The energy crisis in the Middle East is raising costs for EU, with effects that could last months or years – The Commission is putting in place a new framework of subsidies to support vulnerable businesses and households until 2026.
The impact of the current energy crisis due to the conflict in the Middle East “could last for months or even years,” the president of the Commission Ursula von der Leyen said, adding that the Union spends almost 500 million euros a day. Within 60 days the extra cost of fossil fuel imports exceeded €27 billion, with no increase in consumption.
In this context, the Commission presented the new temporary state aid framework which, however, will be in force until the end of 2026. It allows member states to supportvulnerable businesses and households through targeted measures according to their needs.
Coverage of additional fuel costs
Provides for coverage of up to 70% of additional fuel costs for sectors such as agriculture, fisheries, transport and energy-intensive industry, while a simplified aid of up to 50 is introduced for small businesses.000.
The main beneficiaries appear to be countries with a strong industrial basesuch as Germanywhich has secured increased aid rates for energy-intensive industries without additional carbonisation obligations, while Italymay move to subsidies for electricity generation from natural gas. However, experts warn that such measures could increase demand and fossil fuel prices.
Fiscal “flexibility” issue unresolved
But what remains unresolved is the issue of fiscal “flexibility” with Rome calling for the escape clause to be triggered, as it was during the 2022 energy crisis, a position shared by Athens.
Now the Commissionrejects any such possibility, claiming that the conditionsare not the same as in 2022. This issue, as well as the impact of the energy crisis, will be on the agenda of next week’s EU finance ministers’ meetings in Brussels.
Source: Deutsche Welle
