Europe’s energy markets are facing a critical energy crisis and a subsequent rise in prices. This trend is expected to loom on the markets in the coming winter as the gas and power demands face a yearly increase in this season. Right after the lockdowns were lifted gradually, the small business owners had a new thing to worry about: high energy bills.
The rise in energy prices spirals into a cycle of increased rates of daily use items, food, clothing, furniture, and transport, almost anything that is being sold in the markets. This puts an extra burden on the common man, especially the daily wagers as they do not get a raise with the increased prices. In Germany alone, the wholesale energy prices have seen a 60% increase.
The European steam coal prices for power generational requirements are at a 12-year high which is a record-high rate. Such surging costs of natural gas and electricity have led many small shops to shut down during lockdowns when the client base shrunk. The looming inflation has increased all commodity prices with a 2.2% increase for the Eurozone consumers in July this year.
Factors leading to a price surge
Some reasons are responsible for the sudden increase in energy prices ahead of the winter this year. One of the major reasons is that the Asian markets are doing well in the energy field and are recovering from the crises they had faced in the past due to their current economic recovery. This has made the Asian manufacturers and energy suppliers increase the value as the Asian markets are producing their energy and thus European exports have declined. As a result, the imported natural gas and oil have become expensive for European consumers as the Asian markets have increased the prices.
Another reason is the local renewable output has been low since the past year. Europe’s efforts to completely shift towards renewable energy have also had their costs and hurdles. It has made it dependent on the exported energy from Asia to meet the needs of winter.
One of the biggest exporters to Europe is Russia with its world’s largest natural gas reserves which become high in demand during European winters. The new Nord Stream 2 (NS 2) gas pipeline from Russia to Germany is expected to be fully operational by the end of this year which can fulfill the needs of a deprived European market.
The need for increased energy sources has also risen due to the changing wind patterns in Europe in the wake of climate change extreme events. These climatic changes have disrupted the smooth production of wind energy along with an already reduced solar energy as the winters are prolonged in most of the continent.
What to do?
There are a few ways that the European countries can adapt to controlling energy poverty and the resultant energy price hike:
- Energy conservation at all levels
From household use to industrial consumption, energy needs to be used wisely. Many technological devices and systems are being used to help conserve energy in Europe with increases awareness among the masses.
- Financing and partnerships
Energy companies and form partnerships and pacts to provide cheap electricity and gas to the consumers. These companies can be incentivized by the EU for their efforts. In this endeavor, the most vulnerable and deprived parts of Europe can be prioritized for an affordable energy supply.
- EU’s collective plans
The EU can collectively bring a long-term plan for energy conservation and controlling energy poverty. For instance, they can devise The National Energy and Climate Plan (NECP) for Europe for the period from 2021 to 2030. The NECPs can cover the areas of energy efficiency, renewables, greenhouse gas emission reductions, and the research and innovation demands.
- Laws to prevent energy wastage
EU can introduce strict laws for the big companies against energy wastage. Fines and legal regulations can be implemented to ensure energy conservation.
- Social awareness and cooperation
People can be made aware of the looming energy poverty and its long-term dire consequences. Some countries like Estonia, Croatia, Spain, and Greece already emphasize the importance of refurbishment of houses with innovative devices and technology to conserve energy. Thus, such local-capacity building measures can be considered for efficient energy use.
Europe is facing the worst energy poverty ever due to factors like expensive energy exports, the political crisis within the EU energy commission, the changing climatic patterns required for renewable energy, etc. These reasons are making it difficult for business owners and big companies to deal with the looming energy shortages and the demands of people. However, with a proper plan at the local and government level, this crisis can be taken care of in the coming years.
