Energy price subsidies and the green transition – clash of the titans?

In order to mitigate the effects of the energy shock caused by the war in Ukraine, Croatia has been implementing extensive energy price subsidisation measures since 2022, including reduced value added tax (VAT) rates, administrative price freezes, and direct support to energy suppliers. While these measures have helped to stabilise consumer prices in the short term and protect household living standards, concerns of their long-term fiscal sustainability and alignment with the green transition objectives have been raised. The present analysis reviews the evolution of government interventions from 2022 to 2025, assesses their effects on the market, prices, and consumer behaviour, and underlines the need to phase out universal subsidies and redirect support to the most vulnerable groups. A key policy challenge remains the design of a sustainable energy framework that balances social protection, market mechanisms, and climate objectives.