The European Commission has set out plans to tackle the cost of energy in the EU, warning in a draft document that Europe risks de-industrialisation because of a growing energy price gap compared to global competitors.
High energy prices are undermining "the EU's global standing and international competitiveness", the commission said, in a draft action plan for affordable energy, seen by Argus. The plan is expected to be released next week, alongside a clean industrial deal and other strategy documents.
Much of the strategy relies on non-binding recommendations rather than legislation, particularly in energy taxation. Officials cite EU reliance on imported fossil fuels as a main driver of price volatility. And they also highlight network costs and taxation as key factors.
For taxation, the commission pledges — non-binding — recommendations that will advise EU states on how to "effectively" lower electricity taxation levels all the way down to "zero" for energy-intensive industries and households. Electricity should be "less taxed" than other energy sources on the bloc's road to decarbonisation, the commission said. It wants to strip non-energy cost components from energy bills. Officials also eye revival of the long-stalled effort to revise the EU's 2003 energy taxation directive. That requires unanimous approval from member states.
The commission pledges, for this year, an energy union task force that pushes for a "genuine" energy union with a fully integrated EU energy market. Additional initiatives include an electrification action plan, a roadmap for digitalisation, and a heating and cooling strategy. A white paper will look at deeper electricity market integration in early next year.
EU officials promise "guidance" to national governments on removing barriers to consumers switching suppliers and changing contracts, on energy efficiency, and on consumers and communities producing and selling renewable energy. More legislative action will come to decouple retail electricity bills from gas prices and ease restrictions on long-term energy contracts for heavy industries.
By 2026, the commission promises guidance on combining power purchase agreements (PPAs) with contracts for difference (CfDs). And officials will push for new rules on forward markets and hedging. There are also plans for a tariff methodology for network charges that could become legally binding.
Familiar proposals include fast-tracking energy infrastructure permits, boosting system flexibility via storage and demand response. Legislative overhaul of the EU's energy security framework in 2026 aims to better prepare Europe for supply disruptions, cutting price volatility and levels.
Specific figures on expected savings from cutting fossil fuel imports are not given in the draft seen by Argus. But the strategy outlines the expected savings from replacing fossil fuel demand in electricity generation with "clean energy" at 50pc. Improving electrification and energy efficiency will save 30pc and enhancing energy system flexibility will save 20pc, according to the draft.
The commission is also exploring long-term supply deals and investments in LNG export terminals to curb prices.
