Closing the gap between electricity and gas prices: how to reduce electricity bills through lower taxes and levies

Despite being the cleanest and most efficient final energy carrier, electricity is disproportionately burdened by taxes and levies compared to natural gas in the EU. In 2023, electricity was taxed around 1.4 times more than gas per unit of energy. This undermines electrification, encourages continued reliance on natural gas, and weakens the business case for decarbonised technologies such as heat pumps, electric boilers, and electric vehicles.

While long-term structural reforms are needed to sustainably reduce electricity prices, adjusting taxes and levies offers an immediate and effective short-term lever. EU legislation already allows Member States to reduce excise duties and VAT on electricity to minimum levels.

Eurelectric recommends Member States to act through three complementary approaches:

Reduce: lower national excise duties and VAT on electricity to EU minimum levels. This option directly improves affordability and helps address energy poverty. Revenue impacts could be potentially offset through ETS revenues or public budgets.
Shift: reallocate taxes and levies from electricity to fossil fuels, particularly natural gas. This, on paper, budget-neutral approach would improve electricity affordability while reinforcing price signals in favour of electrification and decarbonisation.
Exempt: target tax reductions or exemptions to specific user groups (e.g. energy-poor households) or specific uses (e.g. electric heating), strengthening the investment case for heat electrification.

Non-energy-related charges should be removed from electricity bills to improve transparency and avoid artificially inflating prices.

We encourage the European Commission to publish a transparent overview of national taxes and levies included in electricity bills across Member States. This would clarify which charges support the electricity system versus unrelated services, and highlight where fiscal policies continue to hinder electrification and favour fossil fuel consumption

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