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  • Writer's pictureAddison Clifford

Is Europe's Energy Crisis the Wake-up Call the EU needs?

Written By: Addison Clifford

Edited By: Carson Riar


Right now, Europe is facing an energy shortage that is putting pressure on households as electricity bills skyrocket. This shortage is part of a wider, global crisis characterized by high demand and low supply of energy due to a rare combination of factors. This crisis is raising concerns about the best way forward, generating tension in green politics[1] . Should Europe transition to renewables as quickly as possible, or maintain the use of fossil fuels to meet demand? The European Commission argues for a quick transition to green energy to reduce reliance on natural gas and become energy independent (Press corner, 2021). However, households are currently suffering under high heating bills and increased costs of food and products, while receiving inadequate support from government agencies in terms of funding and infrastructure support.

Various factors are at play in these skyrocketing prices, one of the most significant being recovery from the COVID-19 pandemic (Fleming, 2021). As businesses reopen and individuals return to their pre-pandemic routines, including working and traveling, demand for energy has increased globally[2] . Last year, this pandemic coupled with a mild winter caused global natural gas demand to drop by 1.9% in 2020, but is recovering strongly with the International Energy Agency (IEA) estimating gas demand to rebound by 3.6% across 2021 (IEA, 2021).


A second contributing factor to this crisis is the weather. Europe experienced a relatively cold winter in 2021—which extended its heating season—and a hot summer and intense cooling season, depleting energy supplies. This raises another fundamental question regarding how Europe plans to continue the green transition when this crisis makes it evident to Europeans that we do not have the infrastructure in place to take care of people when the market fails.


But can the crisis be blamed entirely on external factors? Some analysts say Europe itself is to blame for the current situation. Brenda Shaffer, faculty member at the U.S. Naval postgraduate school, claims that “the current European Commission has turned energy policy into a mere subset of climate policy, with little attention paid to supply security or energy affordability” (Shaffer, 2021). By failing to secure newly available sources of natural gas close to home, for example in the Eastern Mediterranean, and closing nuclear power plants in several European countries, the EU has left themselves vulnerable to Russia’s gas monopoly. Refusing to engage with the geopolitics of energy have contributed greatly to the current crisis, Shaffer says(Shaffer, 2021). Ariel Cohen, Senior Fellow at the Atlantic Council, writes that Europe’s master plan for carbon neutrality has pushed member states away from long-term purchase agreements and toward short-term pricing (Cohen, 2021). Further, the EU failed to establish a reliable baseline capacity for electricity generation, and Cohen argues that without ample nuclear, coal, and gas power stations, Europe wouldn’t have the energy supplies for heat and electricity (Cohen, 2021). In other words, the EU’s mission to decarbonize energy infrastructure while maintaining a lack of baseload generation to compensate for unpredictable renewables has resulted in the current crisis. Some analysts blame EU policy decisions not only for the gas shortage, but also cite them as a reason why Europe is unable to correct the issue quickly enough. We cannot know how long this crisis will last, but many experts say prices will remain high through winter and into the spring (Bayer, 2021). While prices are expected to stabilize in Spring 2022, The European Commission states that “prices would remain, however, higher than the average of the past years,” including pre-pandemic levels (European Commission, 2021).


So, we see that the current energy crisis is hitting Europe especially hard due to a shortage of natural gas which is causing a huge price spike. ​​Additionally, we see that many experts believe this is due to a rare combination of policy decisions that made EU member states particularly vulnerable to the gas market. According to some, the solution to this is to go 100% green. This is the view pushed by the European Commission in recent weeks. On October 13th, the Commission released a communication containing a toolbox of measures that contains both short and long-term tools to “address the immediate impact of current price increases and further strengthen resilience against future shocks” (European Commission, 2021). Some of these short-term measures include providing emergency income support for energy-poor consumers, authorizing temporary deferral of bill payments, providing aid to companies or industries, and other ways states can mitigate the impacts on consumers. In the long-term, the Commission claims that “the clean energy transition[3] is the best insurance against future price shocks and needs to be accelerated” (European Commission, 2021). At a European Council meeting on October 21, EU leaders called on the European Investment Bank to examine how to speed up investment in the energy transition (European Council, 2021).


But some analysts note that going 100% green isn’t just about production and investment in renewables, it’s also about storage and transmission (AtlanticCouncil, 2021; Bayer, 2021).[4] This could potentially be achieved through battery storage technology which would supply the reserves of hydropower and wind-generated electricity that are necessary to meet demand. The problem is that this kind of battery storage infrastructure is not in place at the moment, though it’s being developed. The European Commission has “identified batteries as a strategic value chain where the EU must step up investment and innovation to strengthen the industrial policy strategy” (Energy storage, 2020). According to one publication from the IEA,the amount of batteries and energy storage that will be required worldwide by 2040 is 50 times the size of the current market (International Energy Agency, 2020). Another solution would be solar fuels, a more sustainable alternative to battery storage, but the infrastructure necessary to store and transmit solar energy is not in place either (Yao, 2021). This poses a challenge to proponents of transitioning to renewables as soon as possible, because even if Europe were to become completely invulnerable to the gas market by transitioning to 100% renewables, it does not have any means of storing reserves of energy in order to meet demand[5] . The current crisis serves as a valuable case study to investigate the failures of green energy policy, particularly their impacts on poor members of society who are particularly vulnerable to hikes in the price of food and electricity.


Pandemic recovery is contributing to the crisis because as people resume their pre-pandemic activities, they are consuming more energy than they did before. The IEA says gas demand is likely to rebound 3.6% across 2021, by 2024 global gas consumption could rise by 7% from pre-pandemic levels if left unchecked (IEA, 2021). On the other side of pandemic recovery is the exacerbated inequalities and severe loss of income for many families in Europe as the world shut down in early 2020, meaning that many are coming out of this pandemic with depleted savings and higher energy bills. Europe’s gas prices skyrocketed by nearly 600% by early October, though recent imports of natural gas from Russia to Europe in early November could ease this increase (Katya Golubkova,Nora Buli, 2021; Katya Golubkova,Vladimir Soldatkin, 2021). It is important to note that it’s not just the cost of electricity that’s going up. Households may be forced to choose between heating their homes and putting food on the table as the rise in food prices is exacerbated by the current energy crisis (Durisin, 2021). Campaigners are calling for energy to be treated as a human right (Walé Azeez, CNN Business, 2021). The Right to Energy Coalition claims that the European Commission's toolbox is ‘putting lives at risk.’ They claim that being forced to choose between food and heating is unacceptable, and call for stronger EU-wide emergency relief measures like an urgent European-wide ban on disconnections, a requirement for member states to deliver immediate financial support, a commitment to fully subsidised deep renovation programmes for vulnerable households, and subsidised renewable programmes for vulnerable groups, as well as addressing the upfront cost of community energy ownership (Right to Energy Coalition, 2021).


The problem of energy poverty is nothing new. The European Commission presents one possible definition as “Inability to keep home adequately warm” (European Commission). According to one source, the risk of falling into energy poverty within the European population is at double the risk of general poverty, with up to 60% of the population in some countries struggling with this issue (Walé Azeez, 2021). In some cases, living in energy poverty can be deadly. Many die from cold when unable to heat their homes (Jones, 2020). People may light candles for light, or use space heaters for warmth, both of which can cause fatal house fires(Badcock, 2016). In global news, 115 people were burned alive in Sierra Leone while trying to obtain the fuel they need to live from a damaged fuel tanker truck in early November 2021 (Bryce, 2021).

Here we see a conflict emerge: should Europe transition to green energy as quickly as possible or should it focus on securing more gas and other energy sources in the immediate future to meet their growing demand for energy?[6] [7] One thing is clear: green policy and investments need to be expanded to control for storage and transmission, supply and research and development are not cutting it. In practice, Europe’s green goals are being hit hard. In October, Poland said that it will keep a coal mine running, even though the European Court of Justice ruled it should be shut down (Amaro, 2021). More concerning for some analysts is how this crisis will impact public support for green policies. Could Europe soon face a wave of protests similar to the gilets jaunes movement in 2018?


Looking toward the future, some analysts say that we should expect more volatility in the energy market, because it is clear we have less supply cushion than we used to (ARC Energy Research Institute, 2021). In mitigating this crisis, various policy stances have been taken. The IEA has called on Russia to send more gas to Europe to help alleviate the crisis, and many are criticizing Russia by claiming it is withholding gas supplies to get approval for the controversial Nord Stream 2 Pipeline (BBC News, 2021; IEA, 2021). Approval for the pipeline was recently suspended (Thompson, 2021). France and Spain have called for a collective European response, and a revision of the current energy scheme. Some ideas presented by Spain include increasing bargaining power by creating a centralized European platform to purchase natural gas, otherwise termed “joint-procurement,” which is an idea that the European Commission is entertaining (Strupczewski, 2021). French Finance Minister Bruno le Maire proposed better regulation of European gas stocks and a de-linking of the price of electricity from gas prices in favour of tying it to the average cost of production in every EU country (Strupczewski, 2021). He says the alignment of electricity prices with gas prices as a major downside to the European energy market (Strupczewski, 2021). In response, Germany and eight other EU Member States opposed these measures, defending the free-market and rejecting any “ad-hoc” measures that would interfere with the current rules. Instead, they called for specific, temporary, targeted policy responses that would curb the negative effects of the immediate crisis[8] (Euronews, 2021).


The conflict between those who blame fossil fuels and those who blame renewables for the current crisis is heated and nuanced. There is merit to each side of the argument, but in any case, it is important to recognize storage and transmission as key mechanisms in the transition to green energy, while considering how energy poverty is impacted by Europe’s green policy decisions. The crisis raises an interesting question: how should the EU stay on track to transition to green energy as soon as possible without leaving its vulnerable populations behind?







References:

‌‌AtlanticCouncil. (2021). Europe’s energy crisis and the path forward [YouTube Video]. In YouTube.https://www.youtube.com/watch?app=desktop&v=cYRjvbyYoqs&fbclid=IwAR3ocY-jccNte6UfKtxKwDOPRbxnYQ7OSqogjsc4hUK5T8hS7oLqXUU_DB0

Amaro, S. (2021, September 22). Europe’s green ambitions could be hit as gas prices reach record highs. CNBC; CNBC. https://www.cnbc.com/2021/09/22/what-the-energy-crisis-means-for-europes-green-ambitions.html

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