High energy pricing requires targeted action from companies and government

Fundamental shift in economic conditions

Energy-intensive sectors are being hit hardest, with variable costs increasing by 48% in the oil industry, 28% for energy companies, and 11% in the base metals sector. But dependence on natural gas and oil products will also increase costs by 3% to 8% in other sectors, such as agriculture, aviation, hospitality, and—notably—public service sectors such as schools, libraries, and sports clubs. Higher energy costs will also ripple through supply chains to virtually all other sectors.

Although the distribution of impact across sectors resembles that of the 2022 energy crisis, the economic context has fundamentally changed: energy consumption is now lower, supply is more diversified, and price increases are less extreme.

However, the economic tailwind of 2022 is now absent. Economic growth is more moderate, interest rates are higher, and consumers are more vulnerable to price increases. This makes it more difficult for businesses to pass on cost increases to customers without losing demand. Margins were better supported in 2022; they are now coming under sustained pressure.

Our EPIM model shows that the impact on profits may be substantial for companies with limited ability to pass on higher costs. At a cost pass-through rate of 50%, profit margins decline—particularly in the energy, base metals, agriculture, construction materials, and chemicals sectors—by as much as 4 to 10 percentage points. For the oil industry, the decline in profit could reach up to 30 percentage points. This stands in sharp contrast to a profit decline of around 1 percentage point when costs can be fully passed on and customers respond in a historically typical way.

What businesses can do now

Uncertainty about future price developments limits the value of forecasting, making scenario-based preparation all the more crucial. The previous energy crisis was just four years ago, and this one is likely not the last. Companies that took action in 2022 are less affected by the current price increases; those that invest in resilience now will be better positioned for the next shock.

Companies can take action today by:

• Identifying where energy is sourced from and how much is used—both directly (through energy consumption and/or as a raw material) and indirectly (through semi-finished products).
• Limiting price volatility with a well-conceived procurement strategy.
• Building flexibility into production and energy consumption.
• Investing in reducing energy dependency in the medium to long term.
• Strengthening value chain and location choices.
• Identifying cost-saving options beyond energy, especially where higher energy costs cannot easily be reduced or passed on.
• Passing on cost increases only where it improves profitability.
• Taking independent action and not relying on support.
• Making decisions based on multiple scenarios.

What policymakers can do

The European Commission is currently working on legislation to address the impact of high energy prices, with more clarity expected in May 2026. The Dutch government is expected to present a support package in the week starting April 20th, following discussions on the proposals with ministers and opposition parties.

We recommend action in the following policy areas:

• Provide temporary and targeted support to vulnerable households and strategic sectors, rather than broad, generic price interventions.
• Stimulate investment in energy efficiency, flexibility, and local energy production to strengthen the long-term resilience of the economy.
• Facilitate demand reduction and behavioural change to lower total energy demand.
• Ensure stable and predictable policy to encourage companies to invest.
• Avoid complex or hard-to-implement measures that lack a sound legal basis.

The outlook is clear: the era of cheap and stable energy is over. By investing now in flexibility, efficiency, and independence, we will build organisations and an economy that are more resilient to ongoing uncertainty.