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Energy Support for Firms in Europe: Best Practice Considerations and Recent Experience

Author

Listed:
  • Mr. Anil Ari
  • Philipp Engler
  • Gloria Li
  • Manasa Patnam
  • Ms. Laura Valderrama

Abstract

The surge in energy prices due to Russia’s February 2022 invasion of Ukraine significantly increased costs for European firms, prompting governments to introduce a range of support schemes. Although energy prices had eased by early 2023, uncertainty around prices remains unusually large. Against this backdrop, this paper examines the case for government intervention and identifies best practices with a view to improving the design of existing energy support schemes, facilitating exit from those schemes, and preparing policymakers for a downside scenario in which energy prices flare up again. The paper argues that support should be limited in size, strictly temporary in nature, narrowly targeted, and accompanied by strong safeguards and conditionality, while preserving price signals as much as possible to encourage energy conservation. Finally, the paper reviews recent support schemes introduced by European governments in light of the identified best practice considerations.

Suggested Citation

  • Mr. Anil Ari & Philipp Engler & Gloria Li & Manasa Patnam & Ms. Laura Valderrama, 2023. "Energy Support for Firms in Europe: Best Practice Considerations and Recent Experience," IMF Working Papers 2023/197, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/197
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    Cited by:

    1. Simone Emiliozzi & Fabrizio Ferriani & Andrea Gazzani, 2023. "The European energy crisis and the consequences for the global natural gas market," Questioni di Economia e Finanza (Occasional Papers) 824, Bank of Italy, Economic Research and International Relations Area.

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