Energy crisis: Europe braces for a cold winter due to high gas and electricity prices

“Winter will be tough for all European countries, prices will remain high and should continue to rise”Giovanni Sagravati, a researcher at the Brussels think tank Bruegel, said.

Since the beginning of the war, Russia reduced or suspended gas distribution in a dozen European countries, in a strategy perceived as retaliation for Western sanctions against Moscow in the West. To avoid a major crisis, 27 European Union (EU) states have committed to reducing their gas consumption by at least 15% at the end of the boreal winter between August 1, 2022 and March 31, 2023 .

The drop in deliveries triggered the price of gas and, accordingly, that of electricity, as historically 20% of European electricity is generated in thermal power plants that run on gas.

But the war in Ukraine is “not entirely responsible” for these escalations, says Vincent Charlet, economist at a French think tank. For example, France reduced its electricity generation capacity due to corrosion problems in some of its nuclear reactors.

The Bruegel Institute has calculated that EU countries (except Portugal and Hungary) spent €236 billion between September 2021 and August 2022 to deal with rising prices. Germany tops with 60,000 million euros, but in relation to the size of its economies, Greece You Lithuania They are the ones who have made the most effort, devoting 3.7% and 3.6% of their GDP respectively to this energy re-conversion.

Italy About 50,000 million euros were allocated for this work, 2.8% of its GDP, and France 1.8%, with 44,700 million euros. French President Emmanuel Macron is trying to prepare the country for a “difficult” autumn and winter. Last week, he called on France to “unify (…)” to pay the price of “freedom” and “values” in the face of “Russia’s brutal attack” against Ukraine. ,

A tariff shield protects the French until December 31, but it remains to be seen how much energy will increase in 2023. GermanyFrom 1 September it will be mandatory in all public administrations to reduce heating to 19 degrees and to have unheated private pools.

in nordic FinlandCitizens are encouraged to take less showers and, above all, to spend less time in their energy-intensive saunas. But countries are still finalizing their plans, which in some cases include closing shop windows at night or closing shop doors to prevent wastage of energy.

Vincent Charlotte points out that energy savings will also affect the continent’s industry. Initially, “industrial activities that are most at risk are those that directly use gas or electricity as raw materials,” he said, which includes a large part of the metallurgical (aluminum) and chemical industries. “For the first time this year, I’ve heard of potential energy transfer,” he said.

HSBC Bank warned that a “recession” in the eurozone was “probably inevitable”. The institution forecasts a decline in the GDP of the eurozone (constituted by 19 of the 27 EU countries) in the last quarter of 2022 and the first quarter of 2023.


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