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$28 billion and counting: Europe tallies the cost of another energy crisis

The European Union has unveiled a raft of planned emergency measures to cushion its economy from soaring energy costs.

The proposals, announced Wednesday, underscore the economic damage the Iran war is inflicting on Europe, which only recently emerged from the energy crunch precipitated by Russia’s 2022 invasion of Ukraine. Some industries are already fighting for survival.

“For the second time in less than five years, Europeans are paying the price of Europe’s dependency on imported fossil fuels,” the European Commission, the EU’s executive arm, said in a statement detailing the measures.

The bloc has spent an additional €24 billion ($28 billion) on energy imports since the start of the war due to higher prices – or more than $587 million a day – “without receiving a single extra molecule of energy,” it added.

EU plans to cut electricity taxes to shield households from Iran war energy crisis

Brussels will relax state aid rules to allow member countries to offer ‘targeted and temporary’ support

The EU will cut electricity taxes and provide consumers with fresh incentives to ditch fuel-burning cars and boilers, the European Commission has announced, as the energy crisis from the Iran war speeds a shift to a clean economy.

The plan, which foresees tweaking rules so that electricity is taxed less than oil and gas, aims to bring down bills while encouraging the move away from polluting devices that prolong reliance on foreign fuels.

The commission said it would adopt temporary state aid rules to allow member countries to directly shield consumers and businesses from high energy prices, but it warned that any support must be “targeted, timely and temporary”.

How to read the European Commission’s Iran crisis energy emergency plan

EU countries should coordinate measures to offset rising energy prices from the Iran conflict, while using the crisis to drive longer-term change

A plan published on 22 April by the European Commission to deal with the energy shock triggered by the war in Iran and related blockade of the Strait of Hormuz seeks to turn the crisis into a catalyst for long-term change. The plan, known as AccelerateEU, pushes the European Union to go further in reducing its high dependence on volatile fossil-fuel imports, while transitioning to an energy system based on clean, homegrown sources.

In particular, AccelerateEU shows that the European Commission wants to use the Iran crisis to foster electrification in the context of the share of electricity in final EU energy consumption being stuck at around 20% for a decade. Importantly, the Commission’s analysis of the risks of the EU’s dependence on fossil fuels is ultimately correct. This contrasts with statements since the start of the Iran crisis from some national governments – including Germany – which seem to advocate continued use of fossil fuels and a slowdown in the transition.

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