Europe’s balancing act to end dirty energy

We have reached the unfortunate point in the energy crisis where our governments are grasping for ideas and proposing radical measures to prevent their economies from collapsing this winter. If most of the world is struggling with higher energy prices, Europe is being stretched thin.

In the past weeks, the UK and European Union have tabled policies to tackle rising energy bills. The EU has realised that any price intervention on energy bills will need to be met with large-scale demand reduction targets. The European Commission wants all EU countries to reduce power usage and last week announced a 5 per cent mandatory target to cut power use - a step toward rationing for around three to four hours every weekday.

As well as this, EU finance ministers are facing a tough balancing act on how to end their historic reliance on Russia for around 40 per cent of its gas and more than half of its coal reserves. Under the draft European Commission proposal, unveiled last week, the EU will introduce a “solidarity contribution” to the fossil fuel industry. The EU is already expected to burn around 5 percent more coal over the next five years, despite coal being one of the most polluting fuels for power generation purposes.

The EU’s resort to fossil fuels is indicative of their desperation. In July last year, Ursula von der Leyen declared that “the fossil fuel economy has reached its limits” and pledged to be climate neutral by 2050. Whilst Virginijus Sinkevičius, European commissioner for the environment, has insisted that the EU’s climate targets “are not postponed or cancelled”. If the EU is to meet its climate change targets then it should be weaning itself off fossil fuels, not resorting back to them. The EU’s balancing act between climate change and curbing skyrocketing prices is set to anger climate change activists, due to the long-term consequences of boosting the use of fossil fuels that contribute to global warming.

Following Brexit, Britain is taking their own approach to curb energy bills which have been hit by an 80 percent rise. The new prime minister Liz Truss said that energy bills for the average household will be limited to £2,500 from October for the next two years. This means that the Ofgem price cap will be temporarily suspended, the move also has the potential to leave the government with an expensive energy bill if market prices keep climbing.

Liz Truss also has another solution - to lift the ban on fracking and offer new North Sea oil and gas licenses. Truss is adamant that fracking would help cut the UK’s balance of payments, pointing to the fact that boosting the UK’s supply of gas would do little to affect the price which is determined by larger producers such as Norway and Russia. However, there is limited popularity in fracking, half the country opposes it, while a quarter is in favour.

Politicians have realised that they will be unable to gain consensus on decisions surrounding the energy crisis, and trying to do so is often futile. Given the continued need for gas in any net-zero scenario, there is a real need for a quick and reliable source of energy. However, politicians must be mindful of their climate change promises and try to seek alternative and more climate-friendly solutions than simply reviving the fracking industry.

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Eli Abrams

Eli Abrams

Eli Abrams is a London-based political and financial analyst, and a much valued contributor to EU Today.

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