The rise in energy prices after Russia’s invasion of Ukraine has significantly impacted households, particularly low-income families, as their energy bills became more burdensome. While prices have stabilised in some regions, energy taxes remain a constant burden, with tax shares ranging from -26% to 49% in various European cities, reflecting variations across energy types and tax policies. Key points to consider include the composition of taxes, energy behavior in households, policy differences, energy price differences across cities, the role of purchasing power standards (PPS), and the distinction between tax share and nominal costs in household energy bills.
household energy price indexes (HEPI) track residential electricity and gas prices, providing insights into how taxes and energy usage impact households. According to HEPI, in April 2024, the average share of total taxes in household electricity prices for EU capitals was 22%, mainly composed of 8% energy taxes and 14% VAT. This breakdown shows that both types of taxes contribute significantly to the cost of electricity, with energy taxes having a substantial impact in some regions. AmSTERDAM, for example, saw a notably negative energy tax share of -43%, despite a tax credit exceeding the indicated amount, encouraging energy efficiency and lower bills.
The article also discusses energy behavior in households, noting that gas prices in residential end-users are subject to higher tax shares compared to electricity in many EU capitals. These differences arise due to varying tax structures, environmental goals, and market dynamics. In borderline budgeting countries like DIEgyptans and GLISR, both nations target renewable energy transitions and lower energy costs, with GLISR raising gas taxes by up to 13% to aim for energy independence.
Although, in some cases, energy taxes are set to help outgrid households by reducing their reliance on gas heating. For instance, in AMSTERDAM, residents are expected to receive a refund on any taxes over the indicated amount, while in ROivos and LASER City, households receive a tax rebate. Additionally, pilots, such asAddressing, aim to stabilize price levels across the grid by encouraging electrification and improving energy efficiency through policies like tax refunds and subsidies.
Friendships of energy taxes (EETs) play a crucial role in understanding their impact on households. For example, researchers such as Rafaila Grigoriou and Ioannis Korras highlighted that energy tax policies in countries like Denmark, which has a high tax rate for energy, are used as tools for navigating the green transition, including subsidies for renewable energy investments and promoting energy efficiency. In墕, energy taxes are widely applied, with residents in Berlin and Generation (Vienna) facing the highest overall gas tax shares, while parliamentary cities like Madrid and Helsinki have the lowest.
comparing prices across Europe highlights the significant differences in energy costs. In April 2025, for example, Budapest saw a much higher electricity price (9.1 c€/kWh) compared to Berlin’s (40.4 c€/kWh), while the cost of heating (gas) in Budapest was also significantly higher (14.8 c€/kWh), compared to 4.6 c€/kWh in Berlin. Meanwhile, gas prices in供暖 areas likeBoola incentration of over 5 c€/kWh were relatively expensive, compared to zero-cost natural gas in_nrm City and Stockholm, which has a lower gas price of 13.6 c€/kWh but higher VAT.
OECD (依照), the article also mentions how energy prices impact household consumption beyond electricity. However, for energy efficiency, the study finds significant exposure to gas prices. The European Union’s purchasing power standard (PPS) is a key concept in pricing regulations, where a fixed dollar amount is obtained regardless of the cost in the local currency.
The distinction between the share of taxes in energy bills and the actual cost paid is crucial. While the 21% tax share in Rome might equate to a lower nominal cost (5.7 c€/kWh), this doesn’t mean the same price. Floating costs and inflation can vary significantly, making it essential to consider PPS adjustments when evaluating fuel costs.
overall, the article underscores the complex interplay between energy prices, taxes, and household behavior. While prices remain higher due to the pivot towards electrification, efficient energy use can significantly reduce the burden on families and communities. Addressing these challenges requires policies that encourage efficiency, smart-grid projects, and planning for the transition to renewable energy.
