Energy crisis: Europe has expended almost 800b euros on subsidies.

Researchers stated on Monday that the cost for European nations to protect people and businesses from rising energy expenses has risen to about 800 billion euros and urged nations to be more strategic in their expenditure to address the energy crisis.

Since September 2021, countries in the European Union have set aside or budgeted 681 billion euros to address the energy problem, while Norway and the United Kingdom have each contributed 8.1 billion euros.

The overall amount of 792 billion euros is more than the 706 billion euros in Bruegel’s previous assessment from November, as countries continue to deal with the effects of Russia’s decision to stop most of its gas shipments to Europe in 2022.

With a budget of about 270 billion euros, Germany outspent every other nation on the spending front. The next largest spending countries were Britain, Italy, and France, even though each spent less than 150 billion euros. Most EU nations only spent a small portion of that.

Luxembourg, Denmark, and Germany spent the most money per person.

The countries’ spending on the energy crisis is now comparable to the EU’s COVID-19 recovery fund, which has a cap of 750 billion euros. It was decided in 2020 that in order to deal with the epidemic, Brussels will assume shared debt and transfer it to the 27 member states of the bloc.

The report on energy spending comes as nations discuss EU proposals to relax state assistance regulations even more for green technology initiatives as Europe strives to compete with American and Chinese subsidies.

In several EU capitals, those ideas have sparked worries that promoting greater state aid could disturb the bloc’s internal market. Germany has come under fire for its massive energy assistance program, which is much beyond what other EU countries can afford.

According to Bruegel, governments have primarily supported non-targeted actions to reduce the retail price consumers pay for energy, such as reducing the VAT on gasoline or setting retail power price caps.

States are running out of room in their budgets to continue providing such broad assistance, the think tank claimed, hence this relationship needed to shift.

“Governments should now encourage more income-support programs focused towards the lowest two quintiles of the income distribution and towards vital sectors of the economy,” research analyst Giovanni Sgaravatti said. “Price-suppressing measures that are de facto fossil fuels subsidies.”