Europe’s Energy Crisis Raises Alarms as Winter Looms
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As the weather gets colder in Europe, policymakers are this week turning their attention to an increasingly worrying situation affecting energy prices across the continent. There are fears of a “winter of discontent” due to astronomical heating costs, saddling citizens with huge bills amid the ongoing recovery from the economic effects of the coronavirus pandemic.
This week, the European Union’s member countries have been trying to agree to a coordinated response to the surge in energy prices caused by a variety of factors, including a resurgence in demand following last year’s crash amid the coronavirus pandemic and a Russian squeeze on natural gas exports.
At an EU leaders’ summit in Slovenia Tuesday evening, which was intended to be about enlarging the bloc to include the Western Balkans, Spanish Prime Minister Pedro Sanchez demanded the bloc take action to avert a full-blown crisis. Spain, France, Greece, Romania and the Czech Republic have all signed a joint statement calling for an investigation into the EU gas market and proposing joint gas purchases to give European countries more leverage against competitors from other rival economic blocs, as was recently done with COVID-19 vaccines. The topic dominated a meeting of EU environment ministers yesterday.
The European Commission is coordinating a response to the calls for action from EU national capitals. On Tuesday, Commission President Ursula von der Leyen said she is looking into establishing a joint strategic gas reserve for EU countries, while at the same time weighing the possibility of decoupling gas prices from those of electricity in order to limit the financial burden on consumers.
Gas prices in the EU have surged to record highs due to a variety of factors, but a major reason is that Russia—the union’s main gas supplier—has slowed down deliveries to Europe. The increase in energy prices is in turn leading to inflation, though experts still believe this price increase will be a short-term phenomenon. On Wednesday, Russian President Vladimir Putin prompted much relief when he announced Russia will be increasing its gas supply to Europe.
Putin’s comments caused a sharp decline in natural gas futures, although prices remain at historically high levels. France has been highlighting the growing crisis as an example of why the EU urgently needs to improve its strategic autonomy, the big buzzword in Brussels these days. French Finance Minister Bruno Le Maire said in a letter to EU partners last week that “it is crucial to diversify energy supply and reduce European dependency on gas-exporting countries as fast as possible.”
Other EU politicians, though, are blaming the hike in energy prices on the EU’s climate policy, using the current crisis to argue that the ambitious “Fit for 55” proposal to tackle climate change, put forward by the European Commission in July, should be watered down. “While the European Commission is busy introducing Fit for 55, they should be dealing with the energy crisis hitting Europe now,” said Beata Szydlo, vice-chairman for Poland’s ruling Law and Justice party in the European Parliament. Hungarian Prime Minister Viktor Orban has also blamed the energy price hike on the EU’s green policies, echoing comments by Putin.
Still others are pointing to the EU’s emissions trading system, or ETS—which after years of being ineffective has only recently started to influence emissions reduction across Europe—as the main cause of the crisis. There is increasing concern that now that the ETS is working as intended, the cost is going to be passed on to consumers and Europe could see a similar backlash to what was seen in France with the so-called yellow vest protests of 2019.
But European Commission Vice President Frans Timmermans, the point person in charge of Von der Leyen’s sweeping European Green Deal, has hit back at this notion. “Playing around with the ETS is only going to help to a very small extent,” he told the German state broadcaster Deutsche Welle. “That’s not the problem. The problem is in the market conditions, which at this stage, with the highest demand in 25 years, create these price hikes.”
“The level of social unrest if we leave the climate crisis untackled will be insupportable,” he added, countering the yellow vest arguments.
Some European politicians are blaming the energy crisis on EU climate policy and citing it as a reason that efforts to lower emissions should be curtailed.
In Other News
Little accession enthusiasm. The topic that leaders were actually gathered in Slovenia to discuss—EU membership for the six remaining Western Balkan countries that aren’t part of the bloc—didn’t see much progress. Slovenia—which currently holds the rotating presidency of the Council of the EU, is pushing to give new energy to accession talks with the countries it used to be in the Yugoslav federation with: Serbia, Bosnia and Herzegovina, Montenegro, North Macedonia, Albania and Kosovo. The proposal has won support from the European Parliament, but Western European countries have become wary of the accession issue, which has become unpopular with many voters in those countries. The Netherlands, in particular, has become a roadblock in accession talks for the Balkan states.
Part of the problem is that the end goal remains largely undefined. Turkey is still technically an EU accession candidate even though few officials, besides some in Washington and London, think this will eventually materialize. Ukrainian accession also gets frequently discussed, even though the odds of that happening remain remote. Should the EU come out with a clear statement that accession is an option reserved only for the remaining Western Balkan countries, thereby solidifying the EU’s completed membership? This is a topic often discussed privately by diplomats in Brussels but rarely publicly, for fear of causing diplomatic rifts with Kiev and Ankara. But in the Western Balkans, people are growing increasingly frustrated over the slow progress on their own accession, even if Western diplomats privately concede it is bound to happen eventually.
Brexit explosion. Diplomatic hostilities between the EU and U.K. are still in a holding pattern as British government ministers threaten to trigger the dreaded Article 16, canceling implementation of conditions relating to Northern Ireland it committed to in the Brexit divorce deal. One EU diplomat privately called the situation a “tinder box sitting next to an open flame.” Over the past two months, both the European Commission and a majority of the bloc’s national governments have seemed determined to ignore the problem and pretend the U.K. doesn’t exist, with the exception of France. On Tuesday, France’s minister for European affairs, Clement Beaune, said European countries are preparing to take retaliatory measures against the U.K. if it doesn’t comply with the Brexit agreement. “I discussed this with my European counterparts yesterday; we will take European or national measures to exert pressure on the U.K.,” he said, adding that two measures under consideration are targeting U.K. exports to France and stifling—or at least threatening to stifle—European energy exports to the U.K.
French election latest. The rhetoric from Paris is likely to become even more heated as the country heads toward next year’s presidential election. The polls are still many months away but the candidate field is slowly emerging. The far-right political pundit Eric Zemmour has informally thrown his hat in the ring and a poll found that he could make it into a potential run-off election. It is the first poll to predict any other matchup than the expected contest between far-right leader Marine Le Pen and President Emmanuel Macron, which would be a rematch of the 2017 contest. The Harris Interactive poll showed Zemmour winning 17 percent in a first round, beating Le Pen at 15 percent. But the poll found Macron would easily triumph over Zemmour in a second round with 55 percent of the vote, slightly more than the margin by which he would defeat Le Pen. In fact, there has been no poll so far in France showing any other outcome but a Macron reelection win. But six months is a long time in politics, and it’s still unclear whether viable candidates may emerge from the center-left or center-right who could best Macron, or even play a spoiler role.
Dave Keating is an American-European journalist who has been based in Brussels for 12 years. Originally from the New York City area, Dave has in the past covered the halls of the U.S. Congress in Washington, courtrooms of Chicago, boardrooms of London, cafe of Paris and the climate campaigns of Berlin.