REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Report on energy prices and costs in Europe
Date: 2024-03-22
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, coal, electrical energy, energy efficiency, energy supply, gas, petroleum, price of energy, retail price, wholesale price

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 22.3.2024  COM(2024) 136 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Report on energy prices and costs in Europe  
 
 
1. 

INTRODUCTION  

Since 2020, European and global energy markets have been going through a severe crisis. This 
was the result of multiple factors, starting with a COVID-induced recession followed in 2021 
by  strong  post-COVID  global  economic  recovery,  unfavourable  weather  conditions  for 
renewable  generators,  and  outages  at  France’s  nuclear  power  fleet.  Following  Russia’s  full-
scale invasion of Ukraine in February 2022, the crisis entered a new dimension, comparable to 
the oil crises in the 1970s, with an unprecedented disruption in Europe’s natural gas supply, 
leading to historically high gas and electricity prices. 

The  EU  reacted  to  this  crisis  with  unity,  determination  and  solidarity.  Increased  liquefied 
natural gas (LNG) imports reduced Russian leverage over European gas supplies. Rapid EU 
joint emergency measures addressed the need to save gas, fill gas storages, jointly purchase gas, 
strengthen solidarity rules for gas emergencies, lower electricity and gas prices and mitigate the 
impact of high prices on consumers. Gas prices remained very high until the end of 2022, after 
which they gradually decreased to more manageable levels due to regulatory actions, reduced 
demand and improvements in other market fundamentals. 

Nevertheless, the case for a transition towards a decarbonised European energy system, one less 
dependent on energy imports, has never been stronger or clearer. A successful energy transition, 
increasing renewable energy production and energy efficiency would not only reduce carbon 
emissions, but also protect European households and businesses against price volatility, reduce 
our  dependence  on  imported  and  expensive  fossil  fuels  and  strengthen  Europe’s  strategic 
autonomy.  Energy  should  remain  affordable  for  households  and  businesses,  with  regulatory 
conditions enabling investments in the technologies needed for further decarbonisation. 

This  report  aims  to  provide  comprehensive  information  to  understand  the  development  of 
energy  prices  and  costs  in  the  EU  from  2010  to  2022  and,  where  data  are  available,  up  to 
mid-20231. It analyses energy price trends for electricity, natural gas and petroleum products, 
looking  in  detail  at  their  market  and  regulatory  drivers  and  providing  international 
comparisons.  It  also  assesses  the  importance  and  impact  of  energy  costs  for  European 
businesses and households. It analyses the development of the EU’s energy import bill, the 
energy  cost  shares  for  selected  industrial  sectors  and  the  impact  of  energy  expenditure  on 
households’ budgets. It also looks at the importance of energy taxes as a source of government 
revenue. 

As in previous editions2, the report relies on data and analyses from an in-depth study3 and the 
European  Commission’s  own  work.  Public  statistical  sources  were  privileged  in  the  report, 
complemented by a series of specific data collections. Following Brexit, the report focuses on 
the EU27.  

1 Depending on availability, some benchmarks were updated as of September 2023 to reflect latest available data 
2 COM(2016)769 final, COM(2019)1 final and COM(2020)951 final 
3 The study will be published through the Publications Office. 

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2. 

TRENDS IN ENERGY PRICES 

2.1. 

Electricity prices 

From  2015  to  2019,  European  wholesale  electricity  prices  fluctuated  between  40  and  60 
EUR/MWh. Spot prices were relatively stable until the end of 2018, then decreased in 2019 
due to weak demand, lower fuel costs, and increased renewable generation. In 2020, COVID-
19 led to a further significant drop in the demand for electricity, which, together with rising 
renewable generation, pushed wholesale prices to exceptionally low levels (17 EUR/MWh in 
May 2020), including increasingly frequent periods of negative prices during the day. 

The post-COVID economic recovery starting in 2021, Russian interference with gas supply to 
the EU and, finally, Russian invasion of Ukraine led to a widespread disruption in global and 
European energy markets. This also impacted wholesale electricity prices in the EU, as higher 
gas prices (see Chapter 2.2 on gas) drove electricity prices upwards to between 150 and 270 
EUR/MWh (Figure 1). In Europe, gas-fired power stations are often the marginal technology 
setting  the  wholesale  electricity  prices.  The  limited  options  to  replace  gas-fired  electricity 
generation with cheaper power generation sources, together with low levels of hydropower and 
renewable generation, as well as nuclear outages, have pushed electricity prices to record highs 
during 2022 (reaching 400 EUR/MWh in August 2022). 

However, since the end of 2022, the general trend of falling gas prices, reduced demand, higher 
nuclear and renewable generation and recovering hydro stocks have led to a return of relatively 
lower prices (in the range of 70 and 120 during the first half of 2023). 

Figure 1: Evolution of monthly average wholesale day-ahead baseload electricity prices in Europe (EUR/MWh, left scale) and 
the range of minimum and maximum prices across the main EU markets (%, right scale) 

Source: Trinomics et al. (2023), based on data from S&P Platts, ENTSO-E 

In the decade before the energy crisis, European wholesale electricity prices were lower than or 
comparable to Japan and China (Figure 2) and historically (up to 40%) higher than US prices 
most of the time. The energy crisis and Russia’s war in Ukraine have led to a convergence of 
prices between Europe and Asia. Prices in the US, thanks to abundant domestic gas production, 
stayed comparatively low and European electricity wholesale prices became between 2-5 times 
higher  than  the  US  prices.  Wholesale  electricity  prices  in  UK  and  Japan  have  experienced 

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similar increases. Chinese electricity prices could reflect the presence of large-scale subsidies 
before 2020 (no more cent data available). 

Figure 2: Comparison of monthly average day-ahead wholesale electricity prices in the EU, US, UK, Japan, and China 
(EUR2021/MWh4) 

Source: Trinomics et al. (2023), based on data from S&P Platts, ENTSO-E, JEPX, EIA, CEIC 

After a prolonged period of relative stability (2010 – 2019), retail electricity prices started to 
increase significantly in 2021 in response to rising wholesale prices (Figure 3). Retail prices are 
normally higher than wholesale prices, but since late 2021 they have been lower than wholesale 
market prices at the price spikes during the crisis (e.g. just after the invasion of Ukraine and 
during the summer of 2022). 

Figure 3: Composition of weighted average household retail electricity prices for EU27 (EUR/MWh) 

Source: Trinomics et al. (2023), based on data from Eurostat, VaasaETT 

This happened because the increase in wholesale prices was quick and significant reflecting the 
need  to  balance  supply  and  demand.  On  the  other  hand,  the  pass-through  to  retail  prices 
reflected retailers’ market situation and was reduced by their supply strategies (e.g. long-term 
contracts and other price hedging), the structure of contracts in Member States (dynamic price 
vs fixed price contracts), level of retail competition, and by public interventions5. Average EU 

4 All prices were converted to 2021 euros. 
5 Cf. 2023 Report on Energy Subsidies in the EU (COM(2023) 651, 24th October 2023) 

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retail electricity prices started to increase around 6 months later than wholesale prices in late 
2021. They reached their highest level in October 2022 and decreased in 2023 due to falling 
wholesale prices. 

With regards to the components of electricity prices (energy costs, network charges, and taxes 
and  levies),  increases  in  the  energy  costs  component  (mainly  the  wholesale  prices  but  also 
mark-ups charged by the energy suppliers) and to a much lower extent value-added tax (VAT) 
drove the retail electricity price rises in 2021-2022. Network charges remained stable, while 
energy taxes slightly decreased during the same period, reflecting a temporary policy response 
to the crisis. 

In concrete terms, the average EU27 retail electricity price increased by 9% (+19 EUR/MWh) 
to  235  EUR/MWh  between  2020  and  2021.  In  the  first  half  of  2022,  prices  jumped  to  310 
EUR/MWh (+32%), and in the second half of 2022, to 371 EUR/MWh (+20%). In the first half 
of 2023, following the decrease in wholesale markets, retail prices fell back to 310 EUR/MWh 
(-16%). Retail electricity prices peaked above 500 EUR/MWh in Austria, Belgium Denmark, 
Germany, Italy and the Netherlands. 

The  composition  and  level  of  retail  household  prices  varies  widely  across  Member  States 
(Figure 4). Retail electricity prices for households ranged from 637 EUR/MWh (Italy) to 92 
EUR/MWh (Hungary) in January 2023, with most of the difference clearly attributable to the 
energy component (blue bar in Figure 4). Rebates on energy taxes in Lithuania, Luxembourg 
and the Netherlands and on network charges in Portugal reduced, in some cases significantly, 
the retail price actually paid by consumers in these countries. Bulgaria, Hungary, Ireland and 
Latvia reduced the energy taxes and levies on electricity to 0 EUR/MWh as part of their national 
measures to address the energy price crisis. 

Figure 4: Household electricity prices, January 2023 (EUR/MWh, most representative consumption band6) 

Source: Trinomics et al. (2023), based on data from Eurostat, VaasaETT 

Figure 5 below presents the development of retail industrial electricity prices in the EU, the US, 
Japan and other countries between 2008 and 2022. Average industrial retail electricity prices in 

6 The most representative band is defined as the one with the highest share in total consumption in any given Member State. While the DC 
band is used as the main point of reference for comparative analysis, in some Member States another might be the most representative. 
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Japan and the EU27 are at a similarly high level, while prices in the US are significantly lower 
than in the EU (around 2 to 3 times lower). The increase in average EU and Japanese prices 
since 2020 is clear. In 2022, prices in the US have also started to trend upwards, although these 
remain  significantly  below  EU  levels.  In  percentage  terms,  between  January  2021  and  June 
2022, EU average prices (+231%) and US prices (+225%) increased at a relatively similar pace. 

Figure 5: Industrial retail electricity prices in the EU27, the US, the UK, China and Japan (EUR2021/MWh4) 

Source: Trinomics et al. (2023), S&P Platts, Eurostat, US DoE, Enerdata (NBS, E-Stats, BEIS, KESIS), IEA. 

2.2. 

Gas prices 

Historically, European wholesale gas prices fluctuated between  5  and 30 EUR/MWh in  the 
period  from  2015  to  2020.  Prices  fell  to  historic  lows  during  2019  and  2020  (below  5 
EUR/MWh in May-July 2020), when a relatively mild winter and COVID lockdowns depressed 
gas demand. Increasing gas demand in the post-COVID recovery period started to drive gas 
prices higher from mid-2021. By December 2021, increased European and Asian gas demand, 
combined with reduced gas exports from Russia and almost empty Gazprom-owned European 
storages7,  had  tightened  European  gas  markets  and  had  driven  wholesale  prices  to 
113 EUR/MWh; more than 3.5 times above the historical range (Figure 6). 

Then,  in  March  2022,  the  Russian  invasion  of  Ukraine  drove  gas  prices  to  a  new  peak  of 
127 EUR/MWh.  The  gas  market  became  extremely  volatile  due  to  geopolitical  risks  and 
disruption  of  Russian  gas  supplies  to  Europe.  Summer  heatwaves,  water  scarcity,  low 
renewable and nuclear electricity generation and storage refilling increased gas demand. At the 
same  time,  gas  supplies  to  Europe  from  Russia  had  fallen  and  there  was  uncertainty  on  the 
availability of increased LNG supplies8. This resulted in month-ahead gas prices rising to an 
unprecedented 320 EUR/MWh by the end of August 2022, despite a strong increase in LNG 
imports. 

7 Gazprom did not refill the gas storages owned by its subsidiaries in Europe, and did not offer spot gas deliveries to address the rise in demand 
on global and European gas markets, which may have contributed to tighten gas markets. Other gas storages were not fully replenished 
because of high summer gas prices. 

8  On June 8, 2022, a fire at an LNG liquefaction plant in Freeport, US, led to the shutdown of the facility and reduced US LNG export capacity 
by  approximately  20  bcm  per  year.  In  parallel,  infrastructure  bottlenecks  in  North-Western  Europe  (limited  LNG  regasification  and 
transborder pipeline capacity) were preventing increased LNG supply to reach key markets in the EU. 

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Figure 6: Selected wholesale gas prices in Europe, nominal prices (EUR/MWh) 

Source: Trinomics et al (2023), based on data from S&P Platts, EnergyMarketPrice, BAFA, Eurostat Comext 

Since April 2022, there has been a considerable divergence in spot prices between national gas 
hubs  in  Europe,  which  is  a  trend  not  seen  in  the  previous  10  years.  Gas  prices  have  been 
significantly lower in hubs directly connected to LNG import capacity (e.g. in the UK, France, 
Belgium and Spain) than in those Members States without direct access to LNG terminals (most 
significantly, at the time, Germany).  

To replace Russian gas, Europe turned to liquefied natural gas (LNG), imported especially from 
the  US  (Figure  7),  supplemented  by  increased  pipeline  imports  from  Norway,  the  UK  and 
Azerbaijan. 

Figure 7: Weekly natural gas imports to the EU (2020 – July 2023, pipeline and LNG) 

Source: Trinomics et al. (2023), based on data from ENTSO-G, Brueghel 

LNG  imports  increased  from  a  very  low  level  during  COVID  and  reached  historically  high 
levels in 2022, 73% higher than in 2021. The share of LNG in EU gas imports jumped from 
below 20% in 2021 to over 40% in September 2023. This, together with EU demand reductions 
efforts  and  lower  Asian  gas  consumption,  enabled  Europe  to  refill  gas  storages  before  the 

6 

 
 
2022/2023 winter and reach the targets stipulated in the Gas Storage Regulation9. 

Gas prices on European wholesale markets have always been higher than those in major gas 
exporting countries (Canada, Norway, Russia and the US), and comparable to those in other 
G20 economies. The exponential increase in gas prices had a profound impact both in Europe 
and in other gas importing countries (Figure 8), while prices did not change so drastically in 
gas producing countries. 

Figure 8: Day-ahead wholesale gas prices in the EU (weighted average), China, Japan, the UK and the US (EUR2021/MWh4) 

Source: Trinomics et al., based on data from S&P Platts 

Retail gas prices are mainly driven by wholesale gas prices, but changes during 2021 and 2022 
were reflected differently (in the magnitude and the speed of the pass through) across Member 
States (Figure 9). This was mainly due to differences in type and ambition of national crisis 
mitigation  measures,  but  also  to  Member  States’  difference  contract-length  structures  and 
retailers’ difference gas procurement strategies (long-term contracts, price hedging). 

Figure 9: Average EU household gas prices in January 2023 (EUR/MWh) 

Source: Trinomics et al. (2023), based on data from VaasaETT 

Average  EU  household  retail  gas  prices  increased  from  68 EUR/MWh  in  2021  to 

9 EUR-Lex - 02022R1032-20220630 - EN - EUR-Lex (europa.eu) 

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143 EUR/MWh  by  January  2023.  Behind  the  average  EU  price,  there  were  significant 
differences between Member States - the ratio of the highest to the lowest price increased from 
3.5 in 2021 to more than 10 by 2023. 

Because of the crisis, the relative shares of energy costs, networks charges and taxes and levies 
in household gas prices changed significantly. The energy costs component (wholesale price 
plus a mark-up) accounted for 44% of the retail price in 2021, but reached 66% in 2023. The 
share of the network charges component dropped from 23% (2021) to 16% (2023). The share 
of  taxes,  levies  and  VAT  increased  from  28%  in  2010  to  34%  in  2021,  but  subsequently 
significantly decreased to 18% in 2023 as a result of government interventions in retail prices. 

Industrial  retail  gas  prices  in  the  EU  are  significantly  higher  than  in  the  US  and  other 
gas-producing countries, although these also increased in 2021 and 2022. Prices in the UK and 
the EU average are very similar although they diverged somewhat in 2022 as the UK has easier 
access to LNG as well as domestic gas production. Industrial gas prices in China and Japan 
were higher in the past, due to these countries’ higher wholesale prices and dependence on LNG 
deliveries. 

Figure 10: Retail industrial gas prices in the EU and selected countries (EUR2021/MWh4) 

Source: Trinomics et al (2023), based on data from Eurostat, US DoE, Enerdata (BEIS, NBS) 

2.3. 

Oil and coal 

Recent years have also seen new episodes of volatility in crude oil prices, which fell to less 
than  20  USD/barrel  (dated  Brent)  in  April  2020  due  to  significantly  reduced  demand  and 
excessive supply during the first months of COVID lockdowns. Crude oil prices started to rise 
in  parallel  with  economic  recovery  and  the  easing  of  COVID  travel  restrictions,  peaking  at 
130 USD/barrel in March 2022. Since then, prices have fallen below 80 USD/barrel, despite 
OPEC+ production cuts and geopolitical tensions and conflicts in the Near and Middle East, 
mostly due to increased production in the US and relatively low consumption in Asia (Figure 
11). 

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Figure 11: Monthly average of crude oil and thermal coal prices (USD/bbl; EUR/mt) 

Source: DG ENER ENERScope, based on Energy Market Observatory database 

Coal prices have also increased significantly since September 2020, from around 50 EUR/tonne 
to more than 380 EUR/tonne in July 2022, driven by increased post-COVID demand, nuclear 
generation problems and gas-to-coal switching in electricity generation. Since then, coal prices 
have stabilised at lower levels, ending the first half of 2023 at 111 EUR/tonne. 

Overall,  retail  prices  of  oil  products  (Figure  12)  followed  the  crude  oil  price  trend  and 
significantly declined after the autumn of 2022. Diesel and heating oil experienced more severe 
price hikes mainly due to globally restricted refinery capacities. 

Figure 12: Average EU consumer prices of petroleum products, including duties and taxes (EUR/liter) 

Source: DG ENER ENERScope, based on Energy Market Observatory database 

Temporary tax breaks and other forms of subsidies provided in several  Member States only 
partially  mitigated  rising  fuel  prices.  Diesel  retail  prices  peaked  in  most  Member  States  in 
March  2022,  then  decreased  due  to  temporary  tax  breaks  and  other  support  measures  by 
December 2022. After the expiry of these temporary measures, diesel prices again increased 
again in most Member States in September 2023, but they generally remained lower than at the 
price peak of the crisis. 

3. 

TRENDS IN ENERGY COSTS 

3.1. 

EU energy import bill 

The EU energy import bill declined to EUR 163 billion in 2020 due to the impact of COVID 

9 

 
 
(Figure  13)  and  then  increased  back  to  EUR  285  billion  in  2021.  In  2022,  it  reached  an 
unprecedented EUR 604 billion EUR (3.8% of EU27 GDP). Oil prices drove the increase in 
2021 (oil imports accounted for 69 % of the total import bill), while in 2022, both oil and gas 
prices contributed to the increase in the EU import bill. 

The drop in the energy import bill in 2020 to 1% of GDP and the sharp increase in 2021 and 
2022 to nearly 4% of GDP shows how much fossil fuel prices are weighing on growth and how 
much  a  lower  energy  bill  during  the  pandemic  enabled  EU  economies  to  avoid  a  serious 
recession.  Despite  lower  prices,  the  energy  bill  for  2023  could  still  be  very  significant  in 
historical  terms  –  although  much  lower  than  in  2022  -  and  drag  down  European  economic 
growth. 

Figure 13: Estimated EU energy import bill 2014-2022 (billion EUR; % EU GDP) 

Source: Trinomics, DG ENER, based on data from Eurostat Comext 

Putting  this  differently:  if  the  low-carbon  energy  transition  had  been  accelerated  before  the 
crisis, the EU would have had less fossil fuels in the energy mix (still 69% in 2021) and the 
impact of volatile energy prices would have been much lower. 

3.2. 

Household energy expenditure 

The energy expenditure of European households (determined by retail prices and households’ 
consumption)  fell  for  all  income  levels  between  2012  and  mid-2021,  when  the  trend  was 
reversed by the energy crisis. In 202010, low-income European households11 spent on average 
7.8% (EUR 953) of their total budget on energy. Lower-middle- and middle-income households 
tend to have higher absolute energy expenditure, but this expenditure represents a smaller share 
of their household budget. In 2020, these households spent 7.2 % and 6.4 %, respectively, of 
their total budget on energy (down from 7.6% and 6.9% in 2010). 

Rising energy prices, particularly in the second half of 2021 and during 2022, resulted in higher 
than usual energy expenditures for European households (Figure 14), with increasing number 
of  households  struggling  to  meet  their  energy  needs.  Energy  cost  increases  in  2022 

10 Latest data available from the Household Budget Survey. 
11 In this report, 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 respectively 

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disproportionally  affected  the  most  vulnerable  households.  Across  EU  Member  States,  the 
energy expenditure of low-income households increased to an estimated 12% between 2020 
and 2022.  

This increase was mainly driven by the prices of natural gas, liquid fuels and electricity and 
could  not  be  counterbalanced  by  action  to  reduce  energy  consumption.  National  measures 
supporting households’ energy expenditures helped to mitigate the impact of the energy crisis, 
but  very  often  these  measures  (for  example  a  decrease  in  VAT  rates)  were  not  specifically 
targeted at the most vulnerable households. 

Figure 14: Energy expenditures in low-income households (absolute and as % share in total household budget, 202012) 

Source: Trinomics et al, based on ad hoc data collection on household consumption expenditures 

The situation of households varied substantially across EU Member States, both in terms of 
absolute expenditures and expressed as a share of total expenditures. 

• 

• 

In relative terms, the poorest households spent over 20% of their household budget on 
energy in Slovakia; and less than 5% of their budget in Sweden and Luxembourg.  

In absolute terms, the poorest households spent less than EUR 500 on energy products 
in Latvia and Romania, while they spent more than EUR 1 500 in Luxembourg and 
more than EUR 2 500 in Denmark. 

As regards consumer choice, electricity remained the most expensive energy carrier in 2022 
(252 EUR/MWh) (Table 1). In comparison, natural gas (86 EUR/MWh in 2022) and oil-based 
fuels (between 140 and 203 EUR/MWh) were cheaper. Even considering that heat pumps are 
significantly more efficient than oil or gas heaters13, the disparity between gas and electricity 

12 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. The EU 2020 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. 
13 See for example: https://www.technologyreview.com/2023/02/14/1068582/everything-you-need-to-know-about-heat-pumps  

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prices could slow down the electrification of household heating and cooling. 

Table 1: Comparison of various energy options for households in EU per MWh 

Electricity (DC) 
2022 
price 
(EUR/
MWh) 
111 

2022 
share  

44%  41 

80 

59 

252 

32%  21 

24%  23 

   86 

Component 

Energy 

Network 

Taxes 

Total 

Gas (D2) 

Gasoline 

Diesel 

Heating oil 

2022 
price 
(EUR/ 
MWh) 

2022 
share 

2022 price 
(EUR/MWh
) 

2022 
share 

2022 
price 
(EUR/M
Wh) 

2022 
share 

2022 price 
(EUR/MWh) 

2022 
share 

48%  109 
25% 

27%  94 

   203 

54% 

109 

60% 

105 

75% 

46% 

74 

40% 

35 

100% 

183 

100% 

140 

25% 

100% 

Source: Eurostat; for electricity NRG_PC_204 and NRG_PC_204_C, data for first semester; for gas NRG_PC_202 and NRG_PC_202_C, data for first semester DG 
ENER Weekly Oil Bulletin (for oil products), data for 2022. Conversion of gasoline to MWh was done using factor of 1.000 l = 8.9 MWh. Conversion of diesel and 
heating oil to MWh was done using factor of 1.000 l = 10 MWh 

3.3. 

Industrial energy costs 

Although  energy  is  essential  to  economic  activity,  it  plays  an  increasingly  modest  role  in 
European industrial production costs. For the average European business (Table 2), energy costs 
accounted for 1.7% of productions costs in 201914, down from 2.3 % in 2010. Higher energy 
efficiency was the main driver of energy cost reduction in this period. Fuel switching (e.g. from 
oil to gas, or from gas to electricity) played a smaller role. 

Table 2: Energy costs shares across industrial sectors in 2019 

Energy share of production costs  
Average European business   

Manufacturing sectors 

Computer and electronics  

Pharmaceutical products   

Iron and steel  

Non-ferrous metals  

Clay building materials  

Cement, lime and plaster  

Non-manufacturing sectors 

Mining and quarrying  

Construction  

Wholesale and retail trade  

Land transport  

Air transport  

Accommodation and restaurants  

Information and communication  

1.7%  

0.6% 

0.9 % 

6.1% 

3.0% 

9.0% 

13.4% 

4.7% 

1.0% 

0.2% 

34.1% 

29.2% 

2.1% 

0.4% 

Source: Trinomics et al. (2022), based on Eurostat and highly aggregated ad hoc data collection on industrial energy costs 

Energy cost shares in production costs are more important for the energy intensive industries 
(EIIs). In the most energy intensive sub-sectors, the share of energy in production costs  can 
reach very high levels, especially in Fertilizers (71%), Ferro-alloys and silicon (38%), Primary 

14 At the time of writing (October 2023) complete and reliable energy prices and costs data for EU industry is only available up to 2019; while 
partial data is available for 2020 and 2021. 

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aluminium (34%), Ceramics (37%), Container glass (23%) and Zinc (22%). Latest available 
data15 suggest that, between 2021 and the first quarter of 2022, the average energy costs share 
in these sectors could have increased by between 20 and 55%. In the sector Fertilisers, which 
uses natural gas as both feedstock and energy source, energy costs could have reached up to 
90% of production costs by that point. 

In the international perspective, manufacturing sectors in some non-EU G20 countries are often 
enjoying lower energy costs thanks to: (i) access to abundant domestic energy sources; (ii) a 
lack of strict clean energy and climate policies; or (iii) energy subsidies and other governmental 
support  measures.  This  suggests  that  European  industry  needs  to  continue  its  work  on 
improving  energy  efficiency  and  decarbonisation  efforts,  which  could  help  to  reduce 
dependency on fossil fuel imports and  bridge the energy price differences with international 
trade partners. 

3.4. 

Energy taxation 

Energy taxes, both on the production and on the consumption of energy, provide significant 
revenues to EU Member States’ budgets. Energy tax revenue was stable in 2010-2019 at an 
average  of  1.88%  of  GDP,  but  during  COVID,  lower  energy  prices  and  lower  consumption 
triggered a drop to 1.74% of GDP. Data available for 2021 shows an increase in energy taxes 
collected by Member States, which amounted to EUR 255 billion or 1.76% of EU GDP and 
4.2% of total tax revenues (Figure 15). 

Figure 15: Energy tax revenues in the EU27 (billion EUR; % of GDP) 

Source: Trinomics et al., based on data from Eurostat (env_ac_tax) 
*: Percentage of total revenues from taxes and social contributions (including imputed social contributions) 

The role of energy taxes in government revenue varies significantly between Member States. 
In 2021, energy taxes in Bulgaria made up 8% of total tax revenue, while this share was only 
2.9% in Austria (Figure 16). When compared to the GDP, energy tax revenue was the highest 
in  Greece  (3.1%)  and  the  lowest  in  Ireland  (0.8%).  Generally,  Member  States  with  a  lower 
GDP/capita have a higher share of energy taxes relative to both total tax revenue and GDP. 

In the absence of final official statistics for 2022, the impact of the crisis on energy tax revenues 
in  2022  remains  uncertain.  Revenue  from  VAT  linked  to  higher  retail  prices  would  have 
increased.  By  contrast,  lower  energy  demand,  together  with  policy  measures  temporarily 
lowering  VAT  rates  and  introducing  rebates  in  some  Member  States,  would  have  reduced 

15 Based on data collected in 2022 in responses to a bottom-up questionnaire from 60 plants across 6 industrial sectors. 

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energy tax revenues, especially for excise duties. 

Figure 16: Energy tax revenue as a percentage of tax revenue and of GDP16 (2021) 

Source: Eurostat (data series env_ac_tax) 
*: Percentage of total revenues from taxes and social contributions (including imputed social contributions) 

3.5. 

Influence of energy prices on clean technologies – a case study on heat pumps 

Energy  prices  have  a  huge  influence  on  the  financial  attractiveness  of  renewable  energy 
alternatives and on the energy transition. In order to understand this relationship, we analysed 
a key measure that households can take to lower their energy use and emissions: switching from 
gas to electric heating using a heat pump17. 

The following factors influence the viability of heat pumps replacing combustion boilers: 

investment costs; 

• 
•  operational costs (e.g. electricity prices); 
•  heating demand and heating flow temperature18. 

Before recent gas price increases, with the average electricity to gas price ratio being around 
2.8  in  the  EU27,  heat  pumps  without  subsidy  showed  similar  lifetime  costs  to  gas  boilers. 
However, recent high gas prices made heat pumps a significantly cheaper alternative over their 
lifetime.  Considering  long-term  gas  and  electricity  prices,  heat  pumps  allow  a  typical 
household19 to lower heating energy bills by 20-25% (annual savings of EUR 300-700) and to 
recover their investment in 6-9 years. 

Another benefit of switching from gas heating to heat pumps is that an average household can 
save 1 200-2 400 m3 of gas and reduce its emissions by 70% per year. Additional gas used for 
generating the electricity used by heat pumps adds less than 10%20 of this amount to overall gas 
needs. To put this into perspective, gas savings from 1 million heat pumps would be equal to 
~1% of the Russian gas supply to the EU in 2021. 

16 Latest available figures are for 2020. 
17 Based on Analysis of the affordability of switching to renewable heating for a standardised middle-income family in the EU, a study by the 
European Environmental Bureau (2021). 
18 The higher the temperature lift, i.e. the difference between the heating flow temperature and the heat source temperature (air or ground), the 
lower the coefficient of performance of the heat pump. 
19  Common four-person household in a 110 m² house. The four representative heating profiles were cold (e.g. Poland) and moderate (e.g. 
Netherlands) climate zones with average or good insulation levels. 
20 Around 100 m3/y/household. 

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4. 

CONCLUSION 

In 2022, the EU responded with unity, in solidarity and determination to overcome the crisis. 
EU  Member  States  agreed  on  measures  to  increase  transparency  on  price  formation  in  gas 
markets, to address excessive gas prices, and to plan for solidarity measures in the event of a 
gas emergency, which all played a role in calming European markets.  

While wholesale electricity and gas prices have fallen significantly since the end of 2022, they 
remain higher than before the crisis; still around two times their historical levels. The impact of 
higher prices on energy bills, particularly for the most vulnerable households and businesses21, 
is still considerable. The rise in energy costs led to higher energy expenditure for low-income 
households.  Similarly, 
in 
energy-intensive  industries  stopped  and  the  reversal  led  to  a  significant  challenges  for  most 
energy  intensive  industrial  sectors,  despite  their  good  historical  record  in  improving  energy 
efficiency. The impact on the entire EU economy has also been substantial, with a significant 
increase in the EU’s fossil fuel import bill, mainly driven by soaring gas and oil prices. 

the  previously  observed  decline 

in  energy  costs  shares 

By contract, the energy market outlook for 2024 has materially improved. The measures put in 
place  by  Member  States  and  the  Commission  to  fight  the  energy  crisis22  significantly 
contributed  to  that.  Nevertheless,  the  cut  in  Russian  pipeline  gas  supply  to  Europe  caused 
tightness in global gas markets, which are expected to remain tight until new LNG liquefaction 
capacity comes online as of 2025. A number of risks may also materialise in 2024 and trigger 
large  reactions  on  energy  markets,  including  a  strong  rebound  in  Asian  demand,  extreme 
weather conditions, further reductions of gas imports from Russia and armed conflicts in the 
Middle East and elsewhere. To address these risks, some of the emergency measures introduced 
in 2022 have been prolonged23.  

The crisis of 2021/2022 has already induced long-lasting changes in the EU’s gas supply, with 
LNG now accounting for a much higher share (~40%). The accelerated energy transition will 
progressively  introduce  further  changes  into  gas  supply  and  demand  already  in  the  coming 
decade. Renewable gases should be increasingly used to support the EU’s decarbonisation work 
and achieve a greater degree of independence from fossil fuel imports. 

Widespread adoption of low-carbon and renewable technologies, energy efficiency measures 
and increased  electrification  rates in  heating and  in  transport  could  also  help  to  avoid fossil 
fuels-induced crises in the future. Technologies such as heat pumps and electric vehicles are 
predicted to play an important role in protecting household budgets, and generate significant 
savings  throughout  their  lifetime.  In  order  to  preserve  the  competitiveness  of  European 
companies, energy-intensive industries should keep improving their energy efficiency, while 
the EU will introduce measures to enable to benefit from the lower costs of renewables through 
the  new  design  for  electricity  markets  and  ensures  an  international  level  playing  field  by 
implementing measures, like the carbon border adjustment mechanism. 

21 The impact on SMEs is detailed in the SME envoy report: SMEs and rising energy prices - First findings & recommendations 
22 These measures include supply diversification, demand reduction, expansion of LNG import capacity, obligations to fill in gas storages in 
advance, demand aggregation and joint purchasing and measures to address high prices and volatility (e.g. market correction mechanism, 
intra-day volatility mechanism). 

23 

emergency-measures/ 

https://www.consilium.europa.eu/en/press/press-releases/2023/12/19/energy-prices-and-security-of-supply-council-agrees-to-extend-

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