Energy crisis: European power |  Economy

Energy crisis: European power | Economy

The last day of the Constitution I was in Brussels proud to be Spanish and European. Europe is facing an energy crisis unprecedented since the 1980s. We Europeans have become accustomed to abundant energy and affordable prices, but this winter there will be blackouts and shortages of industrial and heating gas.

The crisis, like that of 2010, is asymmetric. Now it affects Germany and nobody is thinking that the men in black will land in Berlin to solve their disastrous energy policy of the last decades. In the mistake of shutting down their nuclear plants without having guaranteed their supply, the German governments handed over the gas to Putin.

The European Commission’s plan is RePower EU. Since 1996 Europe has developed a common electricity market. But the mix of each country is very different and the single market is at risk. For the moment, it has been possible to maintain it with enormous pressure from the countries, except for the Iberian exception that breaks the rules that apply to everyone. But the fear is that when the blackouts arrive, the consensus will end and each country will face the energy crisis on its own.

As happened with inflation, European politicians continue to think that the gas crisis is temporary. But the crisis started before the Ukrainian war and will continue after it ends. China and Asian countries have replaced fuel oil with gas to produce electricity and, if they want to reduce their emissions, they will have to substitute coal as well. This has structurally changed the liquefied gas market per ship and has raised its price. Without Putin’s pipelines, Europe, and especially Germany, must adapt its energy transition roadmap.

To reduce dependence on Russian gas, the supply from alternative sources must be increased and demand contained. Market prices can and should be intervened to avoid collapse situations like last August. But substituting the market pricing system for a planning one is the surest way to fail.

The increase in the offer at competitive prices for the European industry will be with renewables or it will not be. The International Energy Agency has just published its renewable energy forecasts for 2027. China leads the revolution, followed by Europe and behind the US. But the Agency estimates that Europe will install 40% fewer plates and mills than expected at Repower .

The key to achieving the objective is: good regulation, legal security of investments and eradicating bureaucracy. Spain has resolved gas since the eighties and the best conditions to install renewables, especially solar, in Europe. But in January access permits to the 80 gigawatt high-voltage network expire and they will not be executed because the State has not approved the licenses for five years. Renewables account for 1.5% of Spanish GDP and are the most dynamic sector in job creation, but the future of these families is in the hands of bureaucrats. We will see.

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