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If governments truly implement their current climate and energy plans, households in Europe will quickly feel the impact in their wallets. According to the annual energy report from the International Energy Agency (IEA), the average energy bill in developed economies, such as the EU, could decrease by hundreds of euros per year toward 2035.
Lower Energy Bills, But for Everyone? #
For European households, the IEA projects a decrease of nearly €500 per year compared to current levels, provided the energy transition maintains momentum. If policies stall at current levels, part of this advantage disappears, and costs by 2035 could quickly be six percent higher than in the more “ambitious” scenario.
These lower energy bills don’t come automatically. The IEA’s calculations assume people invest in their homes and behavior: better insulation, switching to heat pumps, installing solar panels, and driving electric vehicles more often. The trick is spreading these investments over several years, for example through a loan. You pay a bit more now, but your monthly energy bill decreases afterward.
And precisely this is where the problem lies for many people with lower incomes. For them, it’s often already difficult enough to pay regular fixed expenses, let alone invest in a new heating system or substantial insulation. The IEA authors warn that this group risks falling behind: those who cannot invest in sustainability now will benefit less from lower energy costs later.
Investment in Energy Transition #
Governments therefore receive very concrete advice: if you increase taxes on CO₂, for example on fuel or gas consumption, use part of that revenue to specifically help vulnerable households. Otherwise, climate policy will quickly lead to even greater differences between those who can and cannot invest.
Many countries already have schemes such as subsidies, interest-free loans, or municipal programs, but these are fragmented and often temporary. The IEA advocates for investment in the energy transition based on stable policies and clear rules, so people dare to plan for the longer term.
In the new World Energy Outlook, the IEA calls this period the “age of electricity.” Virtually all major sustainability trends rely on power: electric cars, heat pumps, air conditioners, but also data centers and industrial electrification. Electricity demand could increase by at least 40 percent by 2035, much faster than total energy consumption. Solar energy is rising fastest, followed by other renewable sources, and even nuclear energy is making a comeback after years of stagnation with expected growth of at least a third.