REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS 2024 Report on Energy subsidies in the EU
Date: 2025-01-28
Institutions: Directorate-General for Energy, European Commission
Subjects: EU aid, EU energy policy, carbon neutrality, energy cooperation, energy crisis, energy market, energy transition, energy-generating product, environmental impact, renewable energy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.1.2025  COM(2025) 17 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS 2024 Report on Energy subsidies in the EU  
 
 
1. 

INTRODUCTION 

Energy policy is critical for European competitiveness and security, for decarbonising the 
economy,  tackling climate change,  and reaching  the EU’s goal  of  climate neutrality  by 
2050. Under the European Green Deal, the EU has put in place an ambitious energy policy 
framework,  reflecting  the  fact  that  energy  production  and  use  account  for  75  %  of 
greenhouse gas (GHG) emissions (1). In 2023 and 2024, the Commission consolidated the 
policy  framework  that  is  needed  to  reach  the  EU’s  international  commitments,  and  the 
Union´s energy and climate targets. By reaching political agreements on nearly all the key 
the  legislative  files  in  the  Fit  for  55  Package,  the  European  Union  has  paved  a  clear 
pathway to its 2030 targets. 

Energy  subsidies  play  an  essential  role  in  the  energy  transition:  if  well-designed,  these 
incentives can accelerate the development and deployment of clean energy solutions and 
contribute  to  economic,  environmental,  or  social  welfare  purposes.  If  poorly  designed, 
subsidies  can  act  against  the  energy  transition,  change  incentives  for  energy  use  by 
reducing the carbon price signal and put a burden on public finances. Ultimately all fossil 
fuel subsidies need to be phased out or reformed to maintain the necessary level of support 
without endangering the EU’s climate objectives. 

The energy crisis that started in 2021, and which was aggravated by the Russian aggression 
to  Ukraine  in  2022,  had  significant  consequences  for  European  energy  policy  and,  by 
extension, energy subsidies. The impact of the crisis was still felt in 2023, which can be 
seen in the evolution of the total amount of energy subsidies; in the distribution of these 
subsidies  across  beneficiaries,  energy  sources  and  technologies;  and,  finally,  in  the 
instruments used to provide these subsidies. 

The current, sixth, annual report monitoring energy subsidies and progress towards phasing 
out fossil-fuel subsidies (2) confirms that energy subsidies were stable until 2021, increased 
dramatically in 2022 following the energy crisis, and then moderately decreased in 2023. 
Total energy subsidies in the EU jumped from EUR 213 billion in 2021 to EUR 397 billion 
in 2022 and decreased by 10% to EUR 354 billion in 2023.  

Energy subsidies linked to national crisis measures to protect EU consumers from the high 
prices accounted for an estimated EUR 145 bn in 2023 (down from EUR 187 bn in 2022). 
Across the EU, at least  270 national measures were  created to address the energy price 
crisis. Households were the main direct beneficiaries of these crisis measures (receiving 
EUR 121 bn in 2021-2023), followed by industry and the transport sector (EUR 30 bn and 
28 bn, respectively, over the same period). Cross-sectoral support to all energy consumers 
reached EUR 125 bn in the same period. 

Fossil fuel subsidies increased from EUR 60 bn in 2021 to EUR 136 bn in 2022 in response 
to the crisis, and then decreased to EUR 111 bn in 2023 (3). Renewable energy subsidies 
decreased in 2021 to EUR 83 bn - the first decrease since 2015 - and further to EUR 68 bn 
in 2022 and 61 bn in 2023. The decrease was mainly due to high prices on the wholesale 
electricity  market  that  reduced  the  subsidy  amounts  paid  under  dynamic  market-based 
support instruments as renewables became more competitive, demonstrating their role in 

(1)  Source: Energy and the Green Deal 
(2) Article 35, point n of the Regulation on the Governance of the Energy Union (2018/1999/EU) (“the Governance Regulation”). 
(3) These figures include tax expenditures that cannot be directly compared across countries. 

 
 
 
lowering  energy  prices.  Support  to  energy-efficiency  measures,  for  example  energy 
renovations of buildings, increased from EUR 23 bn in 2021 to EUR 34 bn by 2022 and to 
EUR 44 bn in 2023 helping to reduce energy bills. The overwhelming majority of energy 
subsidies (EUR 247 bn in 2022 and EUR 213 bn in 2023) were still dedicated to supporting 
energy consumption. 

In 2023, the total amount of environmentally harmful energy subsidies (4) in the EU-27 is 
estimated  at  EUR 136 bn,  38%  of  total  energy  subsidies.  The  biggest  share  of  harmful 
subsidies  (EUR 93 bn  or  68%)  is  linked  to  fossil  fuels  and  phasing  out  these  subsidies 
would  free  up  important  public  resources,  which  could  be  used  to  strengthen  Europe’s 
energy  security,  reduce  government  deficits  and  increase  the  pace  of  the  clean  energy 
transition. However, looking at national phase-out plans, less than half (43% or EUR 48 
bn) of fossil fuel subsidies are scheduled to end before 2025, another 9% (EUR 10 bn) are 
scheduled to end between 2026 and 2030, while for the remaining 48% (EUR 53 bn), there 
is either no end-date or it has been set after the year 2030. 

A note on methodology 

This report relies on data from an external study conducted for the Commission. The report 
and the study are based on a bottom-up inventory approach, relying on information from 
national budget documents and reports. National subsidy data was aggregated at the EU27 
level  and  supplemented  with  data  from  recognised  sources  such  as  European  or 
international institutions and specialised databases. If 2023 data were not fully available 
or validated, 2022 data were used as an estimate. As in previous editions, Member States 
were given the opportunity to provide feedback on the data used for the study. 

The  inventory  of  energy  subsidy  measures  provides  reliable  information  on  the  fiscal 
impact  of direct  budgetary transfers  for  energy  use  and  production,  and  is  necessary  to 
promote  transparency  around  public  policies  and  help  identifying  specific  support 
measures for reform. The subsidy amounts of certain measures, such as those based on 
estimates of revenues forgone, may not be comparable across countries due to country-
specific  approaches  to  benchmark  tax  systems.  However,  they  reflect  appropriately  the 
fiscal costs of the subsidy measures. 

The assessment of tax measures depends on the baseline tax rates that are applicable in 
each  country.  Therefore,  a  country  with  higher  “baseline”  taxes  but  significant  tax 
exemptions  can  have  considerably  higher  levels  of  energy  subsidies,  as  well  as  overall 
higher energy tax rates than a country with lower tax rates and fewer or no exemptions. As 
such, this internationally well-established measurement approach, focusing on the fiscal 
cost of subsidies, is less well suited to compare environmental, climate and energy impacts 
of tax-based subsidies between countries. Further work is needed to analyse effective tax 
rates on energy use and carbon emissions, which could usefully complement the inventory 
approach for tax-related measures. 

In addition, implicit subsidies (such as not imposing carbon price or taxes on fuels) are not 
covered due to methodological problems associated with the lack of a robust, reliable and 
comparable assessment of negative social and non-climate related environmental impacts 
associated with subsidies. 

(4)  See Section 2.5 for the definition. 

2 

 
 
2.  ENERGY SUBSIDY TRENDS IN THE EU 

The total amount of energy subsidies in the EU-27 has increased from EUR 213 billion in 
2021 to EUR 397 bn in 2022 and then decreased by 10% to EUR 354 bn (5)by 2023 (Figure 
1). 

It is important to note that the years 2021-2023 have been dominated by the energy price 
crisis. The post-COVID economic recovery in 2021 already put upward pressure on global 
and European  energy prices and led to a first increase in subsidies, which subsequently 
double  from  EUR 199 bn  in  2020  due  to  the  impact  of  emergency  measures  taken  by 
Member States. The 2023 data shows that energy subsidies decreased as some of the price 
containment  measures  expired  or  were  withdrawn.  In  relative  terms,  energy  subsidies 
increased from 1.3% of EU GDP in 2021 to 2.37% by 2022 and 2.1% in 2023 (right scale 
on Figure 1). 

Figure 1: Total energy subsidies in the EU-27 (EUR2023 bn, left, % of EU GDP, right) 
Source: Enerdata, Trinomics, 2024. NB: 2023 estimates are represented with hatching (6) 

In 2023, subsidies provided to fossil fuels, renewables and electricity (7) all decreased, to 
111 bn (-25%), 61 bn (-8%) and EUR 51 bn (-26%), respectively) compared to 2022. Only 
subsidies allocated to all energies (8) continued their increase to EUR 126 bn (+13%), as 
some of cost containment measures implemented by Member States continued to apply to 
two or more energy carriers. 

Fossil fuel subsidies accounted for 34% of total energy subsidies in 2023, similar to support 
to all energy sources (31%) (Figure 2, bottom). Renewable energy sources received only 
17% of energy subsidies in 2023 (down from 40% in 2021 and 22% in 2022) as renewable 
energy  became  more  competitive  under  high  energy  prices,  consequently  reducing  the 
need for financial support from dynamic market-based instruments; while electricity and 
nuclear energy captured 15% and 1% of all subsidies, respectively. 

(5) In this report, all figures are expressed in EUR 2023 bn. Due to data corrections and the change in the monetary basis, total amounts 

in this report may differ from the 2023 energy-subsidy report. 

(6) Data under the “To be confirmed” category amounted to 8% of the total amount included in the Subsidy inventory for the year 2023. 
(7) In certain cases, it is not possible to separate subsidies given to electricity consumption by the source of generation (fossil, nuclear 
or renewable), therefore this chart shows electricity (energy carrier) subsidies alongside those given to its energy sources. 
(8)  This category is used to classify all subsidy measure that apply to energy produced from a mix of both fossil fuel and low carbon 

sources or from an unknown source. 

3 

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In terms of instruments for providing energy subsidies, various income support measures 
remained the most important, comprising 42% of the total (Figure 2, right). These were 
followed by direct transfers and grants (29%) and tax measures (27%). It is notable that 
tax  measures  were  the  most  used  instrument  to  support  fossil  fuels,  while  renewable 
support is relying more on income support measures. 

Figure 2: Subsidy distribution by instrument (2023) 
Source: Enerdata, Trinomics, 2024 

2.1. 

Subsidies by energy source / carrier 

In 2022, the slight downward trend of fossil fuel subsidies since 2019 – as highlighted in 
Figure 3 – was disrupted as a direct consequence of the European response to the energy 
crisis, in which subsidy measures were one of the primary tools to counteract the effects 
of high energy prices on households and European industries. 

As a result, fossil subsidies more than doubled between 2021 and 2022, from EUR 60 bn 
to  EUR 136 bn,  and  decreased  in  2023,  by  -16%,  to  EUR 111 bn.  Support  directed  to 
natural gas and fuels derived from crude oil both dramatically increased in 2022, reaching 
EUR 49 and 58 bn respectively, compared to 2021. The reasons for this are the various 
rebates and tax reductions applying to road fuels, as well as the direct transfers and income 
support measures that supported both natural gas and diesel/gasoline users.  

Figure 3: Fossil fuel subsidies by energy vector (9)(EUR2023bn) 
Source: Enerdata, Trinomics, 2024. *“Others” includes subsidies directed to all fossil fuels, and heat from fossil 
sources. The figures in the graph include tax expenditures that cannot be directly compared across countries. 

(9) Including subsidies provided to electricity explicitly generated by burning fossil fuels.  

4 

CategoryAll energiesElectricityFossil fuelsNuclearRESTotalDirect transfers17.3%1.4%6.8%0.3%2.7%29%Tax measures5.0%5.5%14.0%0.2%2.0%27%Income/price support12.1%7.6%10.3%0.3%12.2%42%Under-pricing0%0.03%0.18%0%0%0.2%RD&D support1.2%0.0%0.1%0.4%0.4%2.1%Total36%15%31%1.2%17%100%24252627282426583477788710494021191919171817192357 58 59 62 59 57 60 136 111 020406080100120140160201520162017201820192020202120222023€2023bnOther*ElectricityCoalGasOil 
 
The strong support for natural gas and oil products continued in 2023, although at a lower 
level (EUR 40 and 34 bn, respectively), which reflects both the evolution of fossil energy 
prices as well as the still-important role fossil fuels play in the EU27 energy mix. 

Subsidies for renewable energy sources have been following a decreasing trend in recent 
years, as shown on Figure 4: these fell from EUR 89 bn in 2020 to EUR 83 bn (-7% year-
on-year) in 2021, EUR 68 bn in 2022 (-18% yoy) and finally to EUR 61 bn (-10% yoy) in 
2023. This decline was mainly due to the increase in wholesale electricity market prices, 
which automatically led to lower payments under the RES support instruments that provide 
a top-up to market prices as renewables became more competitive. The decline in subsidies 
for  renewable  energy  came  also  despite  the  increase  in  installed  and  supported  RES 
generation capacity – as some of this new capacity no longer needs subsidies to compete 
with other energy sources.  

Figure 4: Renewable subsidies by technology (EUR2023bn) 
Source: Enerdata, Trinomics, 2024. NB: 2023 estimates are represented with hatching 

As shown on Figure 4, solar energy received by far the largest share of subsidies, both 
historically and in 2023 (EUR 21 bn), followed by biomass (EUR 9 bn) and wind power 
(EUR  7 bn).  Hydropower  received  marginal  financial  support  (~EUR  1 bn),  while 
subsidies  targeting  multiple  renewable  technologies  (such  as  tax  reductions  on  green 
technology or public aid for investment projects) jumped to EUR 23 bn by 2023. 

The typical  instrument  for  providing subsidies to  renewable energy sources (RES  -  see 
Figure 2) continued to be feed-in tariffs and feed-in premiums or Contracts for Difference, 
together accounting for EUR 36 bn (or 60% of all RES subsidies). Direct payments to RES 
producers almost doubled to reach EUR 9 bn in 2023, most likely due to increasing direct 
support  for  RES  production  and  electricity  infrastructure  included  in  Member  States’ 
recovery and resilience plans, as well as increased support for boosting renewable energy 
and energy efficiency in heating and cooling. The rest of the RES subsidies were provided 
through  tax  measures,  as  well  as  RES  quotas  and  other  instruments  (EUR  7  and  9 bn, 
respectively). 

Support  for  different  renewable  technologies  varies  significantly  in  Member  States, 
reflecting both national energy mixes, priorities and local RES potentials (Figure 5). Solar 

5 

66667911102320212020192020169171920192224191473332333233343127217981828083898368610102030405060708090100201520162017201820192020202120222023€2023bnSolarWindHydroBiomassOther RES 
energy received over 50% of RES subsidies in 9 Member States (10), while wind power 
constitutes  a  substantial  proportion  of  RES  subsidies  in  Belgium,  Croatia  and  Poland. 
Biomass is highly subsidised in the Nordic and Baltic regions, while three Member States 
(Latvia,  Luxembourg  and  Slovakia)  seem  to  have  adopted  technology  neutral-  RES 
support policies that apply to all forms of renewables. 

Figure 5: Share of RES subsidies by technology in Member States (%) 
Source: Enerdata, Trinomics, 2024 

Subsidies  for  nuclear energy  dropped from  EUR 7.9 bn in  2021 to  3.7 bn in  2022 and 
4.1 bn in 2023. Of the 14 MS providing nuclear subsidies, France (EUR 2.9 bn) accounted 
for  the  biggest  share,  followed  by  Germany  (EUR 0.8 bn)  ,  Spain  and  Belgium 
(EUR 0.1 bn each). The rebound seen in 2023 is mainly attributed to an increase in capacity 
payments made by the French government to limit the rise in electricity tariffs, practically 
doubling the amount provided in 2022 (+ 97% to EUR 1.1 bn). 

2.2. 

Subsidies by economic purpose 

Although  the total  amount of energy subsidies  in  2023 decreased compared with  2022, 
there was no significant change in the categories according to the economic purpose of the 
subsidies (Figure 6). 

(10)  Bulgaria, Cyprus, Greece, Malta, Hungary, Slovenia, Czechia, Italy and Spain. 

6 

0%10%20%30%40%50%60%70%80%90%100%CYBGGRMTHUSICZITESLTPTDESKRONLBEFREEIEATHRPLFISEDKLVLUEU27SolarWindBiomassHydroOther RES 
 
Figure 6: Energy subsidies by economic purpose (EUR2023bn) 
Source: Enerdata, Trinomics, 2024. NB: 2023 estimates are represented with hatching 

Financial support directed to energy demand (11) remained the largest category (62% of 
the total) at EUR 213 bn in 2023. Support for energy efficiency measures further increased, 
by 30% compared to 2022, to EUR 44 bn in 2023, while subsidies in every other category 
decreased: for infrastructure development by 37% to EUR 8.8 bn, for energy production 
by 14% to EUR 75 bn and for R&D by 1%, to EUR 7.4 bn. 

Focusing  on  subsidies  supporting  energy  demand,  which  aim  at  limiting  the  costs  of 
energy  consumption,  these  can  address  a  wide  range  of  economic  sectors,  from  energy 
intensive  industries  to  households.  Until  2021,  energy  demand  support  was  provided 
almost  exclusively  through  tax  measures  (for  example  tax  reductions,  exemptions  and 
refunds) and their importance  remained in 2023, with EUR 80 bn. However, during the 
crisis, the importance of alternative measures such as consumer price regulation and direct 
grants started to increase and by 2023, energy demand subsidies corresponding to these 
two categories reached EUR 88 and 37 bn, respectively. 

Figure 7: Subsidies supporting energy demand by instrument (EUR2023bn) 

(11) E.g. supporting the use of energy through lowering its costs. 

7 

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Source: Enerdata, Trinomics, 2024. NB: 2023 estimates are represented with hatching. 
The category “Other” includes direct transfers (except grants), income or price supports (except consumer price 
guarantees) and under-pricing of goods/services supports. 

Subsidies for energy efficiency measures, which both support lower energy bills and the 
zero carbon transition, have substantially increased since 2015 and by 2023 had reached 
EUR 44 bn.  Grants  were  the  most  significant  support  instrument  for  energy  efficiency 
investments, accounting for over EUR 32 bn or 70% of all energy efficiency subsidies in 
2023,  due  to  the  implementation  of  the  investments  in  the  Recovery  and  Resilience 
Facility.  Grants  were  followed  by  tax  measures  (EUR 7 bn),  soft  loans  and  energy 
efficiency obligations (EUR 3 bn both). 

2.3. 

Subsidies linked to the energy crisis 

The European Commission has been working together with Member States since 2021 to 
tackle the energy crisis, including by adopting the REPowerEU plan (12). This has included 
working to: (i) secure alternative energy supplies; (ii) reduce energy demand to compensate 
for the shortfall of Russian gas deliveries; (iii) make greater use of renewables; and (iv) 
increase  energy  efficiency.  In  addition  to  implementing  measures  introduced  at  Union 
level  or  enabled  by  Union-level  frameworks,  Member  States  also  adopted  national 
measures to shield their citizens and their economy from damaging energy prices.  

Through  these  national  measures,  Member  States  provided  energy  subsidies  worth 
EUR 187 bn in 2022 and EUR 145 bn in 2023 in, accounting for 45% and 40% of total 
energy subsidies, respectively (Figure 8). Preliminary figures for 2024 show a significant 
reduction of the crisis support to EUR 78 bn, as most of the crisis subsidies will expire 
before 2025 (see also section 2.6). 

Figure 8: Structural and energy crisis-related subsidies (left); share of crisis subsidies in total 
energy subsidies (right, %) 
Source: Enerdata, Trinomics, 2024. Figures for 2024 are based on preliminary data. 

Figure  9  shows  that  most  of  the  sectoral  targeted  crisis  subsidies  were  aimed  towards 
households (EUR 65 bn in 2022 and 52 bn in 2023), followed by industry and transport 
(EUR 29 bn  respectively  in  2022-23),  while  other  sectors,  such  as  energy  industry  or 
businesses,  received  significantly  less  (EUR 18 and 16 bn  in  total,  respectively). 
EUR 64 bn was provided through untargeted or cross-sectoral subsidies. 

(12)  REPowerEU: Affordable, secure and sustainable energy for Europe 

8 

187145781972102091460%10%20%30%40%50%01002003004005002021202220232024€2023bnOther measuresMeasures relatedto price crisis% of all measuresrelated to pricecrisis (right) 
 
Figure 9: Distribution of subsidies addressing the energy crisis (EUR2023bn) 
Source: Enerdata, Trinomics, 2024 

The 2021-2022 energy crisis was mostly characterised by sudden, large increases in the 
price of electricity, natural gas and, to a lesser extent, crude oil and refined products. The 
support provided to  electricity  increased the most  and reached  EUR 59 bn in  2022  and 
remained essentially at the same level in 2023, despite a significant fall in wholesale and 
retail electricity prices (Figure 10, left). Exceptional subsidies for natural gas (Figure 10, 
centre) were much lower (EUR 29 bn in 2022), but also remained at the same level in 2023, 
despite lower wholesale gas prices. 

Figure 10: Crisis subsidies by energy carrier (left) compared to prices changes (right, %) 

NB: Left axis corresponds to the amount of crisis-related energy subsidies (in EUR2023bn) and right axis to the 
development of spot prices (indexed to 2019). Electricity and gas prices correspond to annual average spot prices 
for Germany (evolution was similar in other EU countries). Annual average Brent prices were considered for oil. 

Crude oil presents a different case (Figure 10, right), as the benchmark Brent prices did 
not  increase  as  much  as  gas  and  electricity  prices.  Exceptional  support  for  oil  reached 
EUR 33 bn in 2022, but, in contrast to electricity and gas, these aids fell sharply in 2023, 
to EUR 6 bn, as oil prices in global markets decreased and exceptional support measures 
targeting oil products (e.g. VAT decrease for road fuel) were ended. 

9 

10 4 1 50 65 25 25 12 9 65 57 4 4 6 7  - 10 20 30 40 50 60 70Cross sectorHouseholdsIndustryTransportEnergy industryBusinessOthers2021202220239 59 60 3 29 33 0 33 6 -50 100 250 400 550 700 850 1,000 - 10 20 30 40 50 60 70202120222023202120222023202120222023ElectricityGasOilindex (2019=100)€2023bnExceptional subsidiesSpot prices (right scale) 
2.4. 

Subsidies by economic sector 

Historically, the energy industry (13) was the most subsidised economic sector: between 
2015 and 2020, it benefited from more than half of all energy subsidies (Figure 11). It was 
followed by industry, households, and transport. 

In  2022,  the  amount  of  energy  subsidies  directed  towards  households  jumped  from 
EUR 34 bn  in  2021  to  EUR 109 bn  in  2022  (+240%).  Support  to  the  transport  sector 
increased to EUR 40 bn, while for industry reached EUR 50 bn. By contrast, subsidies to 
the energy industry  grew by  5%  to EUR 112 bn, and its share  of total  energy subsidies 
dropped from ~50% to 27% in 2022. 

In  2023,  energy  subsidies  to  households  remained  stable  at  EUR 106 bn,  while  energy 
subsidies  to  transport,  industry  and  the  energy  industry  sectors  all  decreased,  to 
EUR 20 bn,  32 bn  and  92 bn,  respectively.  The  amounts  allocated  to  tertiary (14)and 
agriculture  sectors  were  smaller  (EUR 14 bn  and  11 bn,  respectively),  together 
representing about 7% of the total energy subsidies in 2023. 

Figure 11: Energy subsidies by economic sector (EUR2023bn) 
Source: Enerdata, 2024. NB: 2023 estimates are represented with hatching 

When looking at the evolution of FFS distributed by economic sector (Figure 12), the 
2022 increase is mainly caused by large increases in subsidies to the energy industry sector 
(EUR  +23 bn)  and  to  households  (EUR  +16 bn)  to  counteract  the  effects  of  the  energy 
price crisis. Fossil fuel support directly attributable to industry fell in 2022, although this 
might  have  been  shifted  into  the  “All  energies”  category  as  many  industry  measures 
combined electricity and gas support. 

It is worthwhile to note that in 2023, the level of support for two sectors, Transport and 
Energy industry, have quickly returned to their historical pre-crisis levels, highlighting the 

(13) The term covers energy extraction, conversion, refining, infrastructure, transmission, distribution, storage, waste management and 

retail. In short, the energy industry. 

(14) Tertiary sector covers public services and business sectors. 

10 

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temporary nature of related measures. In contrast, Households and Cross sectoral supports 
have  remained  very  important  in  2023  compared  to  their  historical  values,  reflecting  a 
delay in the pass-through of lower wholesale energy prices to retail bills and therefore a 
longer need for continuing support. 

Figure 12: Fossil fuel subsidies by economic sector (2015-2023; EUR2023bn) 
Source: Enerdata, 2024. *Others includes construction, services, business, public, and mining sectors. NB: 2023 

estimates are represented with hatching 

The analysis of energy subsidies to households shows that over the period of 2021-2023, 
60%  of  household  energy  support  was  intended  to  counter  the  impact  of  rising  energy 
prices and can be directly linked to the energy crisis. Furthermore, as shown on Figure 13, 
most of this support (EUR 65 bn or 61% in 2023) did not target any specific energy source 
- denoted as “All energies” on the graph. EUR 25 bn (22%) was allocated towards fossil 
fuels (mostly natural gas) in 2023, while electricity and RES received only  EUR 13 bn 
(12%) and EUR 2.4 bn (2%) respectively. In this respect, even though effectively shielding 
household from sudden increases, these subsidies were lessening the price signals coming 
from the energy markets. 

Figure 13: Composition of energy subsidies provided to households (EUR2023bn) 
Source: Enerdata, Trinomics, 2024 

11 

13131415151212361518181818171714382113131314131315131623251421666677671057585962595760136111020406080100120140160201520162017201820192020202120222023€2023bnOthers*AgricultureCross sectorHouseholdsIndustryEnergy industryTransport1011101413152064652325211420201924222634109106020406080100120201520162017201820192020202120222023€2023bnRESElectricityFossil fuelsAll energies 
The reason behind this distribution of subsidies to households is linked to the fact that an 
overwhelming  majority  of  household  energy  subsidies  supported  energy  consumption: 
80%  in  2022  (EUR  87  bn)  and  71%  in  2023  (EUR  75  bn).  At  the  same  time,  energy 
efficiency  measures  for  households  (that  would  favour  electrification,  local  RES 
production and storage) received only EUR 21 bn in 2022 and EUR 29 bn in 2023. 

2.5. 

Subsidies by environmental impact 

This report attempts to provide the first comprehensive assessment of energy subsidies in 
the  EU  for  their  environmental  impact.  In  this  context,  the  following  definition  was 
adopted: 

Energy subsidies are environmentally harmful if the price or cost reduction that they bring 
about  maintains  or  increases  the  availability  or  the  use  of  energy  sources  that  cause 
significant negative environmental impacts. 

The term “significant negative environmental impacts” was inspired by the EU Taxonomy 
regulation, focusing on the two climate objectives, namely (1) climate change mitigation, 
and (2) climate change adaptation. Assessing the four other environmental criteria in the 
Taxonomy Regulation will require additional work in the next editions of this report. 

As can be seen on Figure 14, the majority of energy subsidies in 2023, EUR 218 bn (or 
62%  of  the  total)  was  classified  as  environmentally  not  harmful,  while  the  amount  of 
environmentally  harmful  subsidies  was  estimated  at  EUR 136 bn  (38%  of  the  total). 
Energy subsidies considered as environmentally harmful were mostly those related to fossil 
fuels (74%), followed by the “all energies” category (21%) (15), heat (3%) and electricity 
(2%) (16). 

There are subsidies that are categorised as “fossil fuel subsidy” and “not environmentally 
harmful” – typically these are linked to measures such as covering the cost of closing coal 
power plants, to rehabilitating former mine sites or to social measures. 

Figure 14: Energy subsidies by environmental impact (EUR2023bn) 

(15)  If energy subsidies did not target any specific energy carrier (i.e. “all energies”), the weight of fossil fuels in each Member States’ 
energy mix, expressed as %, based on Eurostat data for 2022, was used to determine the environmentally harmful portion. 
(16)  The overwhelming majority of subsidies to electricity is considered as not harmful. The exception is when the subsidy is clearly 

linked to electricity generated from fossil fuel sources. 

12 

12812412612913314115021021856575962605764187136184180186190193199213397354050100150200250300350400450201520162017201820192020202120222023€2023bnEnvironmentallynot harmfulEnvironmentallyharmful 
 
Source: Enerdata, Trinomics, 2024. NB: 2023 estimate are represented with hatching 

2.6.  National plans on fossil fuel subsidies 

In 2023, 43% of fossil fuel subsidies (EUR 48 bn) had a planned end-date before 2025 and 
another 9% (EUR 10 bn) had an end-date in the medium term, e.g. between 2026 and 2030 
(Figure 15). For the remaining 48% of fossil fuel subsidies (EUR 53 bn), there is either no 
end-date yet or the end-date has been set after the year 2030 (17). 

Figure 15: Fossil fuel subsidies by end-date, share of total FFS (%, 2023) 
Source: Enerdata, Trinomics, 2024 

Many Member States do not provide end-dates of energy subsidy measures, especially for 
those embedded in their tax code, finance law or national budget. Some measures include 
a minimum period for the subsidy to remain in place, but the decision whether to continue 
the subsidy beyond the minimum period is generally left for the future. When end-dates 
are announced, these are often for short term crisis measures, rather than the longer term 
“structural” measures. 

Almost all EU Member States intend to move away from fossil fuels. However, this could 
pose a problem in several of them, especially where fossil fuel support, compared to their 
GDP, is relatively high (Figure 16). 

(17) The analysis is based on the updated annexes VIII and XV of the draft National Energy and Climate Progress Reports from 2023, 

as well as publicly available updates or announcements. 

13 

0%10%20%30%40%50%60%70%80%90%100%DEFRPLESITNLBEPTGRROHUSKFIIESEBGLULTMTDKCZATHRCYLVSIEE2023€bnEnd-date after 2030 or noneEnd-date between 2026-2030End-date by 2025 
 
Figure 16: Fossil fuel subsidies compared to GDP (%, 2015 and 2023) 
Source: Enerdata, Trinomics, 2024 

To be consistent with the EU’s collective climate ambition, fossil fuel subsidies need to be 
progressively  phased  out,  but  only  Denmark  translated  this  intention  into  concrete 
legislation. The information currently available on end-dates for these subsidies makes it 
evident that  the EU is  not  on track  to phase  out fossil fuel  subsidies  consistent with  its 
climate ambitions. Assuming that the lack on an end date means that the subsidy will stay 
in place, there is an increasing risk of inconsistency with the EU’s climate ambition that 
will  grow  over  time  as  we  are  nearing  2050.  More  effort  and  more  transparency  from 
Member States is crucial in committing to ending fossil fuel support. 

3.  CONCLUSIONS 

The recent energy crisis made it necessary to take bold policy initiatives in the European 
Union to mitigate the social and economic impact of the energy crisis. These exceptional 
measures to address the energy crisis have greatly impacted the trends in energy subsidies, 
temporarily reversing the recent declining trend of fossil fuel subsidies, while lower costs 
and higher energy prices resulted in a significant decrease of RES subsidies as they became 
more competitive. The recent spike in energy prices has also affected the types of measures 
used  to  provide  the  subsidies,  the  technologies  promoted,  and  the  sectors  targeted  by 
subsidies;  leading  to  a  significantly  increase  in  household  and  cross-sectoral  subsidies 
since 2022. 

It  is  important  to  note  that  despite  weakening  price  signals  and  providing  the  wrong 
incentives for energy use, increased energy subsidies did not lead to an increase in energy 
consumption in absolute terms. The EU achieved 18% of gas demand reduction over the 
period August 2022 to May 2024, which resulted in about 138 bn cubic metres (bcm) of 
gas saved (18). These savings are the  combined results of the efforts of Member States, 
businesses and citizens, coordinated by EU-level action (19), that helped to avoid supply 
shortages and to ensure security of supply. Nevertheless, as the report shows, subsidies for 

(18) Comparing gas consumption in the Aug. 2022 – May 2024 period with the 5-year average. [Source: ‘Eurostat (nrg_cb_gasm)’] 
(19)  Such as the coordinated demand-reduction measures for gas. 

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0%1%2%3%4%FFS / GDP (%)20232015EU27 
 
imported fossil energy continue to put a heavy burden on European economies and distort 
incentives for energy use, often in environmentally harmful ways.  

Reducing, reforming or eliminating fossil fuel support is identified as a priority for the new 
Commission. The mission letter to Commissioner Jørgensen (20) explicitly mentioned the 
need  to  create  a  framework  to  further  scale  down  and  phase  out  the  use  of  fossil  fuel 
subsidies as part of the work to reduce Europe's dependencies. This framework needs to 
be  part  of  a  common  effort  between  the  European  Commission  and  Member  States  to 
reduce Europe's dependencies on imported fossil fuels and on costly public interventions 
to protect energy users from volatile prices, in order to facilitate the transition to a clean 
and competitive European economy. 

The 2022 spike in energy subsidies was a reflection of the short-term priority of shielding 
EU  consumers  from  the  energy  bills  shock.  Now  it  is  important  that  the  temporary 
measures supporting fossil fuels and energy demand are not extended, because this could 
have long-lasting negative impacts, by reducing market incentives for energy efficiency 
and  renewable  energy  investments  and  further  locking  in  fossil  fuel  dependencies  in 
households and energy intensive sectors. In addition, the continuously growing EU-wide 
support  for  energy  efficiency  investments  will  be  key  to  reaching  our  2030  energy 
efficiency  target  and  will  ultimately  increase  our  energy  security  and  reduce  our 
dependence on imported fossil fuels. 

The EU has decisively embarked on an energy transition to achieve climate neutrality by 
2050. Under European legislation, there is an agreement to phase out fossil fuel subsidies. 
Spending  public  funds  on  incentives  that  go  against  the  transition  will  slow  down  the 
transition and make it more costly. Energy savings and reduced reliance on fossil fuels in 
the residential, power, transport and industrial sectors should help the EU in a variety of 
ways: (i) reducing imports of fossil fuels; (ii) speeding up the clean-energy transition; and 
(iii) improving the EU’s security of energy supply. The energy transition should therefore 
bring  about  a  reduction  in  fossil-fuel  subsidies,  and  a  significant  redirection  in  subsidy 
support to renewables and energy efficiency.  

Although the situation on global and European energy markets has greatly improved since 
2022, energy prices (like natural gas) remain significantly higher than before and have a 
negative  impact  on  both  European  industrial  competitiveness  and  household  energy 
expenditures. This should be yet another reason for replacing fossil fuel technologies by 
more sustainable solutions and to achieve a significant decline in the consumption of fossil 
fuels  (and  their  subsidies)  in  the  medium  term.  Policy  considerations  for  energy 
affordability  may  justify  temporary  measures  to  support  households  and  industry. 
However,  the  energy  transition  will  only  succeed  if  low-carbon  and  renewable 
technologies  and  energy  efficiency  are  rapidly  scaled  up;  therefore,  it  is  essential  to 
increasingly redirect support away from environmentally harmful fossil fuel subsidies. 

As indicated  already  in  the Commission’s assessment of the draft National  Energy and 
Climate Plans (21), a collective effort by all Member States is necessary to explain how 
they plan to phase out fossil fuel subsidies and to set a clear and credible timeline for their 

(20)  Ref: Mission letter to Dan Jørgensen, Commissioner for Energy and Housing. 
(21) COM(2023) 796 final 

15 

 
 
swift  phase  out,  while  adopting  the  ancillary  measures  needed  to  protect  vulnerable 
households and safeguard competitiveness. 

16