Mar 16, 2026
EU rushes to reduce energy costs as the Iran conflict impacts markets.
European Union energy ministers are set to convene on Monday to explore options for reducing energy costs, as officials work on emergency plans to mitigate the effects of rising oil and gas prices caused by the conflict in Iran.
The European Commission is preparing emergency actions to protect consumers from soaring energy bills, looking into state support for industries, reducing national taxes, and utilizing an upcoming revision of the EU carbon market to alleviate CO2 permit supply, according to officials familiar with the ongoing discussions.
Commission President Ursula von der Leyen has indicated that Brussels is also contemplating implementing a cap on gas prices. Ministers will engage in closed discussions on Monday to evaluate potential measures aimed at addressing price hikes resulting from the closure of the Strait of Hormuz, which has disrupted LNG trade and led to significant oil supply challenges. Europe’s dependence on imported oil and gas makes it vulnerable to global price fluctuations, and immediate solutions are not anticipated.
"There are structural factors driving high energy prices in Europe," stated Joanna Pandera, head of the Polish think-tank Forum Energii. She noted that differing energy mixes and tax policies among countries result in significant price disparities across the EU. "Finding a single solution that accommodates all is quite challenging."
European benchmark gas prices have surged over 50% since the onset of the Iran war. Some governments, including Italy, advocate for an extensive EU intervention, such as halting the bloc's carbon market to lessen the impact of CO2-emitting gas plants on energy costs. Other governments foresee Brussels concentrating on national tax reductions or domestic subsidies, effectively shifting the responsibility for major actions back to member states, as noted by an EU diplomat.
However, relying on national subsidies could exacerbate inequalities between wealthier and less affluent EU nations. "Not everyone can afford state aid; that’s the issue. It works for those with substantial resources," remarked a senior EU diplomat. According to the think-tank Bruegel, more than 500 billion euros ($571 billion) were spent by EU governments on support measures during the 2022 energy crisis, with Germany contributing 158 billion euros, the largest amount among EU members.
Von der Leyen is expected to provide EU leaders with a shortlist of emergency options this week, prior to their summit on Thursday. In the long term, Brussels asserts that increasing the use of locally produced clean energy from renewables and nuclear sources will reduce Europe’s vulnerability to fluctuating fossil fuel imports.
The European Commission is preparing emergency actions to protect consumers from soaring energy bills, looking into state support for industries, reducing national taxes, and utilizing an upcoming revision of the EU carbon market to alleviate CO2 permit supply, according to officials familiar with the ongoing discussions.
Commission President Ursula von der Leyen has indicated that Brussels is also contemplating implementing a cap on gas prices. Ministers will engage in closed discussions on Monday to evaluate potential measures aimed at addressing price hikes resulting from the closure of the Strait of Hormuz, which has disrupted LNG trade and led to significant oil supply challenges. Europe’s dependence on imported oil and gas makes it vulnerable to global price fluctuations, and immediate solutions are not anticipated.
"There are structural factors driving high energy prices in Europe," stated Joanna Pandera, head of the Polish think-tank Forum Energii. She noted that differing energy mixes and tax policies among countries result in significant price disparities across the EU. "Finding a single solution that accommodates all is quite challenging."
European benchmark gas prices have surged over 50% since the onset of the Iran war. Some governments, including Italy, advocate for an extensive EU intervention, such as halting the bloc's carbon market to lessen the impact of CO2-emitting gas plants on energy costs. Other governments foresee Brussels concentrating on national tax reductions or domestic subsidies, effectively shifting the responsibility for major actions back to member states, as noted by an EU diplomat.
However, relying on national subsidies could exacerbate inequalities between wealthier and less affluent EU nations. "Not everyone can afford state aid; that’s the issue. It works for those with substantial resources," remarked a senior EU diplomat. According to the think-tank Bruegel, more than 500 billion euros ($571 billion) were spent by EU governments on support measures during the 2022 energy crisis, with Germany contributing 158 billion euros, the largest amount among EU members.
Von der Leyen is expected to provide EU leaders with a shortlist of emergency options this week, prior to their summit on Thursday. In the long term, Brussels asserts that increasing the use of locally produced clean energy from renewables and nuclear sources will reduce Europe’s vulnerability to fluctuating fossil fuel imports.