How neighboring countries are defending themselves against soaring energy prices

How neighboring countries are defending themselves against soaring energy prices
How neighboring countries are defending themselves against soaring energy prices

If Belgium is counting on the extension of the support measures already in force and on the possibility of “skimming” the superprofits, it pleads above all for an agreement at European level. But what is happening on the other side of the border, in our neighboring countries?

Faced with the war in Ukraine and the current energy crisis, Europe is preparing for the worst this winter. In Belgium, the government wants to extend aid measures such as the 6% VAT or the extended social tariff as well as help businesses, and is even considering the possibility to “skimme” the superprofits reaped by energy companies. But what about other European countries? What strategy have the neighboring countries adopted?

France: rationing and power cuts

In France, the tensions are palpable despite the tariff shield which has enabled the government to limit the energy bill. With only 24 of EDF’s 56 nuclear reactors in working order, the shield may not hold for the next few months, let alone in winter. In question ? Construction errors, maintenance delays due to the Covid crisis, and power plant cooling problems due to drought.

In short, the situation worries the authorities, who have imagined four possible scenarios for the coming months:

  • call for sobriety: both households and companies and businesses must do everything to limit their consumption. Stores are, for example, required to close their doors when the air conditioning is on and to turn off any superfluous light during the night (including luminous signs). These measures will take effect on October 15.
  • Power cuts on a case-by-case basis: it is not excluded that certain companies which consume the most undergo light cuts of electricity.
  • Generalized voltage drop across the entire network: this would result in lower performance, such as slower wi-fi, weaker light, a smartphone that takes longer to charge…
  • Rationing: this time, we are no longer talking about small power cuts carried out on a case-by-case basis, but of “temporary, anticipated, localized and rotating” power cuts first for businesses but also for individuals during a duration of two hours maximum, according to the RTE network manager.

Germany: hunting down waste

Germany, which fears a gas shortage, has enacted a series of measures to save energy. The public authorities intend to set an example: heating in administrations and public buildings will be capped at 19 degrees and even limited to 12 degrees where employees perform intensive physical work. It will be turned off in common areas such as hallways and there will be no hot water for washing hands.

Businesses are required to keep their doors closed and turn off their lights at night. Historic buildings will also have to reduce their lighting, unless there are security constraints.

This waste hunt will not impact all sectors: hospitals, schools or retirement homes are not affected by these heating savings.

The Netherlands: cushioning inflation and increasing purchasing power

In the Netherlands, the problem is taken the other way around: rather than tackling citizens’ consumption, the government is opting for a financial compensation to cushion inflation. The Dutch government plans to release a budget of around 16 billion euros next year to help households pay their energy bills. He will also increase the minimum wage by 10% and reduce income tax for the lowest earners. Another more anecdotal measure: a major advertising campaign encourages the population to take showers of only five minutes.

Spain and Portugal: capping prices and reducing VAT

In order to limit the growth of energy prices, Spain and Portugal have adopted their own tariff system and have capped the prices of gas used to generate electricity. Thanks to this, electricity is three times cheaper than in Belgium.

How ? It should be noted that “wholesale electricity prices are determined by the incremental cost of the last plant that is started to balance supply and demand”, explained Charles Cuvelliez, professor at the École Polytechnique de Brussels at the ULB, in Matin Première. Except that in most cases, this plant is gas. Hence the increase in electricity prices in Belgium, which has the same system. The difference is that the Spanish and Portuguese governments have decided to subsidize the gas that is used in these power plants. Result: the operating price of the last plant decreases and brings with it a decrease in wholesale electricity prices.

Another measure adopted in Spain: the state will lower the VAT on gas from 21% to 5% from October and until the end of the year. Spain thus aligns the VAT on gas with that of electricity, also capped at 5%.

Italy: taxing the surplus profits of energy companies

Belgium is thinking about it, but Italy is the first State to have taken the plunge: the authorities have decided to levy a 10% surcharge on the profits of large energy companies carried out between October 2021 and March 2022. For the hydrocarbon giant Eni, this represents around a few hundred million euros. The money raised will allow finance several measures estimated at 4.4 billion euros and intended to alleviate the surge in energy prices for households and businesses.

The article is in French

Tags: neighboring countries defending soaring energy prices

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