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European Union member states should end financial support for energy bills by the end of 2023 in order to keep budget and fiscal targets within the recommended limits, the European Commission said on Wednesday.
Since the energy crisis escalated last year after the Russian invasion of Ukraine and the soaring commodity and power prices, many EU countries have adopted various temporary relief measures to support households and businesses with their surging energy bills.
But as prices, especially natural gas benchmark prices, have recently returned to levels from before the energy crisis, the EU member states should focus on keeping government expenditures in check, according to the European Commission.
“All Member States should wind down the energy support measures in force by the end of 2023,” the Commission said in its policy recommendations.
“Should renewed energy price increases require the implementation of support measures, these should be targeted at protecting vulnerable households and firms, fiscally affordable, and preserve incentives for energy savings.”
According to economic policy think tank Bruegel, since the start of the energy crisis in September 2021, European countries have earmarked a total of $817 billion (758 billion euros) to shield consumers from rising energy costs.
The sum includes energy bills support in the EU, the UK, and Norway. Germany, Europe’s biggest economy, is spending as much as $286 billion (265 billion euros) on measures to help consumers and businesses with the energy costs, per Bruegel’s estimates.
Germany introduced at the end of last year so-called energy price brakes to support households and businesses against the impact of soaring energy prices.
Early this year, the German Finance Ministry told Reuters that Europe’s biggest economy could end up spending less than planned on its power and gas support packages if prices don’t spike again.
Benchmark natural gas prices in Europe have dropped to below $32.36 (30 euros) per megawatt-hour (MWh) in recent days—the lowest price since November 2021.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com