Europe’s Looming Energy Disaster
EU member states’ widely divergent responses to surging gas and electricity prices are inappropriate for addressing what is obviously a common European challenge. With winter fast approaching, the absence of common guidelines for national energy policies should be regarded as an economic emergency.
PARIS – Eight months after the Russian invasion of Ukraine, the European Union remains woefully divided on its energy-policy response. At their latest summit, on October 20-21, the leaders of EU member states spent hours arguing with each other. In the end, they issued an official communiqué merely acknowledging that “in the face of Russia’s weaponization of energy, the European Union will remain united to protect its citizens and businesses and take the necessary measures as a matter of urgency.” But the only significant decision they had reached was to step up joint gas purchases – and even that came with crippling caveats.
Policy divergences in Europe are not uncommon. But when COVID-19 hit, it took only around three months for France and Germany to devise a joint rescue-and-recovery proposal, and another two months for member states to agree on the corresponding common EU borrowing scheme. And when the vaccines arrived, there was hardly any argument over whether to purchase them jointly and distribute them equally, in proportion to population.
In the current crisis, divergences are not just about public statements and possible responses. The data show massive economic differences among EU member states. In September, year-on-year inflation ranged from 6.2% in France to 24.1% in Estonia. Notwithstanding variation in national energy mixes and in the share of energy in total consumption, these differences primarily reflect divergent national policy reactions.
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