The first ten months of 2021 have seen dramatic increases in energy prices in Europe and elsewhere. Experts now agree that the surging international demand for liquified natural gas and the rise in gas prices are driving electricity prices to seldom-seen heights. The fact that fossil gas accounts for 45% of household energy for heating is real reason for concern, with winter just around the corner.
Governments around Europe are scrambling to find ways to help families struggling to pay their energy bills this winter. The European Commission has now issued a toolbox of short-term recommendations to mitigate the effects of this crisis. RAP also offers guidance on this dynamic situation, with a focus on the current circumstances. Authors Bram Claeys, Michael Hogan and Dominic Scott explore near-term relief measures for Europe’s most vulnerable consumers as well as long-term solutions to ensure this crisis does not repeat.
Analysis of the root causes of the electricity price ‘roller coaster’ shows that the best and most durable solution to alleviate the social and economic impact of volatile fossil fuel prices is tackling the demand for fossil gas. Reducing Europe’s appetite for this fuel requires prioritising energy efficiency, ensuring a massive rollout of solar and wind, electrifying end uses currently served by natural gas, and limiting the use of hydrogen to green hydrogen solutions devoted strictly to hard-to-reach applications.