KAfter the debate on the energy crisis at the EU summit, lar is really only one thing: The heads of state and government do not agree on any point. It starts with analyzing the reasons. The EU Commission and the German government attribute the rise in prices to the recovery of the global economy after the Corona crisis, which was only exacerbated by unfavorable weather conditions and delivery bottlenecks from Russia and Norway. For others, the high CO2 prices and thus climate protection are to blame. Still others see dark forces at work.
Russian President Vladimir Putin is using the gas to blackmail the EU, say the Poles. Now the crisis will certainly play into Putin’s hands, for example to accelerate approval for Nord Stream 2. But he cannot determine the global gas price. The conspiracy theory is pushed to the limit by the assumption that speculators would drive up the price of CO2 and thus energy prices, as the Czech Prime Minister Andrej Babiš promoted at the summit.
So it’s no wonder that the bosses are also far apart when it comes to solutions, apart from the fact that no one is against short-term help for households and companies. But one thing runs like a red thread through almost all proposals for long-term solutions, whether they come from the South, France or the East: a deep skepticism towards the market.
Decouple the electricity price from the gas price?
The suspicion that speculators are at work is only the most extreme form. It is not only Babiš who is apparently incomprehensible that financial actors are important to keep markets flowing and, like a lubricant, to guarantee their smooth functioning. Similar sounds come from Poland or Spain. In addition, there are fundamentally understandable reasons for the increase in the price of CO2 to more than 60 euros: the EU’s new climate targets.
France and Spain want to undermine not only the gas but also the electricity market. The EU should jointly buy and store gas. The electricity should be decoupled from the gas price. Both sound plausible at first. The common gas purchase strengthens the EU against dominant sellers like Russia. And when the electricity price is no longer based on the most expensive energy source, i.e. gas, but on the national average costs, this lowers the prices. After all, more and more electricity is being generated from cheap wind and solar power (and, in France, nuclear power).
On the other hand, the gas markets have worked well in recent years. Spain, too, has long been supplied with gas that is very cheap compared to Germany. The same applies to the electricity market. The marginal price system means that electricity is extremely cheap if the demand can be met from wind, sun or nuclear energy. When electricity becomes scarce, prices rise until the operation of more expensive gas-fired power plants pays off. For the operators of wind and solar power plants, this also has the charm that they can invest the additional income in the expansion – which in turn reduces their dependence on gas. Orientation towards the national average would not only cancel this out, but also the pan-European market – and even increase electricity costs in the medium term.
Efficient markets are part of the solution
In addition, the critics of EU climate protection policy see their rejection of emissions trading and its expansion to buildings and transport as confirmed by the rise in prices. The share of the price for CO2 emission rights in the current price increase is extremely small. But it provides a foretaste of the effect of the increasing scarcity of emission rights for industry and energy producers and the expansion to other sectors. Ultimately, however, these costs can only be avoided by foregoing climate protection. Emissions trading ensures that the costs are lower than climate protection through bans and subsidies – and provides incentives, for example, to insulate buildings better, which lowers heating costs.
The northern Europeans and Germany must therefore do everything in their power to ensure that the EU does not move further away from its market-based core during the energy crisis. Efficient markets for emissions, gas and electricity, even speculators, are not the problem, but part of the solution. That may be unsatisfactory in the short term and, as the SPD politician Katarina Barley has painfully learned, brings few plus points to the audience. But it still remains correct.
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