Europe's Response to the Energy Crisis: No Mandatory Consumption Cuts Yet
European Governments' Approach to the Energy Shock
By Mark John and Kate Abnett
LONDON/BRUSSELS, April 29 (Reuters) - As the energy shock from the Iran war deepens, countries around the world from Australia to Egypt are looking to conserve fuel, be it through encouraging more remote work, limiting air travel, or promoting public transport.
But not – with a very few timid exceptions - in Europe.
Comparing the Current Crisis to 2022
One reason is that the impact on the continent so far is not as severe as back in 2022, when Russia invaded Ukraine and slashed gas supplies to Europe, triggering record-high prices and fears of shortages.
Political Sensitivities and Public Opinion
Another factor is how the cost of living and energy serve as political battlegrounds in a region which saw the 2018 "yellow vests" protests in France over a planned hike in diesel taxes, and where hard-right UK politicians have railed against local schemes to reduce emissions as "anti-car crusades".
For now, say analysts, governments are much keener to dish out money to shield households from rising fuel bills than to urge - or even require - them to use less energy.
"Demand-reduction measures are kind of unpopular by essence, and policy-makers might not want to dedicate too much political clout to promoting this," Phuc-Vinh Nguyen, head of the Paris-based Jacques Delors Energy Centre, told Reuters.
Policy Measures and Government Spending
Of the more than 180 policy measures pursued by European governments to address the energy shock, fewer than 10 largely voluntary ones are geared towards cutting energy consumption, Nguyen said of his centre's findings.
EU recommendations to governments published last week omitted measures to curb consumption - from organising car-free days to encouraging businesses to enforce more remote working - that were in an earlier draft seen by Reuters. A European Commission spokesperson did not immediately respond to a request for comment on the change.
In total, European governments have so far committed nearly 14 billion euros ($16.38 billion) to measures responding to the energy crunch - a fraction of the roughly 500 billion euros they offered back in 2022 but still adding strain to overstretched public budgets.
Moreover, the focus has been on blanket measures such as the fuel tax cuts seen in Germany, Spain, Poland and elsewhere, rather than targeting support to vulnerable households.
'Gentle Suggestions' to Avoid Panic
Such steps are not only expensive but also blunt the impetus the shock could give to the energy transition by making electric cars and heating systems more cost-effective than fossil fuels, say some.
"The oil price shock is effectively a global carbon tax," said Ilian Mihov, a professor at France's INSEAD business school, noting how the early-1970s oil shock prompted auto manufacturers to improve the fuel economy of cars.
In 2022 as gas prices hit record highs, EU and International Energy Agency (IEA) guidelines to curb energy use included home-working and reducing driving speed. Britain launched a public campaign on how to keep warm while saving energy in winter.
But with European natural gas prices still far below 2022 levels and no fuel shortages so far, governments are holding back compared with Asian countries more dependent on Middle Eastern energy.
"Hard measures and restrictions could lead to panic," Poland's Energy Minister Milosz Motyka said this month of concerns such calls could spark hoarding and so add to supply disruption.
"We are making gentle suggestions and hope drivers will adapt to the current situation," he said.
Public Attitudes and Communication Strategies
That approach speaks both to how some Europeans bristle at being told to save energy rather than doing it voluntarily, and the need for well-crafted messages that resonate with people.
In France, opinion polls taken before the current energy shock showed French drivers accept the rationale for driving slower to save fuel. But, noted Nguyen, enforced lower speed limits have tended to prove unpopular.
"Unless you've got the public understanding the scale of some of the issues that we face as a nation ... you're not really going to be able to land these messages about 'now it’s the time to be frugal in the way we use fuel'," Toby Harris, chair of Britain's National Preparedness Commission, an independent advisory body, said.
Evidence of Conservation and Future Outlook
None of this means Europeans oppose energy conservation.
Recent Conservation Efforts
An Irish energy curbs campaign in 2022 was associated with a 12% reduction in residential electricity use, the IEA says. In the winter after Russia's invasion of Ukraine, one poll found that 90% of Germans were consciously saving heating energy.
Arguments for Proactive Measures
While governments may argue that the shock is not severe enough to go down the route of energy usage curbs, some say it would be prudent to do so anyway because it would lower prices now and help fill gas storage over the summer.
"In a situation of scarcity, this is the way you bring down the price - reducing demand," German Green MEP Michael Bloss told Reuters. "And most of the policies that we are seeing are actually increasing demand."
Economic Costs and the Possibility of Stricter Measures
Enrico Giovannini, a former minister for infrastructure and sustainable mobility in Italy, said restrictions on travel and working also had an economic cost and should only be a last resort.
But he added: "If the war drags on, more drastic measures will certainly be taken."
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(Additional reporting by Susanna Twidale in London; Maria Martinez in Berlin; Marek Strzelecki in Warsaw and Giselda Vagnoni in Rome; writing by Mark JohnEditing by Tomasz Janowski)
