European Commission Unveils Strategy to Lower Energy Prices in the EU

On Wednesday, the European Commission unveiled a new action plan aimed at making energy more affordable. This initiative seeks to help EU residents and businesses save up to 260 billion euros annually by the year 2040.

This action plan for lower energy costs is part of the broader Clean Industrial Deal, also introduced on the same day. It outlines immediate steps to assist member states in swiftly lowering energy expenses, easing the financial burden on consumers and businesses, and advancing the establishment of a unified energy market within the EU to achieve independence from fossil fuel imports.

EU Energy Commissioner Dan Jorgensen highlighted the urgency of the situation during a press conference in Brussels, stating, “Currently, Europe is still purchasing gas from Russia, inadvertently funding their aggression in Ukraine. Since the onset of the conflict, we have imported fossil fuels from Russia worth as much as 2,400 F-35 fighter jets. This must end; we need to attain independence from Russia.”

The action plan identifies eight key areas, starting with the necessity to lower energy bills. Retail energy prices and industrial electricity costs have nearly doubled, putting Europe at risk of deindustrialization and hindering economic growth, which negatively impacts citizens. According to EC data, over 46 million Europeans are experiencing energy poverty. Jorgensen noted, “High energy prices diminish competitiveness. In comparison, we are paying two to three times more for industrial energy than our counterparts in the USA and China. Meanwhile, almost 47 million Europeans struggled to adequately heat their homes last year.”

The EC reports that three primary factors affect energy bills: supply costs, network maintenance expenses, and taxes. The rise in wholesale energy prices, spurred by the war in Ukraine, along with the incomplete integration of the EU’s electricity system and escalating network charges, are all contributing to higher energy prices and bills. To address this, the plan proposes solutions that will enable consumers to switch to more affordable, cleaner energy providers, potentially saving households up to 200 euros per year.

The second component focuses on reducing energy supply costs, which includes establishing long-term supply contracts that will help decouple retail energy bills from fluctuating gas prices. It also calls for expedited permitting for renewable energy projects and advancing energy market integration, which could yield annual savings of 40-43 billion euros within the next five years.

Additional measures involve promoting energy efficiency by enhancing consumer access to efficient and lasting appliances, which could lead to savings of up to 162 billion euros annually by 2030. The plan also seeks to regulate gas prices in the EU, including oversight of European gas markets.

A crucial aspect of the plan is ensuring businesses can access affordable energy, which will be facilitated by increased collaboration between the energy industry, clean energy producers, and the public sector. The completion of the energy union is also a focal point, emphasizing the expansion of interconnections and strengthening cross-border networks and trade.

Moreover, the EU must be better prepared for crises. The EC has committed to revising EU energy regulations to address emerging threats such as cyber-attacks, assaults on critical infrastructure, sabotage, and pressure from exporters. The EU aims to enhance its readiness for possible price crises, and the EC will provide member states with guidelines on consumer incentives, such as reducing energy use during peak demand periods.

Commissioner Jorgensen stated that these actions are projected to save the EU 45 billion euros by 2025, with expected savings increasing to 130 billion euros annually by 2030 and reaching 260 billion euros by 2040. (02/26/2025)