Cyprus unveils €174 million energy aid package to cushion EU fuel cost rises
"Cyprus is preparing a €174 million support package starting in 2027 to shield vulnerable households from impending fuel price hikes driven by new EU green transition mandates. With biofuel blending requirements expected to push diesel prices up by 7 cents per litre, lawmakers are demanding concrete aid distribution plans and an end to the "double taxation" on fuel to prevent the costs of the green transition from falling entirely on consumers."
EU Directive 2019/790 Article 15 Attribution • Verified Energy Document
Cyprus is preparing to allocate €174 million in financial support to vulnerable households between 2027 and 2032. This initiative aims to mitigate the anticipated increase in fuel costs stemming from new European energy regulations. The support package, a combination of €131 million from European funding and €43 million from national resources, is specifically designed to assist individuals facing energy and transport poverty as the island transitions to these new rules.
During a recent session of the House Energy Committee, a representative from the Ministry of Finance indicated that EU member states have the option to launch their support programs one year ahead of the new system's official implementation. Consequently, grant schemes in Cyprus are expected to commence in 2027, preceding the new European framework's scheduled enforcement in 2028. This early introduction is intended to facilitate a smoother transition for vulnerable groups, particularly those already struggling with energy and transportation expenses.
The planned measures are intrinsically linked to legislation currently under parliamentary review, which seeks to align Cyprus with European directives promoting renewable energy in transport and sustainable fuels in aviation. Under the proposed framework, Cyprus has opted to pursue an 11.5% reduction in greenhouse gas emissions from transport, rather than adopting the standard 14.5% target for other EU member states. This adjustment leverages an exemption for countries with limited domestic biofuel production.
A Ministry of Energy official clarified that Cyprus currently lacks the domestic capacity to produce sufficient biofuels to meet the higher target. Achieving the 11.5% reduction will necessitate increasing the proportion of biofuels blended into diesel from the current 7.5% to 17.5%, with biofuels also being incorporated into petrol. Officials estimate that these changes could lead to an increase of approximately 7 cents per litre for diesel and 2.5 cents per litre for petrol.
Kyriakos Iordanou, director-general of the Ministry of Energy, informed members of parliament that while harmonisation with European legislation would unfortunately result in additional fuel costs, the proposed bill is a direct response to EU requirements. The Ministry of Finance expects to submit the legislation to the European Union for review within two months, a process anticipated to take around four months.
The proposed support measures drew significant attention during the committee meeting, with politicians urging greater transparency on how consumers will be protected. Committee chairman and DISY MP Nikos Georgiou highlighted that all relevant authorities acknowledged the legislation would raise costs for conventional vehicle owners and could impact air travel expenses. He stressed that general assurances about future support were insufficient. Ministry officials responded by confirming that compensatory measures are included in the National Energy and Climate Plan, which is currently undergoing revision.
Georgiou insisted that the government must provide explicit details regarding these measures, including eligibility criteria, delivery mechanisms, and availability timelines. He underscored that while the green transition is a vital European objective, it should not impose a continuous financial burden on citizens. The €174 million package, he argued, should be part of a comprehensive policy designed to shield consumers from the cumulative impact of escalating energy and transport costs.
AKEL MP Andreas Pasiourtides echoed calls for further action to alleviate financial pressure on consumers. He contended that, without effective measures, Cypriot consumers and taxpayers would ultimately bear the cost of complying with the new EU requirements. Pasiourtides reiterated AKEL's demand for the abolition of what the party describes as "double taxation" on fuel. He suggested that removing value-added tax from excise duty could reduce fuel prices by approximately 7 to 8 cents per litre.
Meanwhile, a representative from the Cyprus Scientific and Technical Chamber (ETEK) advocated for increased support for domestic biofuel producers. Despite private-sector efforts to boost local production, the representative noted that prospective producers had received inadequate assistance from both the state and financial institutions. Members of parliament are now awaiting the government's formal position and further specific details on the support measures before commencing an article-by-article examination of the proposed legislation.