Get ready for higher energy bills in 2025 as the government rolls out major tax hikes on gas and electricity. These changes, set to take effect in January and February 2025, coincide with the conclusion of the “tariff shield,” a protective policy aimed at capping energy costs for households and businesses.
What Are the New Energy Taxes?
- Natural Gas: Starting January 1, 2025, the excise duty on combustible natural gas will be raised to €17.16/MWh. This adjustment reflects inflation and reverts to standard tax rates as per a decree issued in December 2023.
- Electricity: During January 2025, the excise duties will remain unchanged at €21/MWh for households and €20.5/MWh for small and medium-sized enterprises (SMEs). However, from February 1, 2025, rates are set to increase significantly:
- Households: €33.70/MWh
- SMEs: €26.23/MWh
- High-power users: €22.50/MWh
These changes may lead to energy bill increases of up to 60% for households, with SMEs and other business sectors also experiencing substantial hikes.
The government says these changes are needed to keep the budget in check and make energy prices match inflation. The government argues that these increases will promote sustainable energy consumption and reduce reliance on fossil fuels, facilitating a transition to a more environmentally friendly energy landscape.
How Will This Affect You and Businesses?
The forthcoming increases will likely have widespread repercussions:
- Households: For families already feeling the pinch of rising living costs, these new hikes will make things even tougher. A typical household could see a marked increase in monthly electricity expenses, adding further strain to budgets.
- Small and Medium Enterprises (SMEs): Energy-intensive SMEs may encounter tighter profit margins, which could lead to decreased investments or even layoffs as they adjust to the new market conditions.
- High-Power Users: While large industrial consumers face relatively smaller rate increases, they may still struggle with competitiveness in the global market as costs rise.
What Does This Mean for the Future?
The government’s commitment to fiscal prudence and normalizing energy markets is a step in the right direction. However, the abrupt rise in electricity tariffs in February raises significant concerns, especially during the winter months—a period marked by peak energy demand. These sharp increases might hit the most vulnerable hardest, worsening energy poverty and putting extra strain on small businesses.
Alternatives like a gradual withdrawal of the tariff shield or targeted subsidies for low-income households would have been wise choices. Additionally, this shift in policy emphasizes the urgent need to enhance investments in renewable energy sources and improve energy efficiency measures. Advancing greener alternatives can not only mitigate long-term costs but also shield consumers from fluctuations in fossil fuel markets.
What to Expect Moving Forward
As France navigates these changes, expect increased public scrutiny and political discussions. Advocacy groups and industry leaders are likely to call for adjustments or compensatory measures to facilitate this transition. Consumers would benefit from exploring methods to reduce energy consumption and manage rising expenses effectively.
The months ahead will test how well French families, businesses, and the government can handle these big changes.
