Europe’s fiscal policy response to the energy crisis: lessons learned for a greener way out

Abstract

European governments have implemented various policies to mitigate the impact of rising energy prices on households and businesses. However, these policies have often failed to promote energy savings or target the most vulnerable energy users, and they have incentivized fossil fuels against green alternatives. Yet the urgency of climate change compels governments to not delay or counteract climate policy any further. The article highlights the need for better "green targeting" of fiscal measures to accelerate the energy transition. As energy prices in Europe are expected to remain volatile in the near term, governments should focus on designing fiscal measures that prioritize a fair and green transition. The article proposes a "Green triple T" criterion for such measures. Namely, we recommend tailored, targeted and transition-proof support.