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Adapting to the European Energy Crisis: Insights and Policy Initiatives

  • Author Yoonjung KIM
  • Series276
  • Date2023-11-09
The Russian invasion of Ukraine has been a wake-up call in many ways for the whole world, but especially for Europe. Member States initiated policy responses to alleviate the burden of high energy prices in the short term out of necessity, as the disruptions across various sectors of the economy required an immediate response.

Not surprisingly, low-income households tend to be burdened more in times of energy crisis. Supporting vulnerable households should be one of the main focuses of energy crisis management, but price distortionary policies are inefficient and it is also crucial to let the price signal do the work of reducing energy consumption automatically. Governments should also implement universal policies against the energy crisis as there will always be people who fall through the cracks, but targeted policies should be one of the main tools to increase the efficiency of government spending. And these subsidies will reach the needy at different speed depending on the administrative capacity of the governments.

Korea has an energy voucher program that targets vulnerable households, but it relies primarily on the categorical eligibility of other assistance programs and demographic characteristics to determine eligibility. Reviewing the coverage and benefit level of the program seems like a good start before the upcoming winter.
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