Europe responds to the energy crisis

The price of natural gas in Europe has risen by more than 800%, followed by a five-fold increase in electricity prices, which shows the severity of the European energy crisis this year. As the coldest winter is approaching, although Russia has not increased its gas supply to Europe, the future is still bleak. All of these may leave lasting scars on European industry.

“This is a national crisis,” said Nigel Pocklington, chief executive of Good Energy, one of the UK’s largest green energy suppliers. “In the past three weeks, the wholesale prices of natural gas and electricity have risen to unprecedented levels, causing huge difficulties for companies in this industry.”

Many experts have assessed that after the Covid-19 pandemic, energy is the next crisis facing Europe. In the Netherlands, gasoline prices have reached US$180 per barrel and have risen five-fold in six months.

Part of the reason for this is news that Russia is transferring natural gas from the main European pipeline to the pipeline eastward through Poland. Analysts are investigating the reasons. Perhaps this is a political move, but it is also possible that Russia will have to store natural gas to cope with the cold of -20 degrees Celsius.

Russian President Vladimir Putin has promised to supply more natural gas to Europe, but this promise has not yet been fulfilled. Due to the tension between the West and Russia over Ukraine, pressure on the European energy market is increasing.

The United States and its European allies believe that Russia is sending troops to the border to plan an attack on Ukraine, but Moscow denied it, calling the allegation “hysterical.” Europe still relies heavily on Russian natural gas, which accounts for 35% of the region’s supply.

Even in France, where there is ample supply of nuclear energy, there is a shortage of electricity. According to the newspaper, of the country’s 56 nuclear power reactors, 15 were closed for maintenance on December 22. Echo.

France is usually an electricity exporter, but is now forced to import or even burn oil as fuel. Before the crisis, the nuclear power company EDF announced that it would shut down four reactors after maintenance problems, which accounted for 10% of the country’s capacity. Nearly one-third of French nuclear power plants will be shut down early next year. Germany also plans to reduce installed nuclear power capacity by nearly 50% by the end of 2022.

As energy costs continue to soar to record levels, financial pressures on many European industries, including metals and fertilizers, are increasing.

In the first nine months of this year, the wholesale price of natural gas in the UK rose by more than 400%, leading to the bankruptcy of about 26 energy suppliers in the country, and many companies suspending operations due to lack of fuel.

Sarah Hewin, head of European and American research at Standard Chartered Bank, said in an interview: “Whether it is for households or businesses, rising natural gas prices will have a major impact on everything.” Bloomberg. “The recent increase in natural gas prices is clearly detrimental to the prospects of all European economies.”

Aluminum production is one of the most energy-intensive industries. Rising electricity prices have forced Aluminium Dunkerque, a major European smelter in France, to cut production by about 3%. Dunkirk stated that it has lost about 22.6 million U.S. dollars since the beginning of November, and if electricity prices remain high, the company may have to reduce production further.

Trafigura’s Nyrstar plant also announced that it will stop producing zinc in France in early January next year.

The energy crisis also poses a threat to the food supply chain. Romania’s largest fertilizer producer Azomures is part of Swiss grain trader Ameropa AG. The company said last week that its facilities had begun to shut down because farmers could not afford fertilizer when prices were pushed up.

Norwegian fertilizer producer Yara International also cut production earlier this year and will continue to monitor the situation closely and adjust production as needed.

Anne Sophie Corbo, a researcher at Columbia University’s Center for Global Energy Policy, commented that the energy crisis “will eventually affect food prices, and it will not only affect Europe, but also many other countries.”

If the prices of electricity, gasoline and natural gas continue to rise as they are today, millions of people in Europe, especially the poor, will not be able to pay for heating in the cold winter. this price.

A study conducted in October by Stefan Bouzarovski, a professor at the University of Manchester, found that before the pandemic, as many as 80 million households in Europe had difficulty paying for winter heating.

Now, rising prices will put more households at risk of power outages and gas outages because they cannot pay their bills. Many people become vulnerable because their income has been reduced during the pandemic. Workers in the retail, hotel, and aviation industries have been hit particularly hard, with many unemployed.

“The risk of European countries falling into energy scarcity is twice the overall risk of poverty,” Buzarovsky said. According to him, about 20-30% of the population in Europe face poverty, and in some countries, up to 60% of the population suffer from energy hunger.

Experts and activists said that as the cold winter approaches, the European Union (EU) should prohibit suppliers from cutting off household electricity supply in the short term. However, in the long run, to overcome the sudden increase in energy prices, reducing dependence on natural gas and using more renewable energy is a sustainable way.

“It is not clear why we have not banned power outages throughout the European Union,” Buzarovsky said, adding that the implementation of the ban could be similar to the way the European Union exempts mobile phone roaming charges.

“We should treat access to energy as a human right, just like clean water,” emphasized Martha Myers, a climate and energy justice activist for Friends of the Earth Europe.

Wu Huang (follow CNN, Bloomberg)