Europe is feeling the pinch of the energy crisis with natural gas prices soaring across the continent. This energy is used to heat homes and generate electricity, and as the price rises, so do energy bills. Some countries have responded to the crisis more decisively than others. For example, the French President, Emmanuel Macron, has not declared a second term because he does not want to create discontent among the population over rising energy bills.
Germany
In recent years, Germany’s energy policy has focused on the “Energiewende,” or energy transition, and rapid expansion of renewable energy capacity. This approach has gained support among Germans and has made the country a global climate leader. However, it has come at a cost: the country remains heavily reliant on fossil fuels, particularly gas from Russia. As a result, German household bills have shot up sharply.
Despite the price hikes, the German government has decided to introduce a package to counter the effects of the energy crisis. Scholz has promised to protect German citizens from price rises by providing a 300 euro energy price allowance to each household, and an additional $100 for children, with the bonus increasing to two hundred euros if the child’s parents are on low income. The government is also planning to spend $12 to $13bn each year on subsidising renovations to reduce energy costs.
While Germany heavily depends on Russian gas, the crisis in Ukraine has put a strain on its supply. Russian gas flows into Germany have dropped to 20 percent of their capacity through the main Nord Stream pipeline. The European Union has accused Russia of using energy as a weapon in the conflict. In response, Berlin has introduced measures to ensure gas stocks are at a 95% level by November 1.
The government is now working on replacing all Russian energy imports. The goal is to have an independent supply of natural gas by mid-2024. While the German economy depends on Russian gas, it will have to find other sources of energy for its industry. Last year, Germany received approximately 55% of its gas from Russia. But that number has fallen to just 26% by the end of June 2022. The Nord Stream 1 pipeline is only at 20 percent capacity, so Germany needs to find other sources of energy to replace the Russian supply.
Italy
As the world grapples with energy prices rising, Italy is tackling the crisis head-on. It has approved a package of emergency aid worth more than EUR17 billion, aimed at shielding companies and households from the impact of the higher prices. Meanwhile, the government is planning to introduce a tax on companies that profit from higher energy prices. It is also working towards implementing a European gas price cap.
As a result, Italy has had to find alternative energy sources. It has been heavily dependent on Russian gas and must find a way to diversify its supply. This has become a huge challenge for Italy, whose productive structure was based on the security of fossil fuels. Meanwhile, the geopolitical crisis is pushing up the price of energy, escalating its costs for many Italians. The first Italian category association, Confindustria, has warned that the effect on industry is “dramatic.”
Despite Italy’s recent success, the European Union is still struggling to meet its energy targets. Italy has set ambitious goals to reduce its emissions by 2030, which include upgrading the thermal coat of old buildings and replacing outdated heating systems. This has boosted the construction sector. The country has also committed to phase out coal from its energy mix by 2025. However, this is not without its risks.
The country is working on an emergency plan to address the crisis. The plan included a number of measures, including the early closing of commercial activities and switching off lights around monuments. However, these measures have not been implemented. The Italian Ministry of Ecological Transition is also planning a public awareness campaign to encourage the population to reduce their energy consumption. But the situation remains precarious and further reductions in supply seem likely.
Spain
Spain is dealing with the energy crisis in a number of ways. First and foremost, it has stepped up renewable energy capacity across the country. Gas, which makes up a quarter of Spain’s power mix, has seen a surge in prices. However, Spain is hardly alone. Italy has also launched one-day protests over the high cost of gas.
The Spanish government has also taken steps to curb gas prices, with the government urging people to cut their gas consumption by seven percent, compared to 15 percent in the rest of the EU. It has also announced a 100% discount on train journeys, for commuter services, and medium-distance routes. The new measures are designed to help residents save money and also help to protect the economy. These measures have already been implemented in some regions. For instance, lights must be switched off at night in unoccupied buildings, and doors must be shut to prevent inefficient energy use.
The government has also introduced new legislation that will help keep energy prices down. The Spanish Government has outlined plans to claw back ‘windfall profits’ that power companies have reaped as a result of the EU electricity market design. This policy aims to ensure that power companies can afford to pay the EU’s carbon price, which is EUR90 per tonne.
Spain has pledged to phase out nuclear and coal by 2030, but is largely dependent on gas for many years to come. It has six LNG terminals and imports gas from North Africa. Its National Energy and Climate Plan predicts that gas cycle turbines will make up 17% of installed power capacity in 2030.
France
As the European Union tightens its belt around energy supplies, France is grappling with a crisis of its own. French President Emmanuel Macron has pledged to restore energy sovereignty and national control. This year, he announced a 51.7 billion-euro nuclear program, which aims to build 14 large nuclear reactors by 2035.
To combat the crisis, the government has taken several measures. First, it has capped energy prices for households. Gas prices have been frozen until April, and electricity prices are only set to rise by four percent next month. The government has also offered subsidies for energy and fuel. These measures will help France weather the winter while reducing greenhouse gas emissions.
Another step is to tax superprofits. The French government has been urging businesses to adopt energy-saving measures to protect the environment. However, there are concerns over the impact on business. As a result, the left-wing opposition has called for a referendum on this issue. The United States and France both support this approach. In fact, Germany has also shown willingness to tax energy profits.
Despite the fact that Europe is suffering from the worst energy crisis in decades, France is already taking some drastic steps to ensure its energy needs. This includes a temporary restart of its coal-fired power plant in Saint-Avold, Moselle. The plant will close in March 2022, but until then, France will import 70 percent of its electricity from Belgium and Germany. It also plans to supply excess gas to Germany.
Macron has also called for European solidarity and Franco-German cooperation to address the crisis. The deal between France and Germany will see France send more gas to Germany receive more electricity to meet its energy shortfall. It’s important to note that the deal will not compromise the country’s greenhouse gas reduction targets.
UK
A number of measures have been introduced by the UK government to combat the energy crisis. These include the reduction of energy use and a temporary switch to alternative fuels. However, these measures are not palatable to the average consumer. They also require a degree of sacrifice on the part of the public.
To make energy prices more affordable, the government should introduce a price cap and introduce a direct income support scheme. It should also introduce a new obligation on landlords and housing associations to implement energy-saving measures. In addition, it should mandate energy-saving measures for businesses. It should also boost the use of alternative fuels.
A long-term strategy is essential to overcome the energy crisis. It should include energy market reform, the production of new renewables, nuclear and domestic gas, and reducing demand through measures such as insulation. The new Prime Minister should make these investments a priority and implement a long-term energy strategy.
Energy bills in the UK have reached a high point. The average annual bill is PS1,971 ($2,318) this year. In April, the energy regulator announced that prices would rise by 80% next year. In addition, the energy regulator will introduce a price cap on energy from Oct. 1 that will limit the amount gas suppliers charge per unit of energy. This move will cause the average household bill to rise to over 4,000 pounds by January 2022.
The conflict in Ukraine has also increased prices of natural gas in the European market. This has led governments to consider energy rationing measures. This is a potentially harmful solution for many European nations that rely on natural gas for their heating and electricity. In the UK, the impact is likely to be severe.
