SHARE OF RENEWABLES IN THE ENERGY MIX VS PRICE INCREASE BETWEEN 2021 AND 2023
The Covid-19 crisis, and even more so the energy crisis triggered by the Russian war in Ukraine, have changed the course of prices in the European Union (EU). Because they buy 90% of their gas and oil from abroad, the EU-27 have paid dearly for their dependence on fossil fuels. In 2022 and 2023, their annual energy bill rose to nearly EUR 700 billion, double that of previous years[1], while 200 million households saw their cost of living rise by an average of 16%, the same as throughout the whole of the 2010s.
Faced with such a shock, expressed in aggregate terms, not all member states were in the same boat. Some of them, often the wealthiest, spent large sums to compensate consumers and businesses for the rise in energy prices. Others had more difficulty. According to the Bruegel Institute, tariff shields, fuel vouchers and other forms of reduced VAT totalled almost EUR 540 billion in the EU, the equivalent of 3.5 points of annual GDP. In the countries in the top income quartile, the average subsidy per capita was EUR 1,760, while it was only EUR 675 in the countries in the bottom quartile[2].
Over the past two years, European households have seen disparate price rises, ranging from +15% to +35% depending on whether they are Swedish or Hungarian, for example[3]. While government protection measures have played a role, they are far from the whole story. Once their effects have been neutralised[4], inflation trajectories seem to depend above all on the degree to which economies have moved away from fossil fuels. For example, the countries that are furthest ahead in deploying renewable alternatives are often those that recorded the lowest inflation rates in the wake of the energy crisis (see chart). As well as being a climate and sovereignty issue, the "green" transition is already proving to be a major factor in price stability.
In collaboration with Aurane Vernière, intern
