Tax exemption. Reduction of electricity consumption. And a desperate search for alternative sources of gas. Europe faced one of its biggest energy crises in history as the cold, dark days of winter arrived.

Al Jazeera spoke to economic experts to find out which European countries are handling the crisis better than others, what’s working and what’s not.

The short answer: France and Spain are the best at keeping inflation under control, while Italy, Germany and Greece are leading the way in long-term preparations to meet their energy needs. In contrast, Great Britain is struggling.

In 2021, Russia accounted for almost half of Europe’s total natural gas imports, but some countries have always been more vulnerable than others.

Poland, Finland, and Slovakia were almost entirely dependent on Russia for natural gas due to their geographic proximity to its pipelines.

Germany, Europe’s largest economy, was dependent on Russia, importing half of its natural gas from the country in 2021. Germany’s large chemical industry, employing more than 300,000 people, uses natural gas as a raw material.

Then there are the countries that traditionally have a higher share of natural gas in the total energy balance: Italy (40 percent), the Netherlands (37 percent), Hungary (33 percent) and Croatia (30 percent). Although these countries depended on Russia to varying degrees, they all witnessed strong inflation as gas prices rose to record levels.

However, according to experts, some countries are leading in the search for alternatives to Russian gas.

Transition to liquefied natural gas (LNG)

Europe as a whole is turning to liquefied natural gas (LNG) to reduce its dependence on Russian gas, which is mainly delivered by pipeline. Between January and September of this year, the European Union imported more LNG than it bought all year.

Some countries, including Spain, France and Italy, have an advantage in the form of existing fixed LNG terminals, Wiffelaars said, compared to other European countries such as Germany, which have traditionally relied more on pipeline gas. Together with Great Britain, these countries have the largest LNG import capacities in the region.

Many others are turning to floating terminals, which take less time to install than permanent ones on land.

At the forefront of this initiative is Germany, which recently completed the construction of the first of five planned floating LNG terminals.

Already in recent months, the eurozone has seen the strongest increase in inflation since its foundation – about 70% of inflation this September was caused by energy prices.

But some countries have protected their citizens better than others.

Price restrictions

France has frozen household gas prices at October 2021 levels and limited electricity price increases in 2022 to 4% compared to last year. It recently announced that it would limit electricity and gas price increases to 15% next year.

Without these measures, household bills would have more than doubled. The costs will be borne by the French public operator.

According to a November 18, 2022 Rabo Research report cited by Al Jazeera, after France, Spain has stood out in terms of protecting citizens from inflation with a series of tax cuts and gas tariff caps.

But while France and Spain have imposed price caps and fuel rebates to protect citizens from high costs, others, including Germany, are focusing more on providing financial support directly to the most vulnerable, while taking measures such as tax cuts on motor oil and exceptional taxes on energy carriers. companies.

• In AustriaFor example, households received a one-time discount of 150 euros ($158) on their electricity bills, while the most vulnerable received double the amount.
• Starting next year, and Germany will begin to subsidize the payment of electricity for consumers, which should lead to a decrease in inflation.
• UK reverted to previous plans to freeze energy prices for two years, instead limiting that period to six months until March 2023.
• In Romania, for approximately 5 million household consumers, the capped final billed price is a maximum of 0.68 lei/kWh, including VAT, and applies to those whose monthly consumption is between 0 and 100 kWh inclusive; incomplete families, etc.
• In ItalyFormer Prime Minister Mario Draghi took the first steps to offset rising electricity prices back in September 2021, when he allocated €3 billion, money he used to offset the overall cost of the energy system from electricity and gas bills. For approximately 6 million small businesses (with users consuming a maximum of 16.5 kW) and approximately 29 million residential customers, the Italian government effectively abolished the tariffs related to the general system charges, which were set at zero in the last quarter of 2021. .
• Netherlands has one of the best renewable energy performance in Europe, in which it has invested heavily. In addition, many households have fixed energy contracts, so they have not yet felt the pressure of rising prices. RTL Nieuws estimates that about two million households are in this situation. The government has reduced energy tax for households and businesses for the whole of 2022. A simple reduction in the energy tax represents a compensation of about 430 euros for the average Dutch household, according to analysts’ estimates, according to the Smart Energy Association.
• Hungary has an energy market where tariffs for residential consumers are regulated below cost, and companies pay for energy at market prices. The dual mechanism, where household consumption is controlled by prices and companies pay market prices, however fuels inflation, which is why Hungary’s prime minister has decided to cap food prices.

The EU’s response to the crisis

As energy prices remain volatile on the markets, EU countries have agreed on measures aimed at improving EU solidarity and better coordination of joint gas purchases.

The new measures will allow member states and energy companies to jointly buy gas on world markets. The pooling of demand at the EU level ensures that EU countries have a better influence on the purchase of gas on world markets and that member states do not outbid each other in the process.

In Brussels, the energy ministers of the member states of the European Union agreed to cap gas prices, the Financial Times reports.

This is an important agreement that will protect citizens from rising energy prices through a realistic and effective mechanism that includes the necessary guarantees of security of supply and stability of financial markets.

In October 2022, the European Council agreed on new measures to be taken at EU level to overcome the energy crisis:

• joint purchase of gas
• gas benchmarks
• improving the functioning of energy markets
• measures of energy solidarity in case of gas supply interruption
• activation of energy saving measures

As different countries take different measures, Europe as a region will face tough questions in the coming weeks, months and years, experts say. The biggest of these: Should every nation think first of itself?

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