With two of the coldest months of winter ahead, there are growing concerns that Europe could completely run out of gas reserves. The cold weather has caused a sharp increase in heating demand, along with limited supply, gas prices have been pushed to skyrocket.
A series of discussions by leaders of the European Union (EU) countries, around the energy issue have been conducted in recent months, but have not been able to help curb the skyrocketing increase in gas prices. In the final days of 2021, for the first time in history, gas prices in Europe hit 2,190 USD per 1,000 m3.
This winter has been likened to an “expensive heating season” when gas prices have increased fivefold since January 2021, pushing consumers and many businesses into financial distress, and threatening post-pandemic economic recovery.
This is not the first time that Europe has faced fuel shortages, but this “thirst” has exploded at the exact time when countries are accelerating their economic recovery, after a period of stagnation due to the pandemic. The supplies of oil, gas, and coal could not keep up with the demand for production and economic recovery.
Europe's lack of gas agreements with Russia is also one of the main reasons for the current gas shortage problem. According to Massimo Di Odoardo, vice president of the Wood Mackenzie consulting company, Europe cannot achieve the necessary level of gas reserves in storages without additional supply from Moscow via Nord Stream 2 or other pipelines.
Energy has always been a hot topic of discussion at recent EU summits. EU members are all trying to find a way to solve the problem of soaring energy prices, so as not to create negative consequences for the market.
However, at present, EU countries have only agreed on temporary measures, that is, continuing to deploy an emergency “tool package” including a number of solutions such as direct income support for households, subsidies for businesses in difficulty and energy tax reductions.
But when it comes to sustainable and long-term solutions, the parties encountered some disagreements that were difficult to resolve. Accordingly, Spain, France, Italy and Greece supported the establishment of a common gas purchasing system among EU countries, in combination with building strategic reserves across the bloc; and called on the EU to introduce regulations to protect consumers against fluctuations in energy prices.
However, the above proposal was met with fierce opposition from Germany, Austria, the Netherlands, Denmark, Finland, Estonia and Luxembourg, with reasons that the above reform proposals would hinder electricity trade among countries, and at the same time weaken the incentive to increase renewable energy sources. With their strength in renewable energy, Nordic countries are often less affected by developments in the fossil energy market.
Experts predict that the fuel crisis in Europe has not shown any signs of abating in the immediate future and the worst may come in late January or early February 2022, when the temperature drops to the lowest point.
This crisis is a challenge, but also an opportunity for the whole world to realise the necessity of building sustainable energy systems for the future, including accelerating the green energy transition.