What is the cost of the energy crisis in Europe?
Europe is trying to reduce its dependence on Russian fossil fuels.
As gas prices in Europe soar eight times average over 10 years, countries are implementing policies aimed at limiting the impact of rising prices on households and businesses. These include everything from cost-of-living subsidies to wholesale price regulation. Overall, funding for these initiatives reached $276 billion from August.
As the continent faces uncertainty, the graph above shows the funding allocated by country in response to the energy crisis.
The energy crisis, in numbers
Using data from Bruegel, the table below reflects spending on national policies, regulations and subsidies in response to the energy crisis for selected European countries between September 2021 and July 2022. All figures are in US dollars .
|Country||Funding allocated||Percentage of GDP||Household energy expenditure,
|🇩🇪 Germany||$60.2 billion||1.7%||9.9%|
|🇮🇹 Italy||$49.5 billion||2.8%||10.3%|
|🇬🇧 United Kingdom||$37.9 billion||1.4%||11.3%|
|🇪🇸 Spain||$27.3 billion||2.3%||8.9%|
|🇦🇹 Austria||$9.1 billion||2.3%||8.9%|
|🇵🇱 Poland||$7.6 billion||1.3%||12.9%|
|🇬🇷 Greece||$6.8 billion||3.7%||9.9%|
|🇳🇱 Netherlands||$6.2 billion||0.7%||8.6%|
|🇨🇿 Czech Republic||$5.9 billion||2.5%||16.1%|
|🇧🇪 Belgium||$4.1 billion||0.8%||8.2%|
|🇷🇴 Romania||$3.8 billion||1.6%||12.5%|
|🇱🇹 Lithuania||$2.0 billion||3.6%||10.0%|
|🇸🇪 Sweden||$1.9 billion||0.4%||9.2%|
|🇫🇮 Finland||$1.2 billion||0.5%||6.1%|
|🇸🇰 Slovakia||$1.0 billion||1.0%||14.0%|
|🇮🇪 Ireland||$1.0 billion||0.2%||9.2%|
|🇧🇬 Bulgaria||$0.8 billion||1.2%||11.2%|
|🇱🇺 Luxemburg||$0.8 billion||1.1%||n / A|
|🇭🇷 Croatia||$0.6 billion||1.1%||14.3%|
|🇱🇻 Latvia||$0.5 billion||1.4%||11.6%|
|🇩🇰 Denmark||$0.5 billion||0.1%||8.2%|
|🇸🇮 Slovenia||$0.3 billion||0.5%||10.4%|
|🇲🇹 Malta||$0.2 billion||1.4%||n / A|
|🇪🇪 Estonia||$0.2 billion||0.8%||10.9%|
|🇨🇾 Cyprus||$0.1 billion||0.7%||n / A|
Source: Bruegel, IMF. Exchange rate of the euro and the pound sterling against the US dollar as of August 25, 2022.
Germany spends more $60 billion to combat rising energy prices. Key measures include a one-time $300 energy allowance for workers, in addition to $147 million in funding for low-income families. Yet energy costs are expected to rise another $500 this year for households.
In Italy, workers and retirees will receive a $200 cost-of-living bonus. Additional measures, such as tax credits for energy-intensive industries, have been introduced, including an $800 million fund for the automotive sector.
With energy bills set to triple over the winter, households in the UK will receive a $477 subsidy in winter to help cover electricity costs.
Meanwhile, many Eastern European countries – whose households spend a higher percentage of their income on energy costs – are spending more on the energy crisis as a percentage of GDP. Greece spends the most, at 3.7% of GDP.
Spending related to the energy crisis also extends to massive utility bailouts.
Uniper, a German utility company, received $15 billion in support, the government acquiring a 30% stake in the company. It is one of the largest bailouts in the country’s history. Since the original bailout, Uniper has requested an additional $4 billion in funding.
Additionally, Wien Energie, Austria’s largest energy company, received a €2 billion credit line as electricity prices soared.
Deepening of the crisis
Is this the tip of the iceberg? To offset the impact of high gas prices, EU ministers are discussing even more tools throughout September in response to a looming energy crisis.
To limit the impact of high gas prices on the price of electricity, European leaders are considering, among other things, price caps on imports of Russian gas and temporary price caps on gas used for electricity production. .
Price caps for renewables and nuclear have also been suggested.
Given the depth of the situation, Shell’s chief executive said Europe’s energy crisis will last beyond this winter, if not for several years.