On Thursday 9 April 2026, Fondation IDEA Asbl published Analysis No. 55, titled “Responses to the Energy Crisis: Why 2026 Is Not 2022?”, an analysis by IDEA economist Frédéric Meys examining the current energy shock and its implications for Luxembourg.
According to the analysis, the recent surge in energy prices, driven by the conflict in the Middle East and the closure of the Strait of Hormuz, shares certain similarities with the 2022 energy crisis. However, IDEA stressed that the current situation differs in several key aspects, particularly in terms of its causes, economic context and policy options available.
The report noted that the closure of the Strait of Hormuz, through which nearly 20% of global hydrocarbons transit, has had a significant impact on energy markets. Between the beginning of 2026 and March, Brent crude prices rose by around 60%, while gas prices also increased. This rise was quickly reflected in consumer prices in Luxembourg, with diesel increasing by 29.2%, petrol by 14.4% and heating oil by 50.7% over the same period.
IDEA highlighted that, despite uncertainty over the duration of the crisis, the supply shock is unlikely to be offset in the short term, even in the event of a ceasefire, due to damage to production infrastructure and the need to rebuild energy stocks.
The analysis pointed out that the effects of higher energy prices are spreading across the wider economy. Energy-intensive sectors, agriculture and parts of the electronics industry are facing increased cost pressures, while risks of supply disruptions remain limited in Europe but more pronounced in parts of Asia. Inflation expectations have so far remained relatively contained, although continued increases in energy prices could prompt tighter monetary policy, raising borrowing costs for households and businesses.
The report also underlined the tangible impact on households. Rising fuel and heating costs are putting pressure on purchasing power, particularly for lower-income households, which spend a larger share of their income on energy. IDEA noted that such households also have less flexibility to adapt to price increases due to factors such as limited access to remote work and reliance on older, less efficient vehicles.
Businesses are also facing increased costs, particularly in energy-intensive sectors and in activities dependent on transport and logistics. The analysis recalled that during the 2022 crisis, many companies were unable to fully pass on higher costs to consumers and were forced to adjust activity levels, contributing to reduced margins and, in some cases, business failures.
Reviewing policy responses during the 2022-2023 energy crisis, the publication noted that Luxembourg introduced extensive support measures, including price stabilisation, subsidies, tax reductions and support for businesses. These measures, which amounted to €2.5 billion, aimed to protect purchasing power and limit inflation but were also criticised for weakening price signals and being costly and broadly applied.
According to IDEA, the current crisis takes place in a more constrained fiscal environment, with public finances having shifted from surplus to deficit and new spending pressures emerging. In addition, the current surge is more concentrated in oil prices, while gas and electricity prices have so far been less affected.
The analysis suggested that the current situation should be used as an opportunity to accelerate the energy transition, particularly through electrification. This includes continued support for renewable energy, electric mobility and energy efficiency measures. IDEA noted that existing support schemes, such as subsidies and incentives for electrification, could help reduce dependence on fossil fuels and strengthen energy security.
At the same time, the publication emphasised the importance of maintaining the price signal to encourage behavioural change and investment in the transition. While targeted support measures may be necessary for vulnerable households and businesses, these should not fully offset price increases.
Possible measures include targeted subsidies, energy vouchers for low-income households and financial support for businesses, potentially combined with requirements such as energy audits to support long-term efficiency improvements.
The report concluded that Luxembourg’s response to the current energy crisis should differ from that of 2022. Rather than broad and costly interventions, policy measures should be more targeted, temporary and aligned with long-term objectives, including electrification and improved energy efficiency.
However, IDEA warned that maintaining the price signal could also have implications for wage indexation and labour costs, potentially affecting competitiveness. As such, the outcome of the crisis will depend both on well-calibrated short-term measures and on the country’s ability to accelerate its energy transition.
The full analysis (in French) is available on the IDEA website.
