How EU Eases The Pain Of Energy Inflation While Becoming Less Dependent On Russia

High energy prices were a headwind for many economies worldwide in 2022. It squeezed family budgets and made life hard for millions of low-income households.

The problem was more severe for EU households, as Europe was the epicenter of the crisis and saw much higher energy price hikes than the US.

Nonetheless, the pain of high energy prices was eased by a host of government policies, which ended up paying for most of the price hikes. For instance, a retired farmer living on a 500 euros monthly pension in Southern Greece had to pay only 20 out of the 170 euro bill she received for November. Credit from the Ministry of Energy and Environment covered the rest.

How did it happen? To get an answer to this question International Business Times caught up with Greek Energy Minister Kostas Skrekas during his recent visit to New York.

International Business Times: How Does Greece and EU Pay for subsidizing energy bills?

Kostas Skrekas: Through a windfall tax mechanism.

Greece has demonstrated a pivotal role in driving energy market reforms at the EU level. The windfalls' tax mechanism, designed and implemented in Greece last July, inspired the European regulation, which was adapted two months later to capture the windfall profits of the electricity producers.

We plan to increase subsidies on household energy bills to 840 million euros ($892.08 million) in January to continue easing the pain for households and businesses of soaring energy prices.

That's double the subsidies we allocated in December. In addition, a windfall tax on power producers and carbon emission rights will pay for it.

But that's a short-term solution to the energy crisis. So what's the long-term solution?

The development of a diverse energy infrastructure, with emphasis on green investments.

In these disruptive times, we will have mobilized green investments of 50 billion euros by 2030 and are currently deploying crucial, massive infrastructure which redefines the energy map in South-East Europe and the East Mediterranean.

Overall, our government is completely transforming the Greek energy sector, shifting to 80% renewables by 2030 vs. 40% today, doubling our electricity interconnections in all directions and tripling our LNG infrastructure.

We are deploying various support schemes to incentivize energy efficiency and green innovation, catalyzing storage, renewable gases, carbon capture, and e-mobility, all part of a circular economy.

This year, we are deploying a record level of 2 GW renewables, four times the annual installed capacity of three years ago.

Renewables' capacity has already surpassed 10 GW and will almost triple by 2030.

We have significantly simplified renewable licensing while introducing digital and transparent processes, reducing the average licensing time to 14 months.

How are these initiatives implemented?

Through public and private partnerships, as is demonstrated on the Greek islands. They are being transformed into world-class innovation labs.

I am glad that US companies in Greece have registered substantial investment momentum across green sectors, from renewables and carbon capture to data centers and intelligent energy systems.

What's the message for the rest of the EU?

Europe needs a new vision for energy, grounded on reality and affordability, alliances, and new tools, including possibilities within the EU platform for standard gas and LNG purchases.