Consumers stand to enjoy more affordable electricity bills under EU plans

The EU today published a series of proposals [1] to decarbonise Europe’s economy and reform energy bills. For consumers, this can mean more affordable bills and easier participation in the energy transition.

As well as a 2030 electrification target to accelerate the shift away from fossil fuels and a heating and cooling action plan, the Commission plans to ensure electricity is taxed less than gas. This is key to incentivise the shift to heat pumps. It also plans to potentially introduce sales targets for heat pump manufacturers.

The Commission will also push countries to cut VAT on electric cars, heat pumps, and household batteries. Countries will be encouraged to use revenues dedicated to Social Climate Plans to finance social leasing of EVs. This will help address a key barrier for consumer participation: up-front costs. There will also be improved certification of heat pump installers, which has been an issue that consumers have highlighted.

BEUC Director General Agustín Reyna commented: “Consumers have paid the price for too many energy crises caused by volatile fossil fuels. The Commission is right to accelerate the shift to electricity. It’s the best way to protect consumers long-term from fossil fuel price shocks. Cutting taxes on electricity to make it a more attractive option than gas is key. But we need to ensure that those who remain connected to the gas network are protected against rising costs.  For too long, consumers have been put off from investing in heat pumps or electric cars due to high electricity prices in many countries.

“Cutting VAT on heat pumps and electric cars also sends the right signals to consumers and will go some way to addressing up-front costs. Social leasing schemes are great because they will allow everyone the chance to access an electric car. In countries where this was implemented, like France, it was a huge success, so we want to see it rolled out to other countries. Combined, these measures should save consumers money, by cutting energy bills and easing consumer access to clean tech.”

Background:

• This plan follows on from the Commission’s recent Accelerate EU plan and Citizens Energy Package.

• BEUC report: How to make energy markets work for consumers and deliver affordable bills.

• BEUC report on the affordability of electric cars. 

• BEUC report on how to ensure consumers are protected in the gas phase-out.

[1]  ETS1 review and Energy Package: these proposals will now need to be negotiated by EU Council and European Parliament.