Oct 18, 2021
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Forcing an energy transition, Europe is trapped

The drastic decarbonization of the energy sector was a mistake

The chairman of the Commission on Labor and Social Rights of the Council of Europe, Nicholas Schmidt, threw up his hands and said: “Energy poverty in Europe will grow.”

What is this thing – energy poverty? It turns out that this is not only a proposal to forget about talking about the welfare state, not only the inability of the population to pay bills for heating their homes. Energy poverty is a general rise in prices due to a sudden jump in energy prices. The representative of the Council of Europe said that “Millions of EU citizens are already suffering from this growth, but everything is just beginning”… And he added: “The European Commission could limit the rise in energy prices, but this is the business of national governments”… The question is, why is the European Union needed then?

In short, the Germans do not like all this. In a week the issue will be discussed in Brussels, but the success of the discussion is not guaranteed. What, in fact, to discuss? The European Trade Union Confederation (ETUC) announced that already 2.7 million working people in Europe are unable to pay for the heating of their homes. The situation is best described by the president of a research institute Handelsblatt Research Institute (HRI) and chief economist of the newspaper Handelsblatt Professor Bert Rurup (Bert Rurup): “Let’s start with the fact that in European countries the salaries of civil servants are tied to inflation and the German trade unions have already demanded their increase. Despite the difficult situation, there is no doubt that the increases will be made. In addition, the previously promised increases for 2022 must be added. And the main thing is that the fight against climate warming involves increasing taxes on products that increase CO2 emissions.2

At this point, Herr Professor got to the most important thing. The surges in energy prices, primarily gas, are largely due to external factors. However, the European economies could cope with them, albeit with difficulty, but the internal reasons are much more serious.

In its “offensive against warming,” the European Union has increased taxes on fossil fuels (coal, peat, oil) to such an extent that they have become prohibitively expensive and cannot replace gas even with adequate capacity. So after all, these capacities in a number of EU countries, for example, in Germany, are no longer left.

By abandoning traditional energy sources and switching to renewable sources, Europe has fallen into a trap. Europe’s master plan to achieve carbon neutrality forced EU member states to abandon long-term procurement contracts and move to short-term pricing. Because of this, the crisis is even more expensive for energy companies and consumers.

Professor Bert Rurup states bluntly: the decarbonisation of the energy sector was a mistake. The problem is that, having abandoned traditional energy sources, Brussels has failed to create sufficiently reliable capacities for electricity generation. Europe is threatened with becoming a dark and cold continent. She does not even have a replacement for renewable sources in case of calm or cloudy periods. The reasons for the crisis lie not in the jump in prices, but in the lack of basic generation. The “green” euphoria ends. Nobody guarantees a decrease in world gas prices, and this promises sad times.

Throwing began in the European Union. For example, France has announced that it will allocate a billion euros for nuclear energy by the end of the decade. However, the locomotive of the “green idea” Germany is committed to decommissioning the last nuclear reactors in 2022. Not the wind and not the sun will replace them, but Russian gas from Nord Stream 2, the project of which the Germans were able to defend. Although the issue of gas prices is not being removed. In addition, Germany will very soon face a slowdown in production due to an aging workforce. If in the past decade the working resource of the German industry grew by 1.5% per year, then, according to experts, this growth will soon stop, and from 2026 the number of employees will begin to decrease by 130 thousand people annually.

A decrease in production volumes will entail an increase in imports from Asia, but the impulses of inflation that will come with these imports will not be able to extinguish; at the same time, the European Central Bank will be forced to continue fulfilling the obligations on financing “green energy”, which are imposed on it by the decisions of the Council of Europe. This will only complicate the fight against price increases, since green technologies are powerless to influence market conditions. The era of low inflation is long gone. Inflation will primarily hit weak industries, which will require social equalization, but low GDP growth will reduce the ability to allocate sufficient funds.

Finding a new balance will not be easy.

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