Europe faces tough energy markets in summer and winter, unless war ends; carbon contracts for difference are key

March 10, 2023

CarrZee: Panelists (below) said this coming summer of 2023 plus winter 2023-24 will be challenging for EU energy and the region faces much higher energy prices vs competitors the US and China.

Prices could be extremely volatile.

EU is asking its companies to not renew LNG supply agreements with Russia/Gazprom amid Russia-Ukraine war; it’s helping secure €2 billion of energy and seeking an extension of energy austerity measures.

The end of war could ease fuel supplies.

See this statement (unedited) plus video of press conference, below, plus Reuters and Faz.

One year after the publication of the first REPowerEU Communication (8 March 2022), Commissioner for Energy, Kadri Simson, is today taking stock of the energy situation at a committee meeting and a press conference in the European Parliament. REPowerEU is the Commission’s plan to end Europe’s dependency on Russian fossil fuels, in light of Russia’s unjustified aggression against Ukraine.

Speaking to the members of the ITRE Committee in the European Parliament, Commissioner Simson, said:

One year ago the Commission presented REPowerEU Plan to end our dependency on Russian fossil fuels and diversify our sources. We have since sanctioned coal and oil and dramatically reduced our gas imports – all the while staying the course regarding our commitments under the European Green Deal. In fact, the carbon emissions dropped in Europe by 2.5% last year. Achieving this has been a joint effort – the European Parliament is an important ally in our work, which is far from done! I also want to acknowledge the millions of Europeans who demonstrated solidarity and unity by adjusting their lifestyles when Europe was hit by the gravest energy crisis in decades.

Carbon Contracts for Difference are Key Longer Term

BERLIN, March 9 (Reuters) – Germany plans to provide its industry with a double-digit billion-euro amount to support the transition towards cleaner production in industry, the economy ministry said on Thursday.

Under the mechanism, called ‘carbon contracts for difference’, which aim to shift the energy source used in energy-intensive industries from fossil sources to renewables and hydrogen, companies can qualify for subsidies if they reduce carbon emissions in their production, Reuters said.

New plants, existing ones?

Faz (interpreted): The model is similar to Berlin’s ideas on the EU electricity market reform. France and Spain, on the other hand, had called for contracts for difference to be made compulsory for almost all plants, including existing ones – not on a voluntary basis for new investments, as in the Commission’s draft. That would be a much stronger intervention in the market. It would effectively be the continuation of the temporary skimming of “excess profits” introduced in 2022. The big question should therefore be whether the proponents of more far-reaching interventions will be satisfied with that. The European Parliament and the Council of Ministers must approve the reform before it can come into force. The idea is also not well received by German green electricity producers, as it is intended to replace the previous system of feed-in tariffs, which stipulates minimum but no maximum prices.

See this:

Commissioner Simson participated in a press conference organised by the European Parliament alongside the chair of the ITRE Committee, Cristian Silviu Bușoi, and the Executive Director of the International Energy Agency, Fatih Birol.

Simson (above)

This above is a followup on CarrZee’s forecast from last year:

See this from 2021:

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