Brussels' Affordable Energy Plan Targets the Right Parts of the Bill. Delivery Sits With Member States

On 26 February 2025 the European Commission published its Affordable Energy Action Plan as a central part of the Clean Industrial Deal. The plan sets out short-term measures to lower energy costs for households, businesses and industry, alongside structural reforms intended to make the system more resilient to future price shocks. The Commission estimates savings of EUR 45 billion in 2025, rising to up to EUR 130 billion a year by 2030 and EUR 260 billion a year by 2040.

It says energy efficiency alone could deliver savings of up to EUR 162 billion a year by 2030. The plan's most important feature is that it addresses all three components of an energy bill: supply costs, network charges, and taxes and levies. European industrial electricity and gas prices remain well above those in the United States and China. On supply costs, the plan's long-term answer is more renewables, grid investment and energy efficiency, so that gas sets the price less often.

Network charges are a growing share of bills and will rise further as grids expand to connect renewables and serve electrified demand. Taxes and levies vary widely across member states and in many cases tax electricity more heavily than fossil fuels used for heating or industry. The emphasis on network tariffs and taxation is welcome, because those are areas where policy rather than markets determines the outcome. The first concern is that the headline savings are estimates that assume full implementation.

The third concern is that the short-term measures may come at the expense of investment signals. The plan also promises an update to the EU energy security framework, covering threats such as cyberattacks and extreme weather. The most useful thing the Commission can do is publish country-by-country progress on the three parts of the bill, showing where electricity taxes, levies and network tariffs stand relative to the plan's recommendations.