How Europe responds to the energy crisis in the winter

Europe urgently implements a series of measures to deal with the energy crisis, such as imposing a ceiling on electricity prices or calling for savings, when the cold winter approaches.

European Union (EU) officials on September 30 agreed on a number of urgent measures to tackle soaring energy prices in Europe, including a super tax on profits for some producers. energy production and set mandatory consumption reduction targets. However, the EU remains divided over calls for a price ceiling on natural gas.

The meeting of EU energy ministers in Brussels, Belgium, comes just days after the Nord Stream gas pipeline from Russia to Europe leaked, suspected of being sabotaged, and amid an energy crisis Severe energy is causing electricity prices to soar, raising concerns about broader economic and social unrest.

The situation becomes more worrisome as European countries prepare to enter a cold winter, when people’s heating needs skyrocket, while gas supplies from Russia have almost completely stopped.

A gas processing plant in Norway on September 28.  Photo: AFP.

A gas processing plant in Norway on September 28. Image: AFP.

“Europe is being pressured by Russia with energy and global gas demand now outstrips supply. We need coordination across the entire supply chain to tackle this challenge,” said EU Energy Commissioner Kadri. Simson on September 29 said.

Under the plan, the EU would tax the profits of non-gas power producers when they sell electricity above the price set by the government and require fossil fuel mining companies to contribute. a profit to support consumers.

In order to reduce energy demand, countries also agreed to a voluntary reduction of 10% of total electricity consumption and 5% of electricity during peak hours.

More than 10 EU countries have urged the European Commission (EC) to propose a gas price ceiling, but the bloc has so far failed to reach a consensus. However, Energy Commissioner Simson said that the EU must sooner or later take this measure, if efforts to negotiate with gas suppliers to reduce costs are unsuccessful.

Member countries in Europe also made their own decisions to deal with the energy crisis this winter. The French government asked the state-owned energy company to sell electricity at a low price and quickly intervened to impose an energy price ceiling.

That reaction probably stems in part from the “Yellow Vests” protest movement that erupted during the early stages of President Emmanuel Macron’s first term. The movement erupted in protest against the 2018-2019 environmental fuel tax, then spread and became increasingly violent before settling down in the face of government concessions.

When France entered the presidential election in April, Mr. Macron imposed a ceiling on electricity price increases of 4% and froze natural gas prices at the lows of 2021 and continued to do so after the election.

Earlier this month, French Prime Minister Elisabeth Borne said electricity and natural gas price increases would be capped at 15% in 2023 and that 12 million low-income families would receive a one-time subsidy. about $200 to support energy costs.

The price ceilings and energy subsidies are expected to cost France around $44 billion and the government will have to borrow a record $260 billion to fund next year’s extra budget.

But future spending could be even higher in neighboring Germany, Europe’s largest economy, which is more dependent on Russian gas than most other European countries.

After the nationalization of gas importer Uniper in early September, the German government suspended the gas tax that was scheduled to be imposed from October 1. Instead, they are expected to take countermeasures that have much in common with France. Households as well as small and medium enterprises will be able to use a certain amount of electricity at a subsidized price. If they use more than that subsidized electricity, they will have to pay the market price.

Germany also wants to encourage households and businesses to reduce their energy consumption. German officials have urged the public to use less energy by washing clothes at 30 degrees Celsius, using energy-efficient light bulbs and keeping indoor heating at around 19 degrees Celsius. It is also advised to shorten the bath time and reduce the hot water temperature. Monuments, public buildings and shop fronts across the country are no longer lit at night.

The UK government also plans to borrow money to protect consumers against the energy price crisis, but it does so while cutting back significantly, sending investors into panic and shock to the local currency.

The UK currently has the highest energy prices in Europe, so its government has spent more than most other countries in the region responding to the energy crisis. Last year, Britain spent 6.5% of GDP protecting companies and people from the shock of rising energy prices, more than most other European countries, according to Bruegel, an economic policy institute based in Germany. Brussels, Belgium.

New British Prime Minister Liz Truss has announced a package of measures to deal with the energy crisis, which includes a lower-than-expected ceiling on energy bills until 2024.

According to the Energy Savings Fund, the average price that UK households spend each year on energy was once predicted to rise to $3,900, which could put millions of families in trouble. However, government interventions have kept this cost at $2,800.

But her government’s proposed tax cut prompted the International Monetary Fund (IMF) to warn of the risk of rising inequality, raising concerns about Britain’s potential for a wave of anger. from the public in the face of this winter’s energy crisis.

The depreciation of the pound will also make it more expensive for the UK to pay for imports, including energy.

Steam rises from the cooling tower of the Isar 2 nuclear power plant in Essenbach, Germany, on September 13.  Photo: AP.

Steam rises from the cooling tower of the Isar 2 nuclear power plant in Essenbach, Germany, on September 13. Image: AP.

The response plan was launched by European countries in the context of the continent facing increasing challenges in energy supply.

In Germany, Economy Minister Robert Habeck said the country was unlikely to take all the remaining nuclear power plants off the grid by the end of the year as originally planned.

After decades of Green Party struggle to get the government to give up nuclear energy, Germany in 2011 decided to close all reactors by 2022. But Mr. Habeck argued that extending the operating time for the reactors This nuclear power plant was necessary, as Germany’s other energy supplies, especially Russian gas, were severely depleted.

France is also under pressure from the governments of Germany, Spain and Portugal to approve a natural gas pipeline project between this country and Spain through the Pyrenees mountains.

French officials say the existing pipelines between the two countries are already at full capacity and the project to build a new pipeline will take too long.

But pipeline proponents in Spain and Portugal argue that France is seeking to give its own energy producers an advantage by limiting the amount of gas that Spain and Portugal use. can move to Central Europe.

These challenges make Europe’s winter energy crisis plan potentially risky. “The biggest risk is that energy prices for households and businesses explode as demand soars in the winter, something Europe is unlikely to cope with with current plans,” said Henning Gloystein, director. of consulting firm Eurasia Group, warns.

Vu Hoang (Theo Washington Post)

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