New EU report on the rising retail energy prices in Europe suggests ways to cut consumer costs and keep EU businesses competitive in the global market.
Between 2008 and 2012 retail energy prices in Europe rose significantly despite falling wholesale electricity prices and stable wholesale gas prices. Differences between EU countries are also marked, with some consumers paying 2.5 to 4 times more than others.
Focusing on gas and electricity, the EU’s report on energy prices and costs analyses why retail prices are rising and suggests how consumers and industry can save energy and money.
Cutting consumers' energy costs
The EU aims to complete the common energy market in 2014 and further develop energy infrastructure. A more liberal and coordinated market should boost investment and competition and improve efficiency in several areas. This should lead to price reductions and a more level playing field within the bloc.
To keep costs down, households and industry should improve energy efficiency by using more energy-efficient products or other energy-saving practices. Consumers should also take advantage of better tariffs or switch to cheaper suppliers where possible.
As rising energy costs hit the poorest households hardest, EU governments should also consider social policy measures to protect vulnerable consumers.
Keeping the EU competitive
The energy price gap between the EU and other major economies is growing. According to the International Energy Agency, this disparity is expected to reduce the EU’s share in global exports for energy-intensive goods such as ceramics and aluminium steel.
Though the EU still leads in exports of energy- intensive goods, efforts to mitigate higher energy costs through energy efficiency improvements may need to go even further.
The EU must continue its efforts with international partners on energy subsidies and export restrictions. Where necessary, it must also help protect certain industrial consumers through fiscal transfers and exemptions and cuts in taxes and levies.
Investing in the future
With energy prices set to rise in the short term, investment is needed now in smart electricity grids and improved technologies to produce, transmit and store energy more effectively. Together with a common energy market, these measures should bring prices down in the long run.
With flexible energy systems, responsive consumers, competitive markets and efficient governance, Europe will be better equipped to contain future price rises, pay for investments and minimise cost increases.