Will the European Union Freeze this Winter?

The ongoing European Energy crisis has been a much-debated topic everywhere. The energy crisis that the European Union is facing will be intensifying this winter. Gas prices have shot up exponentially. Winter is literally coming.

Let's try to understand how Europe fell into this situation of energy crisis. From a simple Economics point of view, it all lies in the supply and demand of energy, be it coal, fossil fuel or natural gas. Prices will continue to rise as the supply is restricted and demand is ever-increasing, Basic Econ 101.

Let's take a look at different reasons why this situation may have arisen:

Firstly, issues that are outside the control of the EU, for instance, the war in Ukraine or the Covid Pandemic bring sudden change to the demand and supply of the energy requirement. These changes are unprecedented and unpredictable therefore it is difficult to be prepared for such shock in the demand and supply. At these times, emergency funds / measures need to be used.

Secondly, due to certain policy inconsistencies, like the EU’s climate control measure to reduce carbon emissions, there arises demand and supply shock in energy requirements either by the public or due to diplomatic reasons. Ironically, Europe’s policies and measures to tackle climate change are also a contributor to this energy crisis. The shift from coal to gas for electricity generation observed in the past decade in European power markets has helped in the reduction of emissions as gas when used for power generation produces fewer byproducts and is cleaner. However, with this, Europe’s reliance on Russia for gas imports increased.

And finally, Europe being too dependent on Russian energy exports - 43% Natural gas imports, 53% solid fossil fuel imports make it vulnerable to Russia. Russia shutting down the Nord Stream-1 pipeline has been one of the biggest contributors to this energy crisis in the EU.

Nord Stream is an export gas pipeline which runs under the Baltic Sea, carrying gas from Russia to Europe. It bypasses transit countries, making it highly reliable for European customers. It has two pipelines - Nord Stream 1 and Nord Stream 2. The twin pipelines can transport a combined total of 110 billion cubic meters of gas a year to Europe for at least 50 years.

On September 2nd, Russian gas giant Gazprom announced that the Nord Stream pipeline would be completely stopped until a turbine is repaired. This gave rise to acute gas supply restrictions.

Post-pandemic demand has shot way ahead of supply, combined with inflation, energy prices have shot up exponentially. Also, higher gas consumption at the beginning of 2021 due to cold weather. The latter led to higher prices in the spring and summer.

What is the EU doing about it?

Europe is not sitting idle. It has already lined up alternative gas supplies, including LNG from the US and pipeline gas from Norway and Azerbaijan. Germany is keeping coal plants in operation that it was going to shut down to reduce greenhouse gas emissions. The European Union has approved a plan to reduce gas use by 15% by next March. And now it plans to impose stricter restrictions on Moscow. The G7 has agreed to implement a price cap on oil exports from Russia.

How can we help?

Households generate roughly a quarter of all direct CO2 emissions produced in the EU today. And about three-quarters of the energy used by homes across the EU is for heating and cooling. By taking small steps at home, we can save energy and money and help to protect the climate by reducing our emissions. Here are some suggested methods by the European Commission:

Heating & cooling

Don’t overheat the water.
Use the thermostat wisely.
Close curtains or shutters on hot days to reduce the sunlight entering the home.
Keep cool with a fan. Fans use much less energy than air conditioners.

Insulation

Replace single-glazed windows with double-glazed ones. Double-glazed windows lose 50-70% less heat.
Thick curtains or removable insulating window panels will reduce the flow of cold air into the home. Drought can be a big source of heat loss. Energy can be saved by sealing gaps around windows or installing draught-supply. proofing beneath doors. Even adding covers to keyholes and letterboxes can make a difference!
Insulate hot water tanks, central heating pipes and wall cavities.

In the kitchen

Buy energy-efficient appliances.
Avoid washing dishes by hand if a dishwasher is available. Modern dishwashers use less water and energy
Only boil as much water as needed.

Wash smart

Fill up the washing machine.
Choose the lowest suitable temperature.
Skip the pre-wash cycle if the clothes are not very dirty.
Avoid using a tumble dryer if possible. One tumble dryer cycle can use twice as much energy as an average washing machine cycle.

Save electricity

Replace incandescent or halogen light bulbs with more energy-efficient ones.
Switch off devices. Internet-connected devices like smart TVs, printers and game consoles from 2016 or earlier can use up to 80 watts of electricity when on standby mode. Can use a single multi-socket power strip to switch them all off easily.
Ask the energy supplier about installing a smart meter.
Go for green power. Most energy suppliers offer 'green' electricity tariffs, which support the expansion of renewable energy sources such as wind and solar. If your home has a roof, consider fitting solar panels to generate some of your electricity.

So, will the European Union freeze this winter?

No, the European Nations are wealthy enough to buy gas and fuels at spiked-up rates. That being said, these short-term measures will not be sustainable in the long run.

The Nation leaders are working together to tackle this situation of energy crisis coupled with the predicted recession by formulating innovative policies and collaborating with American and Asian Nations. We are hopeful of an effective solution.

Notes:

Issues outside the EU's control, for instance, the war in Ukraine.
Policy inconsistencies, like the EU’s climate control measure to reduce carbon emissions. Ironically, Europe’s policies and measures to tackle climate change is also a contributor to this problem. The shift from coal to gas for electricity generation observed in the past decade in European power markets has helped in the reduction of emissions as gas when used for power generation produces fewer byproducts and is cleaner. However, with this, Europe’s reliance on Russia for gas imports increased.
Being too dependent on Russian energy exports - 43% Natural gas imports, 53% solid fossil fuel imports. Russia shutting down the Nord Stream-1 pipeline has been one of the biggest contributors to this energy crisis in the EU

Will the European Union Freeze this Winter?