomposition analysis in total production costs in EU-27 by sector 

NACE Code 

Description 

Total effect 

C10 

C11 

C13 

C16 

C17 

C19 

C20 

C21 

C22 

C23 

C24 

C25 

C26 

C27 

C28 

C29 

C30 

C32 

C33 

Food products 

Beverages 

Textiles 

Wood products 

Paper products 

Refineries 

Chemical 

Pharmaceutical 

Rubber and plastic products 

Non-metallic minerals 

Basic metals 

Fabricated metal products 

Computer, electronic and optical 

equipment 

Electrical equipment 

Machinery and equipment n.e.c. 

Motor vehicles 

Other transport equipment 

Other manufacturing 

Repair and installation of machinery 

and equipment 

16.9% 

19.1% 

1.9% 

9.8% 

10.7% 

27.9% 

11.4% 

35.8% 

15.1% 

17.6% 

15.6% 

18.3% 

10.5% 

18.3% 

22.8% 

19.6% 

54.8% 

30.2% 

12.6% 

Energy cost 

Other cost 

effect 

-0.11% 

0.14% 

-0.14% 

0.11% 

-0.40% 

5.02% 

-0.59% 

0.03% 

0.09% 

-0.40% 

-0.06% 

0.07% 

effect 

17.0% 

19.0% 

2.1% 

9.7% 

11.1% 

22.8% 

12.0% 

35.8% 

15.0% 

18.0% 

15.7% 

18.3% 

0.02% 

10.5% 

0.02% 

0.02% 

0.00% 

-0.04% 

0.01% 

18.3% 

22.8% 

19.6% 

54.8% 

30.2% 

0.02% 

12.6% 

Decomposition analysis of the output effect 

The output effect shows the effect of changes in production levels into changes in purchases of energy 

products for a given industry.  We also perform a decomposition analysis for the output effect that 

drives energy costs and identify whether the increase of output is associated with changes in domestic 

demand, exports and/or imports by sector. 

Methodology 

The calculation of domestic demand: 

Type for the decomposition analysis: 

𝐷𝑜𝑚𝑒𝑠𝑡𝑖𝑐 𝑑𝑒𝑚𝑎𝑛𝑑 = 𝑜𝑢𝑡𝑝𝑢𝑡 + 𝑖𝑚𝑝𝑜𝑟𝑡𝑠 − 𝑒𝑥𝑝𝑜𝑟𝑡𝑠 

𝑂𝑢𝑡𝑝𝑢𝑡 = 𝑑𝑜𝑚𝑒𝑠𝑡𝑖𝑐 𝑑𝑒𝑚𝑎𝑛𝑑 + 𝑒𝑥𝑝𝑜𝑟𝑡𝑠 − 𝑖𝑚𝑝𝑜𝑟𝑡𝑠 => 

∆(𝑜𝑢𝑡𝑝𝑢𝑡) =   ∆(𝑑𝑜𝑚𝑒𝑠𝑡𝑖𝑐 𝑑𝑒𝑚𝑎𝑛𝑑) +   ∆(𝑒𝑥𝑝𝑜𝑟𝑡𝑠) −   ∆(𝑖𝑚𝑝𝑜𝑟𝑡𝑠) 

The data collected was processed as follows: 

217 

 
 
 
 
 
 
 
 
 
 
 
1.  We converted data from national current prices to € using the exchange rates from the OECD 

database  

2.  We used sectoral level deflators (as in the previous section) to deflate prices into constant prices 

2015  

3.  We calculated EU 27 output data based on the data that was available per sector and country, 

removing any intra EU-trade (for countries where data was available193). 

Results 

Figure 24 presents the results of the decomposition analysis regarding the source of changes in output for 

the  aggregate  sectors  shown  in  Table  18.  The  EU27,  Canada,  Japan  and  the  UK  register  an  output 

increase  that  is  driven  by  domestic  demand  while  the  US  registers  an  output  decrease  driven  by 

higher imports.  

Figure 182: Decomposition analysis of output changes 

EU27 

Beverages, Pharmaceutical, Computer and electronic equipment and Other transport equipment sectors 

show the highest increase in total output, according to the available data. Domestic and export demand 

are driving this increase. The export effect is remarkable in the pharmaceuticals sector. On the contrary, 

the largest decrease in output is recorded in the Textiles and in the Refineries sectors, driven by a drop 

in domestic demand (textiles) and in domestic and export demand (refineries). 

193 Austria, Belgium, Czech Republic, Germany, Denmark, Estonia, Greece, Spain, Finland, France, Hungary, Ireland, Italy, 
Lithuania, Luxembourg, Latvia, Netherlands, Poland, Portugal, Sweden, Slovenia, Slovak Republic, Canada, Japan, United Kingdom, 
United States 

218 

 
 
 
 
 
 
 
 
 
 
 
                                                      
Table 26: Decomposition analysis results in EU27 for output 

NACECo

de 

Description 

Demand 

Export Effect 

Import effect 

effect (2015-

Domestic 

Total Output 

Effect 

2019) 

C10 

C11 

C13 

C16 

C17 

C19 

C20 

C21 

C22 

C23 

C24 

C25 

C26 

C27 

C28 

C29 

C30 

Food products 

Beverages 

Textiles 

Wood products 

Paper products 

Refineries 

Chemical 

Pharmaceutical 

Rubber and plastic products 

Non-metallic minerals 

Basic metals 

Fabricated metal products 

Computer, electronic and optical 

equipment 

Electrical equipment 

Machinery and equipment n.e.c. 

Motor vehicles 

Other transport equipment 

C31_32 

Furniture and other manufacturing 

G20 

-1% 

12% 

-4% 

-1% 

1% 

-1% 

-3% 

6% 

6% 

7% 

3% 

7% 

20% 

4% 

9% 

14% 

12% 

8% 

1% 

4% 

0% 

1% 

0% 

-1% 

5% 

26% 

2% 

0% 

2% 

0% 

10% 

4% 

2% 

-1% 

11% 

2% 

0% 

0% 

-1% 

-1% 

0% 

-1% 

-2% 

-14% 

-2% 

-1% 

-2% 

-1% 

-17% 

-7% 

-3% 

-4% 

-8% 

-5% 

1% 

16% 

-5% 

-1% 

1% 

-3% 

0% 

18% 

6% 

6% 

3% 

6% 

13% 

1% 

7% 

9% 

15% 

5% 

In Canada, most sectors assessed show an increase in output. The highest increase is registered in the 

Refineries,  Non-metallic  minerals  and  Computer  equipment  sectors  and  is  driven  primarily  by  the 

domestic  effect.  In  Japan,  sectors  related  with  the  production  of  motor  vehicles  (one  of  the  largest 

contributing sectors in total industrial output), such as Fabricated metal products, Machinery equipment 

and Motor vehicles, register output increases that are driven by domestic demand.  

The largest drop in output, seen in the Computer, electronic and optical equipment and Textiles sectors, 

is caused by changes in domestic demand. Similarly, in the UK changes in sectorial output occur mostly 

due to changes in domestic demand, with the exception of Basic metals and Electrical equipment. There, 

despite higher domestic demand, total output decreases.  

In the US, the largest reductions are recorded in the Beverages, Textiles and Chemicals sectors, driven 

primarily by domestic demand. 

219 

 
 
 
 
 
 
 
 
 
 
Table 27: Decomposition analysis results in G20 for output 

Country 

NACE 

Description 

Domestic 

Export 

Import 

Total 

Code 

Demand 

Effect 

effect 

Output 

C10 

C11 

C16 

C17 

C19 

C20 

C21 

C22 

C23 

C24 

C25 

C26 

C27 

C28 

C29 

C30 

Food products 

Beverages 

Wood products 

Paper products 

Refineries 

Chemical 

Pharmaceutical 

Rubber and plastic products 

Non-metallic minerals 

Basic metals 

Fabricated metal products 

Computer, electronic and optical 

equipment 

Electrical equipment 

Machinery and equipment n.e.c. 

Motor vehicles 

Other transport equipment 

C31_32 

Furniture and other manufacturing 

C10 

C11 

C13 

C16 

C17 

C19 

C20 

C21 

C22 

C23 

C24 

C25 

C26 

C27 

C28 

C29 

C30 

C10 

C13 

C16 

Food products 

Beverages 

Textiles 

Wood products 

Paper products 

Refineries 

Chemical 

Pharmaceutical 

Rubber and plastic products 

Non-metallic minerals 

Basic metals 

Fabricated metal products 

Computer, electronic and optical 

equipment 

Electrical equipment 

Machinery and equipment n.e.c. 

Motor vehicles 

Other transport equipment 

Food products 

Textiles 

Wood products 

220 

Canada 

Japan 

UK 

Effect 

6% 

5% 

8% 

6% 

15% 

7% 

21% 

6% 

11% 

0% 

7% 

22% 

17% 

9% 

11% 

16% 

12% 

3% 

-3% 

-9% 

1% 

3% 

0% 

-2% 

-2% 

5% 

0% 

4% 

11% 

-8% 

6% 

6% 

4% 

0% 

6% 

16% 

22% 

effect 

(2015-

2019) 

11% 

6% 

7% 

1% 

15% 

-1% 

3% 

4% 

15% 

3% 

11% 

12% 

9% 

10% 

0% 

11% 

8% 

3% 

-2% 

-8% 

3% 

3% 

4% 

0% 

-1% 

4% 

0% 

2% 

11% 

-9% 

5% 

7% 

3% 

-4% 

4% 

12% 

12% 

5% 

2% 

-1% 

-5% 

4% 

-5% 

5% 

2% 

2% 

1% 

3% 

1% 

6% 

8% 

-4% 

4% 

0% 

0% 

1% 

-1% 

0% 

0% 

1% 

3% 

3% 

-1% 

0% 

-2% 

-1% 

-2% 

0% 

2% 

0% 

0% 

3% 

1% 

1% 

-1% 

-1% 

1% 

0% 

-4% 

-4% 

-23% 

-4% 

2% 

2% 

0% 

-10% 

-14% 

-6% 

-7% 

-9% 

-4% 

0% 

0% 

2% 

2% 

1% 

3% 

-1% 

-1% 

0% 

1% 

0% 

0% 

0% 

-1% 

0% 

0% 

-4% 

-5% 

-6% 

-11% 

 
 
 
 
 
 
Country 

NACE 

Description 

Domestic 

Export 

Import 

Total 

Code 

Demand 

Effect 

effect 

Output 

Effect 

4% 

21% 

12% 

31% 

11% 

5% 

326% 

14% 

34% 

13% 

8% 

14% 

-11% 

6% 

-3% 

-7% 

-9% 

3% 

-4% 

7% 

-11% 

11% 

1% 

4% 

-2% 

1% 

-2% 

8% 

4% 

-1% 

-2% 

-1% 

effect 

(2015-

2019) 

5% 

17% 

3% 

26% 

5% 

3% 

-9% 

6% 

16% 

-3% 

7% 

14% 

4% 

2% 

-4% 

-11% 

-12% 

2% 

-5% 

9% 

-10% 

-2% 

-2% 

3% 

-2% 

0% 

-2% 

-3% 

-3% 

-2% 

-5% 

-5% 

2% 

5% 

6% 

-10% 

5% 

2% 

-48% 

1% 

-2% 

-9% 

-15% 

5% 

-11% 

-4% 

-287% 

-9% 

21% 

-39% 

9% 

13% 

9% 

25% 

14% 

0% 

-1% 

-3% 

-1% 

-1% 

4% 

0% 

1% 

-1% 

-1% 

-2% 

0% 

-2% 

-3% 

-4% 

0% 

-2% 

-1% 

-26% 

-14% 

-9% 

-10% 

-18% 

-1% 

-3% 

0% 

0% 

0% 

-1% 

1% 

-13% 

-3% 

-1% 

2% 

-1% 

3% 

-7% 

-4% 

0% 

-1% 

-3% 

C17 

C19 

C20 

C21 

C22 

C23 

C24 

C25 

C26 

C27 

C28 

C29 

C30 

Paper products 

Refineries 

Chemical 

Pharmaceutical 

Rubber and plastic products 

Non-metallic minerals 

Basic metals 

Fabricated metal products 

Computer, electronic and optical 

equipment 

Electrical equipment 

Machinery and equipment n.e.c. 

Motor vehicles 

Other transport equipment 

C31_32 

Furniture and other manufacturing 

C10 

C11 

C13 

C16 

C17 

C19 

C20 

C21 

C22 

C23 

C24 

C25 

C26 

C27 

C28 

C29 

C30 

Food products 

Beverages 

Textiles 

Wood products 

Paper products 

Refineries 

Chemical 

Pharmaceutical 

Rubber and plastic products 

Non-metallic minerals 

Basic metals 

Fabricated metal products 

Computer, electronic and optical 

equipment 

Electrical equipment 

Machinery and equipment n.e.c. 

Motor vehicles 

Other transport equipment 

C31_32 

Furniture and other manufacturing 

6.7 

International comparisons  

US 

This section compares indicators that can influence the international competitiveness of EU industry with 

regards to energy costs in relation to non-EU G20 countries plus Switzerland, Norway and Iceland. This 

221 

 
 
 
 
 
 
 
group of countries are the main trading partners of the EU27 as shown in Table 21. According to 2021 

figures, the US, China and the UK are the EU27’s primary trade partners.  

Table 28: EU27 trade in goods by partner (2021)  

Partner Extra EU-27 

Group 

Total Trade Value (bln EUR) 

Share (%) 

China 

US 

UK 

Switzerland 

Russia 

Turkey 

Norway 

Japan 

South Korea 

India 

Brazil 

Mexico 

Canada 

Saudi Arabia 

South Africa 

Australia 

Indonesia 

Argentina 

Iceland 

Other partners 

Source: DG TRADE, 2022.194 

G20 

G20 

G20 

Non-G20 

G20 

G20 

Non-G20 

G20 

G20 

G20 

G20 

G20 

G20 

G20 

G20 

G20 

G20 

G20 

Non-G20 

Non-G20 

696.1 

631.8 

430.5 

280.2 

251.6 

157.2 

131.2 

124.6 

107.3 

87.9 

66.8 

61.1 

60.7 

45.8 

44.1 

42.3 

24.7 

16.7 

6.9 

16.2% 

14.7% 

10.0% 

6.5% 

5.9% 

3.7% 

3.1% 

2.9% 

2.5% 

2.1% 

1.6% 

1.4% 

1.4% 

1.1% 

1.0% 

1.0% 

0.6% 

0.4% 

0.2% 

1031.9 

23.7% 

To understand the underlying reasons for energy costs differentials, the comparison is made for the shares 

of energy costs in production cost, the GOS as share of production costs and the energy intensity. This is 

only done for the manufacturing sectors. The risk of losing international competitiveness is considered 

limited in the non-manufacturing sectors as these sectors do not produce tradeable goods. As the data 

on energy costs and energy intensity are limited, the findings should be interpreted with caution.  

This  section  also  looks  at  the  international  differences  in  the  prices  of  energy  products,  which  are 

generally the main drivers of the energy costs in the short term and thereby of costs differentials. Hereby 

lies the focus on retail industrial prices for electricity and gas as these two energy carriers tend to be the 

most relevant for industrial energy costs.  

6.7.1 

EU energy costs vs other G20 countries  

The  comparison  of  the  shares  of  energy  costs  in  production  costs  between  EU  sectors  and  other  G20 

countries could give indications of the impact energy costs have on the international competitiveness of 

EU industries. Specific data on energy cost shares of non-EU G20 partners is scarce and therefore only a 

limited comparison could be made. Energy cost shares could only be depicted for trade partners where 

194 DG Trade (2022). EU27 trade in goods by partner (2021, excluding intra-EU trade). 

222 

 
 
 
 
 
 
 
 
 
 
                                                      
data on purchases of energy products, personnel costs and total purchases of goods and services were 

available. Where possible, gaps in data have been estimated using the methods described in Section 6.4.  

Figure 25 shows the energy costs shares of the most energy-intensive manufacturing sectors with available 

data.  Of  the  non-EU  G20  countries,  the  energy  cost  shares  could  only  be  calculated  or  estimated  for 

sectors in the United Kingdom, Norway, Turkey, the United States, Mexico, Korea and Japan based on 

data in one or more years between 2017 and 2019. For the other non-EU G20 countries, generally data 

was missing for energy consumption or energy prices, or both.  

Trends  in  energy  cost  shares  internationally  vary  per  sector,  with  the  results  broadly  similar  to  the 

previous edition of the study. Notably, across the most energy-intensive subsectors in Figure 25: 

  On  average,  the  EU27  has  energy  cost  shares  comparable  to  those  of  its  most  important 

international trade partner; 

 

Compared  to  the  main  trading  partners  with  sufficient  data  for  the  most  energy-intensive 

manufacturing sectors, the energy cost share of the EU27 is not the highest in any of the sectors. 

The EU27 does have a relatively high energy cost share in Pulp and paper and Non-ferrous metals 

compared to most other countries shown, and a relative low energy cost share in Refineries and 

Textiles. 

  Norway has the highest energy cost shares in the Iron and Steel and Non-ferrous metals sectors 

in  spite  of  lower  electricity  prices  than  the  EU’s,  due  to  their  relatively  higher  energy 

consumption; 

  Mexico has the highest energy costs shares in several sectors, most notably in the Pulp and paper 

and Textiles  

 

 

 

 

 

Turkey has the highest energy cost share in the Refineries sector, closely followed by Japan; 

Japan has the highest energy cost share in the Glass sector; 

The United States has by far the highest energy cost shares in the Basic chemicals and Cement, 

lime and plaster sectors; 

Korea has the highest energy costs shares in Clay building materials and Man-made fibres 

Japan, Turkey and the United States appear to have a (much) high energy cost share in the fossil 

fuel intensive sectors such as Refineries, Basic chemicals, Glass and Cement, lime and plaster 

compared to the EU27. This would imply that on average, these sectors in the EU27 would be 

less  affected  by  a  change  in  fossil  fuel  prices  compared  to  the  three  trading  partners.  It  is, 

however, important to note that this observation may not be valid for certain subsectors within 

the sector. Studies comparing the fuel costs in subsectors of e.g. Basic chemicals show that the 

average fuel costs in the EU27 is much higher than for the same subsector in the United States.195 

This would mean that these subsectors are actually more affected by changes in fossil fuel prices 

compared to their competitors the main trading countries.  

The energy cost shares in the less energy-intensive manufacturing sectors appear to show a similar trend 

for the EU27 as the most energy-intensive sectors, depicted in Figure 26. The EU27 energy cost shares 

are around the average of the group of countries shown for most sectors. None of the less energy-intensive 

manufacturing sectors has the highest or the lowest energy cost shares in relation to the production costs. 

In contrast, Mexico has the highest energy cost shares in five sectors (Grain products, Sawmills, Articles 

of paper, Porcelain and ceramics and Stone). In some sectors (Grain products, Sawmills, Porcelain and 

ceramics, Stone, Casting of metal), the energy costs shares for Mexico are between 5% and 10% which is 

195 JRC (2016). Production costs from energy intensive industries in the EU and third countries.  

223 

 
 
 
 
 
 
 
 
 
                                                      
around the EU27 average values for some of the energy-intensive sectors. Japan also  has significantly 

higher energy costs shares in several sectors compared to the EU27, which are Casting of metal, Computer 

and electronics, Fabricated metal products, Plastics products, Fruit and vegetables, Motor vehicles and 

Other manufacturing. 

It is important to note is that the sectors compared are made up of various subsectors, and the impact 

of energy costs in the production costs on a sector in a country is strongly influenced by the composition 

of the sector.  

224 

 
 
 
 
 
 
 
Figure 183: Energy cost shares in production costs of the most energy-intensive manufacturing sectors in the EU27 and main trading partners with available data, 2017-2019 
average 

Source: Own calculations based on Eurostat SBS, National data sources, IHS database, and OECD SISS database 

225 

 
 
 
 
 
 
 
 
Figure 184: Energy cost shares in production costs of the less energy-intensive manufacturing sectors in the EU27 and main trading partners with available data, 2017-2019 
average  

Source: Own calculations based on Eurostat SBS, National data sources, IHS database, and OECD SISS database 

226 

 
 
 
 
 
 
 
6.7.2 

Gross Operating Surpluses of EU sectors vs other G20  

A comparison of the EU27’s GOS share in the production costs across the main trading partners gives an 

indication of the profitability of the sectors and thus the competitive position.  Figure 27 provides the 

GOS share for the EU27 averaged across all manufacturing sectors compared to the average GOS share of 

the manufacturing sectors of the main trading partners for which data is available.196,197 

Figure 185: Gross Operating Surplus as a share of production costs, averaged across all available manufacturing 
sectors 

Source: Own calculations based on Eurostat SBS and IHS database. 

The results of the analysis show that the EU27 average profitability of between 10% and 15% is similar to 

that of Switzerland and Norway — both have direct access to the EU single market. This is lower than the 

EU’s main trading partners, which have an average GOS share between 15% and 25%. Saudi Arabia even 

has an average GOS share between 50% and 70%, which is largely driven by the high profitability of its 

Refineries and Basic chemicals sectors. Only China has a lower GOS share for its manufacturing sector 

between 5% and 10%, driven by the high costs in ‘Total purchases of goods and services’ across all sectors 

with available data.  

Overall, the average profitability in the EU manufacturing sectors is less volatile than in most of the G20 

countries. Australia, Brazil and China have seen a sliding GOS share since 2010 and in the recent years, a 

same trend can be observed for Japan, Korea, Mexico and the United Kingdom. Only the United States 

registers a continuously increasing GOS share. India and Saudi Arabia have the most volatile GOS share. 

For the other countries, the GOS share is remains roughly stable as in the EU27. 

6.7.3 

Energy intensity of EU sectors vs G20 countries 

Energy  efficiency  affects  its  international  competitiveness  of  companies  and  can  help  provide  more 

insight in drivers of energy cost shares. The more energy efficient a firm is, the lower its relative energy 

consumption  and  related  costs  compared  to  its  competitors.  By  comparing  energy  intensities  across 

sectors and countries, this provides an indication of the energy efficiency in these sectors and countries. 

This does come with the caveats as discussed in Section 6.5 with the energy intensity expressed as share 

of the GVA. In addition, international data on energy intensity is much more limited, especially for the 

196 In the previous edition of this study, the GOS was calculated as a % of GVA instead of production costs due to the absence of data 
on personnel costs (production costs = purchases of goods and services + personnel costs) In this study, the personnel costs have been 
calculated as the difference between the GVA and GOS as Eurostat defines the GOS as the value added minus personnel cost.  
197 Iceland is excluded from the figure due to insufficient data. 

227 

 
 
 
 
 
 
 
 
 
 
 
                                                      
recent years. The energy intensity for the international comparison has therefore been calculated as an 

average over 2010-2019 instead of 2017-2019 as with the other international comparisons. A comparison 

between the averages of 2010-2019 and 2017-2019 for the sectors and countries for which data is available 

reveals little difference. Nonetheless, these results should still be taken with caution. 

Figure  28  shows  the  energy  intensities  for  the  most  energy-intensive  manufacturing  sectors,  averaged 

over  time  in  the  EU27  and  main  trade  partners  for  which sufficient  data  is  sufficiently available.  The 

energy intensities of these manufacturing sectors varied considerably across countries with similar results 

as the previous edition of this study: 

 

 

 

 

 

In Pulp and Paper, the EU27’s average energy intensity is more than twice as high as the US, 

Japan and Korea’s due to higher energy consumption on average in EU plants; 

In Refineries and Cement, lime and plaster, the energy intensity for the EU27 is also higher than 

all of its international trade partners for which data was available; 

The EU27 has an average energy intensity that is lower than China, Japan and Russia for Basic 

Chemicals. For Man-made fibres, the EU27 energy intensity is also lower than China; 

The  EU27  has  by  far  the  lowest  intensity  levels  of  all  international  counterparts  in  Abrasive 

Products; 

In Iron and Steel and in Non-ferrous metal, the EU27 has higher intensity levels than Switzerland 

but lower levels than Norway due to higher energy consumption levels in Norway, can be partly 

attributable  to  the  distribution  of  upstream  and  downstream  manufacturing  processes  across 

these countries; 

 

In  Glass,  the  EU27  has  lower  energy  intensity  levels  than  Mexico  and  the  United  States,  but 

higher intensity than Norway and Canada. 

Figure 29 shows the comparison of energy intensities for the less energy-intensive manufacturing sectors. 

The figure shows that for many sectors there is no data available for comparison. For the sectors that 

have data for an international comparison, the EU27 has lower than average intensity levels. This is visible 

for the sectors Beverages, Sawmills, Pharmaceutical products, Fabricated metal products, Computer and 

electronics, Electrical equipment, Machinery and equipment, and Motor vehicles. 

228 

 
 
 
 
 
 
 
 
 
 
Figure 186: Energy intensities of the most energy-intensive manufacturing sectors in the EU27 and main trading partners with available data, 2010-2019 average  

Source: Own calculations based on IHS database and national sources  

Note: the energy intensity could not be calculated as an average of 2017-2019 as with the other international comparisons due to a lack of data.  

229 

 
 
 
 
 
 
 
 
 
Figure 187: Energy intensities of less energy-intensive manufacturing sectors in the EU27 and main trading partners with available data, 2010-2019 average  

Source: Own calculations based on IHS database and national sources 

Note: the energy intensity could not be calculated as an average of 2017-2019 as with the other international comparisons due to a lack of data.  

230 

 
 
 
 
 
 
 
6.7.4 

Industrial electricity prices: EU vs G20 countries  

Please refer to analysis in section 2.2.2.  

6.7.5 

Industrial gas prices: EU vs G20 countries  

Please refer to analysis in section 3.2.2.  

6.8 

Introduction to PPAs 

Key takeaways:  

  There  are  many  hedging  strategies  available  to  the  industry  against  energy  price 

volatility. 

  Successful  hedging  (that  essentially  leads  to  risk  reduction)  requires  transactions 

where the contracting parties involved have opposite risk profiles.  

  Power purchase agreements (PPAs) for electricity from renewable (RES) power plants 
are emerging as a significant tool for further developing investment in renewables and 
securing long term price stability for industries. 

  The majority of power projects are structured on power purchase agreements. 
  EU located industries steadily increased the use of RES-PPAs over the last 7 years: the 

 

EU RES PPA market has grown from 0.5GW in 2014 to 24W in 2021.  
In 2021, the PPA market grew by 8.8 GW. The key regions of RES PPA in EU are: i) Iberia 
(Solar), ii) Germany (Solar and Wind), Belgium and Luxembourg (Wind) and Nordics 
(Wind). 

Hedging is an agreement that sets energy prices to a predetermined level over a time period and secures 

the industry against the price volatility of energy carriers. It also allows to reduce risk and to develop an 

accurate  future  economic  outlook.  Hedging  can  be  carried  out  through  many  instruments  involving 

bilateral contracts (supplier of energy and industry) and/or access to a marketplace. Hedging through a 

marketplace  requires  cash  collateral  and  entails  certain  reporting  duties.  Successful  hedging  (that 

essentially  leads  to  risk  reduction)  requires  transactions  where  the  contracting  parties  involved  have 

opposite risk profiles. 

Although there are many hedging strategies, below we list the most common198 in the industry and power 

sectors:  i)  Hedging Tolling  Contracts,  ii)  Energy  forwards, iii)  Energy  futures:  Swaps:,  iv)  Contract  for 

Differences (CfDs), v) Spreads, vi) Options, vii) Structured power-purchase-agreements. The majority of 

the power projects are structured on power purchase agreements.  

Power purchase agreements (PPAs) for electricity from renewable energy sources (RES) are emerging as 

a  significant  tool  for  further  developing  investment  in  renewables.  A  PPA  is  a  traditional  financial 

instrument  to  qualify  an  investment  project  for  efficient  fundraising.  A  PPA  is  essentially  a  bilateral 

contract  for  economic  differences  (equivalent  to  a  two-ways  option)  with  a  strike  price  defining 

remuneration of electricity produced by the RES power plant. The bilateral contract applies for a period 

usually longer than one year and acts as a guarantee and source of future revenues for the investment 

project. Such a bilateral contract may also qualify for being directly dispatched in the power system, 

198 As identified by ACER (2015) , MONDAQ (2019) , Halkos (2019)  and McKinsey (2022) 

231 

 
 
 
 
 
 
 
 
 
                                                      
having  characteristics  similar  to  a  nomination  of  load  and  power  capacity  for  the  system  operator  to 

include in the dispatching schedule. It depends on regulatory rules whether a nomination based on a RES 

PPA is possible and for this purpose, usually, the PPA will have to associate balancing resources, such as 

storage  of  electricity  and  flexibility  resources  (gas-based  power  capacities,  hydropower,  etc.).  For 

example,  such  an  augmented  PPA,  i.e.,  "RES  PPA  plus  storage",  qualifies  for  direct  dispatching  as  it 

operates as a virtual dispatchable power plant.  

Depending on location, there are different types of PPAs, such as: 

• 

‘on-site’  (a  producer's  RES  plant  is  immediately  next  to  the  customer’s  plant  –  a  PV  system  on  a 

factory's roof), 

• 

‘near site direct wire’ (a RES plant is located nearby the customer and the power is transmitted over 

a dedicated direct line, 

•  classic  ‘off-site’  (energy  produced  in  a  RES  plant  is  transmitted  to  the  customer  over 

transmission/distribution lines of the grid operator). 

‘Off-site’ PPAs commonly take various forms such as ‘multi seller’ (several RES producers sell power to 

one customer based on one contract) or ‘multi buyer’ (opposite to the ‘multi seller’ – one producer sells 

power based on one contract with several customers). At the same time, there are ‘virtual’ PPAs, i.e., 

contracts  for  difference  signed  between  the  renewable  energy  producer  and  the  end  consumer.  The 

virtual PPA (also sometimes called a ‘synthetic’ PPA) is not a contract for supply to an end consumer but 

an agreement guaranteeing a fixed and stable power price in a long-term perspective.  

One type of Corporate PPA is a “sleeved” or “physical” PPA. This purchasing contract may be executed 

if the plant is located on the same grid network as the corporate off-take point or if the electricity is 

sleeved by the utility from the generation plant to the buyer. The sleeved or physical Corporate PPA is 

the  most  commonly  used  contractual  structure  in  some  countries  in  the  early  stages  of  PPA  market 

development.  Under  this  scheme,  the  corporate  buyer  simultaneously  enters  into  a  PPA  with  the 

developer and a back-to-back PPA with its incumbent utility. One characteristic of this type of Corporate 

PPA is that it requires the utility to physically deliver power to the relevant site, for the corporate buyer 

that  is  not  permitted  to  offtake  the  power  directly  under  local  electricity  supply  rules.  Instead,  the 

developer transfers the electricity to the utility, which will sleeve it through the grid to the corporate 

buyer. 

The  parties  may  also  agree  that  physical  delivery  is  not  required.  This  is  called  taking  a  “virtual”, 

“synthetic”  or  “financial”  approach.  Virtual  PPAs  are  financial  derivatives  (such  as  Contracts  for 

Difference), where generators and off-takers agree to a strike price that will be paid for each  unit of 

energy generated over an agreed period of time. The project sells the power to the open market, and 

the off-taker purchases power from the open market. If the market price rises above the strike price, 

then  the  developer  pays  the  difference  to  the  off  taker.  Conversely,  the  off  taker  compensates  the 

developer in the event that the market price falls below the strike price. Similar financial structures may 

be  created  through  the  use  of  call  options  and  put  options.  For  instance,  put  options  would  give  the 

developer  the  opportunity  to  buy  the  right  to  sell  the  generated  energy  at  a  certain  strike  price.  If 

wholesale power prices fall below the strike price, then the developer can exercise its option to sell the 

electricity at a higher strike price. 

232 

 
 
 
 
 
 
 
 
 
A PPA has at least two contractual parties, the seller (i.e., the investor) and the purchaser of electricity, 

the latter being an electricity supplier to customers, an aggregator of RES or an individual or group of 

customers. Obviously, there is interest to conclude a PPA primarily if a) the strike price is competitive in 

comparison to alternative sources of electricity and b) stable enough over time. A PPA acts as a source 

of  electricity  and  risk  management  instrument  hedging  against  the  variability  of  electricity  prices 

observed in spot markets. The cost certainty also depends on hedging against cost variability of balancing 

energy  and  ancillary  services.  Renewable  energy  sources  are,  by  their  nature,  variable  and  therefore 

need  significantly  higher  and  more  expensive  balancing  services  than  other  sources  of  electricity. 

Therefore, complex PPAs, such as the "RES PPA plus storage", become attractive when they effectively 

incorporate resources for self-balancing at a reasonable cost.  

The  RES-PPAs  enjoyed  a  demand-pull  recently.  They  are  attractive  to  large  corporate  electricity 

customers  who  see  significant  benefits,  both  economic  and  related  to  their  brand  reputation  and 

sustainability, in switching to renewable energy. The RES-PPAs exhibited a spectacular development in 

recent years driven by large corporations' demand and drove a new record for clean energy purchased by 

corporations worldwide. It is noteworthy that the international RE100 initiative, involving more than 280 

multinationals, with the common aim of transforming their consumption into 100% RES, already records 

315 TWh of green energy per year.  

A well-structured RES-PPA is beneficial to both parties: it ensures a steady stream of income for suppliers 

and provides price security that simplifies business planning for the buyer. Putting PPAs in place during 

the  development  phase  helps  investors  mitigate  risks  and  predict  long-term  income  streams  for  new 

projects,  making  the  project  more  attractive  to  investors  and  maximizing  the  chances  for  securing 

funding. 

The market for RES-PPAs is still at an early stage of development in Europe and is often opaque. It can 

be difficult for participants to tell whether the prices and terms they are being offered are as good as 

possible.  The  rapid  pace  of  change  in  energy  markets  and  policy  can  make  planning  a  PPA  strategy 

difficult, with a variety of sometimes-unfamiliar risks to account for. At the same time, the RES investors 

face challenges during the current transition from security under support schemes to a more uncertain 

financial environment, depending on yet uncertain revenues from PPAs. Such conditions may lead to a 

market coordination failure unless public intervention helps participants mitigating short-term risks and 

uncertainties.  

A key question from a regulatory perspective is whether pure market forces are sufficient to drive the 

expansion of RES-PPAs, hence RES investment, at a fast pace as required for the energy transition. Would 

it be enough to put regulatory-driven enabling conditions in place, such as facilitation measures, non-

market barrier removals and arrangements for risk-hedging and protection of small players? On the other 

hand, would it be  necessary to include  direct support  measures, of financial and economic nature, at 

least in the early stages to push development effectively? 

To  enlighten  the  issue,  we  need  first  to  identify  current  barriers  impeding  development  of  RES-PPAs 

towards a mature free market. The barriers are differently depending on market and non-market factors, 

and challenges can be categorised as follows: 

 

Challenges in the new era 

233 

 
 
 
 
 
 
 
 
 
 

 

 

Structure and parameters of contracts 

Platforms and reliability 

Industry 

  More ambitious corporate goals 

 

 

 

 

Storage 

PPA for green gas 

Cross-border PPAs 

Risks associated with the PPA definition 

Each of these challenges are explored below. 

6.8.1 

Challenges in the new era  

The support schemes for RES projects are being transformed internationally, with the implementation of 

competitive procedures and the transition from guaranteed prices to revenues based on market prices. 

In several countries, the abolition of direct supports is already underway or implemented, reflecting the 

decline in costs, particularly mature technologies. It is typical that in RES auctions in Portugal, conducted 

in  August  2020,  the  lowest  price  in  the  world  so  far  was  11.14  EUR/MWh  for  the  photovoltaic  power 

station. 

The day-ahead markets experience under-pricing of total costs due, among others, to the increase in RES 

having  zero  marginal  costs.  Thus,  the  wholesale  market  revenues  are  not  enough  for  RES  investment 

seeking  capital  cost  recouping.  The  RES  projects  may  also  see  revenue  eroding  in  the  balancing  and 

ancillary services markets, as they are stochastic199 and cannot bid for such services. As there is more 

RES in the system, the lower are the revenue recouping possibilities (cannibalization effect). Under such 

conditions,  only  bilateral  electricity  purchase  contracts  can  allow  RES  investment  projects  to  achieve 

financial security and bankability.  

In Europe, bilateral contracts are expected to exceed 10 GW in 2021, according to a study by Pexapark, 

where investments in 2020 exceeded EUR 26 billion. Box 6-4 shows some recent examples of RES-PPAs. 

In addition, Aurora Energy Research estimates that photovoltaic projects that will not be subject to aid 

in France, Germany, Italy, Spain, Portugal, and the United Kingdom will produce more than 70 TWh per 

year by 2030. 

Contract prices are significantly heterogeneous between European countries, reflecting in particular the 

dynamics of wholesale prices, the structure and adjustment of the energy mix, the level of competition 

and liquidity of the markets, and financial risks. For example, in the 4th quarter of 2020, PPA prices for 

wind ranged from 30 EUR/MWh in Finland to 91 EUR /MWh in France, for photovoltaics from 31 EUR /MWh 

in Denmark to 62 EUR /MWh in Austria.  

Box 6-4 Recent examples of RES-PPAs 

The current dynamics of PPAs in Europe are reflected in a number of transactions completed in recent 

times, after years of analysis and negotiations. In October 2020, Norwegian Statkraft signed a PPA with 

the  Spanish  supply  company  Fortiaso  that  its  industrial  customers  could  absorb  about  half  of  the 

production from wind farms with a capacity of 93 MW. 

199 I.e. intermittent due to external, unpredictable factors such as weather conditions. 

234 

 
 
 
 
 
 
 
 
 
 
                                                      
In November 2020, German railway company Deutsche Bahn announced new PPAs for 780 GWh of green 

energy per year, having set a target of 80% RES energy by 2030, compared with 60% today. In December 

2020, the largest PPA in Europe was announced for offshore wind power. 

Then, in January 2021, Iberdrola made a PPA for one of the largest photovoltaics under construction 

in Europe (590 MW) with the French food company Danone. In addition, the English chemical company 

Johnson Matthey  secured 100% green energy for its battery plant in Poland. In February 2021, RWE 

announced a 10-year contract with a Dutch semiconductor company for an annual production of 257 

GWh. 

The response of banks on a global scale to meeting their energy needs is also noteworthy. In July 2018, 

the first contract of this category was announced, between Iberdrola and Spain's Kutxabank, In June 

2020, Bank of America signed 10 PPA contracts guaranteeing 340 GWh of green energy per year. An 

interesting  case  is  the  Japanese  bank  MUFG,  which  finances,  before  concluding  PPAs  with  multiple 

users, the world's largest hybrid seawater project in Chile.  

6.8.2 

Structure and Parameters of Contracts  

The  structure  of  bilateral  contracts  is  constantly  evolving  to  reflect  the  characteristics  of  each 

consumption better and to address the intermittency of RES production more effectively. More generally, 

contracts now contain a set structure with a number of parameters and conditions, to incorporate the 

individual  risk  factors  (price,  volume,  liquidity,  balancing,  credit,  tax  and  regulatory  changes),  to  be 

assessed  by  means  of  simulations  and  scenarios,  and  to  distribute  the  degree  of  risk,  reflecting  the 

acceptable limits of the parties. 

The most notable of the current trends are: 

•  the  involvement  of  electricity  suppliers  to  avoid  imbalances  and  representation  in  the  balancing 

market (sleeved synthetic PPA); 

•  the introduction of collar PPAs with ceilings and thresholds at final prices; 

• 

liquidation on the basis of pre-agreed indicators (not necessarily the domestic wholesale market or 

measured production); 

•  terms  of  redefinition  in  the  event  of  substantial  changes,  but  also  tendering  procedures  for  the 

promotion of the best offer.  

The shift from pay structures-as-proved to pay-as-consumed is a new form of bilateral contract (pgPPa), 

recently  appearing  in  the  US  between  BP  and  Capital  Solutions,  also  allows  for  the  management  of 

weather-related risk. 

At  the  same  time,  contracts  have  evolved  to  allow  the  participation  of  multiple  companies  (multi-

corporate  PPA),  while  maintaining  the  favourable  conditions  resulting  from  a  negotiation  of  large 

quantities.  Storage  and  renewable  gases  are  two  important  dimensions,  which  will  also  release  new 

prospects for cross-sector integration. While  the  actual parameters of contracts may vary, their basic 

content is standardized, with master agreements such as EFET and ISFM.  

6.8.3 

Platforms and Reliability  

235 

 
 
 
 
 
 
 
 
 
 
 
 
In addition to established platforms for corporate PPAs, such as Re-Source and LevelTen, new ones are 

emerging, with  an  emphasis  on  smart  technology,  to  match  the  desired  characteristics  on the  part  of 

buyers, with the optimal RES portfolio. DNV GL launched a digital PPA platform, Instatrust. Similarly, in 

England,  the  new  Zeigoplatform  has  managed  to  register 300  RES  projects  directly,  totalling  20  GWh, 

attracting more than 100 developers. 

Crowdfunding is an alternative way of raising funds for RES projects, from a large number of stakeholders 

that can enhance acceptance by local communities. The new European regulation200 aims to harmonise 

practices  and  standards  in  order  to  strengthen  competition  and  trust  on  all  sides,  and  to  establish 

safeguards for investors, inviting local residents to invest between EUR 20 and 2000, providing a gross 

interest rate of 3% over a five-year period.  

More generally, as industry experts point out, a crucial parameter for the future of PPAs is the increase 

in buyers who can be considered financially solvent by banks. 

6.8.4 

Industry  

As announced in December 2020, after many months of consultation, Spain's energy-intensive industries 

and exposure to international competition will be compensated, to a degree of up to 85%, for charges 

they pay (equivalent to ETMEAR and SSF) by the end of 2022. The budget for the measure is estimated at 

EUR 92 million. At the same time, the EU approved the granting of state guarantees for the conclusion of 

bilateral contracts with RES in order to remove the financial risk, in particular the risk of bankruptcy of 

buyers.  

More specifically, large industries (with consumption of more than 1 GWh in 2 of the previous 3 years and 

at least 50% consumption in non-peak hours) will have access to the special fund to be set up. The fund 

will be able to channel up to EUR 200 million per year to industries that contract bilaterally with RES for 

at least 10% of their consumption over the next five years.  

6.8.5 

Storage  

The  institutional  framework  for  storage  differs  between  European  countries,  and  institutional  gaps  or 

insufficient incentives are often found, potentially creating conditions for the development of projects 

through PPAs.  

It is worth noting that in Spain, despite the introduction of an institutional framework, no storage projects 

have been awarded in recent RES competitions. In particular, as the target for 2.5 GW of batteries has 

been set by 2030, high expectations had been set for storage  participation in the  auctions held on 26 

January 2021.  

However, the restriction on charging batteries exclusively from the RES station and not from the network 

was considered a catalyst for the failed outcome, especially for photovoltaics, as it excludes charging in 

low-price evening hours. It also appears that the 25% increase in the reference price for hybrid projects 

was not considered sufficient, despite the emphasis placed on regulatory changes to involve storage in 

reserve markets. In addition, the 3 GW of hip auctioned were fully allocated and the mean price levels 

200 Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity 

236 

 
 
 
 
 
 
 
 
 
 
 
                                                      
ranged to 24.47 EUR / MWh for photovoltaics and 25.31 EUR /MWh for wind turbines, with the highest 

levels of 14 EUR /MWh, for contracts of 12 years.  

In Portugal, on the other hand, the auctions held in August 2020 were also very successful in terms of 

storage. It is noteworthy that 483 MW of the 670 MW awarded involve storage. The example shows that 

the establishment of power mechanisms, in addition to participation in reserve markets, is critical to the 

sustainability of hybrid projects. 

6.8.6 

PPA for Green Gas 

In January 2021, the first PPA for renewable gas was announced in Europe. French Wave Energy, with 

innovative technologies in the sector, and the Spanish waste management company, Ferrovial Servicios, 

will generate additional funding, helping to prevent the release of 17,000 tonnes of CO2 per year. The 

PPA will finance the French company's investment of EUR 7.5 million in the conversion infrastructure and 

its connection to the natural gas network. It is noted that 10 corresponding plants are already in operation 

in France, supplying 35 000 households.  

6.8.7 

Cross-border PPAs 

Cross-border PPAs allow the matching of RES projects with consumption in different countries. Corporate 

consumers can avoid institutional gaps in the countries in which they operate and optimise the desired 

characteristics  of  the  contract,  taking  advantage  of  more  favourable  climate  characteristics  but  also 

better levels of market maturity and competition.  

At  the  same  time,  they  allow  for  a  comprehensive  approach  to  the  management  of  individual 

consumptions and provide flexibility in the event of changes in location or scale of infrastructure. A prime 

example is Novartis's five 10-year contracts with projects developed in Spain by Enel Green Power, EDP 

and Accion. The company will implement its climate neutrality target by 2025, limiting annual emissions 

corresponding to 113 000 passenger cars per year201.  

In conclusion, bilateral contracts are key to the financing and revenue of RES projects, at a time when 

support  schemes  are  being  transformed  or  abolished.  The  structure  and  parameters  of  contracts  are 

constantly evolving to reflect more effectively the characteristics and preferences of both parties. The 

integration of storage, industry participation, offshore wind, the cross-border dimension, and renewable 

gases, give impetus to the further development of PPAs in Europe. 

Guarantee mechanisms, such as the one recently adopted in Spain, strengthen the economic solvency of 

buyers, removed one of the most serious obstacles to the conclusion of contracts. The role of the Recovery 

Fund can also be a catalyst for reducing other economic risks. On the buyers' side, companies' ambitious 

environmental commitments, particularly for green energy at the time rather than year level, but also 

for their entire supply chain, are strengthening demand. At the same  time, the active involvement of 

municipalities and citizens, through innovative programmes at local level, encourages social acceptance, 

which is crucial for the energy transition.  

201 The company in 2019 generated nearly 900000 tons of CO2e. The vehicles fleet contributes around 124000 tons of CO2 to the total 
emissions. 

237 

 
 
 
 
 
 
 
 
 
 
 
                                                      
More generally, the finalization of the institutional framework, liquidity in the futures market and the 

removal of bureaucratic obstacles are an important basis for the development of PPAs. 

6.8.8 

Risks associated with PPA definition 

There are numerous risks to consider before entering into a Corporate PPA. Key risks include: 

1.  Market risk: Agreeing to a purchase price for power over a long period of time could be risky if 

electricity prices are volatile.  

2.  Price and project revenue risk: It is related to the PPA pricing structures, which may be fixed or 

flexible.  

3.  Tenor risk: It relates to the period over which the corporate buyer is obliged to pay for power 

contracted for under the Corporate PPA. Lenders will expect that Corporate PPAs cover at least 

the term of the loan being contemplated. 

4.  Currency or interest rate risk: The risk arises because of the mismatch in the currency of debt 

obligations and currency of revenue, which exposes the project to the risk of devaluation over 

time.  

5.  Credit  risk:  Since  Corporate  PPAs  are  crucial  revenue  contracts,  the  creditworthiness  of  the 

corporate buyer is also crucial. 

6.  Scheduling risk: It relates to the deviations between forecasts of expected power production by 

generators to network operators and the actual outturn production.  

7.  Basis risk: This is commonly referred to as location risk. Numerous factors relating to location, 

including:  transmission  line  congestion,  wind  and  solar  intermittency  and  variability,  market 

saturation, and state-based or regional regulations. 

8.  Balancing risk: Balancing risk relates to the need to provide a continuous supply of power to the 

corporate  buyer.  It  is  the  risk  of  exposure  to  power  system  costs  that  arise  when  an  asset’s 

forecast generation is less than its actual generation. 

9.  Volume risk: It captures the variability of power generation of a plant over a period of time, 

which may be a season or a full year. The risk may derive from climatic variations, such as wind 

that is higher than expected one year or lower solar irradiation levels due to a cloudy summer. 

10.  Shape or profile risk: Shape or profile risk is connected to volume risk but it captures the fact 

that hourly generation will be variable depending on wind speed or solar irradiation, irrespective 

of whether the overall volume over a given period is equal to the estimated volume. 

11.  Construction risk: For new projects still to be built, development or construction risk is another 

factor to be taken into consideration. 

12.  Performance or operating risk: It is the risk that the project does not perform as expected, in 

terms  of  the  level  of  mechanical  availability,  warranted  power  curve  (wind)  or  performance 

ratio (solar PV). 

13.  Change in law or regulatory risk: During construction or operation of the project or during the 

term of the contract, a change in law or a force majeure event may occur. 

14.  Force  majeure  risk:  It  is  the  risk  that  extraneous  events  may  occur,  over  which  neither  the 

developer  nor  the  corporate  buyer  have  control  (including  acts  of  God  or  extreme  weather 

conditions), which may delay completion of the project or have an impact upon the project’s 

power generation capabilities. 

6.8.9 

Current status of the European corporate RES PPA market 

238 

 
 
 
 
 
 
 
The EU RES PPA market has grown from 0.5GW in 2014 to 24W in 2021. In 2021, the PPA market grew by 

8.8 GW. The key regions of RES PPA in EU are: i) Iberia (Solar), ii) Germany (Solar and Wind), Belgium 

and  Luxembourg  (Wind)  and  Nordics  (Wind).  According  to  RMW202,  the  onshore  wind  has  been  the 

preferred technology for PPA deals in 2021, while the average size and length of PPAs has decreased to 

11 years from 14 years in 2018.  Figure 30 provides the RES PPA capacity in the EU as if 2021. The  EU 

market grows at an accelerated pace and the EU located industries increasingly use RES-PPAs.   

6

5

4

W
G

3

2

1

0

Figure 188: Cumulative Corporate RES PPA capacity by 2021 

Source: Based on RMW (2021)203 

202 Rebewable Market Watch “Europe Corporate Renewable PPA Market” (2021) 
203 Renewable Market Watch “Europe Corporate Renewable PPA Market” (2021) 

239 

 
 
 
 
 
 
 
 
                                                      
7 The EU energy bill 

In this chapter, we outline the main drivers of the EU energy import bill and estimate its size in the last 

few years.  

Main findings:  

 

The EU is highly dependent on energy imports, with an overall dependency rate of around 60% 

and showing an upward trend since 2013. The import dependency rate is particularly high for oil 

and petroleum products (97%) and for natural gas (94%), which results in a large annual energy 

import bill of between EUR 200 and EUR 400 billion. Crude oil is by far the largest component of 

the import bill, representing 74% of the total in 2019. The share of gas and hard coal was 24% 

and 2%, respectively, in 2019. 

 

The fall in oil prices at the beginning the Covid-19 pandemic in 2020 and the parallel drop in 

consumption  (caused  by  the  slowdown  in  economic  activity  and  transport  due  to  worldwide 

lockdowns) reduced the energy bill by almost half in 2020, to around EUR 150 billion. The overall 

import dependency rate fell to 57.7%, 84% for natural gas. It increased slightly by 0.2 percentage 

point for oil and petroleum products. 

  However, in 2021, the energy import bill has more than doubled to EUR 320 billion (2.2% of EU 

GDP), returning close to the 2014 level, due to the explosion in gas prices and the sharp rise in 

oil  prices.  The  latest  data  show  that  the  import  bill  for  the  first  half  of  2022,  at  around 

EUR 330 billion, is already higher than the annual bill of 2021. 

 

In particular, the gas import bill was already 3.5 times higher in 2021 than in 2020 and reached 

EUR 129 billion (twice the annual average over the period 2014-2019). The trend continued into 

2022  and  the  gas  import  bill  reached  over  EUR 160 billion  for  the  first  half  of  the  year.  It 

corresponds, over the same period, to 9 times the amount for 2020 and 4.6 times that for 2021. 

80

70

60

50

40

30

20

10

0

Russia

Norway

Algeria

Libya

LNG

Azerbaijan

Figure 189: The EU quarterly gas import bill 2019-2022 
Source: DG ENER calculation for gas imports (until June 2022) based on ENTSO-G flow data and estimated average import 
prices, based on information from Eurostat, natural gas and LNG hubs. 

240 

 
 
 
 
 
 
 
 
7.1 

Introduction 

The EU is a net importer of energy and highly dependent on other region of the world to meet its energy 

needs, especially when it comes to fossil fuels. The EU’s import dependency204 increased from 50.7% in 

1990 to an unprecedented peak in 2019 at 61.5%, slightly decreasing to 57.7% in 2020 due to Covid-19 

measures.  In  other  words,  the  EU  imports  more  than  half  of  all  the  energy  it  consumes.  Import 

dependency is particularly high in case of fossil energy carriers such as oil, gas and coal. 

 

Between 2013 and 2019, import dependency increased steadily for gas, from 65.6% to 94.1%, 

because of the confluence of two trends: rising residential and industrial gas consumption and 

falling domestic production. This dependency dropped to 83.9% in 2020 due to the decrease of 

gas consumption, particularly in the industry sector. 

  Oil import dependency has always been at high levels, and shows a consistently upward trend, 

particularly since 2017: from 91.8% in 2013 to 97.4% in 2020. 

 

Import  dependency  also  increased  for  solid  fossil  fuels  from  39.1%  in  2013  to  42.8%  in  2019, 

notably because of the consistently decreasing lignite production in the EU - then dropping to 

35.4% in 2020 for the same reasons as for gas. Import dependency reached 66.7% for hard coal 

in 2019. 

While the import dependency of fossil fuels shows a long-term increasing trend, their share in the EU27 

energy mix is gradually decreasing. The share of renewables - typically produced within the EU - is growing 

steadily.  However,  the  increase  in  the  EU  energy  import  dependency  shows  that  renewable  energy 

expansion has not been strong enough to compensate for the reduction in intra-EU fossil fuel production 

and the increase in EU energy consumption. 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

0
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2

Global

Solid fossil fuels

Hard coal

Natural gas

Oil and petroleum products

Figure 190: EU import dependency by fuel 

Source: Eurostat (nrg_bal_c, nrg_ti_sff, nrg_te_sff, nrg_ti_gas, nrg_te_gas, nrg_ti_oil, nrg_te_oil, nrg_ti_eh, 

nrg_te_eh) 

204 Import dependency is calculated as net imports divided by gross available energy (instead of net imports divided by gross inland 
consumption as in the previous report). Nuclear fuel imports are not included in this figure by convention. 

241 

 
 
 
 
 
 
 
 
                                                      
As recent events show very clearly, a high import dependency poses significant challenges  in terms of 

energy  security, especially in the absence  of the  diversification of suppliers and supply routes. It also 

means that in times of high demand and price volatility, the EU faces a substantial energy import bill. 

7.2 

Methodology 

In this analysis, the EU is treated as a whole and only extra-EU imports are considered in the calculation 

of the EU import bill.  

The analysis covers the main fossil fuels: crude oil, natural gas and hard coal205. These fuels still account 

for two thirds of the EU's gross inland energy consumption and the overwhelming majority (around 97% in 

2020) of net energy imports206. Crude oil alone accounts for more than half of the EU's net energy imports, 

while gas accounts for a third.  

3%; 23

6%;
50

34%; 274

56%; 448

Crude oil & NGL

Natural gas

Hard coal

Other

Figure 191: EU net energy imports in 2020 (share in % and amount in Mtoe207) 
Source: Eurostat (nrg_bal_c, nrg_ti_sff, nrg_te_sff, nrg_ti_gas, nrg_te_gas, nrg_ti_oil, nrg_te_oil, nrg_ti_eh, nrg_te_eh) 

In addition to crude oil, the EU is also an importer of petroleum products. However, considering the fact 

that  the  EU's  exports  of  petroleum  products  are  similar  in  magnitude  to  its  imports  (the  EU  generally 

exports motor gasoline and imports middle distillates) and the practical difficulties of finding reliable 

volume and price data for a multitude of products with different specifications, petroleum products were 

not included in the calculation of the import bill. Brown coal is typically not traded internationally and 

imports into the EU are negligible. Therefore, the analysis of solid fossil fuels was restricted to hard coal. 

The EU exports electricity most of the time, in the range of 2-6 TWh per year between 2014 and 2019, 

which represents a revenue of around EUR100 million per year. The EU was a net importer of electricity 

in 2018 and 2020 but the bill did not exceed EUR500 million according to rough estimates. Electricity was 

therefore not included in the analysis. 

In terms of time horizon, the import bill is estimated for the period 2014-2021 and first estimates are 

given for the first half of 2022. 

205 Hard coal includes anthracite, coking coal and other bituminous coal. Sub-bituminous coal was included in hard coal in the 
previous report although it is brown coal according to the Eurostat nomenclature; it has therefore been excluded from the analysis. 
206 Nuclear fuel imports are not included in this figure by convention. 
207 Toe = tons of oil equivalent. According to the international conventions, one ton of “oil equivalent” amounts for example to 1 616 
kg of coal, 1 069 m³ of gas or 954 kg of gasoline. For electricity, 1 toe is worth 11.6 MWh. 

242 

 
 
 
 
 
 
 
 
 
 
 
 
                                                      
7.2.1 

Calculation of the energy dependency rate 

Regarding the energy dependency calculations and the analysis of imported volumes as a driver of the 

energy  bill,  the  energy  data  is  taken  from the  Eurostat  energy  balances  (nrg_bal_c)  dataset,  which  is 

expressed in tonnes of oil equivalent (toe), to ensure comparability between fuels. However, the data 

taken from this dataset include intra-EU flows, i.e. imports and exports between Member States. Because 

the EU is treated as a whole in this report, these intra-EU flows must be removed to analyse only imports 

and exports with non-EU countries. The Eurostat datasets of imports and exports by partner country208, 

which are expressed in physical units, are used to calculate the ratio of extra-EU imports to total imports 

for solid fossil fuels, natural gas, oil products and electricity. This approach is replicated for exports. 

Then, these ratios are applied on the energy balances figures to obtain harmonised energy data for extra-

EU imports and exports (in toe)209. 

7.2.2 

Calculation of energy bills  

Regarding the calculation of energy bills by fuel, more detailed data is used as described in the following. 

Crude oil 

In the case of crude oil, Member States report on a monthly basis the volume and average CIF price210 of 

imported crude oil211. Each month, the collected and aggregated information is published in a Eurostat 

database (nrg_cb_cosm). This database only includes data  on gross extra-EU  imports, not on extra-EU 

exports. The oil bill has thus been calculated without removing extra-EU exports. However, these exports 

are negligible, so the bill is only slightly overestimated. Data are available until August 2022. Volumes in 

barrels and prices in USD per barrel are used. For the conversion of US dollars into euros, the monthly 

arithmetic average of the daily official exchange rates published by the European Central Bank is used212. 

The bill is therefore calculated per month for each country and then summed up to get the annual figure 

for the EU, which allows price and volume variations to be better taken into account than with annual 

averages. 

 

It  should  be  noted  that  since  2015  Czechia  does  not  report  these  figures.  In  2014,  Czechia's 

imports represented about 1.5% of total EU imports, implying an estimated annual import bill of 

 

 

EUR 2-4 billion. 

For confidentiality reasons, Germany does not report pipeline import volumes and prices since 

2018. 

From  January  2020  onwards,  data  for  Denmark,  Ireland,  Greece,  Poland  and  Finland  have 

become confidential; for Sweden in July 2020, and for Slovakia in December 2020.  

  Only crude oil volumes are reported for Bulgaria, Lithuania and Hungary from January 2020. 

 

The calculation methodology is therefore adjusted from 2020 onwards. The monthly oil import 

volumes reported are multiplied by a coefficient reflecting the share of these reporting countries 

in  the  total  oil  import  volume  in  2017-2019,  in  order  to  estimate  the  import  volumes  of  the 

countries no longer reporting data for confidentiality reasons. This estimated monthly import 

volume for the EU is multiplied by the average monthly import price for the EU (calculated as 

208 Namely nrg_ti_sff, nrg_te_sff, nrg_ti_gas, nrg_te_gas, nrg_ti_oil, nrg_te_oil, nrg_ti_eh, nrg_te_eh. 
209 Because of missing data, the data for renewables and other energy products are not corrected (so they include intra-EU flows). 
However,  as  their  share  is  very  small  (less  than  1%  of  the  EU  net  energy  imports),  this  doesn’t  affect  the  global  results  and  the 
estimations can be considered sufficiently accurate. 
210 The CIF price includes the FOB price (the price actually invoiced at the port of loading), the cost of transport, insurance and 
certain charges related to transfer operations. 
211 Reporting obligation introduced under Regulation (EC) No 2964/95 of 20 December 1995 introducing registration for crude oil 
imports and deliveries in the Community. (EC (1995). Council Regulation (EC) No 2964/95 of 20 December 1995 introducing 
registration for crude oil imports and deliveries in the Community.  
212 European Central Bank (2022). Euro foreign exchange rates. 

243 

 
 
 
 
 
 
                                                      
the average of the monthly prices of the 9 countries still providing this information, weighted 

by the import volumes of these countries) to obtain the monthly oil import bill for the EU. The 

conversion between dollars and euros is still done on the monthly bills. 

Natural gas 

For natural gas, the monthly import volumes of the European Network of Transmission System Operators 

for Gas (ENTSO-G) transparency platform213 are used, which are based on the gas flows reported by gas 

transmission  system  operators.  Gas  imports  come  into  the  EU  from  Russia,  Norway,  Algeria,  Libya, 

Azerbaijan  and  the  UK  through  several  pipelines,  while  in  2020  LNG  imports  were  coming  from  12 

supplying countries to  24 terminals in 12 Member States214. Volumes are calculated by adding the  gas 

flows at the relevant entry points of the EU gas network. As the re-exports (Balkans, Kaliningrad, etc.) 

are removed, these volumes can be considered as net imports. Data are available until August 2022. 

Gas import prices can vary across Member States depending on the supplier, the supply route, the type 

of  contract  (spot  or  long-term),  the  pricing  method  (hub-based  or  oil-indexed)  and  the  level  of 

competition.  Based  on  available  sources,  including  customs  data,  national  agencies  (e.g.  BAFA  in 

Germany) and commercial data providers, an estimated monthly average price has been established for 

each supplier (Russia, Norway, Algeria, Libya, Azerbaijan and LNG) by DG ENER. The gas import price for 

the  UK  is  estimated  by  the  price  for  Norway. These prices  are  nominal.  Data  are  available  until June 

2022. The annual average prices shown in the table below are averages weighted by the volumes imported 

each month.  

Table 29: Estimated average gas import prices by supplier (EUR/MWh) 

Year 

Russia 

Norway 

Algeria 

Libya 

LNG 

Azerbaijan 

Average 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

2021 

2022* 

28.0  

23.5  

16.0  

17.8  

21.7  

18.4  

11.2  

28.8  

77.8  

20.1  

19.1  

14.1  

17.3  

23.3  

14.0  

8.7  

38.6  

92.5  

28.3  

23.4  

16.0  

17.9  

20.6  

21.9  

15.4  

18.0  

36.7  

29.4  

23.5  

14.7  

15.4  

21.2  

17.8  

12.2  

33.5  

85.0  

25.4  

20.5  

15.4  

18.4  

23.6  

14.9  

8.8  

47.6  

92.7  

25.5  

21.9  

15.4  

17.6  

22.2  

16.7  

10.2  

35.0  

83.9  

42.1  

94.2  

Source: DG ENER estimations 
*Only for the first half of 2022. 

Coal 

In the case of coal, the volumes considered are the net extra-EU hard coal imports reported in the annual 

Eurostat  statistics  (nrg_ti_sff for  imports,  nrg_te_sff  for  exports). The  CIF  ARA  spot  price  reported  by 

Platts is taken as representative of most coal imports into the EU. An annual average price is calculated 

as the arithmetic average of the monthly prices. 

213 Entsorg (n.d.). Transparency platform.  
214 Including small-scale terminals in Finland and Sweden. 

244 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                      
At the date of writing, data from Eurostat are only available until 2020. Import volumes for 2021 and the 

first  half  of  2022  are  estimated  by  applying  the  variations  in  extra-EU  imports  from  the  nrg_cb_sffm 

dataset to the 2020 data. The CIF ARA spot price is available for the whole period. 

Table 30: Sources of data for the calculation of the bills 

Fuel 

Crude oil 

Natural gas 

Hard coal 

Volume 

Eurostat 
(monthly) 
ENTSOG 
(monthly) 
Eurostat 
(annual) 

Price 

Eurostat  
(monthly) 
DG Energy estimations 
(monthly) 
Platts  
(monthly) 

Restated 

Yes (from 2020) 

No 

Yes (from 2021) 

7.3 

Drivers 

The import bill depends essentially on the volume and average price of imports. Like most commodities, 

energy sources are generally traded in US dollars and therefore the evolution of the USD/EUR exchange 

rate also influences the import bill if expressed in euros. 

7.3.1  Volumes 

Import volumes depends on the level of consumption, the evolution of domestic production (a decrease 

leads to a higher import dependency) and, to a lesser extent, stock changes. Exports can also influence 

import volumes, as an increase in exports must be balanced by an increase in imports. 

700

600

500

400

300

200

100

0

e
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0
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9
1

1
9
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1

2
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1

3
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1

4
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1

5
9
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1

6
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1

7
9
9
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8
9
9
1

9
9
9
1

0
0
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2

1
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2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
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2

6
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2

7
0
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2

8
0
0
2

9
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2

0
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1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

0
2
0
2

Solid fossil fuels

Natural gas

Oil and petroleum products

Figure 192: EU net energy imports 1990 – 2020 

Source: Eurostat  

Total EU fossil fuel imports showed a clear upward trend during the 1990s and most of the 2000s. Since 

then, the trends for the different fuels are diverging.  

 

In the case of oil, imports declined from 2008 onwards but rebounded in 2013 as the sharp fall 

in oil prices triggered an increase in fuel demand. As a result, they rise slightly until 2019. In 

245 

 
 
 
 
 
 
 
 
 
 
 
2020, oil imports plummeted due to the COVID-19 pandemic, which drastically reduced demand 

and international trade. 

  Gas imports fell between 2010 and 2014 as gas lost ground in the power sector, where it faced 

increasing competition from renewables and coal. Gas imports rose sharply again after 2014, as 

increased gas consumption and the ongoing decline in domestic production increased the need 

for imports, as did the substitution of coal for industrial and power generation needs. 

 

In case of hard coal, import volumes increased in 2010 and 2011, helped by low prices (cheap 

shale gas squeezed coal out of the US power sector and made it available for export), coupled 

with low carbon prices. Imports then stagnated, before starting a marked downward trend from 

2018. Indeed, the competitiveness of gas has improved compared to coal and, in addition, many 

Member States have announced their intention to phase out coal. This trend has reversed in 2021 

and 2022 as historically high gas prices led to gas-to-coal switching in the power sector. 

7.3.2 

Prices 

International commodity prices generally decreased between 2014 and 2016 and rose between 2016 and 

September-October 2018. Prices subsequently decreased until April-May 2020, before rebounding. The 

surge in gas and coal prices since mid-2021 is unprecedented. 

In  the  short  run,  changes  in  the  import  volumes  are  usually  moderate  whereas  prices  can  be  rather 

volatile. For example, the price of oil fell by almost 70% between mid-2014 and early 2016 or between 

December 2019 and April 2020, while coal prices have more than doubled between the beginning and the 

end of 2016.  

t
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b
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 200

 180

 160

 140

 120

 100

 80

 60

 40

 20

 -

h
W
M
/
R
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E

1 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5

2014

2015

2016

2017

2018

2019

2020

2021

2022

Brent Spot (EUR/bbl)

Coal CIF ARA Spot (EUR/t)

Platts GCI (EUR/MWh)

TTF day-ahead Spot (EUR/MWh)

Figure 193: European oil, gas and coal prices over 2014-2022 

Source: Platts 

246 

 
 
 
 
 
 
 
 
 
 
GCI is the North-West Europe Gas Contract Indicator, a theoretical index showing what a gas price linked 100% to 

oil would be.  

Price volatility has an impact on the energy expenditure of EU consumers and, at macroeconomic level, 

the impact can be tracked in economic growth and inflation. According to an analysis carried out in 2015 

and  2016,  lower  oil  prices  resulted  in  an  additional  GDP growth  of  0.8%  and  0.5%,  respectively.  Since 

crude oil prices are rising again, an opposite impact is anticipated.  

The average oil import price for the EU was close to the Brent spot price until the end of 2019 (deviation 

ranging from +4.1% to -6.7%, -1.4% on average). A sharp fluctuation occurred between March and May 

2020. Since May 2020, the average oil import price for the EU has been below the Brent spot price by an 

average of 7%. 

)
l
b
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(
e
c
i
r
P

120

100

80

60

40

20

0

20%

10%

0%

-10%

-20%

-30%

-40%

n
o
i
t
a
i
v
e
d
d
e
v
i
t
a
e
R

l

1 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5

2014

2015

2016

2017

2018

2019

2020

2021

2022

Average oil import price

Brent spot

Relative deviation

Figure 194: Comparison between average oil import price and Brent spot price 

Source: Eurostat (nrg_cb_cosm) for import price, Platts for Brent spot price. 

The average gas import price for the EU was higher than the TTF day-ahead spot price until around the 

end of 2016, by 17% on average. In 2017 and 2018, this relative deviation fluctuated, being sometimes 

positive, sometimes negative. From the beginning of 2019, the import price again became clearly higher 

than the spot price, reaching +68% in May 2020. Thereafter, the spread collapsed, losing 88 percentage 

points in four months. The import price has remained below the spot price since then, by 17% on average. 

247 

 
 
 
 
 
 
 
 
 
 
 
 
)
h
W
M
/
R
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E
(
e
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140

120

100

80

60

40

20

0

80%

60%

40%

20%

0%

-20%

-40%

-60%

n
o
i
t
a
i
v
e
d
d
e
v
i
t
a
e
R

l

1 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5

2014

2015

2016

2017

2018

2019

2020

2021

2022

Average gas import price

TTF day-ahead spot

Relative deviation

Figure 195: Comparison between average gas import price and TTF day-ahead spot price 

Source: DG ENER estimations for import price, Platts for TTF spot price. 

7.3.3 

Exchange rate  

Most energy products are traded in US dollars, even if the share of natural gas contracts signed in euros 

increased from 38% in 2018 to 64% in 2020215. Therefore, fluctuations in the USD/EUR exchange rate can 

directly affect prices and the import bill when measured in euros.  

Historically, there has always been a negative correlation between oil prices and the US dollar. In other 

words,  the  price  of  oil  and  the  value  of  the  US  dollar  generally  move  in  an  opposite  direction:  a 

strengthening dollar typically coincides with a decrease in oil prices and vice versa216. This means that 

changes  in  the  oil  price,  either  upwards  or  downwards,  are  mitigated  by  the  exchange  rate  and  the 

volatility of the oil price expressed in euros is lower than the volatility of the price expressed in dollars. 

Given the correlation between oil, gas and coal prices, this also applies to some extent to coal and gas 

prices. 

In recent years, the USD/EUR exchange rate was fluctuating between 1.25 and 1.05. Then the COVID-19 

crisis caused instabilities and a rise in the rate to reach USD 1.23 per EUR by the end of 2020. Since the 

beginning  of  2021,  the  euro  has  been  weakening  and  reached  an  historical  low  of  USD  0.9565  in  late 

September 2022. Since then, the USD/EUR exchange rate recovered to near parity. 

215 European Commission (n.d.). The international rôle of the euro. 
216 Although recently, with the decline in US oil imports, this relationship has weakened. 

248 

 
 
 
 
 
 
 
 
 
                                                      
 
 
1.45

1.4

1.35

1.3

1.25

1.2

1.15

1.1

1.05

1

0.95

Daily rate

Average annual rate

Figure 196: USD/EUR exchange rate 

Source: European Central Bank  

Therefore, it would be in the best interest of the European Union to develop further the global role of 

the euro, reflecting the euro area’s economic and financial weight217. As the EU is a net importer of oil, 

gas and coal, a broader deployment of the euro in the international trade of these energy products could 

eliminate the risk of price volatility stemming from the fluctuation of the euro against the US dollar. 

7.4 

Import bill calculation  

7.4.1  Oil  

Table 31: EU crude oil import bill in 2014-2022 

Unit 

2014  2015  2016  2017  2018  2019  2020  2021  2022 H1* 

Imports 
(extra-EU) 

Average CIF 
price 

Import bill in 
USD 

USD/EUR 
exchange rate 

Import bill in 
EUR 

Mbbl 

3500 

3723 

3660 

3675 

3654 

3659 

3150 

3204 

1693 

USD/bbl 

99.1 

51.8 

41.9 

53.1 

70.3 

64.1 

40.1 

65.9 

98.1 

bn USD 

345 

192 

154 

195 

257 

234 

128 

212 

166 

USD/EUR 

1.33 

1.11 

1.11 

1.13 

1.18 

1.12 

1.14 

1.18 

1.09 

bn EUR 

259 

173 

139 

173 

218 

209 

112 

180 

153 

Sources: Eurostat (nrg_cb_cosm), based on Member State reports under Regulation (EC) No 2964/95, for the volumes and prices; 
European Central Bank for the exchange rate; own calculations for import bill. 
*Only for the first half of 2022. 

217 European Commission (n.d.). The international role of the euro. 

249 

 
 
 
 
 
 
 
 
  
 
                                                      
Historically, the EU's oil import bill decreased significantly between 2014-2016 due to falling oil prices, 

from USD 375 billion to around USD 150 billion in 2016 (~-60% in three years). The weakening of the euro 

compared to the USD over the same period slightly reduced the impact on the euro bill, which fell from 

EUR 282 billion in 2013 to EUR 139 billion in 2016, a decrease of 51%. 

In 2017-2018, the average price of Brent rose to 71 USD/bbl and, with annual import volumes remaining 

fairly stable at around 3650 Mbbl per year, the EU's oil import bill was mainly driven by this price increase: 

around EUR 218 billion in 2018 (+57% compared to 2016). The euro strengthened slightly over this period, 

which moderated the increase in the oil bill (+57% in EUR vs +68% in USD).  

The oil import bill was almost halved in 2020 to EUR 112 billion, as a result of a sharp fall in prices and 

reduced  consumption  due  to  the  COVID  crisis,  before  rebounding  by  60%  in  2021  to  EUR 180  billion 

following  the  sharp  rise  in  prices  and  the  recovery  in  consumption.  The  bill  for  the  first  half  of  2022 

already  amounts  to  85%  of  the  2021annual  bill;  the  average  import  price  of  oil  over  the  period  has 

increased by 50% compared to 2021 and the 8% fall in the exchange rate exacerbates the phenomenon. 

7.4.2  Gas  

The  EU's  gas  import  bill  followed  the  fluctuations  in  gas  prices.  It  fell  between  2014  and  2016,  from 

EUR 65 billion to EUR 49 billion (-25%), thanks to a significant fall in gas prices, despite a 25% increase in 

gas import volumes. It then rose sharply in 2017 and 2018, due to a parallel increase in import volumes 

and rising prices, to reach EUR 80 billion in 2018 (+60% vs 2016). The EU's gas import bill fell by 16% in 

2019 and by 45% in 2020 to EUR 36 billion before exploding in 2021, multiplied by 3,5 compared to 2020, 

to reach EUR 129 billion (which is twice the annual average over the period 2014-2019). The main factor 

is, again, the price of gas, which the EU is obliged to buy on the spot markets as Russian deliveries under 

long-term contracts fell. 

Table 32: EU gas import bill in 2014-2022 

Unit 

2014  2015  2016  2017  2018  2019  2020  2021  2022* 

Net imports (extra-
EU) 

Estimated average 
import price 

TWh 

2548  2810  3173  3579  3586  3966  3555  3689 

1924 

EUR/MWh 

25.5 

21.9 

15.4 

17.6 

22.2 

16.7 

10.2 

35.0 

83.9 

Import bill 

bn EUR 

65.0 

61.6 

48.8 

63.1 

79.7 

66.4 

36.2  129.0 

161.3 

Sources: ENTSO-G for volumes; DG ENER estimations for prices; own calculations for import bill. 
*Only for the first half of 2022. 

The trend continued into 2022 and the gas import bill reached over EUR 160 billion for the first half of 

the year – exceeding the entire year of 2021. It corresponds, over the first 6 months of each year, to 9 

times the amount for 2020 and 4.6 times that for 2021.  

7.4.3 

Coal  

Table 33 - EU hard coal import bill in 2014-2022Q2 

250 

 
 
 
 
 
 
 
 
  
 
 
Unit 

2014  2015  2016  2017  2018  2019  2020  2021  2022* 

Net imports 
(extra-EU) 

Coal CIF ARA 
spot price 

Mt 

151.0  151.6  145.1  150.2  143.5  115.3 

77.5 

95.6 

52.1 

EUR/t 

56.6 

51.2 

54.4 

75.0 

77.6 

53.7 

43.7  105.0 

262.1 

Import bill 

bn EUR 

8.6 

7.8 

7.9 

11.3 

11.1 

6.2 

3.4 

10.0 

13.7 

Sources: Eurostat (nrg_ti_sff, nrg_te_sff and nrg_cb_sffm) for volumes; Platts for CIF prices; own calculations for 

import bill. 

*Only for the first half of 2022. 

Extra-EU coal import volumes remained almost stable between 2014 and 2017 and the import bill followed 

the evolution of prices: 9% decrease in 2015 to reach EUR 7.8 billion, stagnation in 2016, 40% rebound in 

2017 to EUR 11.3 billion. Imported volumes started to decrease in 2018, leading to a stabilisation of the 

bill despite an increase in prices. This downward trend was confirmed and accentuated in 2019 and 2020. 

Coupled  with  a  sharp  drop  in  prices,  the  bill  was  divided  by  more  than  3  in  two  years  to  represent 

EUR 3.4 billion in 2020. 

According to the estimates of net EU coal imports for 2021218, the coal import bill is expected to rebound 

sharply in 2021 to around EUR 10 billion, as volumes have increased again, and prices have more than 

doubled.  In  line  with  the  increased  demand  for  coal  –  as  an  alternative  fuel  for  natural  gas  –  and 

unprecedented  price  increases,  the  coal  import  bill  for  the  first  half  of  2022  is  estimated  at  around 

EUR 14 billion, 36% higher than the annual coal bill for 2021. The coal import bill for 2022 is anticipated 

to be 2.5 times higher than in 2021 and exceed EUR 25 billion. 

7.4.4  Total  

Since crude oil accounts for at least 70% of the EU's estimated total import bill (73% over the period 2014-

2019), changes in its price and import volumes correspondingly drive changes in that of the import bill. 

Gas has a lower impact, on average 24% of the total import bill over this period, and coal - 3%. 

In 2013, the total import bill was estimated at around EUR 375 billion, which is more than EUR 1 billion 

per  day.  Falling  prices  allowed  the  EU  to  reduce  its  estimated  import  bill  to  EUR 333 billion  in  2014, 

EUR 243 billion in 2015 (-28% yoy) and EUR 196 billion in 2016 (-19% yoy). In 2017, higher energy prices 

and import volumes of gas resulted in a 27% increase in the import bill to EUR 247 billion. The continuation 

of  this  trend  led  to  a  further  increase  of  24%  in  2018,  reaching  EUR 309  billion.  In  2019,  lower  prices 

reduced the total import bill by 9% to EUR 282 billion. 

The fall in prices and reduced consumption due to the COVID pandemic almost halved the import bill in 

2020 to EUR 151 billion, but it rebounded sharply in 2021 to EUR 319 billion, mainly due to the surge in 

gas and oil prices. The total import bill for the first half of 2022 is already higher than the annual bill of 

2021, accounting for around EUR 330 billion. 

When expressed as a percentage of EU GDP (at current prices), the share of the estimated import bill 

decreased from 2.8% in 2014 to 1.6% in 2016. It rebounded in 2017 and 2018 to 2.3% of GDP in 2018. It 

218 Source: Enerdata (2022) 

251 

 
 
 
 
  
 
 
 
 
 
 
                                                      
decreased to 2% in 2019 and dropped to 1.1% in 2020. The estimated import bill stood at 2.2% of EU GDP 

in 2021. The share of the estimated import bill in the EU GDP for the first half of 2022 was almost twice 

as high. 

450

400

350

300

9

65

250

2.8%

R
U
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o

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200

150

100

50

0

259

4.5%

4.3%

4.0%

8

62

2.0%

173

8

49

1.6%

139

11

63

1.9%

173

11

80

2.3%

6

66

2.0%

218

209

10

14

129

2.2%

161

180

153

3

36

1.1%

112

3.5%

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

2014

2015

2016

2017

2018

2019

2020

2021

2022*

Oil

Gas

Coal

As % of the EU GDP

Figure 197: Estimated EU energy import bill 
Source: DG ENER calculation. *Only for the first half of 2022. 

Between 2014 and 2019, the decrease in the total energy import bill is due to the downward  trend in 

energy prices. Two thirds of this effect was offset by the deterioration of the USD/EUR exchange rate 

(for 52%) and by the increase in imported volumes (for 14%). 

Figure 198: Breakdown of energy bill effects between 2014 and 2019 
Source: Own calculations 

252 

 
 
 
 
 
 
 
 
 
 
 
In 2020, the total energy import bill fell by 45%. This is due to the sharp fall in prices (71%), the drop in 

imported volumes (linked to the drop in consumption during the pandemic; 26%) and the change in the 

USD/EUR exchange rate (3%). 

Figure 199: Breakdown of energy bill effects between 2019 and 2020 

Source: Own calculations 

In 2021, the doubling of the bill is almost entirely due to the explosion in energy prices. 

Figure 200: Breakdown of energy bill effects between 2020 and 2021 
Source: Own calculations 

7.5 

Comparison with other estimates of the EU energy import 

bill  

253 

 
 
 
 
 
 
 
 
 
 
 
 
7.5.1 

EU imports of energy products - recent developments – Eurostat219  

Data in this publication is taken from Eurostat's COMEXT database. Its scope is slightly broader than that 

of our study as lignite, peat and coke are included. When we compare the figures for an equivalent scope 

(that of this study), we find that our estimates of annual energy import bills are about 4% higher than 

those of Eurostat since 2018 (which corresponds to EUR 10-17 billion annually), except in 2020 where our 

estimate is 10% lower (EUR 18 billion) than that of Eurostat. Our estimates tend to underestimate the 

coal bill compared to Eurostat calculations, and on the contrary to overestimate (by almost 20%) the gas 

bill. Our estimate of the oil bill is higher than Eurostat's in 2018 (+1.8%) and 2019 (+4%) but lower in 2020 

(-10%), 2021 (-6.8%) and for the first half of 2022 (-5.6%). 

7.5.2 

CREA counter on Russian fossil fuel exports220  

Since the start of the conflict in Ukraine in February 2022, many attempts were made to estimate the 

EU’s import bill, specifically the payments made to Russia in exchange for natural gas and oil deliveries. 

One of them is the “counter” published CREA221. Such calculations are difficult to compare with those of 

this study, for many reasons: 

 

They focus on Russia's exports since the start of the war in Ukraine (24 February 2022). 

  Not all detailed results are published. 

 

Their approach by importing country does not allow to calculate the EU as a sum because only 

bills of the main importers are published. 

 

Furthermore, the focus in our study is not on the origin of the imports. 

However, the CREA study is interesting to analyse, especially from a methodological point of view. They 

use ENTSOG data for gas exports by pipeline, and monthly Eurostat data for exports of oil, oil products 

and coal overland. They track seaborne shipments from Russian ports using data from MarineTraffic.com 

and Datalastic, derived from ship location (AIS) data. They estimate prices of fossil fuel trades in 2022 

by deriving historical monthly average prices for imports from Russia to the EU from Eurostat. They then 

fit models between these historical prices and average monthly spot prices for the current month and 

with time lags (Brent crude oil, TTF gas, Newcastle steam coal, Asian LNG, ARA coal).  

219 Eurostat (2022). EU imports of energy products – recent developments. 
220 CREA (2022). Payments to Russia for fossil fuels.  
221 Centre for Research on Energy and Clean Air 

254 

 
 
 
 
 
 
 
 
 
                                                      
8 Role of energy for government revenues, 

taxes and levies 

8.1  Government revenues from the energy sector in the EU-27 

Main findings:  

 

In 2020, energy taxes collected by EU Member States amounted to EUR 232 billion or 1.74% of 

EU GDP. As a percentage of GDP, energy tax revenue has been rather stable for the period 2010-

2019.  The  Covid-19  pandemic  led  to  an  erosion  of  the  energy  taxation  base  (e.g.  energy 

consumption) thus triggering an 11% drop of revenues.  

 

In  EU  Member  States,  the  role  of  energy  taxes  in  government  revenues  and  GDP  shows  a 

significant  variety:  Member  States  with  a  lower  GDP/capita  typically  have  a  higher  share  of 

energy taxes in both total tax revenue, and relative to GDP. 

 

The EU average implicit tax on energy, measured as the energy tax revenue per 1 tonne of oil 

equivalent  of  gross  inland  energy  consumption,  was  EUR 179/toe  in  2020.  In  real  terms,  this 

average calculated tax rate increased by 15.3% between 2010 and 2020, peaking at EUR 184/toe 

in 2019. 

 

Excise duties constitute the largest part of energy taxes, amounting to around EUR 187 billion in 

2020.  When  adjusted  for  inflation,  excise  duty  revenues  almost  constantly  increased  from 

EUR 176 billion in 2010 to EUR 216 billion in 2019, which represents a 23% increase. Excise duty 

revenues dropped by 2.2% in 2019, and by 14.9% in 2020 due to Covid-19 mobility restrictions 

leading to reduce fuel consumption. 

  Oil products derived from crude oil continue to dominate excise duty revenues, with an average 

share consistently above 80% in EU-27, even though their share decreased over the last decade. 

In 2020, the share of petroleum products in excise revenues was more than 90% in 19 Member 

States. 

 

The total reported energy tax rate has slightly shrunk in the EU-27 from EUR2021 33/MWh in 2015 

to EUR2021 31/MWh in 2020, mainly due to the mobility restrictions imposed during the Covid-19 

pandemic.  The  total  tax  rates  in  Member  States  ranged  from  EUR2021 13/MWh  in  Hungary  to 

EUR2021 45/MWh in Denmark, with a median of EUR2021 24/MWh, in 2020. 

 

The total tax rate on electricity for the EU-27 as a whole has almost doubled since 2010 from 

EUR2021 18/MWh to EUR2021 34/MWh in 2020 because of the growth of renewable charges, which 

have been a burden shouldered by electricity consumers. 

255 

 
 
 
 
 
 
 
8.2  Energy taxes  

Energy  taxes  are,  according  to  the  common  definition  of  the  OECD  and  Eurostat,  a  subset  of 

environmental  taxes222.  They  include  taxes  on  energy  production  and  on  the  consumption  of  energy 

products, used for both transport and stationary purposes; as well as taxes on the stocks of energy and 

on energy system infrastructure. Eurostat also includes in this category the revenues derived from the 

auctioning of emissions allowances under the EU ETS223. 

Energy taxes represent a significant source  of government revenue in all EU  Member States, the total 

reaching EUR 232 billion in 2020, representing 1.74% of the  EU  GDP  and 4.2% of total tax revenues224. 

While nominal energy tax revenue increased by 15% between 2009 and 2019 (on average by 1.47%/year), 

it remained relatively stable around 1.9% of EU GDP (and 4.7% of total tax revenues). Energy tax revenues 

dropped by 10.9% in 2020, mostly due to COVID-19 related mobility restrictions.  

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Figure 201: Energy tax revenue in the EU-27 
Source: Eurostat (env_ac_tax) 
*: Percentage of total revenues from taxes and social contributions (including imputed social contributions) 

The role of energy taxes in government revenues varies a lot between Member States: in 2020, energy 

taxes in Bulgaria made up 8.7% of total revenues from taxes and social contributions (including imputed 

social  contributions),  while  this  share  was  only  2.9%  in  Austria.  When  compared  to  GDP,  energy  tax 

revenue was the highest in Greece (2.9%) and the lowest in Ireland (0.8%). In general, Member States 

with a lower GDP/capita tend to have a higher share of energy taxes relative to both total tax revenue 

and GDP. 

222 Environmental taxes - A statistical guide - 2013 edition, https://ec.europa.eu/eurostat/fr/web/products-manuals-and-guidelines/-
/ks-gq-13-005 
223 It is to be noted that the Eurostat guideline “recommends that taxes on oil and gas extraction should be 
excluded from environmental tax statistics” to facilitate benchmarking across countries and prevent high volatility 
effect. Similarly, when it comes to “fees and charges or obligatory contributions to finance renewable energy which 
are not taxes”, “this guide recommends being very restrictive about imputing taxes”. The revenues from VAT on the 
consumption of energy products are also excluded. As a result, revenues from energy taxes reported by Eurostat are 
yielded quasi-exclusively from taxes on the consumption of energy. 
224 Including social contributions  Source : Eurostat, Environmental tax revenues (env_ac_tax), extracted on 17/08/2022 

256 

 
 
 
 
 
 
 
 
                                                      
 
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Figure 202: Energy tax revenue as a percentage of tax revenue and of GDP in 2020 
Source: Eurostat (data series env_ac_tax) 
*: Percentage of total revenues from taxes and social contributions (including imputed social contributions) 

Eurostat energy tax revenues  

The Eurostat energy tax revenue data, based on the National Tax List, is currently the reference dataset 

in the EU. However, as mentioned by Economisti Associati and Nomisma Energia in their “Study on Energy 

Taxation Indicators”225, this dataset suffers serious drawbacks: “The main advantage of this dataset is 

that  it  is  fully  compatible  with  the  (environmental)  national  accounting  principles  (accrual  values, 

territoriality, etc.) so it can be used to make direct comparisons with total taxation, GDP data as well 

as with the energy balances. It has two main drawbacks. First, only aggregate data per  each Member 

State are available. For instance, there can be Member States reporting a single category for ’excise 

duties’, without differentiating between transport or heating fuels, or electricity. (…). Secondly, and 

possibly  even  most  importantly  from  the  policymaking  perspective  in  terms  of  possible  quantitative 

distortions, there are major problems with data comparability, because of the national definition of 

what a tax, or an energy tax is, as already discussed in the case of RES charges (…). Once compliance 

with  national  accounts  is  ensured,  there  is  no  binding  criterion  Member  States  must  follow  for  tax 

reporting. This gives rise to a number of heterogeneous reporting practices that hinder subsequent data 

comparability. For instance, there are countries: (i) separately reporting excise duties by type of fuels 

and  keeping  track  of  the  related  carbon  tax  component  even  if  the  tax  is  formally  the  same  (e.g. 

Denmark); (ii) bundling together in the same amount revenues from all fuel excises together with the 

carbon  tax  component  (e.g.  Sweden);  (iii)  bundling  together  all  energy  excises  including  electricity 

together with the carbon tax (e.g. Portugal); (iv) separately reporting system charges or public service 

obligations as a tax; (v) separately reporting RES charges as a tax (e.g. Belgium); (vi) bundling together 

electricity excises with RES charges (e.g. Italy, Croatia).” 

225 “Study on Energy Taxation Indicators”, 2021, Economisti Associati and Nomisma Energia, available at 
https://op.europa.eu/en/publication-detail/-/publication/4609322a-56e1-11eb-b59f-01aa75ed71a1/language-
en/format-PDF/source-186554625  

257 

 
 
 
 
 
 
 
 
                                                      
According to Eurostat NACE classification, households are the main contributor to energy tax revenues 

with  55%  of  total  energy  taxes  paid  in  2020,  down  from  58%  in  2008.  Economic  activities  such  as 

manufacturing, transportation, and retail energy supply through networks are only second in contributing 

to energy taxes, with their shares at 12%, 11% and 7% of total energy taxes, respectively. 

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Agriculture, forestry and fishing

Services*

Trade and repair of motor
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conditioning supply

Transportation and storage

Manufacturing

Households

Figure 203: Energy tax revenue by economic activity (NACE) 
Source Eurostat (data series env_ac_taxind2) 
*: Services (except wholesale and retail trade, transportation and storage) 
**: Wholesale and retail trade; repair of motor vehicles and motorcycles 

Another interesting indicator to analyse the evolution of the energy tax revenue is the implicit tax on 

energy that is defined as the ratio between energy tax revenues and final energy consumption. This ratio 

represents  the  average  energy  tax  revenue  for  1  toe226  of  gross  inland  energy  consumption  in  EU-27. 

Figure 4 shows that the EU’s gross inland energy consumption has decreased by 6.5% between 2010 and 

2019  (green  line  in  the  graph),  which  means  a  reduction  of  the  tax  base.  Meanwhile  the  energy  tax 

revenue has increased (see graphs above) which results to an increasing implicit energy tax rate both in 

nominal (blue bars in the graph below) and real terms (orange bars). Thus, the implicit energy tax rate 

in real terms (in euros 2021) increased from 151 EUR2021/toe in 2010 to 177 EUR2021/toe in 2014 and then 

stabilized around 180 EUR2021/toe until 2020. 

226 Tonne(s) of oil equivalent, abbreviated as toe, is a normalized unit of energy. By convention it is equivalent to 
the approximate amount of energy that can be extracted from one tonne of crude oil. It is a standardized unit, 
assigned a net calorific value of 41 868 kilojoules/kg. See also: Eurostat glossary 

258 

 
 
 
 
 
  
 
 
                                                      
 
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Gross inland consumption (right scale)

Figure 204: Average implicit energy tax rates in the EU-27 
Source: Authors' calculations based on Eurostat data (env_ac_tax and nrg_100a) 

On  average,  the  implicit  energy  tax  reached  EUR 173/toe  in  2020  (Figure  5),  but  there  was  a  huge 

variation across Member States, from EUR 87/toe in Hungary to EUR 325/toe in Denmark.  

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Figure 205: Average implicit tax on energy in 2020 (EUR/toe) 
Source: Authors calculations based on Eurostat data (env_ac_tax and nrg_100a) 

259 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.3  Excise duties  

Excise duties are indirect taxes imposed on the sale or use of specific products, typically alcohol, tobacco, 

and energy products. All revenue from excise duties goes to the budgets of Member States. Excise duties 

are set in absolute values, i.e., as a fixed amount per quantity of the product (e.g. per liter/kg/GJ/MWh). 

Accordingly, assuming that the rates do not change, the revenue will depend on the consumption of the 

specific product. In contrast, price changes should not impact revenues unless they lead to a decrease of 

consumption.  

Current EU rules for taxing energy products are laid down in Council Directive 2003/96/EC227 (the Energy 

Taxation Directive). The Directive covers petroleum products (gasoline, gasoil, kerosene, LPG, heavy fuel 

oil), natural gas, coal, coke, and electricity when used as motor or heating fuel. In addition to establishing 

a  common  EU  framework  for  taxing  energy  products,  the  Directive  sets  minimum  excise  duty  rates. 

Member States are free to apply excise duty rates above these minima, according to their own national 

needs. 

The Directorate-General for Taxation and Customs Union (DG TAXUD) regularly publishes the excise duty 

rates applicable in EU Member States228 and the revenue from excise duties229. From 2010 to 2019 the 

excise duty revenues were constantly increasing from EUR 176 billion in 2010 to EUR 216 billion in 2019, 

which represents a 23% increase. In 2020, the reduction of energy consumption in the EU due to mobility 

restrictions as well as the scale-back of industrial production, reduced the underlying tax base of excise 

duties,  leading  to  a  13%  decrease  of  excise  duties  revenues.  Excise  duties  revenues  from  mineral  oils 

were the most impacted based on the decrease of transport energy consumption, and went down from 

EUR 173 billion in 2019 to EUR 153 billion in 2020. 

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Coal & coke

Natural gas

Mineral oils

Figure 206: Excise duty revenues from energy consumption in the EU 
Source: DG TAXUD, Excise duty receipts 

227 Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of 
energy products and electricity: https://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:283:0051:0070:EN:PDF. Entered into force on 1 January 
2004. 
228 Excise duty rates applicable in the EU – Taxes in Europe database (TEDB) available at 
https://ec.europa.eu/taxation_customs/tedb/advSearchForm.html?taxType=EDU_ENERGY  
229 https://taxation-customs.ec.europa.eu/system/files/2021-11/excise_duties_energy_products_en.pdf ( at the 
time of writing the report this document included revenue data for the period 2008-2020) 

260 

 
 
 
 
 
 
 
 
                                                      
 
If adjusted for inflation, excise duty revenues measured in 2021 euros remained relatively stable from 

2008 to 2015 at around EUR2021 207 bn. Between 2015 and 2018, however, real revenues increased by 11% 

reaching EUR2021 229 bn. Excise duty revenues started falling in 2019 (-2%), especially during the COVID-19 

pandemic, leading to a 15% decrease in 2020 at EU level. 

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Figure 207: Excise duty revenues from energy consumption, adjusted for inflation (in 2021 euros) 
Source: Authors calculations from DG TAXUD (excise duty receipts) and World Bank (deflator) data 

The share of oil products of total revenues for the EU-27 decreased from 84.4% in 2010 to 81.6% in 2020, 

mainly compensated by natural gas and electricity. The share of natural gas increased from 6.5% to 7.2% 

and that of electricity raised from 8.9% to 11% between 2010 and 2020. 

Unfortunately, as Austria and Germany do not provide excise duty receipts for each petroleum product, 

we cannot obtain a consolidated view of the revenue distribution between all the oil products at EU level. 

However, removing these two countries (that represent 25% of the EU’s excise duty revenue from mineral 

oils), gasoil accounts for 47% of the total excise duty receipts, petrol for 21% and the other fuels for the 

remaining 2%. 

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 208: The share of excise duty revenues by energy product 
Source: DG TAXUD, Excise duty receipts 

261 

Electricity

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Mineral oils

 
 
 
 
 
 
 
 
 
 
 
Oil products make up most of the excise duty revenues in all Member States. Figure 9 shows that in 2020, 

oil products excise duty revenues represented more than 90% of the total revenues from excise duties in 

19 Members States. Countries with the largest share of their excise duty revenues derived from natural 

gas  are  the  Netherlands  (38%),  Austria  (18%)  and  Italy  (11%),  while  those  relying  more  on  electricity 

include Sweden (36%), Denmark (36%), Finland (25%) and France (19%).  

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Figure 209: The share of excise duty revenues by energy product in 2020 
Source: DG TAXUD, Excise duty receipts 

The excise duty on petrol on average for the EU-27 increased by 21% between 2008 (EUR 45.8c/l) and 

2021 (EUR 55.3c/l) (Figure 10). Due to the energy crisis, 15 MS reduced excise duties on gasoil between 

2021 and 1st July 2022, leading to a 12% decrease on average in the EU-27. The largest falls have been 

recorded in Germany230, Italy and Malta with drops reaching 45%, 35% and 34%, respectively. 

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Figure 210: Excise tax rates for petrol in EU-27 
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230 The reduction in Germany was a temporal reduction during the months of June to August. 

262 

 
 
 
 
 
 
 
 
 
 
                                                      
The excise duty on gasoil (diesel) on average for the EU-27 increased by 27% between 2008 and 2021, 

going up from EUR 34.2ct/l to EUR 43.5ct/l (Figure 11). As for gasoil, the excise duty rate was reduced 

by 12% on average in EU-27 between 2021 and 1st July 2022 in an attempt to offset the increasing prices 

of fuels, of which Italy, Portugal and Germany230 implemented the largest with reductions of 40%, 35% 

and 30%, respectively. 

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Figure 211: Excise tax rates for gasoil (diesel) propellant in EU-27 
Source: DG Taxation and Customs Union, https://ec.europa.eu/taxation_customs/tedb/  

The  average  excise  duty  on  electricity  for  households  (non-business  use)  for  the  EU-27  increased  on 

average by 51% between 2008 and 2021 going up from EUR 10.4/MWh to EUR 15.7/MWh (Figure 12). This 

was driven by noticeable increases in the Netherlands, Denmark and Finland, and the inclusion of the 

fees financing the development of renewable technologies into the electricity excise taxes in Italy and 

France. Between 2021 and 1st July 2022, the EU-27 average excise duty rate on electricity shrunk by 23% 

as a consequence of cuts in 8 Member States (Austria, Hungary and the Netherlands implemented the 

largest decreases over this period). 

263 

 
 
 
 
 
 
 
 
 
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Figure 212: Excise tax rates for electricity for households (non-business use) in EU-27 
Source: DG Taxation and Customs Union, https://ec.europa.eu/taxation_customs/tedb/  

The average excise duty on natural gas for households (non-business use) across the EU-27 increased by 

80% between 2008 and 2021, growing from EUR 1.3/GJ to EUR 2.3/GJ; and then decreased by 2% since 

2021 (much lower than the drop reported for other fuels). In contrast to excise duty cuts on electricity, 

gasoil  and  petrol,  only  4  Member  States  (Austria,  Belgium,  Hungary  and  Belgium)  have  lowered  their 

excise duty rate on natural gas between 2021 and 1st July 2022.  

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Figure 213: Excise tax rates for natural gas for households (non-business use) in EU-27 
Source: DG Taxation and Customs Union, https://ec.europa.eu/taxation_customs/tedb/ 

264 

 
 
 
 
 
 
 
 
 
 
 
8.4  Value added tax 

The  value  added  tax  (VAT)  imposed  on  energy  products  is  another  important  source  of  government 

revenue. However, unlike for excise duties, there is no publicly available data for VAT revenues from 

energy products.  

The VAT Directive (2006/112/EC)231 requires that the standard VAT rate must be at least 15% and Member 

States can apply one or two reduced rates of at least 5% but only to goods or services listed in Annex III 

of the Directive (energy products are not in the list). However there are multiple exceptions to the basic 

rules, including the possibility of reduced rates for certain goods and services (e.g. Article 102 allows the 

use  of  reduced  rate  to  the  supply  of  natural  gas,  electricity  and  district  heating,  as  well  as  several 

country-specific exceptions, including the permission to use “super reduced” rates under 5% (including 

for energy products). 

The simple average standard rate of VAT on electricity in the EU-27 increased slightly from 17.5% in 2010 

to 19.2% in 2021 (Figure 214); then it dropped to 17.2% due to cuts in several Member States, such as in 

Belgium,  Ireland,  the  Netherlands,  and  Poland.  In  addition,  several  Member  States  (including  Cyprus, 

Romania and Spain) have implemented VAT cuts for electricity consumer groups. 

The average standard rate of VAT on electricity hides huge differences. Malta and Luxembourg have a 

rate of 5% and 8%, respectively, whereas Sweden and Hungary have a rate of 25% and 27%, respectively. 

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Figure 214: The average VAT rate for electricity in the EU-27 
Source: DG Taxation and Customs Union, Bruegel, national sources 

The simple average standard rate of VAT for natural gas in the EU-27 increased from 17.5% in 2010 to 

19.7%  in  2021  (Figure  215).  Since  then,  it  went  down  to  16.8%  due  to  reductions  in  Belgium,  Croatia, 

Ireland,  the  Netherlands  and  Poland.  The  Polish  government,  through  the  ‘Anti-Inflation  Shield  2.0; 

measure, implemented the largest cut on VAT on natural gas from 8% to 0% from 1 February to 31 July 

2022 after a first reduction from 23% to 8% in December 2021.  

231 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:347:0001:0118:en:PDF 

265 

 
 
 
 
 
 
 
 
 
 
                                                      
The average VAT rate conceals significant differences between Member States. Greece and Poland have 

the lowest rates at 6% and 0%232, respectively, in 2022 whereas Hungary and Sweden have the highest 

with 27% and 25%, respectively.  

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Figure 215: The VAT rate for natural gas in the EU-27 
Source: DG Taxation and Customs Union, Bruegel, national sources 

The simple average VAT rate for heating gasoil in the EU-27 went up from 19.6% to 21.1% between 2010 

and 2021. Since then, only Portugal reduced its VAT on heavy fuel oil from 23% to 13% between 2021 and 

1st July 2022. 

Considering VAT cuts on the sale of petroleum product, we only identified reductions in Greece, Poland 

and Portugal in 2021 and 2022. Therefore, the simple average standard VAT rate on petroleum products 

has slightly increased for all the petroleum products over the past decade.  

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Figure 216: The VAT rate for heating gasoil in the EU-27 
Source: DG Taxation and Customs Union 

232 As of 31st July 2022. 

266 

 
 
 
 
 
 
 
 
 
 
 
                                                      
The simple average VAT rate for gasoil (diesel) in the EU-27 (Figure 217) increased by 5.7% between 2010 

and  2021  from  20.4%  to  21.5%.  The  VAT  rates  for  diesel  are  close  together  with  only  a  range  of  10 

percentage points in 2021. Up to 31st July 2022, only Poland reduced the VAT on diesel through its Anti-

Inflation Shield 2.0, going from 23% to 8%. 

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Figure 217: The VAT rate for gasoil (diesel) in the EU-27 
Source: DG Taxation and Customs Union 

The average VAT rate for Euro-super 95 in the EU-27 (Figure 218) increased similarly to that of gasoil 

(diesel)  from  20.4% to  21.6% between  2010  and  2021.  In  2022,  Poland,  Greece  and  Finland  decreased 

their VAT on Euro-super 95 from 23%, 24% and 24% to 8%, 20% and 21%, respectively, to fight inflation and 

rising fuel prices. 

EU27 av.
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Figure 218: The VAT rate for Euro-super 95 in the EU-27 
Source: DG Taxation and Customs Union 

267 

 
 
 
 
 
 
 
 
 
 
In December 2021233, EU Finance Ministers agreed to update the  current rules governing VAT rates for 

goods and services. These new rules234 that came into force in April 2022, provide governments with more 

flexibility in the rates they can apply and ensure equal treatment between EU Member States. 

8.5  Tax revenues from oil products 

Oil products, especially motor fuels, are the main source of energy tax revenue for government budgets. 

Data from the Weekly Oil Bulletin235 allows a detailed analysis of tax revenues from petroleum products, 

including an estimation of VAT revenues. 

Our analysis covers the three main petroleum products sold in the retail sector between 2008 and 2020: 

 

 

 

gasoline (Euro-super 95), 

diesel (automotive gasoil) and 

heating oil (heating gasoil).  

Due to the volatility of motor fuel prices, we calculated an average price as an arithmetic average of the 

weekly prices for each year and each Member State. The EU average price was then calculated as the 

weighted average of these, weighted by consumption in each Member State. 

We estimated the tax revenues collected by Member States by multiplying average tax rate included in 

consumer prices with the consumption of each fuel converted to litres236  

Since most companies can reclaim the VAT, so the calculated VAT revenue is a theoretical maximum; the 

actual VAT revenue collected by Member States must be significantly lower. 

The estimated inflation-adjusted revenue from excise duties on oil products remained almost stable at 

around EUR2021 180 billion up to 2018 and started to decrease in 2019 (Figure 219). As the VAT is an ad 

valorem  tax,  the  estimated  (theoretical)  VAT  revenue  is  fluctuating  in  line  with  the  net  price. 

Accordingly,  the  estimated  (theoretical)  VAT  revenues  decreased  from  EUR 92 billion  in  2012  to 

EUR 59 billion euros in 2016 (a decrease of 36%), then increased again in the period 2017-2019.  

In 2020, the COVID-19-related mobility restrictions lead to a decrease of oil products consumption and of 

fuel  prices.  Consequently,  the  estimated  VAT  revenues  and  excise  duties  decreased  by  32%  and  13%, 

respectively, compared to 2019. Gasoil and Euro-super 95 consumption, which are the main tax base of 

oil products excise duties, dropped by 15% and 13%, respectively, in 2020 in line with the global decrease 

of excise duties on oil products.  

233 New rules on VAT rates offer Member States more flexibility while supporting the EU's green, digital and public 
health priorities, European Commission, available at:  
https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6608    
234 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022L0542&from=EN 
235 https://energy.ec.europa.eu/data-and-analysis/weekly-oil-bulletin_en 
236 Since consumption data is given in kt (kilotons), we were using a factor 1135.07 to convert 1 ton of Gasoline into 
litre of Gasoline and 1129.94 to convert 1 ton of Diesel and Heating oil into litres 

268 

 
 
 
 
 
 
 
 
 
 
 
 
                                                      
n
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140

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Maximum theorethical revenue from VAT

Excise and other indirect taxes

Figure 219: Estimated tax revenue from gasoline, diesel, and heating oil, in EUR2021 bn 
Source: DG TAXUD 

8.6  Energy taxes, prices and incentives  

In the following section, we present the results of a modelling exercise of the energy tax system based 

on a detailed inventory and analysis of energy-related taxes, levies and other fiscal measures in the EU. 

The main goal was to estimate tax revenues by economic sector and subsector to analyse the contribution 

of each of them to the total revenues from energy taxes. We also aimed to estimate the level of taxation 

by energy use. 

For this exercise, we have used energy consumption data from Eurostat, complemented by Odyssee237 

data to refine energy consumption data in the road transport sector. These data have then been combined 

with the actual tax rates taken from DG TAXUD and national sources. Our approach had four steps: 

1. 

Identifying relevant sectors and energy products in Eurostat (top-down data). 

2.  Mapping tax rates from national sources to the sectors-products selected in step one. 

3.  Converting energy volumes from Eurostat, which are in ktoe, to the tax rate units collected. 

4.  Estimating tax revenues. 

Step 1: Identifying relevant sectors and energy products 

The first step was to identify relevant sectors in Eurostat. Final energy consumption data for 2008-2020 

was pulled from Eurostat238 for each EU MS by economic sector by energy product. Industrial sector data 

was aggregated into Energy-intensive industry (‘EII’), non-energy-intensive industry (‘non-EII’), mining, 

and construction (Table 1) – these categories align with categories at which energy taxes on industry are 

typically applied by EU MS. Eurostat does not identify which industries are EIIs, and which are not. It was 

therefore necessary for us to do so, otherwise we could not distinguish between taxes on EIIs and non-

EIIs in the project database. 

237 https://www.odyssee-mure.eu/  

238 https://ec.europa.eu/eurostat/data/database  

269 

 
 
 
 
 
 
 
 
 
 
                                                      
 
We then sorted energy product data from Eurostat by volume in each sector for the EU-27 in total to 

identify those products with the highest consumption in each sector. These were kept for the database 

and are as shown in Table 1 in the second column. 

Table 34: Energy using sectors from Eurostat (left column) and the sector assignment for the project database 

(right column) 

The next step was to update the taxation mapping developed during the previous study on this topic239 

based on the Energy Taxation Directive 2003 framework leveraging excise tax rates provided by TAXUD240 

and Eurostat energy consumption data.  

Although the previous study from 2018 demonstrated that this approach has limitations because it cannot 

cover  the  tax  expenditures  due  to  reduced/exempted  tax  bases  granted  by  MS,  it  is  quite  properly 

covering  the  tax  expenditures  due  to  reductions/exemptions  of  tax  rates.  Indeed,  while  explicit 

mentioning  of  partial/full  exemptions  of  any  tax  base  is  often  difficult  to  identify  and  to  quantify  in 

official  publications  released  by  MS,  the  apparent  tax  rates  paid  by  the  various  economic  actors  are 

generally available. 

Table 2 shows how the tax bases we have identified in Eurostat match the harmonised tax bases currently 

in effect under the ETD.  

239 Energy costs, taxes and the impact of government interventions on investments, available at 
https://op.europa.eu/en/publication-detail/-/publication/39fa0090-1750-11eb-b57e-01aa75ed71a1/language-en  
240 Excise duty rates applicable in the EU – Taxes in Europe database (TEDB), available at  
https://ec.europa.eu/taxation_customs/business/excise-duties-alcohol-tobacco-energy/excise-duties-energy_en  

270 

NRG_BAL_LABELSector short labelFinal consumption - industry sector - iron and steel - energy useIndu-EIIFinal consumption - industry sector - chemical and petrochemical - energy useIndu-EIIFinal consumption - industry sector - non-ferrous metals - energy useIndu-EIIFinal consumption - industry sector - non-metallic minerals - energy useIndu-EIIFinal consumption - industry sector - transport equipment - energy useIndu-non-EIIFinal consumption - industry sector - machinery - energy useIndu-non-EIIFinal consumption - industry sector - mining and quarrying - energy useIndu-MiningFinal consumption - industry sector - food, beverages and tobacco - energy useIndu-non-EIIFinal consumption - industry sector - paper, pulp and printing - energy useIndu-EIIFinal consumption - industry sector - wood and wood products - energy useIndu-EIIFinal consumption - industry sector - construction - energy useConstructionFinal consumption - industry sector - textile and leather - energy useIndu-EIIFinal consumption - industry sector - not elsewhere specified - energy useIndu-non-EIIFinal consumption - transport sector - rail - energy useTrans-railTrans-road-passengerTrans-road-freightFinal consumption - transport sector - domestic aviation - energy useTrans-airFinal consumption - transport sector - domestic navigation - energy useTrans-waterFinal consumption - other sectors - commercial and public services - energy useServicesFinal consumption - other sectors - households - energy useResidentialFinal consumption - other sectors - agriculture and forestry - energy useAgricultureFinal consumption - other sectors - fishing - energy useFishingFinal consumption - transport sector - road - energy use 
 
 
 
 
 
 
 
 
 
 
                                                      
Eurostat 

Sector 

Energy product/carrier 

Sector 

Energy product/carrier 

Electricity 

Natural gas 

Electricity 

Business use  

Natural gas 

Motor fuel for agricultural 

ETD/CIRCABC 

Agriculture and forestry 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Motor fuel for agricultural 

Fishing 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol 

Fuel oil 

Electricity 

Natural gas 

Heavy fuel oil 

Agriculture, horticulture, pisciculture, forestry 

Electricity 

Agriculture, horticulture, pisciculture, forestry 

Natural gas 

Agriculture, horticulture, pisciculture, forestry 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Agriculture, horticulture, pisciculture, forestry 

Fuel oil 

Electricity 

Natural gas 

Heavy fuel oil 

Agriculture, horticulture, pisciculture, forestry 

Electricity 

Business use  

Natural gas 

Industrial/Commercial use 

Commercial and public services 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Industrial/Commercial use 

Fuel oil 

Electricity 

Natural gas 

Heavy fuel oil 

Industrial/Commercial use 

Electricity 

Non-business use 

Natural gas 

Heating – Non business use 

Households 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Heating – Non business use 

Transport sector - road - personal 

Fuel oil 

Electricity 

Natural gas 

Heavy fuel oil 

Heating – Non business use 

Natural gas 

Propellant 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol/Leaded petrol 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Propellant 

Transport sector - road - freight 

Electricity 

Natural gas 

Natural gas 

Propellant 

271 

 
 
 
 
 
  
 
  
Eurostat 

Sector 

Energy product/carrier 

Sector 

Energy product/carrier 

ETD/CIRCABC 

Transport sector - rail 

Motor gasoline (excluding biofuel portion) 

Other kerosene 

Gasoline 

Kerosene 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Electricity 

Electricity 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Busses 

Unleaded Petrol/Leaded petrol 

Propellant 

Propellant 

Railways 

Railways 

Transport sector - domestic navigation 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Propellant 

Fuel oil 

Heavy fuel oil 

Propellant 

Transport sector - domestic aviation 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol/Leaded petrol 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol/Leaded petrol 

Energy Intensive Industries (EII)* 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Industrial/Commercial use 

Electricity 

Natural gas 

Natural gas 

Industrial/Commercial use 

Non-energy Intensive Industries (non-EII)* 

Industry sector - construction  

Fuel oil 

Electricity 

Natural gas 

Natural gas 

Industrial/Commercial use 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Industrial/Commercial use 

Fuel oil 

Electricity 

Natural gas 

Natural gas 

Industrial/Commercial use 

Motor gasoline (excluding biofuel portion) 

Gasoline 

Unleaded Petrol 

Gasoil and diesel oil (excluding biofuel portion)  Gasoil 

Industrial/Commercial use 

Table 35: Eurostat energy consumption data matched with current ETD harmonized tax bases  

272 

 
 
 
 
 
 
 
 
 
  
 
  
 
  
 
  
 
  
 
Step 2: Mapping tax rates 

Tax  rates,  along  with  the  tax  rate  units  (litre,  ton,  etc.)  from  DG  TAXUD  and  national  sources,  were 

matched with the appropriate sector-product pairs for each tax. Tax exemptions and reductions due to 

partial/full exemptions of tax rates were also accounted for in this step. 

Step 3: Energy volume conversion 

Eurostat reports energy volumes in ktoe, but tax rates are reported in various liquidation units. Therefore, 

energy  volumes  needed  to  be  converted  to  appropriate  liquidation  units  for  each  tax.  We  performed 

these conversions using energy content data from Eurostat241. 

Step 4: Tax revenue estimation 

Tax revenues were then estimated as the product of converted energy volumes and tax rates. We checked 

our  estimates  against  Eurostat  National  Tax  List  (TNL)  data  on  revenues  for  each  tax  to  ensure  our 

estimates are reasonably consistent. Where possible, especially for renewable support, we documented 

different sources between our estimates and the reported data. 

Analysis 

Taxes on energy consumption analysed in this section include: 

 

Excise taxes on fuels. 

  Non-tax levies on fuel purchases, such as on natural gas and electricity bills, used to finance 

renewable energy sources (RES) (e.g., the Renewable Energy Sources Act (‘EEG’) in Germany) 

Environmental charges such as carbon taxes (note: the EU ETS is not covered in this section) 

All other taxes, levies and fiscal measures that end consumers pay when they consume energy. 

 

 

Reported tax rates are taken from DG TAXUD and official national sources such as energy and finance 

ministries.  The  full  list  of  the  taxes  considered  in  this  research  can  be  found  in  the  annexes.  Energy 

products which are considered are: gasoil, petrol, fuel oil, natural gas and electricity. 

Reported tax rates 

MS reported total tax rates, calculated as the total of energy tax revenues divided by  the total energy 

consumption,  ranged  in  2020  from  EUR2021 13/MWh  in  Hungary  to  EUR2021 45/MWh  in  Denmark  with  a 

median of EUR2021 24/MWh (Figure 220). The total reported tax rate has slightly shrunk in the EU-27 from 

EUR2021 33/MWh in 2015 to EUR2021 31/MWh in 2020, mainly due to the historically low level of revenue 

from excise duties in road transport because of the mobility restrictions linked to Covid-19. In addition 

to this specific effect, we also note remarkable drops in countries like Denmark242 and Italy243 that are 

also explained by reduction of the cost the RES non-tax levy over this period. In contrast, countries like 

France and the Netherlands record increases of their reported total tax rate due to increases in excise 

duties on fossil fuels244. 

241  Eurostat, Energy balance guide, Methodology guide for the construction of energy balances & Operational guide 
for the energy balance builder tool, available at 
https://ec.europa.eu/eurostat/documents/38154/4956218/ENERGY-BALANCE-GUIDE-DRAFT-
31JANUARY2019.pdf/cf121393-919f-4b84-9059-cdf0f69ec045   
242 Indeed, the Danish government has decided to gradually phase out the charge financing the development of 
renewable technologies (called “PSO”) to reduce consumer electricity bills. From 2022, renewable projects will be 
directly part of the State budget and won’t be bear by electricity end-users. 
243 The cost of policies supporting the development of renewable technologies is decreasing in Italy from 
€ 17.7 billion in 2016 to € 13.5 billion in 2020. 
244 France started to apply a carbon tax (included in the excise duty) as from 2015, while The Netherlands has 
strongly raised in excise duty on natural gas which represented 45% of its final consumption in 2020.  

273 

 
 
 
 
 
 
 
 
                                                      
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Figure 220: Total tax rates on energy consumption in EU-27 in 2015 and 2020 (EUR2021/MWh) 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

Tax rates by sector 

Overall, the share of energy consumption by sector remained the same between 2010 and 2020 (Table 

3), with a noticeable decrease of the share of personal road transport between 2019 and 2020 going from 

20.9% of the total energy consumption to 18.9% in 2020 (Covid-19). 

274 

 
 
 
 
 
  
 
 
 
 
Sector 

Fishing 

Mining 

Trans-water 

Trans-rail 

Construction 

Agriculture 

Non-EII 

Trans-road-freight 

EII 

Services 

Trans-road-personal 

Households 

2010 

0.2% 

0.4% 

0.7% 

0.8% 

0.8% 

2.8% 

7.8% 

12.9% 

13.8% 

15.8% 

19.3% 

24.8% 

2019 

0.2% 

0.4% 

0.6% 

0.7% 

1.3% 

3.2% 

7.6% 

13.6% 

13.9% 

14.9% 

20.9% 

22.6% 

2020 

0.2% 

0.5% 

0.5% 

0.7% 

1.3% 

3.4% 

7.7% 

13.2% 

14.4% 

14.9% 

18.9% 

24.3% 

Table 36: Share of energy consumption by sector, 2010, 2019 and 2020 
Source: Authors calculation from Eurostat and Odyssee 

Tax  rates  by  sector  for  the  EU-27  ranged  from  EUR2021 4/MWh  for  energy-intensive  industries  (EII)  to 

EUR2021 53/MWh  for  personal  road  transport  (Figure  221).  The  low  tax  rate  observed  for  the  energy-

intensive industry sector is mainly explained by numerous tax reductions and exemptions in almost all 

Member States, in particular on RES non-tax levies. Rates increased the most, in absolute terms, in the 

households, services and non-energy-intensive industry sectors because they bear the largest portion of 

the  cost  of  renewable policies,  while  they  benefit from  almost  no  tax  exemptions. The  total  tax  rate 

changes in water transport, EII, and mining were small between 2010 and 2020. However, road transport 

(personal and freight) has remained the most taxed sector since 2010, while air transport still benefits 

from an almost complete tax exemption on the consumption of kerosene. 

2010

2019

2020

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Figure 221: Tax rates by sector in EU-27, 2010, 2019 and 2020 (EUR2021/MWh) 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data 

275 

 
 
 
 
 
 
 
 
 
Personal road transport is the most taxed sector: the average tax rate for personal road transport for the 

EU-27  as  a  whole  increased  by  10%  between  2010  and  2020  to  reach  EUR2021 53/MWh,  ranging  from 

EUR2021 34/MWh in Bulgaria to EUR2021 68/MWh Finland in 2020 (Figure 222).  

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Figure 222: Effective tax rate for personal road transport in EU-27, 2020 (EUR2021/MWh) 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data 

Tax rates by fuels 

Total tax rates by fuel for the EU-27 as a whole, range from EUR2021 5/MWh (fuel oil) to EUR2021 69/MWh 

(petrol, 2020 data, Figure 223). Petrol or gasoline, which is mainly consumed for road transport, is by 

far  the  most  taxed  product;  although  the  total  tax  rate  applied  to  this  product  has  experienced  a 

moderate decrease over the period 2010-2020. Gasoil or diesel, which is consumed in various sectors, 

has seen its total tax rate increase by nearly 25% mainly due to the increase in excise duty in the road 

transport sector, which brought it nearer to gasoline’s tax rate. The total tax rate on electricity for the 

EU-27 as a whole has doubled from EUR2021 15/MWh in 2010 to EUR2021 33/MWh in 2020; because of the 

growth  of  renewable  charges,  which  have  been  borne  by electricity  consumers  only.  The  total  tax  on 

natural gas and fuel oil remains at a level well below that of other energy products. 

276 

 
 
 
 
 
 
 
 
2010

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Gas Oil

Petrol

Figure 223: Reported total tax rates in EU-27, by fuel, 2010, 2019 and 2020 (EUR2021/MWh) 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

Figure  224  show  how  tax  rates  on  key  fuels  are  distributed  among  the  EU-27.  Each  blue-filled  box 

represents the interquartile range and the bar in each box represents the median tax rate of the fuel in 

EU-27 in 2020. The median tax rate in EU-27 in 2020 on gasoline was EUR2021 60/MWh, on gasoil (diesel) 

EUR2021 38/MWh,  while  the  median  tax  rate  on  natural  gas  was  EUR2021 1.8/MWh,  and  on  electricity 

EUR2021 4.5/MWh245. The  box  plot  on  tax  rate  on  electricity shows  that  75%  of  the  MS  have  a  tax  rate 

below EUR2021 17.6/MWh. The box plot on tax rate on natural gas highlights that most of the tax rates are 

concentrated around the median value of EUR2021 3/MWh. 

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Figure 224: Distribution of reported tax rates for key fuels, in EU-27 in 2020 (EUR/MWh) 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

Taxes on electricity and natural gas 

The distribution of taxes on electricity highlights huge disparities among Members States (Figure 225). 

Half of the MS tax electricity below EUR2021 4.5/MWh whereas only seven MS exceeds the 75th percentile. 

The  highest  tax  rate  of  EUR2021 72/MWh  was  reported  for  Germany.  The  average  EU-27  tax  rate  on 

245 Note that energy inputs to the electricity sector are not taxed to avoid double taxation – only the final consumer 
is taxed on electricity consumption, not the power producer on the consumption of input fuels. 

277 

 
 
 
 
 
 
 
 
 
                                                      
electricity increased by 116% going from EUR2021 15/MWh in 2010 to EUR2021 33/MWh in 2020. However, 

the median only increased by 40% going from EUR2021 3.2/MWh in 2010 to EUR2021 4.5/MWh in 2020. 

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2020

Average EU-27

Mean EU-27

Figure 225: Effective tax rate on electricity in EU-27 in 2020 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

The tax rates on natural gas in 2020 ranged from zero to EUR2021 37/MWh in Sweden in 2020. Overall, the 

average tax rate on natural gas in the EU-27 was EUR2021 8.2/MWh in 2020. It increased by 34% going from 

EUR2021 6.1/MWh in 2010 to EUR2021 8.2/MWh in 2020.  

h
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40

35

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20

15

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

2020

Average EU-27

Mean EU-27

Figure 226: Effective tax rate on natural gas in the EU-27 in 2020 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

Tax revenues by sector 

Road  transport  (freight  and  personal)  accounts  for  55%  of  energy  tax  revenues  in  EU-27,  followed  by 

households with 21%, then services with 13% in 2020. On one side, the road transport sectors account for 

278 

 
 
 
 
 
 
 
 
 
 
at least 80% of energy-related tax revenue in 14 Member States (BE, BG, CY, CZ, IE, LT, LU, LV, MT, PL, 

PT, RO, SI, and SK). On the other side, they account for less than half of the tax revenue in four Member 

States  in  2020  (DE,  DK,  NL,  and  SE).  The  households  account  for  at  least  25%  of  total tax  revenue  on 

energy consumption in 6 Member States (DE, DK, NL, SE, and ES). 

100%

90%

80%

70%

60%

50%

40%

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20%

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Trans-road-personal

Trans-road-freight

Residential

Services

Indus (EII + non-EII)

other sectors

Figure 227: Share of reported total tax revenue by sector in EU MS, 2020 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

In 2020, energy-intensive industries (EIIs) paid the lowest per unit tax rates, while road transport sectors 

paid the most. EIIs account for 14% of energy consumption in EU-27 and 2% of tax revenue. Agriculture 

accounts for 3% of energy use and 1.7% of tax revenue while road transport (freight and personal) accounts 

for 32% of energy consumption and 55% of tax revenue. 

Figure 228 shows the Revenue/Use (RU) factors by sector in the EU-27. The RU factor is a measure of 

energy tax proportionality. It is calculated as the natural logarithm of the ratio of the share of tax revenue 

to the share of energy consumption: 

RU Factor = Ln (Share of total tax revenue / Share of total energy consumption) 

An RU factor of zero means the sector’s share of taxes on energy consumption is proportional to the share 

of energy it consumes. A factor of less than zero means the sector pays less taxes on energy relative to 

the amount it consumes, and a factor of greater than zero means the sector pays more taxes relative to 

the amount it consumes. If all sectors paid taxes on consumption proportional to what they consume they 

would be aligned with the x-axis.  

Taxes related to road transport in 2020 were proportionally higher than energy consumed for this purpose. 

On  the  other  hand,  taxes  paid  by  the  EIIs,  agriculture  and  non-EIIs  were  less  relative  to  the  energy 

consumption in these sectors, in 2020. Agriculture, non-EIIs, rail transport, households and services are 

paying more taxes in 2020 relative to what was consumed than in 2010. 

279 

 
 
 
 
 
 
 
 
 
 
 
 
Figure 228: Revenue/Use factors by sector for the EU-27 (2020) 
Source: Authors calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

Tax revenue by type 

Three-quarters of revenues from energy taxes in the EU-27 were from excise taxes in 2020, and 22% from 

renewable  support.  Excise  taxes  account  for  at  least  90%  of  revenues  in  16  MS.  Renewable  support 

accounts for 34% of total revenue in Germany, 21% in France, 25% in Italy, while environmental charges 

make 30% of total revenue in Sweden, 29% in Finland and 12% in Ireland. 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Other tax

Oil
stockholding
fee

Nuclear tax

Environmental
charge

Renewables
support

Excise tax

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7
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Figure 229: Distribution of revenues from taxes on energy use by tax type in the EU-27 (2020) 
Source: Authors’ calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

280 

 
 
 
 
 
 
 
 
 
There were EUR 64 billion in additional revenues from taxes on energy consumption in 2019 compared to 

2010  (Figure  230).  Additional  revenues  from  excise  taxes  accounted  for  EUR 26 billion,  or  41%  of  the 

increase.  Additional  revenues  from  renewable  support  accounted  for  EUR 37 billion  or  57%  of  the 

increase, mainly from the renewable energies surcharge on electricity (EEG) in Germany, fees to support 

renewable energy sources in Italy246 and in France247. 

Figure 230: Decomposition of additional revenues from taxes on energy use in 2019 vs 2010 
(EUR billion) 
Source: Authors’ calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

The 9% decrease of total revenues from energy consumption between 2019 and 2020 is due to a decrease 

of  revenues  from  excise  taxes  (Figure  231).  Excise  duties  revenues  are  directly  related  to  energy 

consumption and road transport (freight and personal), which makes up roughly 75% of excise revenue 

and which were restricted due to Covid-19 lockdowns. EUR 20 billion out of EUR 21 billion decrease came 

from the excise revenues from road transport. 

Figure 231: Decomposition of additional revenues from taxes on energy use in 2020 vs 2019 
(EUR billion) 
Source: Authors’ calculations based on Eurostat, Odyssee, DG TAXUD and national sources data  

246 Oneri di sistema sulle energia rinnovabili 
247 CSPE 

281 

 
 
 
 
 
 
 
 
 
                                                      
8.7  International comparisons 

To  position  the  tax  policy  of  EU  Member  States  against  its  major  economic  partners,  we  use  data  on 

energy taxes provided by the OECD, which provides energy tax data and indicators using definitions similar 

to those of Eurostat, allowing us to make direct consistent comparisons. 

However,  it  should  be  noted  that  while  the  OECD  covers  all  the  countries  of  the  world,  few  of  them 

provide complete data series. Thus, only four EU neighbouring countries (Iceland, Norway, Turkey and 

the United Kingdom) and only five non-European G20 countries (the South Africa, Argentina, Canada, USA 

and Japan) provide data that can be used in such analysis. Many of the economic partners of the EU could 

not be treated within the framework of this analysis due to lack of data. This is particularly the case for 

Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia and South Korea. 

When it comes to timeline, we have chosen to use 2019 as the reference year for the comparisons. Indeed, 

the last year for which data is available is 2020 but it cannot be considered as a reference year due to 

the  Covid-19  pandemic  which  has  significantly  affected  energy  demand  and  therefore  revenue  from 

consumption taxes on energy. 

The analysis of the evolution of revenues from energy taxes between 2008 and 2019 in real terms (euros 

2021)  shows  that  most  countries  have  seen  their  energy  tax  revenues  increase.  However,  the  growth 

observed in EU countries significantly exceeds that of Canada, the USA and Japan (see Figure 33). 

)
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Figure 232: Energy tax revenue evolution (CAGR 2008/2019, in USD 2015 PPP) 
Source: Authors’ calculations based on OECD and Eurostat data 

282 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy tax revenue as a percentage of the GDP 

The first interesting indicator for comparing countries is the percentage that energy taxes represent in 

relation to domestic GDP. Figure 233 shows that the energy tax revenues-to-GDP ratio is much higher in 

the EU-27 (as a whole), except South Africa. This ratio is even significantly higher than that of Japan, a 

country  that  is  also  a  major  energy  importer,  and  those  of  Canada  and  the  USA  (both  net  energy 

exporters). 

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Figure 233: Energy tax revenue as a percentage of GDP in 2019 (%) 
Source: Authors’ calculations based on OECD and Eurostat data 

The evolution of the energy tax revenue-to-GDP ratio between 2008 and 2019 (Figure 234) shows a slight 

rise for the EU as a whole, which means that revenues from energy taxes have grown at roughly the same 

rate as GDP. The opposite movement is observed with most of our economic partners, which recorded a 

falling ratio over the same period. This is especially true for all the non-European countries, except South 

Africa, that all report negative figures meaning that their economic growth has exceeded that of their 

energy tax revenue.  

283 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3

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EU27

Others
Europe

G20

Energy taxes as % of GDP 2008/19

EU27

Figure 234: Energy tax revenue as a percentage of GDP evolution between 2008 and 2019 
(percentage point) 
Source: Authors’ calculations based on OECD and Eurostat data 

Energy tax revenue as a percentage of total tax revenue 

The  second  indicator  used  is  the  ratio  between  energy  tax  revenue  compared  to  total  tax  revenue, 

measuring the dependence of State budget yields from energy taxes. 

As for the energy tax revenue-to-GDP, the EU ratio is significantly higher than that of our major economic 

partners (Canada, Japan and the USA), which show levels almost twice as low as those of the EU. This 

therefore means that EU Member States are more dependent on energy tax revenues than their partners 

to balance their budgets. 

As previously demonstrated, fossil fuel taxes represent the most important tax base of Member States. 

Therefore, they are more dependent on their economic partners for the consumption of fossil fuels to 

finance their budgets. This must be questioned in the light of the EU's ambition for carbon neutrality, 

which  implies  drastically  reducing  the  consumption  of  fossil  fuels,  and  therefore  eroding  the  income 

derived from it (unless also drastically increasing taxes on these energies). 

284 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
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Source: Authors’ calculations based on OECD and Eurostat data 

The evolution of the energy tax-to-total tax revenue ratio also shows a slight increase in the EU in 2008 

and 2019, therefore a slight increase in the share of energy taxation in all tax revenue. This trend is also 

opposite in non-European G20 countries. 

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Energy taxes as % of GDP 2008/19

Energy taxes as % of total taxes

Figure 236: Energy tax revenue as a percentage of total tax revenue between 2008 and 2019 
(percentage point) 
Source: Authors’ calculations based on OECD and Eurostat data 

285 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In addition to this global international comparison, we provide an overview of the energy taxation systems 

in the USA and Japan. 

The United States 

In the US, revenues from energy taxes reached USD 155 billion in 2019, of which 

 

 

 

 

32%  (USD 50 billion)  come  from  excise  taxes  imposed  by  the  States  on  road  transport  fuel 

consumption (mainly gasoline); 

24% (USD 37 billion) from the excise tax levied by the federal administration on fuels for road 

transport; 

7% (USD 10.5 billion) from royalties drawn on onshore and offshore oil and gas production; and 

37% (USD 57.5 billion) of miscellaneous taxes. 

The  excise  taxes  levied  by the  federal  administration  and  those  of  the  states  represented  the  largest 

amount  of  revenue;  therefore  we  have  focused  our  analysis  on  the  evolution  of  these two  taxes.  The 

analysis of the evolution of excise taxes for gasoline and diesel shows that the tax rates have increased 

little for the States, while the rates imposed by the Federal Administration have not changed since 1993. 

Figure 237: Evolution of excise taxes (States + Federal) on petrol between 2008 and 2022 
(EURc/liter) 
Source: Authors’ calculations based on US Federal Tax Administration 

286 

 
 
 
 
 
 
 
 
 
Figure 238: Evolution of excise taxes (States + Federal) on gasoil between 2008 and 2022 
(EURc/liter) 
Source: Authors’ calculations based on US Federal Tax Administration 

Looking at the tax levels and their evolution with those of the EU Member States, we note a significant 

difference. Indeed, the EU-27 average excise rate is five times higher for petrol (Figure 239) and three 

times higher for gasoil (Figure 240), and this on the whole period 2008-2022. 

e
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70

60

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2008

2010

2015

2018

2019

2020

2021

2022

EU range

EU average

US average

Figure 239: Evolution of excise taxes on petrol in the EU and the USA between 2008 and 2022 
(EURc/liter) 
Source: Authors’ calculations based on US Federal Tax Administration and DG TAXUD 

287 

 
 
 
 
 
 
 
 
 
e
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EU average

US average

Figure 240: Evolution of excise taxes on gasoil in the EU and the USA between 2008 and 2022 
(EURc/liter) 
Source: Authors’ calculations based on US Federal Tax Administration and DG TAXUD 

288 

 
 
 
 
 
 
 
Japan 

As in many countries, taxes on road transport consuming petroleum products represent the vast majority 

(75%  in  2018)  of  energy  tax  revenues  in  Japan.  Revenues  have  been  relatively  stable  since  2008,  in 

particular because the excise rates on gasoline (Gasoline tax) and diesel (Diesel oil delivery tax) have not 

changed since April 2010. 

However, Japan stands out because it is one of the few OECD countries, if not the only one, to apply a 

double taxation on fossil fuels burned to produce electricity (Petroleum and coal tax) as well as on final 

consumption of electricity (Electric power tax). It stands out because it is also one of the few countries 

in the world to apply an excise tax on kerosene consumption for internal flights (Aviation fuel tax). 

 5,000

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 -

Figure 241: Energy tax revenues in Japan in 2018 (JPY billion) 
Source: Authors’ calculations based on Japan Ministry of Environment.  

2018

Electric Power Tax

Petroleum and Coal Tax

Aviation Fuel Tax

Diesel Oil Delivery Tax

Oil and Gas Tax

Local Gasoline Excise

Gasoline Tax

289 

 
 
 
 
 
 
 
 
 
8.8  Annex: Taxes on energy consumption included in the analysis 

Country 

Tax or non-tax levy name 

Austria 

Austria 

Austria 

Austria 

Austria 

Belgium 

Belgium 

Belgium 

Belgium 

Belgium 

Bulgaria 

Bulgaria 

Bulgaria 

Croatia 

Croatia 

Croatia 

Cyprus 

Cyprus 
Czech 
Republic 
Czech 
Republic 
Czech 
Republic 

Denmark 

Denmark 

Denmark 

Denmark 

Estonia 

Estonia 

Finland 

Finland 

Finland 

Finland 

Finland 

Finland 

Finland 

France 

France 

France 

France 

Tax on mineral oils 

Tax on energy - electricity 

Tax on energy - natural gas (1000 m3) 

Tax on energy - coal 

Emergency stock fee 

Excise duties on mineral oils 

Federal contribution on electricity and natural gas 

Stockholding fee 

Social heating fund fee 

BOFAS fee 

Excise tax on oil products 

Excise tax on electricity 

Excise tax on natural gas 

Excise duties on mineral oils 

Excise duties (NG, electricity) 
Fee for Incentivizing Electricity Production from Renewable Energy Sources and 
Cogeneration  

Excise Hydrocarbon Oils 

Excise tax on electricity 

Excise duty on mineral oil products 

Excise Tax Power 

Excise tax on natural gas 

Excise duties on oil products 

Electricity tax 

Natural gas tax 

Public Service Obligations 

Fuel excise 

Excise duties on electricity 

Energy content tax (oil products) 

Energy content tax (elec, natural gas) 

Carbon dioxide tax (oil products) 

Carbon dioxide tax (elec, natural gas) 

Strategic stock fee (oil products) 

Strategic stock fee (elec, natural gas) 

Oil pollution fees 

Domestic duty on energy products 

Other domestic duties 

Tax on electric energy 

Contribution to the public service of electricity (CSPE) 

Germany 

German Energy Tax Law 

290 

 
 
 
 
 
 
 
Germany 

Germany 

Germany 

Germany 

Germany 

Germany 

Greece 

Greece 

Greece 

Hungary 

Ireland 

Ireland 

Ireland 

Ireland 

Ireland 

Italy 

Italy 

Italy 

Italy 

Latvia 

Latvia 

Lithuania 

Luxembourg 

Luxembourg 

Malta 

Malta 

Netherlands 

Netherlands 

Netherlands 

Netherlands 

Poland 

Poland 

Poland 

Portugal 

Romania 

Romania 

Slovakia 

Slovakia 

Slovakia 

Slovakia 

Slovakia 

Slovenia 

Slovenia 

Spain 

Spain 

Electricity Tax Act 

EEG surcharge 

CHP levy 

Concession fee levy 

Individual grid charges levy 

Interruptible loads levy 

Excise duties on oil products and natural gas 

Excise duties on electricity 

Special Gaseous Emissions Reduction Fee 

Excise duties 

Mineral Oil Tax (Non-carbon charge component) 

Mineral Oil Tax (Carbon charge component) 

Natural Gas Carbon Tax (NGCT) - gross calorific value 

Electricity tax 

National Oil Reserve Agency  

Excise duty on mineral oils 

Fee to support renewable energy sources (A3 component) 

Excise duty on electricity 

Excise tax on natural gas 

Excise tax on oil products 

Excise on electricity 

Excise tax on oil products 

Taxe d'accise (incl. U.E.B.L. + autonomous) 

Autonomous taxes (electricity, natural gas, ) 

Excise Levies - Petroleum 

Excise on electricity 

Excise duty on mineral oils 

Energy tax (electricity and natural gas) 

Sustainable energy surcharge (Opslag duurzame energie) 

Oil stockholding fee 

Excise taxes on oil products 

Fuel surcharge 

Excise duty (electricity, natural gas) 

Tax on oil and energy products 

Excise duty on energy products 

Excise duty on electricity 

Taxes mineral oils 

Taxes on energy - natural gas 

Taxes on energy - electricity 

Taxes on energy - electricity (System operation tariff) 

Levy to nuclear energy fund 

Excise duties on oil products 

Excise duties (natural gas, electricity) 

Special Tax on Hydrocarbons 

Retail sale tax for certain hydrocarbons 

291 

 
 
 
 
Spain 

Spain 

Spain 

Spain 

Sweden 

Sweden 

Sweden 

Sweden 

Sweden 

Tax on Fuels derived from petroleum products 

Special tax on electricity 

Fees for Regimen retributivo especifico 

Contributions to the petrol products' strategic reserve corporation 

Energy tax (fuel oils) 

CO2 tax (fuel oils) 

CO2 tax (gas) 

Energy tax on natural gas 

Taxes on electrical power 

292 

 
 
 
 
 
 
 
9 Analysis of energy prices 

9.1  Introduction 

This section focuses on identifying which factors affect the wholesale electricity price, the natural gas, 

and the diesel prices, and by how much. Ordinary Least Squares (OLS) regression methods on time series 

and in panel data [multi-dimensional data (cross-section and time-series data)] have been applied and 

hourly, monthly, and yearly data have been collected and used. The period examined is the 2015 – 2021 

and is split to two periods 2015 – 2019 and 2020 – 2021 to examine the impact of the latest energy price 

surge. The speed and the magnitude of the pass-through rate from the wholesale price to retail price is 

also examined for the electricity and the natural gas prices. The analysis has not considered explicitly 

national or EU policies that may have been applied to alleviate the energy price surge. Energy policies, 

such as the recent gas price cap for Spain and Portugal that has been approved in March by the EU, have 

a significant impact on energy prices. Section 9.2 presents the main methodology used for each energy 

product examined, sections 9.3, 9.4, and 9.5 include the econometric248 results and section 9.6 provides 

conclusions. 

9.2  Methodology 

The following main topics have been analysed: 

 

 

Electricity Price Factors: Carbon price, natural gas price, electricity generation, power mix, 

nuclear unavailability and the cooling degrees days. 

Pass  through  -  electricity:  Speed  and  magnitude  of  pass-through  rate  of  wholesale  to  retail 

electricity price. 

  Gas Price Factors: Carbon price, LNG price, crude oil price, natural gas (NG) Storage and imports 

of natural gas. 

 

Pass through - gas: Speed and magnitude of pass-through rate of wholesale to retail gas price. 

  Oil Price Factors:  Oil imports, GDP per capita, carbon price and natural gas price. 

9.2.1  Wholesale electricity price 

For the wholesale electricity price, annual panel data were used to derive EU average estimates, monthly 

data to derive estimates at EU member state level, and hourly data by EU member state as we found that 

these  explain  the  electricity  price  variability  better  (i.e.,  reducing  the  standard  deviation  of  the 

estimates). Table 37 presents the data and the variables used in each estimation.  

Table 37: Data and variables by estimation 

Period 

Hourly Data 

Two periods examined: 2015 – 
2019, 2020 - 2021 

Monthly Data 

2015 – 2021 

Yearly data 

2015 – 2021 

Countries 

22249 EU member states 

22250 EU member states 

22 EU member states 

Methodology 

Dependent 
Variable 

OLS regression 

OLS regression 

OLS with fixed effect 

Wholesale electricity price 
(€/MWh) 

Wholesale electricity price 
(€/MWh) 

Log of wholesale electricity price 
(€/MWh) 

248 All estimates have been performed using the commercial software Eviews11 
249 Incomplete data for Croatia, Cyprus, Luxemburg, Malta, and Sweden. 
250 Incomplete data for Croatia, Cyprus, Luxemburg, Malta, and Sweden. 

293 

 
 
 
 
 
 
 
                                                      
independent 
variables 

 
 

 
 

 

 

 

Electricity price (€/MWh) 
Carbon Price (€/tonCO2) 
Price of natural gas (€/MWh) 
Total electricity generation 
(MWh) 
Share of coal-fired to total 
electricity generation (%) 
Share of gas-fired to total 
electricity generation (%) 
Share of wind and solar to 
total electricity generation 
(%) 

 
 

 
 

 

 

 

 

Electricity price (€/MWh) 
Carbon Price (€/tonCO2) 
Price of natural gas (€/MWh) 
Total electricity generation 
(MWh) 
Share of coal-fired to total 
electricity generation (%) 
Share of gas-fired to total 
electricity generation (%) 
Share of wind and solar to 
total electricity generation 
(%) 
Nuclear unavailability’s 
(MWh unavailable in a 
month) 

 

Renewable share in 
electricity generation (%) 
Electricity consumption per 
capita (KWh/person) 
Log Price natural gas 
(€/MWh) 
Cooling degree days index 
Log carbon price (€/tonCO2) 

 

 

 

 

The mathematical formulation for the hourly data estimates is: 
𝑃_𝐸𝐿𝐸𝑡,𝑐 = 𝛽0 + 𝛽1 ∗ 𝑃𝐶𝑃𝑡,𝑐 +   𝛽2 ∗ 𝑃𝑁𝐺𝑡,𝑐 + 𝛽3 ∗ 𝐸𝐿𝐸𝑇𝑂𝑇𝑡,𝑐 +   𝛽4 ∗ 𝑆𝐻𝑅𝐶𝑂𝐴𝐿𝑡,𝑐 + 𝛽5 ∗ 𝑆𝐻𝑅𝐺𝐴𝑆𝑡,𝑐 + 𝛽6

∗ 𝑆𝐻𝑅𝑊𝑆𝑡,𝑐 + 𝜀𝑡 

where: 

𝑃_𝐸𝐿𝐸𝑡,𝑐: Wholesale Electricity price (€/MWh) 
𝑃𝐶𝑃𝑡,𝑐: Carbon Price (€/tonCO2) 
𝑃𝑁𝐺 𝑡,𝑐: Price of natural gas (€/MWh) 
𝐸𝐿𝐸𝑇𝑂𝑇𝑡,𝑐: Total electricity generation (MWh) 
𝑆𝐻𝑅𝐶𝑂𝐴𝐿𝑡,𝑐: Share of coal-fired to total electricity generation (percentage points) 
𝑆𝐻𝑅𝐺𝐴𝑆𝑡,𝑐: Share of gas-fired to total electricity generation (percentage points) 
𝑆𝐻𝑅𝑊𝑆𝑡,𝑐: Share of wind and solar to total electricity generation (percentage points) 
Indexes t and c stand for time and country, respectively. The mathematical formulation for the monthly 

data estimates is: 

𝐷 {𝑙𝑜𝑔 (

𝑃𝐸𝐿𝐸 𝑡,𝑐
𝑃𝐸𝐿𝐸 𝑡−12,𝑐

)}

= 𝛽0 + 𝛽1 ∗ D {log (

𝑃𝐶𝑃𝑡,𝑐
𝑃𝐶𝑃𝑡−12,𝑐

)} +  𝛽2 ∗ D {log (

𝑃𝑁𝐺 𝑡,𝑐
𝑃𝑁𝐺 𝑡−12,𝑐

)} + 𝛽3 ∗ D {log {

𝐸𝐿𝐸𝑇𝑂𝑇𝑡,𝑐
𝐸𝐿𝐸𝑇𝑂𝑇𝑡−12,𝑐

)}

+   𝛽4 ∗ (𝑆𝐻𝑅𝐶𝑂𝐴𝐿𝑡,𝑐 − 𝑆𝐻𝑅𝐶𝑂𝐴𝐿𝑡−12,𝑐) + 𝛽5 ∗ (𝑆𝐻𝑅𝐺𝐴𝑆𝑡,𝑐 − 𝑆𝐻𝑅𝐺𝐴𝑆𝑡−12,𝑐) + 𝛽6 ∗ (𝑆𝐻𝑅𝑊𝑆𝑡,𝑐

− 𝑆𝐻𝑅𝑊𝑆𝑡−12,𝑐) + 𝛽7 ∗ D{log (

𝑁𝑈𝐶𝑈𝑁𝑡,𝑐
𝑁𝑈𝐶𝑈𝑁𝑡−12,𝑐

)} + 𝜀𝑡 

where: 
𝑁𝑈𝐶𝑈𝑁𝑡,𝑐: Nuclear unavailability’s (MWh unavailable in a month)  
𝐷: Stands for the monthly difference of the variable 

The mathematical formulation for the yearly data estimates is: 
log 𝑃_𝐸𝐿𝐸𝑡,𝑐 = 𝛽0 + 𝛽1 ∗ log 𝑃𝐶𝑃𝑡,𝑐 +   𝛽2 ∗ log 𝑃𝑁𝐺𝑡,𝑐 + 𝛽3 ∗ log 𝐸𝐿𝐸𝐶𝐴𝑃𝑡,𝑐 +   𝛽4 ∗ 𝑆𝐻𝑅𝑅𝐸𝑆𝑡,𝑐 + 𝛽5 ∗ 𝐶𝐷𝐷𝑡,𝑐 + 𝜀𝑡 
where: 
𝐸𝐿𝐸𝐶𝐴𝑃𝑡,𝑐: electricity consumption per capita (KWh/person) 
𝑆𝐻𝑅𝑅𝐸𝑆𝑡,𝑐: renewable share in electricity generation (renewables electricity production (eprpddiv), and 
Hydroelectric production (ehypd)) 

𝐶𝐷𝐷𝑡,𝑐: Cooling degree days index 

9.2.2  Electricity: Speed of pass-through rate between wholesale and retail prices 

An Autoregressive Distributed Lag (ARDL) model has been used to identify the speed and the magnitude 

of pass-through rate from wholesale price to retail price. Monthly time series data for the EU weighted 

average price have been used. The selection of the lags used in the model is based on the Akaike minimum 

information criterion. 

The mathematical formulation used is: 

294 

 
 
 
 
 
 
𝑃R𝐸𝑡,𝑐 = 𝛽0 + 𝛽1 ∗ 𝑡 +  𝛽2 ∗ 𝑃W𝐸𝑡,𝑐 + ∑ 𝛾𝑗 ∗ 𝑃R𝐸𝑡−𝑗,𝑐

+ ∑ 𝛿𝑖 ∗ 𝑃W𝐸𝑡−𝑖,𝑐

+ 𝜀𝑡 

𝑗=1

𝑖=1

𝑚

𝑘

where: 

𝑃R𝐸𝑡,𝑐: electricity retail price (€/MWh) 
𝑃W𝐸𝑡,𝑐: electricity wholesale price (€/MWh) 
ε𝑡: the error term 
m stands for the number of lags for the dependent variable 

k stands for the number of lags for the independent variable 

9.2.3  Wholesale natural gas price 

For the wholesale natural gas price, we used panel yearly data. The mathematical formulation used is: 
log 𝑃_𝐺𝐴𝑆𝑡,𝑐 = 𝛽0 + 𝛽1 ∗ log 𝑃𝐶𝑃𝑡,𝑐 +   𝛽2 ∗ log 𝑃𝐶𝑂𝐼𝐿𝑡,𝑐 +   𝛽3 ∗ log 𝑁𝐺𝑆𝑡,𝑐 +   𝛽4 ∗ log 𝐼𝑀𝑃𝑡,𝑐 + 𝜀𝑡 
where: 

𝑃_𝐺𝐴𝑆𝑡,𝑐: natural gas price (€/MWh) 
𝑃𝐶𝑃𝑡,𝑐: Carbon Price (€/tonCO2) 
𝑃𝐶𝑂𝐼𝐿𝑡,𝑐: Price of crude oil (€/bbl) 
𝑁𝐺𝑆𝑡,𝑐: Natural gas storage (TWh) 
𝐼𝑀𝑃𝑡,𝑐: Imports of natural gas (million cubic meters) 

9.2.4  Gas: Speed of pass-through rate between wholesale and retail prices 

An Autoregressive Distributed Lag (ARDL) model has been used to identify the speed of pass-through rate 

from wholesale price to retail price. All estimates have been performed by using Eviews11. Monthly time 

series data for the EU weighted average price have been used. The selection of the lags used in the model 

is based on the Akaike minimum information criterion. 

The mathematical formulation used is: 

𝑃RG𝑡,𝑐 = 𝛽0 + 𝛽1 ∗ 𝑡 +  𝛽2 ∗ 𝑃WG𝑡,𝑐 + ∑ 𝛾𝑗 ∗ 𝑃RG𝑡−𝑗,𝑐

+ ∑ 𝛿𝑖 ∗ 𝑃WG𝑡−𝑖,𝑐

+ 𝜀𝑡 

𝑗=1

𝑖=1

𝑚

𝑘

where: 

𝑃RG𝑡,𝑐: natural gas retail price (€/MWh) 
𝑃WG𝑡,𝑐: natural gas wholesale price (€/MWh) 
ε𝑡: the error term 
m stands for the number of lags for the dependent variable 

k stands for the number of lags for the independent variable 

9.2.5  Diesel Oil price 

For the diesel price, we used panel yearly data. The mathematical formulation used is: 
log 𝑃_OIL𝑡,𝑐 = 𝛽0 + 𝛽1 ∗ log 𝑃𝐶𝑃𝑡,𝑐 +  𝛽2 ∗ log 𝑃𝐿𝑁𝐺𝑡,𝑐 + 𝛽3 ∗ 𝐼𝑀𝑃𝑡,𝑐 +   𝛽4 ∗ 𝐺𝐷𝑃𝐶𝑡,𝑐 +   𝜀𝑡 
where: 

𝑃_𝑂𝐼𝐿𝑡,𝑐: diesel oil price (€/liter) 
𝑃𝐶𝑃𝑡,𝑐: Carbon Price (€/tonCO2) 
𝑃𝑁𝐺 𝑡,𝑐: Price of natural gas (€/MWh) 
𝐼𝑀𝑃𝑡,𝑐: Imports of oil (million barrels) 
𝐺𝐷𝑃𝐶𝑡,𝑐: GDP per capita (thousand € per person) 

9.3  Impact on electricity prices 

295 

 
 
 
 
 
 
 
 
Key findings 

1.  Hourly data explain better the electricity price variability as compared to monthly or yearly 

data.  

2.  The  natural  gas  price,  the  carbon  price,  the  total  electricity  generation,  and  the  shares  of 

renewable are found statistically significant in almost all cases. 

3.  Electricity price increases by an increase in natural gas price, carbon price and total electricity 

generation. 

4.  Electricity price decreases by an increase in the share of renewables. 

5. 

In the period between 2019 and 2021, a sudden change in the wholesale price would take 2 months 

to pass through to the retail price in industries were the magnitude of the pass-through rate is 

0.39.  

9.3.1  Wholesale electricity price estimates 

Yearly data estimates indicate that the electricity consumption per capita, the price of natural gas and 

the  carbon  price  each  have  a  positive  relationship  with  the  wholesale  electricity  price,  whereas  the 

renewable share in electricity generation has a negative impact. Empirically the relationship between 

temperature  and  electricity  price  is  verified251,252.  In  our  case  the  yearly/monthly  observations  mask 

important information hence we found no statistically significant estimates. The aggregated character of 

the variable may hide important information, which highlights the importance to have hourly data on the 

cooling degree index which possibly have a strong relationship at peak electricity demand hours. Based 

on the results of the OLS panel regression with fixed effects253 the following coefficients were estimated: 

log 𝑃_𝐸𝐿𝐸𝑡,𝑐 = −6.6 + 0.2 ∗ log 𝑃𝐶𝑃𝑡,𝑐 + 0.5 ∗ log 𝑃𝑁𝐺𝑡,𝑐 + 0.98 ∗ log 𝐸𝐿𝐸𝐶𝐴𝑃𝑡,𝑐 − 0.004  ∗ 𝑆𝐻𝑅𝑅𝐸𝑆𝑡,𝑐 + 0

Where: 

∗ 𝐶𝐷𝐷𝑡,𝑐 

𝑃_𝐸𝐿𝐸𝑡,𝑐: Wholesale Electricity price (€/MWh) 
𝑃𝐶𝑃𝑡,𝑐: Carbon Price (€/tonCO2) 
𝑃𝑁𝐺 𝑡,𝑐: Price of natural gas (€/MWh) 
𝐸𝐿𝐸𝐶𝐴𝑃𝑡,𝑐: electricity consumption per capita (KWh/person) 
𝑆𝐻𝑅𝑅𝐸𝑆𝑡,𝑐: renewable share in electricity generation (renewables electricity production (eprpddiv), and 
Hydroelectric production (ehypd)) 

𝐶𝐷𝐷𝑡,𝑐: Cooling degree days index 

Estimates are found statistically significant at a 1% level of significance. In particular: 

 

 

 

 

A 1% increase in carbon price results in a 0.2% increase in electricity price 

A 1% increase in natural gas price results a 0.5% increase in electricity price 

A 1% increase of electricity consumption per person results a 0.98% increase in electricity price 

A 1% change in the share of renewable energy generation results a 0.004% decrease in electricity 

price. 

251 Knittel CR and Roberts MR (2005), "An empirical examination of restructured electricity prices", Energy Economics., sep, 2005. 
Vol. 27(5), pp. 791-817. Elsevier BV.  
252 Kropyvnytskyy A (2016), "An Empirical Study of Electricity Price and Temperature" 
253 Fixed Effects allow intercept to vary across countries. Based on this approach, the estimator used is consistent with an unkn own 
country characteristic that allows heterogeneity across countries. 

296 

 
 
 
 
 
 
 
 
                                                      
In  these estimates, the variables have cross section N larger than time T.  Table  38 presents the main 

statistical properties of the residual of the estimates for the electricity price: 

Table 38:  Statistical properties of the residual – Unit root test 

Monthly data was used to increase the degrees of freedom and derive estimates at the EU member state 

level.  To  check  the  stationarity  of  the  variables  unit  root  tests  applied  in  the  series  and  has  been 

identified non-stationary in levels or year-by-year differences while is stationary in monthly and monthly 

difference of the annual growth rate. The estimations have been done in monthly difference of the annual 

growth rate. 

Table 39 presents the beta coefficient of the statistically significant estimates by EU member state where 

data  were  available.  Empty  boxes  relate  to  statistically  no  significant  estimates  at  5%  level  of 

significance.  

Table 39: Estimates based on monthly data – impact on wholesale electricity price (statistically significant 
estimates at 5%) 

D [log 
(P_GAS/P_GA
S (-12))] 

D [log 
(P_CP/P_CP 
(-12))] 

D [log 
(ELE_TOT/EL
E_TOT (-
12))] 

D 
[(SHR_COAL-
SHR_COAL (-
12))] 

D [(SHR_GAS-
SHR_GAS (-
12))] 

D [(SHR_WS-
SHR_WS (-
12))] 

0.15 

n/a 

AT 

BE 

BG 

CZ 

DE 

DK 

EE 

GR 

ES 

0.39 

0.76 

0.34 

0.41 

0.44 

0.36 

-0.30 

0.29 

1.31 

0.61 

0.34 

0.39 

0.67 

0.20 

0.09 

0.17 

0.20 

0.01 

0.01 

0.03 

0.04 

0.01 

-0.01 

-0.01 

-0.03 

0.03 

0.02 

297 

 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
0.65 

0.71 

0.58 

0.31 

0.38 

0.72 

0.59 

0.58 

0.36 

0.27 

0.50 

0.53 

FI 

FR 

H
U 

IE 

IT 

LT 

LV 

NL 

PL 

PT 

RO 

SI 

SK 

-0.66 

0.02 

0.94 

0.12 

0.09 

0.01 

n/a 

n/a 

0.08 

0.03 

0.01 

0.01 

0.01 

0.00 

-0.03 

0.09 

0.02 

0.01 

0.01 

0.20 

0.08 

The results of the OLS regression using monthly data confirm the main findings of the estimations using 

yearly data, that is: 

 

 

Total electricity generation, carbon price and natural gas prices are the main factors that are 

related positively to the electricity price 

The share of renewable energy sources, and more specifically the share of wind and solar power 

generation, impact negatively the electricity price. 

Estimates for Estonia, Finland, and Slovenia were not possible as there was missing data in electricity 

prices (Estonia and Slovenia) and gas prices (Finland).   

It should be noted that the monthly data fail to capture  day-by-day or hour-by-hour factors that may 

have important statistical information which explain better the electricity price variability. By extending 

our analysis to hourly data, we confirmed this argument as we found statistically significance estimates 

to almost all cases. Table 40 presents the beta coefficient of the statistically significant estimates at 1% 

level of significance by EU member state. 

Table 40: Estimates based on hourly data – impact on wholesale electricity price (statistically significant 
estimates at 1%) 

𝑷𝑪𝑷𝒕,𝒄 

Units 

€/tonCO2 

𝑷𝑵𝑮𝒕,𝒄 

€/MWh 

𝑬𝑳𝑬𝑻𝑶𝑻𝒕,𝒄 

MWh 

𝑺𝑯𝑹𝑪𝑶𝑨𝑳𝒕,𝒄 

𝑺𝑯𝑹𝑮𝑨𝑺𝒕,𝒄 

𝑺𝑯𝑹𝑾𝑺𝒕,𝒄 

p.p 

p.p 

p.p 

(a) 

0,79 

0,25 

1,02 

0,46 

1,13 

0,94 

1,45 

0,71 

0,88 

(b) 

0,10 

0,45 

0,75 

2,16 

0,67 

0,95 

1,38 

2,80 

n/a 

(a) 

1,35 

2,07 

n/a 

0,95 

0,74 

0,57 

-0,12 

n/a 

1,14 

(b) 

1,99 

1,84 

2,18 

1,21 

1,30 

0,88 

0,31 

2,75 

n/a 

AT 

BE 

BG 

CZ 

DE 

DK 

EE 

ES 

FI 

(a) 

(b) 

(a) 

(b) 

0,004 

0,011 

0,23 

-4,06 

0,005 

0,010 

0,010 

0,014 

0,003 

0,010 

n/a 

0,43 

0,29 

n/a 

0,51 

0,18 

0,001 

0,001 

-0,22 

-0,21 

(a) 

0,15 

0,80 

(b) 

(a) 

(b) 

0,73 

-0,42 

-0,72 

-0,43 

-0,03 

-1,39 

-1,95 

-0,64 

1,94 

0,45 

1,75 

0,85 

3,98 

0,15 

0,04 

n/a 

-0,99 

-0,91 

-1,46 

-0,38 

0,22 

0,001 

0,002 

-0,11 

1,15 

-0,12 

0,013 

0,150 

0,001 

0,001 

0,003 

n/a 

0,78 

0,98 

0,46 

-1,00 

2,86 

n/a 

3,50 

0,19 

37,78 

0,33 

-1,48 

1,65 

-0,27 

-0,23 

-1,36 

n/a 

-0,69 

n/a 

298 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
FR 

GR 

HU 

IE 

IT 

LT 

LV 

NL 

PL 

PT 

RO 

SI 

SK 

0,57 

0,49 

0,31 

0,81 

-0,43 

0,66 

0,62 

0,22 

6,88 

0,48 

1,23 

0,62 

0,45 

0,63 

n/a 

0,88 

3,68 

0,36 

0,97 

1,39 

0,41 

0,57 

2,30 

1,49 

1,05 

0,94 

1,29 

1,57 

0,26 

0,62 

1,70 

3,65 

0,65 

-0,12 

-0,58 

2,25 

1,02 

0,65 

0,68 

1,73 

2,94 

2,25 

0,84 

2,08 

1,60 

0,93 

1,79 

0,57 

2,73 

0,25 

1,91 

1,64 

0,000 

0,000 

0,004 

0,011 

0,006 

0,017 

0,012 

0,011 

2,21 

0,07 

0,37 

n/a 

5,79 

-0,35 

n/a 

-0,64 

0,001 

0,002 

0,12 

0,45 

0,004 

0,058 

0,014 

0,044 

n/a 

n/a 

n/a 

n/a 

0,001 

0,004 

0,09 

0,30 

0,006 

0,004 

-4,46 

-0,57 

0,004 

0,003 

0,007 

0,011 

0,022 

0,042 

0,006 

n/a 

0,60 

0,63 

0,41 

2,12 

0,32 

n/a 

0,32 

0,50 

2,24 

0,25 

1,24 

0,29 

0,56 

4,93 

-0,46 

-0,73 

n/a 

-0,13 

-0,82 

1,64 

-0,48 

-0,17 

-0,15 

-0,33 

-0,79 

n/a 

-0,22 

-0,97 

-0,23 

-0,18 

-0,34 

-0,82 

0,17 

0,27 

2,92 

0,34 

0,44 

1,21 

1,17 

0,31 

0,51 

0,65 

0,27 

-0,48 

-0,55 

0,04 

-0,81 

-6,95 

-1,97 

-0,07 

-0,43 

-0,45 

-0,59 

-0,98 

7,87 

2,54 

0,30 

0,51 

-1,05 

-0,38 

(a): Estimates for the period 2015 – 2019 

(b): Estimates for the period 2020 - 2021 

Estimates on hourly data confirms that: 

 

The gas price increases the fuel cost of gas fired power plants which increasing the short run 

marginal costs and as a result the electricity prices. The effect is also determined by the gas 

share to power generation. The higher the share of gas in total electricity generation the higher 

the impact of an increase in the natural gas price.  

 

Carbon price increases electricity price as fossil fuels become more expensive. Effect 

moderated over time in cases where fossils are substituted (with RES or towards natural gas 

that has lower carbon intensity).  

 

The increase in the share of renewables to power generation decreases the price of 

electricity254. 

  Higher  contribution  of  gas-fired  share  to  power  generation  increases  the  electricity  price  in 

almost  all  cases.  The  effect  is  even  higher  in  the  period  2020-2021  for  most  cases  including 

Germany, France, Spain, and Netherlands. 

9.3.2  Speed of pass-through between wholesale and retail electricity prices. 

An  ARDL  model  has  been  utilized  to  estimate  the  speed  and  the  magnitude  of  pass-through  rate  of  a 

change in the wholesale electricity price to retail price for industries and households. All estimates have 

been based on monthly data for EU weighted average price. The estimations are split into two periods 

(2008-2019 and 2019-2021) to examine the speed of pass-through before and after the energy price surge.  

Table 41: Overview of the estimations of the magnitude and speed of pass-through for the electricity price 

Period: 2008-2019 

Confidence 
Interval (95%) 

PTR 

Speed 

PTR 

Period: 2019-2021 

Confidence 
Interval (95%) 

Speed 

254 This effect was noted to be particularly high for Poland, Germany, Belgium and Slovenia 

299 

 
 
 
 
 
 
 
  
  
                                                      
y
r
t
s
u
d
n

I

l

d
o
h
e
s
u
o
H

1.65 

[-0.01, 3.32] 

-0.03 

[-1.75, 1.68] 

4% - (26 
months) 

2% - (50 
months) 

0.39 

[0.28, 0.50] 

0.009 

[-0.05, 0.06] 

46% - (2 
months) 

33% - (3 
months) 

Table 41 presents the overview of the results for the speed and the magnitude of the pass-through for 

the  electricity  price.  Red  boxes  are  characterized  by  low  r-squared  and  statistically  non-significant 

estimates for the magnitude of the pass-through rate and indicates the complex dynamics that take place 

in a “canonical period” such as price hedging, contracts etc. On the other hand, green boxes are found 

with statistically significant estimates for the pass-through rate. The magnitude of the pass-through rate 

in industries for the period 2019-2021 has been found to be 0.39 and the speed of pass-through is 46%, 

which means that 39% of the change in the wholesale prices will be pass-through in industries in a time 

period of 2 months. 

Figure 242: ARDL Error Correction Regression for industries (2008-2019, EU27 weighted average) – Electricity 
price 

300 

 
 
 
 
 
 
 
 
 
  
Figure  243:  ARDL Error  Correction  Regression  for  industries (2019-2021,  EU27  weighted average)  –  Electricity 
price 

Figure 242  and Figure 243 presents the  results of the  cointegration equation for industries in the two 

examined periods. The lag in the ARDL model has been selected by using the Akaike minimum information 

criterion.  The  ARDL  (1,3)  (period  2008-2019)  and  ARDL  (1,2)  (period  2019-2021)  was  selected  for 

industries.  The  parameter  that  corresponds  to  rate  of  adjustment,  the  pass  through  rate,  is  the 

coefficient of the variable CointEq(-1).  

Figure 244: ARDL Error Correction Regression for Households (2008-2019, EU27 weighted average) – Electricity 
price 

301 

 
 
 
 
 
 
 
 
 
Figure 245: ARDL Error Correction Regression for Households (2019-2021, EU27 weighted average) – Electricity 
price 

Figure 244 and Figure 245 presents the results of the cointegration equation for households in the two 

examined periods. The lag in the ARDL model has been selected by using the Akaike minimum information 

criterion.  The  ARDL  (1,5)  (period  2008-2019)  and  ARDL  (1,0)  (period  2019-2021)  was  selected  for 

households.  The  parameter  that  corresponds  to  rate  of  adjustment,  the  pass  through  rate,  is  the 

coefficient of the variable CointEq(-1). The estimations for households are characterized by low r-squared 

and non-significant estimates for the magnitude of the pass-through rate.  

Figure 246 shows the evolution of wholesale and retail electricity prices from 2008 to 2021. In the period 

2008-2019 the variability of the wholesale prices is not followed by retail prices while in the period 2019-

2021 the electricity prices in industries follows the lasting increase in the wholesale prices. 

Figure 246: Wholesale and retail electricity prices (in €/MWh) 

302 

 
 
 
 
 
 
 
 
9.4  Impact on natural gas prices 

Key findings 

1.  Carbon price and the price of crude oil have a positive relationship with the wholesale natural gas 

price  

2.  Natural gas storage and the natural gas imports have a negative impact on the wholesale price. 

3.  For industries the estimations shows that the magnitude of the pass-through rate is 0.62 in 2008-

2019 that will be pass-through in a period of 8 months and 0.73 in 2019-2021 that will be pass-

through in 1.7 months. For households the magnitude is 1.04 in the period 2008-2019 that will be 

pass-through in a period of 4 months.  

9.4.1  Wholesale natural gas price estimates. 

Yearly panel data estimates indicates that the carbon price and the price of crude oil have a positive 

relationship with the wholesale natural gas price whereas  the natural gas storage  and the  natural gas 

imports have a negative impact on the wholesale price. Based on the results of the OLS panel regression 

with fixed effects: 
log 𝑃_𝐺𝐴𝑆𝑡,𝑐 = 0.18 + 0.06 ∗ log 𝑃𝐶𝑃𝑡,𝑐 + 1.14 ∗ log 𝑃𝐶𝑂𝐼𝐿𝑡,𝑐 −  0.28 ∗ log 𝑁𝐺𝑆𝑡,𝑐 −  0.16 ∗ log 𝐼𝑀𝑃𝑡,𝑐 
Estimates are found statistically significant at a 10% level of significance. In particular: 

o  A 1% increase in carbon price results a 0.06% increase in natural gas price 

o  A 1% increase in crude oil price results a 1.14% increase in natural gas price 

o  A 1% increase of natural gas storage results a 0.28% decrease in natural gas price 

o  A 1% increase in the level of natural gas imports results a 0.16% decrease in natural gas 

price. 

9.4.2  Speed of pass-through between wholesale and retail natural gas prices. 

An ARDL model has been used to estimate the speed and the magnitude of pass-through rate of a change 

in the wholesale electricity price to retail price for industries and households. All estimates have been 

based on monthly data for EU weighted average price. The estimations are split into two periods (2008-

2019 and 2019-2021) to examine the speed of pass-through before and after the energy price surge.  

Table 42: Overview of the estimations of the magnitude and speed of pass-through for the gas price 

Period: 2008-2019 

Period: 2019-2021 

PTR 

Confidence 
Interval (95%) 

Speed 

PTR 

Confidence 
Interval (95%) 

Speed 

y
r
t
s
u
d
n

I

l

d
o
h
e
s
u
o
H

0.62 

[0.46, 0.78] 

1.04 

[0.68, 1.40] 

13% - (8 
months) 

26% - (4 
months) 

0.73 

[0.41, 1.06] 

-0.32 

[-0.53, -0.10] 

59% - (1,7 
months) 

67% - (1.5 
month) 

Table 42 presents the overview of the results for the speed and the magnitude of the pass-through for 

the gas price. Red boxes are characterized by low r-squared and statistically non-significant estimates 

303 

 
 
 
 
 
 
 
 
 
 
 
 
for the magnitude of the pass-through rate. On the other hand, green boxes are found with statistically 

significant  estimates  for  the  pass-through  rate.  The  magnitude  of the  pass-through  rate  in  the  period 

2008-2019 was found to be statistically significant for both industries and households. In period between 

2008  and  2019,  the  magnitude  of  the  pass-through  rate  is  0.62  for  industries  with  a  speed  of  13%  (8 

months) and 1.04 for households with a speed of 26% (4 months). However, the results in the period 2008-

2019 have relatively low r-squared (Figure 247 and Figure 249) and it must be considered with caution. 

In the period between 2019 and 2021, the magnitude of the pass-through rate is 0.73 for industries with 

a speed of 59% (1.7 months), where for households there are no statically significant estimates.  

Figure 247: ARDL Error Correction Regression for industries (2008-2019, EU27 weighted average)– Natural gas 
price 

304 

 
 
 
 
 
 
 
 
Figure 248: ARDL Error Correction  Regression for industries (2019-2021, EU27 weighted average)– Natural gas 
price 

Figure 247  and Figure 248 presents the  results of the  cointegration equation for industries in the two 

examined periods. The lag in the ARDL model has been selected by using the Akaike minimum information 

criterion.  The  ARDL  (1,3)  (period  2008-2019)  and  ARDL  (1,6)  (period  2019-2021)  was  selected  for 

industries.  The  parameter  that  corresponds  to  rate  of  adjustment,  the  pass  through  rate,  is  the 

coefficient of the variable CointEq(-1).  

305 

 
 
 
 
 
 
 
Figure 249: ARDL Error Correction Regression for Households (2008-2019, EU27 weighted average) – Natural gas 
price 

Figure 250: ARDL Error Correction Regression for Households (2019-2021, EU27 weighted average) – Natural gas 
price 

Figure 249 and Figure 250 presents the results of the cointegration equation for households in the two 

examined periods. The lag in the ARDL model has been selected by using the Akaike minimum information 

306 

 
 
 
 
 
 
 
 
criterion.  The  ARDL  (1,7)  (period  2008-2019)  and  ARDL  (1,3)  (period  2019-2021)  was  selected  for 

households.  The  parameter  that  corresponds  to  rate  of  adjustment,  the  pass  through  rate,  is  the 

coefficient of the variable CointEq(-1).  

Figure 251 shows that in the recent energy crisis the EU27 weighted average wholesale natural gas price 

decreased  from  early  2019  to  2020  with  sharp  increased  afterwards  and  seems  that  retail  prices  for 

industries follow this increase more profoundly than households. 

The  magnitude  of  the  pass-through  rate  in  the  period  between  2008  and  2019  was  found  statistically 

significant for both industries and households. In period between 2008 and 2019, the magnitude of the 

pass-through rate is 0.62 for industries with a speed of 13% (8 months) and 1.04 for households with a 

speed of 26% (4 months). However, the results in the period 2008-2019 have marginally low r-squared 

(Figure 6 and Figure 8) and it must be considered with caution. In the period between 2019 and 2021, the 

magnitude  of the pass-through  rate  is  0.73 for  industries with  a  speed  of  59%  (1.7  months)  where  for 

households there are no statically significant estimates. 

Figure 251: Wholesale and retail natural gas price (in €/MWh) 

9.5  Impact on oil prices 

Yearly panel data estimates indicates that the natural gas price and the GDP per capita have a positive 

relationship  with  the  diesel  oil  price255  whereas  the  oil  imports  have  a  negative  impact  on  the  diesel 

price. Based on the results of the OLS panel regression with fixed effects: 
log 𝑃_𝑂𝐼𝐿𝑡,𝑐 = −1.6 + 0 ∗ log 𝑃𝐶𝑃𝑡,𝑐 + 0.26 ∗ log 𝑃𝑁𝐺𝑡,𝑐 +  0.30 ∗ log 𝐺𝐷𝑃𝐶𝑡,𝑐 −  0.11 ∗ log 𝐼𝑀𝑃𝑡,𝑐 
Most of estimates are found statistically significant at a 1% level of significance. In particular: 

 

 

A 1% increase in natural gas price results in a 0.26% increase in diesel oil price 

A 1% increase of GDP per capita results in a 0.30% increase in diesel oil price 

255 See also: Nkwantabisa D (2021), "Determinants of Natural Gas Prices in the United States – A Structural VAR Approach", SSRN 
Electronic Journal. Elsevier BV. 

307 

 
 
 
 
 
 
 
 
 
 
                                                      
 

A 1% increase in the level of oil imports results in a 0.11% decrease in diesel oil price, with a 10% 

level of significance. 

9.6  Conclusion 

OLS  regression  and  panel  OLS  with  fixed  effects  methods  were  used  to  analyse  the  impact  of  various 

factor  on  the  electricity,  natural  gas  and  oil  price.  The  estimation  by  using  hourly  data  found  to  be 

superior  in  terms  of  statistical  significance  due  to  the  better  explanation  of  the  electricity  price 

variability as peak and base load demand differ by hour.  

For  the  wholesale  electricity  price,  it  is  found  that  an  increase  in  the  natural  gas  price  increases 

electricity costs since the gas-fired power plants can cover peak load demand and have increased their 

penetration in the power mix in the period examined in most EU member states. Hence, the role of gas 

price as an electricity price determinant has been intensified  over the period 2020  -2021. The carbon 

price is positively correlated with the electricity price. The  effect is moderated over time  in cases of 

fossils being substituted by renewable energy or other fossil fuels that have a lower carbon intensity. The 

increase in the share of renewables to power generation decreases the price of electricity. 

By  examining  how  quickly  a  change  in  the  wholesale  electricity  price  is  passed  through  the  retail 

electricity price we found that a sudden change in the wholesale electricity price would take 2 months 

to pass through to the retail electricity price in industries were the magnitude of the pass-through rate 

is 0.39 in the period 2019-2021. For the wholesale natural gas prices in industries the estimations shows 

that the magnitude of the pass-through rate is 0.62 in 2008-2019 that will be pass-through in a period of 

8 months and 0.73 in 2019-2021 that will be pass-through in 1.7 months. For households the magnitude is 

1.04 in the period 2008-2019 that will be pass-through in a period of 4 months. 

Natural gas and diesel oil prices were analysed by using yearly panel data across for the EU countries. In 

both cases, there is a positive correlation of the price with the change in other energy prices considered 

in the estimated equation and a negative correlation with their respective imports. Natural gas storage 

levels negatively impact (e.g. lower) the natural gas price. 

308 

 
 
 
 
 
 
 
 
 
 
 
 
10 Impact of price developments on low-carbon 

emission technologies 

In this Chapter, we take a closer look at how the current energy prices impact the financial attractiveness 

of renewable energy alternatives and energy saving measures for households. To do this, we analyse two 

of the key measures that households can take to lower their energy use and emissions:  

a) 

switching from gas to electric heating with a heat pump and  

b)  switching to an electric vehicle (EV). 

The analysis focuses on the financial attractiveness of these investments and  on how the recent price 

increases influenced the business case for these two key measures.  

10.1 Case study 1: Heat pumps vs. gas boilers 

In  the  first  case  study,  we  analyse  the  Total  Cost  of  Ownership  (TCO)  of  full-electric  heat  pumps  in 

comparison with conventional gas boilers — currently the most used heating source for households in the 

EU. The European Commission see (full electric) heat pumps as one of the main technologies that could 

deliver  significant  energy  and  emission  reductions  in  the  built  environment  and  households,  and 

potentially save costs as well. 

Methodology 

For this analysis, we selected four representative heating profiles: households in cold (e.g. Poland) and 

moderate (e.g. Netherlands) climate zones with average or good insulation256. The analysis is based on a 

common  four-person  household  occupying  a  110m2  house,  as  in  Table  43.  These  four  profiles  give  a 

simplified but good basis for the analysis on the financial viability of heat pumps in the EU. Most input 

parameters were based on a study of the Coolproducts initiative of the European Environmental Bureau.257 

Table 44 shows all parameters and inputs that were taken into account to assess full lifetime costs.258  

Heat pump viability and cost differences in the EU 

This analysis is inevitably a simplification of reality, which gives a rough estimate of the impact of higher 

energy prices on heating technologies throughout the EU, based on average EU27 costs. Among others, in 

this analysis we use EU27 tax levels, average EU heat pumps costs and efficiency, average EU emission 

intensity. Also, the calculation is based on forecasts for wholesale spot prices and the retail energy price 

can differ significantly. 

Individual cases can show (significantly) different results as a result of variations in among others: 

  Operational costs: depends on the household’s energy contract (electricity and/or gas), which 

(especially in 2021-2022) can lead to large differences in energy prices; national tax levels.  

256 All values are in EUR2021 prices. 
257 European Environmental Bureau (2021). Analysis of the affordability of switching to renewable heating for a standardized middle-
income family in the EU. 
258 The model is inevitably a simplification of reality, used to compare the impact of higher energy prices on heating technologies. 
Absolute estimates of payback times, operational costs etc. should be interpreted with caution. Individual cases may show 
(significantly) different results, depending on the price of the heat pump, the energy price paid by households under their contract, 
insulation level, geographical location, additional measures needed in (old) houses, etc. This is especially the case given the use of 
EU27 averages when available (average EU27 taxes, average EU27 heat pump cost and efficiency, average EU27 emission intensity). 
Also, the calculation is based on forecasts for wholesale spot prices and the retail energy price can differ significantly. All values are 
in EUR2021 prices. 

309 

 
 
 
 
 
 
 
 
 
                                                      
 

Investment costs: depends on the necessary adjustments to the existing heating system; high 

labour costs increase installation costs. 

  Heating demand: specific heating demand of the house depending on insulation level; heat pump 

efficiency (depending on house type, heat pump type and insulation level). 

Table 43: Characteristics of reference household type in different climates and with different insulation levels. 
Reference household is 110 m2 with a four-person family. Unit: kWh heating need per year.  

Climate zone 

Moderate 

Cold 

Insulation level 

Average 

High 

Average 

High 

Heat demand (kWh) 

Space heating demand 
Water heating demand 
(4 persons) 

9,595  

6,716  

17,271  

12,089  

3,778  

3,778  

3,778  

3,778  

Total heat demand 

13,373  

10,494  

21,048  

15,867  

Heating profiles based on 944 kWh water heating demand per person. Average space heating demand in moderate climate based on 
average heating demand in the Netherlands in 2019 of 87 kWh/m2; for cold climate average space heating of Poland is used of 157 
kWh/m2. For high insulation a 30% reduction of heating demand is assumed. 
Source: Odyssee-Mure (2022). Heating consumption per m2 and dwelling. 

In addition, in this analysis, houses in warm climates are not included, as (air-to-source) heat pumps are 

rarely the most viable decarbonisation route in warm climates with limited heating needs. Cheaper air-

to-air heat pumps that can both heat and cool in combination with solar boilers are expected to be more 

cost-efficient options. 

Poor  insulation  dwellings  are  not  included  as  well,  as  they  can  require  large  additional investments  in 

insulation  measures  first  to  reduce  their  heating  demand  before  heat  pumps  become  viable.  In  this 

situation, the relative saving compared to gas is lower, but the reduction of absolute energy consumption 

(and bills) is likely the highest. 

Table 44: Main assumptions used in simplified analysis of heat pump financials. 

Standard 
boiler 

High-
Efficiency 
boiler 

Air-to-
source 
heat 
pump 

Ground 
source 
heat 
pump 

Category 

Indicator 

Characteristics 

Efficiency 

Costs260 

Emissions 

Lifetime 
Purchase 
+installation cost 
Operational + repair 
+ maintenance 
Refrigerant 
emissions 
Gas 
Electricity (EU 
average 2022-2030) 

Unit 
Heat 
output/heat 
input (%) 
years 

EUR2021 

EUR2021/year 

kg CO2 annually 

kg CO2/MWh 

kg CO2/MWh 

75% 

12 

90% 

12 

360% 

20 

460% 

20 

1701 

2430 

10000 

16000 

270  

0 

270  

49  

52  

140 

140 

0 
204 

190 

Source 

Ecoboiler-
Review259 

Coolproducts 
(2021)261 

IPCC262 

EEA (2022)263 

259 Ecoboiler-review (2019).Review study: Environment & economics 
260 In the case of existing houses, additional investments could be necessary in order to make the house suitable for heat pump 
heating. This includes insulation measures, but could also mean a switch replacing existing radiators to larger models or a switch to 
floor heating or forced-air systems. These costs can make up 35% of total investment costs (incl. installation). Source: IEA (2022).The 
future of heat pumps. 
261 Coolproducts (2021). Analysis of the affordability of switching to renewable heating 
262 IPCC data via RVO (2020). List of energy carriers and emission factors. 
263 EEA (2022). Greenhouse gas emission intensity of electricity generation in Europe 

310 

 
 
 
 
 
                                                                
                                                                  
                 
                 
                                                                
                                                                   
                   
                   
                                                              
                                                      
                  
              
 
 
 
 
 
 
  
  
  
  
                        
                        
                  
                
                                                      
Insights and results 

Table 45 shows some key indicators of the cost savings for households when switching to heat pumps. The 

results are shown for four possible gas and electricity price scenarios264: 

 

Current price forecast 2022-2030 (Elec 250 EUR/MWh; gas 100 EUR/MWh): This provides an up-

to-date price forecast for the next 8 years. Therefore, taking into account the current very high 

prices but also lower prices towards 2030. 

 

Pre-price increase forecast 2022-2030 (Elec 150 EUR/MWh; gas 49 EUR/MWh): This shows the 

expected price forecast made mid-2021, so before the current very high price increases. The 

difference between these first scenarios shows the impact of the recent price increase.   

 

Continuing  current  price  levels  (Elec  380  EUR/MWh; gas  168  EUR/MWh):  In this  scenario,  we 

assume that the current extremely high price level will continue. While this scenario could be 

considered as extreme, it gives a good insight on the impact of the current situation on heat 

pumps.  

Below we present some of the main results of the analysis in which we compare the costs of an (air-to-

source) heat pump with a (high-efficiency) gas boiler.  

 

The  current  very  high  price  levels  and  forecasted  long-term  prices  will  likely  make  heat 

pumps over their lifetime cheaper than fossil gas boilers. When assessing total lifetime costs, 

before recent price increases heat pumps without any subsidy showed similar lifetime costs to 

gas  boilers.  However,  because  of  the  current  high  energy  prices  and  its  likely  impact  on  the 

overall  price  level  in  the  coming  10  years,  heat  pumps  will  be  cheaper  (or  ‘less  expensive’) 

compared to gas boilers and saving around €300-€700 per year and lowering heating energy 

bills by 20-25% compared to gas. The main reason heat pumps are relatively more favourable 

now is that the ratio between electricity and gas prices has decreased, while staying lower than 

the  efficiency  ratio  between  boilers  and  heat  pumps  (Figure  252).  Nevertheless,  in  case  of 

continuing high electricity prices, energy bills will stay high; also with a heat pump still higher 

than  the  heating  costs  pre  price-increase.  The  estimated  payback  time  for  heat  pumps 

(additional investment compared with gas) in this scenario is 6-9 years. Also, it is estimated that 

investment costs for heat pumps could further reduce with 20% towards 2030, both through heat 

pump cost reductions as well as more efficient installation methods (though labour shortages 

might on the other hand drive up costs).265 

Figure 252: Difference between efficiencies and energy price for gas boilers and electric heat pumps. 
A higher efficiency difference and lower energy price difference, results in heat pumps being 
relatively more financially attractive. 

264 All above 4 total costs include a network + tax costs of 28 EUR/MWh for natural gas and 113 EUR/MWh for electricity, in line with 
the 2021 EU27 average. 
265 IEA (2022). The future of heat pumps. 

311 

 
 
 
 
 
 
 
                                                      
 

Even more so, if current price levels continue, energy bill savings from a heat pump can pay 

back the high initial investment (compared to gas) in 2 to 4 years. Though it is worthwhile to 

note that this is based on current day-ahead wholesale prices, which may not translate into the 

same level of retail prices. As an example, the current average retail price for electricity is, at 

250 EUR/MWh, significantly lower than recent peaks in wholesale prices, which have risen  as 

high as 500 EUR/MWh.   

 

Current price developments still lead to very high energy bills, independent from the heating 

technology. This creates an undesirable situation that puts stress on (low-income) household 

budgets. For example, in the ‘current price forecast’ scenario total lifetime costs for gas boiler 

heating increase by 65%-90% (energy bill increases from €1429 to €2403 per year) compared to 

the pre-price increase situation. For heat pumps, the increase is lower but still 20%-40 (€1360 

to €1849).  It should be noted that these scenarios are based on energy price scenarios for a 

ten-year  period  and  already  take  into  account  a  reduction  of  energy  prices  in  coming  years 

compared with 2022 levels (Figure 253 and Figure 254). 

 

Switching  from  gas  heating to  heat  pumps  can  save  1200-2400  m3  of  gas  per  year  for  an 

average  household.  To  put  this  into  perspective,  gas  savings  from  1  million  heat  pumps  in 

households are equal to ~1% of the Russian gas supply in 2021 to the EU. Gas used for generating 

the additional electricity accounts to less than 10% of the gas saving (100 m3/y), when assuming 

the 2019 average of a 20% share of gas in the electricity generation mix. 

  Heat  pumps can reduce heating emissions for  households by around 70%.  The use of heat 

pumps leads to emission reductions both through energy savings and in many grid cases a cleaner 

fuel  (electricity).  With  increasing  low-carbon  electricity  penetration,  emissions  could  be 

reduced up to 100% instead of ~70%. Besides energy-related emissions however, heat pumps also 

lead  to  a  limited  amount  of  refrigerant  emissions,  which  still  have  potential  to  be  further 

reduced in the future. Heat pumps mainly lead to energy savings through its very high efficiency 

of up to 360% to 460% (heat output compared to energy input; lower heating value) compared 

to  the  80-90%  for  gas  boilers.  Other electrical  alternatives,  such  as  electric  heaters  can  only 

reach an efficiency of up to 100% and are therefore significantly less efficient than heat pumps. 

In addition, switching to heat pumps from other polluting fuel heating systems such as coal or 

oil boilers — still widely used in some Member States — can also significantly improve air quality 

and thus lead to additional health benefits. 

 

The results are comparable for other heating technology types. Ground-to-source heat pumps 

under  current  prices  will  lead  to  more  lifetime  savings  for  households  with  high  energy  use 

(larger houses) but have higher initial purchase costs, which forms a barrier to high uptake. Also, 

standard gas boilers, which are still installed in many homes in the EU, have higher lifetime costs 

than high-efficiency boilers and thus switching to a heat pump will lead to more relative savings 

for  households  with  a  standard  gas  boiler  (if  a  house  has  sufficient  insulation  to  take  full 

advantage of a heat pump).  

312 

 
 
 
 
60%

50%

40%

30%

20%

10%

0%

1233

637

1740

1293

Absolute annual 

478

338

689

477

100

20

99

56

Climate: moderate
Insulation: avg

Climate: moderate
insulation: high

Climate: cold
Insulation: avg

Climate: cold
Insulation: high

Pre-price increase

Current price forecast

Continuing current price
levels

Figure 253: Reduction of energy bill as a result of switching from a gas boiler to an all-electric heat pump. The 
bars show the percentage reduction (%) of the energy bill. The amounts indicate the absolute cost saving in the 
scenarios for an average household. 

)
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Operational - gas boiler

Operational - heat pump

Investment -gas boiler

Investment - heat pump

pre-price increase

Current price
forecast

Continuing current
price levels

Figure 254: Total annual heating costs per heating technology in 3 different energy price scenarios in EUR2021, 
split into investment costs and operational costs (fuel + maintenance). 

Table 45: Overview of financial benefits of (air-to-source) heat pumps compared to natural gas boilers. 

Climate zone 

Moderate 

Cold 

Household type 

Insulation level 

Average 

High 

Average 

High 

Price scenario 

Indicator 

Unit 

Business case heat pumps for different price scenario's 

pre-price increase forecast 
2022-2030 

Cost savings per year 

EUR2021 

% reduction of energy costs 

% 

-100 

-7% 

-20 

-2% 

-99 

-5% 

-56 

-4% 

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Climate zone 

Moderate 

Cold 

Household type 

Insulation level 

Average 

High 

Average 

High 

Price scenario 

Current price forecast 2022-
2030 

Continuing current price 
levels (Sept 2022) 

Impact of high energy prices 

Indicator 

Payback time 

Unit 

Years 

Cost savings per year 

EUR2021 

% reduction of energy costs 

% 

Payback time 

Cost savings per year 

Years 

EUR2021 

% reduction of energy costs 

% 

Payback time 

Years 

Additional savings per year 

All scenario’s 

Impact higher energy prices on 
business case heat pump 

EUR2021 
% Additional 
energy bill 
reduction  

Reduction of payback time 

% 

Climate benefits 

Gas saving 

X 1000 m3/year 

All scenario’s 

Net energy saving 

Additional electricity 

Emission saving (Forecast 
emission intensity 2021-2030) 

MWh/year 

MWh/year 

t CO2/year 
% decrease of 
heating emission 

15 

-478 

-25% 

8 

-1714 

-38% 

3 

-482 

-19% 

-55% 

1.5 

3.7 

11.1 

2.3 

-72% 

19 

-338 

-23% 

9 

-1329 

-36% 

4 

-303 

-19% 

-52% 

1.2 

2.9 

8.7 

1.8 

15 

-689 

-24% 

6 

17 

-477 

-22% 

8 

-2411 

-1799 

-35% 

-34% 

2 

3 

-691 

-436 

-20% 

-19% 

-64% 

-60% 

2.4 

6.4 

17.0 

3.6 

1.8 

4.8 

12.8 

2.7 

-71% 

-73% 

-71% 

Policy implications 

 

The significant initial investment costs of heat pumps might still require support schemes 

for  lower-income  households  to  help  overcome  the  initial  investment  hurdle.  While  our 

analysis shows that in many cases heat pumps can be cheaper than fossil fuel alternatives, many 

lower-income  households  do  not  have  the  means  for  financing  a  large  one-time  investment. 

Given  that  heat  pumps  eventually  will  pay  this  investment  cost  back,  such  support  do  not 

necessarily have to be subsidies, but could also be financing schemes that help spread out the 

initial  investment.  Nevertheless,  the  societal  benefit  of  reduced  emissions  may  justify  public 

spending. 

 

Policies that decrease the cost of electricity compared to natural gas or other heating fuels 

improve the business case for heat pumps. The profitability of installing heat pumps depends 

on the price differential between the current heating fuel (mainly natural gas) and electricity. 

Thus, policies that reduce the price of electricity compared to natural gas will make switching 

to heat pumps more financially attractive. The main instrument for governments to steer this 

price differential is via tax policy. As an example, several Member States such as the Netherlands 

have implemented tax reforms in which the energy tax for households is increased on gas while 

lowered  on  electricity.  Additionally,  smart  heating  technology,  which  enables  heating  during 

hours with lower electricity prices, can further improve the business case for heat pumps. 

10.2 Case study 2: Electric vehicles vs. Gasoline internal combustion engine 

In this case study, we analysed how the costs of a full battery electric vehicle (BEV) compared to a vehicle 

with a gasoline internal combustion engine (ICE) and how the energy price increases have influenced the 

314 

 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
costs difference. For a complete comparison, we take a Total Cost of Ownership (TCO) perspective, which 

means that all costs during the full vehicle lifetime are taken into account. 

Methodology 

Cost components 

The costs components taken into account in this analysis are the following: 

 

Purchase price premium of the BEV (compared to the ICE), taking into account: 

o 

o 

battery and home charger cost266 (positive purchase price premium); 

Powertrain cost (negative purchase price premium).267 

 

Fuel (gasoline or electricity) expenditures over the vehicle lifetime; 

  Maintenance costs over the vehicle lifetime. 

The approach taken to estimate the above-mentioned various costs components is further detailed below. 

The results can be very sensitive to a number of these assumptions; therefore the latter should always 

be borne in mind when interpreting the results. 

Vehicle lifetime 

The  vehicle  lifetime  mileage  is  based  on  an  annual  mileage  of  10  000  km  (considered  broadly 

representative  of  an  average  EU  gasoline  car)  and  a  vehicle  lifetime  of  15  years  (also  broadly 

representative of an average EU car), i.e. 150 000 km.268 The TCO analysis is performed over this overall 

distance,  for  the  vehicle  lifetime.  Therefore  it  does  not  reflect  first-owner  perspective  only  (as  is 

sometimes done in other vehicle TCO analyses), and does not consider any residual value for the car at 

the end of its lifetime. 

Charging costs 

As mentioned above, the analysis includes the purchase and installation cost of a home charger (estimated 

to EUR 1 000269) and does not account for operational home charging expenditures other than the retail 

electricity price. It is assumed that the vehicle will run 80% of its lifetime mileage on electricity from 

(slow) home charging, and 20% on electricity from fast charging along the road (e.g. on highways). The 

cost of fast charging is assumed to have a price premium of 50% compared to the electricity retail price 

for home charging. This therefore reflects a BEV usage mainly based on home charging (usually the main 

charging solution for BEV owners), with instances of fast charging for longer trips.  

Battery costs 

The  battery  price  applied  to  BEV  batteries  in  this  analysis  is  EUR  140/kWh  and  is  considered  to  be 

representative of a BEV battery pack price in Europe in 2021.270 Rapidly falling battery prices over the 

past  decade  (which  is  expected  to  continue  throughout  this  decade  in  particular  through  technology 

266 See assumptions on battery and home charger costs in the corresponding paragraphs below. 
267 The assumption of the difference in powertrain costs between the BEV and the ICE is EUR 2,000 in favour of the BEV. A BEV 
powertrain is cheaper than an ICE powertrain among others due to simpler architecture and fewer moving parts. In the future, more 
stringent pollutant and GHG emissions requirements on ICEs will tend to further increase the ICE powertrain cost, while with larger-
scale manufacturing BEV powertrain costs may experience a further decreasing trend. Combining these different purchase price 
premium components (battery, home charger and powertrain), the purchase price premium is positive for BEVs (i.e. the BEV purchase 
price is higher than the ICE), driven by the battery costs. 
268 Many battery electric vehicle warranties are for eight years and 160 000 km (Car magazine, 2022), which should represent a 
minimum battery durability. However, many early adopters report longer battery durability. It is therefore assumed in this analysis 
that no battery replacement is necessary during the vehicle’s lifetime. 
269 All used prices are in real EUR2021 and use simple prices (no discounting). 
270 Estimated from BNEF, 2021. 

315 

 
 
 
 
 
 
 
 
 
                                                      
learning and scale-up), but also rising raw material prices and supply bottlenecks (i.e. lithium costs, see 

chapter 4) make this assumption subject to possible variations (e.g. depending on geography and in time), 

and therefore variations in TCO analyses results. 

Maintenance costs 

Maintenance costs are generally understood to be lower for BEVs than for ICEs due to simpler vehicle 

architecture, fewer moving parts and brake energy recovery271. These have been estimated to amount to 

around 1.3 €ct/km for a BEV, and 40% more for an ICE (i.e. around 1.8 €ct/km). Insurance costs have not 

been accounted for in this analysis, as they are estimated to generally be independent of powertrain.272 

Other vehicle characteristics 

The analysis is carried-out for a medium-size car consuming 6.5 litres of gasoline per 100 km for the ICE 

version. A similar, medium-size BEV is considered, which, depending on its range (2 ranges are considered 

–  200  km  and  400  km),  consumes  0.185  kWh/km  and  0.19  kWh/km,  respectively.  This  difference  in 

consumption accounts for additional electricity use in moving the 400 km range BEV, due to a heavier 

battery.  Battery  size,  and  therefore  battery  purchase  costs,  are  calculated  from  the  BEV  range  and 

electricity consumption per km, with a 5% penalty in order to account the avoidance of a completely full 

charge or discharge of the battery. 

Gasoline price 

The TCO analysis results are provided for three gasoline price cases (Figure 255): 

 

 

 

The “central” case has a gasoline price of EUR 1.83/L and reflects the EU average gasoline price 

(inclusive of taxes) on 17 October 2022.273  

The “low” case accounts for a gasoline price 0.50 EUR lower than in the central case, i.e. EUR 

1.33/L. 

The “high” case accounts for a gasoline price 0.50 EUR higher than in the central case, i.e. EUR 

2.33/L. 

For each case, these gasoline prices are fixed for all fuel expenditures over the vehicle lifetime. 

Electricity price 

The TCO analysis results are provided for the same three electricity price scenarios as in the heat pump 

case study (see footnote 264 and Table 46):  

 

 

 

The "Pre-price increase forecast" scenario has an electricity price of 0.15 EUR/kWh. 

The "Current price forecast" scenario has an electricity price of 0.25 EUR/kWh. 

The "Continuing current price levels" scenario has an electricity price of 0.50 EUR/kWh. 

For each scenario, these electricity prices are fixed but they represent an average price forecast over 

the  whole  vehicle  lifetime  (except  ‘continuing  current  price  levels’  in  which  current  very  high  prices 

simply continue). All electricity expenditures over the vehicle lifetime, are inclusive of current tax levels. 

Results 

Figure 255 shows that the cost-competitiveness of BEVs over ICEs is highly dependent on electricity and 

gasoline prices, as well as on BEV range and therefore battery size and price. The cheaper the electricity 

271 Brake energy recovery allows for longer brake durability and thus reduced brake replacement costs over the vehicle lifetime. 
272 Element Energy (2021). Electric Cars: Calculating the Total Cost of Ownership for Consumers 
273 European Commission (2022). Weekly oil bulletin, 17th of October 2022. 

316 

 
 
 
 
 
 
 
 
 
 
                                                      
price,  or,  on  the  other  hand,  the  higher  the  gasoline  price,  the  more  cost-competitive  the  BEV  is. 

Conversely,  the  current  rapid  increase  in  electricity  prices  reduces  the  cost-competitiveness  of  BEVs. 

Table 46 presents this difference in total cost of ownership under 18 specific combinations of BEV range, 

electricity price and gasoline price. 

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Electricity price (EUR/kWh)

ICE (gasoline price 1.83 EUR/L)
ICE (gasoline price 1.33 EUR/L)
ICE (gasoline price 2.33 EUR/L)

EV (200 km range)
EV (400 km range)

Figure 255: Difference in TCO between a medium-size car under 4 cases (BEV with 200 km range, BEV with 400 
km range, ICE associated to a high gasoline price and ICE associated to a low gasoline price) and a medium-size 
gasoline ICE car associated to a central gasoline price, over the vehicle lifetime, in function of electricity price. 

Notes: A negative TCO difference means that the alternative (e.g. the BEV) is cheaper than the ICE associated to a central gasoline 
price. For assumptions, refer to the above “Methodology” section. 

Table 46: Difference in TCO between a medium-size BEV and a medium-size ICE under various BEV range, 
electricity price and gasoline price assumptions 

Gasoline 

'Low' gasoline price 
(1.33 EUR/L) 

'Central' gasoline 
price (1.83 EUR/L) 

'High' gasoline price 
(2.33 EUR/L) 

200 km 
range 

400 km 
range 

200 km 
range 

400 km 
range 

200 km 
range 

400 km 
range 

-4,756 

1,101 

-9,631 

-3,774 

-14,506 

-8,649 

-1,703 

4,236 

-6,578 

-639 

-11,453 

-5,514 

'Pre-increase' electricity price 
scenario (0.15 EUR/kWh) 

y
t
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e
l
E

'Current market conditions' 
electricity price scenario              
(0.25 EUR/kWh) 

'Continuing current levels' 
electricity price scenario                      
(0.4 EUR/kWh) 

2,875 

8,938 

-2,000 

4,063 

-6,875 

-812 

Notes: Negative TCO difference means that the BEV is cheaper than the ICE, emphasized by the green colour. For assumptions, refer 
to the above “Methodology” section. 

317 

 
 
 
 
 
 
 
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
With the used assumptions, a recently-purchased BEV with a 200 km range is cost-competitive with an 

ICE car for electricity prices lower than EUR 0.47/kWh, and the same vehicle with a 400 km range is cost-

competitive for electricity prices below EUR 0.27/kWh. Only under the “Pre-increase” electricity price 

scenario are both types of BEVs clearly cheaper on a TCO basis than their ICE counterpart (Figure 255). 

The currently observed electricity price increases challenge the cost-competitiveness of BEVs (without 

any subsidies), in particular for long-range models.274 

Under the “Current market conditions” electricity price scenario, only the short-range BEV (200 km) is 

clearly cost-competitive (around EUR 6 500 cheaper over the vehicle lifetime - Table 46) with the gasoline 

car under the central gasoline price scenario. 

Under the “Continuing current levels” of electricity prices, the 400 km range BEV has a higher TCO than 

the ICE car. On the other hand, the 200 km range BEV is only EUR 2 000 cheaper than the ICE car over its 

lifetime, unless gasoline prices significantly increase: with a gasoline price of 2.33 EUR/L (high gasoline 

price case), both BEVs are cost-competitive with the ICE regardless of the electricity price scenario.  

With increasing electricity prices, lifetime electricity expenditures for a BEV come at par with and even 

surpass  the  vehicle’s  battery  purchase  costs.  While  battery  purchase  is  an  upfront  expenditure,  and 

therefore may remain a stronger barrier to BEV purchase than electricity price (electricity expenditures 

are  spread  across  the  lifetime  of  the  vehicle),  this  shows  that  high  electricity  prices  can  possibly 

significantly affect the overall cost structure of owning a BEV. However, lifetime gasoline expenditures 

of  the  ICE  remain  higher  than  lifetime  electricity  expenditures  of  both  BEV  types,  whichever  the 

electricity scenario and gasoline price case275. 

Table 46 shows that under most combinations of BEV range, electricity price and gasoline price the BEV 

has  a  lower  TCO  than  the  ICE  (in  13  cases  out  of  18).  Under  these  favourable  cases  for  BEVs,  cost 

differentials range from around EUR 14 500276 to below EUR 1 000277 over the vehicle lifetime.  

When considering the 400 km range BEV only, it does not reach cost-competitiveness with the ICE under 

any of the electricity price scenarios when the gasoline price is “low” (1.33 EUR/L), nor does it do so 

significantly under any of the gasoline price scenarios when the electricity price remains similar to current 

levels (“Continuing current levels” scenario). Under this electricity price scenario, the 400 km range BEV 

reaches TCO competitiveness under the ‘high’ gasoline price case, in which the TCO difference is around 

EUR  800  in  favour  of  the  BEV,  which  however  does  not  constitute  a  clear  cost-competitiveness  case. 

Indeed,  too  low  TCO  savings  over  the  vehicle  lifetime  may  not  suffice  to  trigger  the  decision  for  a 

consumer to buy a BEV given its higher purchase cost than an ICE car (the purchase premium for a 400 

km range medium-size BEV is around EUR 10 000)278. 

274 This analysis focuses on costs and does not discuss any other aspects that may motivate EV adoption besides cost-competitiveness, 
such as pollution, climate, and noise-related aspects. 
275 This difference between lifetime gasoline and electricity expenditures is as low as around EUR 450-750 when considering a BEV 
under the highest electricity price scenario (EUR 0.4/kWh) and an ICE under the ‘low’ gasoline price case (EUR 1.33/L). It can be as 
large as around EUR 18 000 when considering a BEV under the lowest electricity price scenario (EUR 0.15/kWh) and an ICE under the 
‘high’ gasoline price case (EUR 2.33/L). 
276 For a 200 km range BEV under “Pre-increase” electricity prices (0.15 EUR/kWh) and the high gasoline price (EUR 2.33/L) cases. 
277 For a 400 km range BEV under “Current market conditions” of electricity prices (0.25 EUR/kWh) and the ‘central’ gasoline price 
(EUR 1.83/L) cases; and for a 400 km range BEV under “Continuing current levels” electricity prices (0.4 EUR/kWh) and the ‘high’ 
gasoline price (EUR 2.33/L) cases. 

318 

 
 
 
 
 
 
 
 
 
 
                                                      
 
Policy implications 

Although the TCO-competitiveness of BEVs vs ICE cars is favourable to BEV in most cases shown in Table 

46, continuous policy support in favour of BEVs still seems necessary for the time being and particularly 

in  the  current  context  of  increasing  electricity  prices.  Such  support  can  take  various  forms,  notably 

policies having an effect on the relative fuel expenditures of EVs vs ICEs, such as an increase of gasoline 

taxes to reflect its externalities adequately. Moreover, temporary tax reductions on gasoline and diesel, 

which are currently implemented in many Member States, reduce the relative competitiveness of BEVs. 

For  BEV  buyers,  the  purchase  cost  premium  due  to  the  battery  cost  remains  a  major  barrier,  which 

purchase  subsidies  or  differentiated  purchase  taxes  can  continue  to  alleviate.  This  also  shows  the 

important role that further battery cost reductions can play in stimulating BEV attractiveness and how 

any supply bottlenecks (for raw materials or battery components) should be anticipated.  

In  addition,  mechanisms  to  encourage  BEV  charging  at  off-peak  times  or  coupled  with  home-based 

renewable generation (e.g. PV), would allow BEV owners to enjoy cheaper-than-average electricity and 

may  significantly  reduce  the  electricity  expenditures  of  BEV  owners  and  positively  affect  the  cost-

competitiveness of BEVs, even in cases of high average electricity prices. However, there are still major 

regulatory  barriers  limiting  the  incentives  for  off-peak  charging.  Among  others,  dynamic  pricing  (with 

hourly variable rates) is not used by consumers on a large scale yet. Smart charging (and pricing) could 

not only have a positive impact on EV costs but can also enable more efficient and flexible use of the 

electricity  grid,  which  becomes  ever  more  important  in  an  electricity  system  relying  on  variable 

electricity sources (solar, wind). 

Finally, in a first vehicle owner perspective, policies that increase market confidence in the future of 

BEVs  (e.g.  EV  deployment  targets,  charging  infrastructure  deployment,  ICE  bans)  will  increase  the 

residual value of BEVs and/or decrease that of ICEs after the first owner time period and therefore affect 

the residual value gap between BEVs and ICEs in favour of BEVs. This will benefit the TCO competitiveness 

of BEVs for first owners. 

319 

 
 
 
 
 
 
 
 
 
In person 

GETTING IN TOUCH WITH THE EU 

All over the European Union there are hundreds of Europe Direct information centres. You can find the 
address of the centre nearest you at: https://europa.eu/european-union/contact_en 

On the phone or by email 

Europe Direct is a service that answers your questions about the European Union. You can contact 
this service: 

– by freephone: 00 800 6 7 8 9 10 11 (certain operators may charge for these calls), 

– at the following standard number: +32 22999696, or  

– by email via: https://europa.eu/european-union/contact_en   

Online 

FINDING INFORMATION ABOUT THE EU 

Information about the European Union in all the official languages of the EU is available on the Europa 
website at: https://europa.eu/european-union/index_en 

EU publications 

You can download or order free and priced EU publications from: https://op.europa.eu/en/publications. 
Multiple copies of free publications may be obtained by contacting Europe Direct or your local 
information centre (see https://europa.eu/european-union/contact_en). 

EU law and related documents 

For access to legal information from the EU, including all EU law since 1952 in all the official language 
versions, go to EUR-Lex at: http://eur-lex.europa.eu 

Open data from the EU 

The EU Open Data Portal (http://data.europa.eu/euodp/en) provides access to datasets from the EU. 
Data can be downloaded and reused for free, for both commercial and non-commercial purposes. 

Written by Trinomics et al. 

December 2022 

 
 
 
 
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