High energy costs are forcing factories across Europe to stop production

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Europe's Shortage of Energy Shortage



Rising energy costs are forcing factories across Europe to shutter. July saw the most drastic drop in production of industrial units in Europe over the last two years and the industry is in crisis mode. In order to combat the rising costs of energy European governments have set aside around 500 billion euros. Germany for example has nationalized its utility company Uniper in an effort to reduce costs.



Europe's energy security crisis



The energy security crisis in Europe is a grave issue that affects all continents. The energy security crisis of the continent is a significant issue despite its vast natural coal, gas and reserves of uranium. It relies on foreign energy sources to meet its energy needs. European energy production is hampered by anti-nuclear policy and anti-fossilfuel policies.


There are numerous ways to deal with Europe's security issues. One strategy is to create market conditions that boost the production of energy. This is a far more sustainable solution than the idea of imposing an excessive tax on the profits of energy firms. Europe is currently going through major changes to the market for energy. Although it's probably not the most likely option however, it is currently the most cost-effective option to lower energy costs as well as increase security of energy.


The European Union will need to resolve the deep tensions among the member states over nuclear energy. Nuclear power may reduce reliance on Russian energy supplies and help the European Union meet its climate goals. There are many in Central and Eastern Europe, however, disagree with the German government's anti-nuclear policy. Furthermore it is possible that the United States' nuclear power industry might regain the market share that was lost to Rosatom due to its anti-nuclear energy stand.



Problems arising out of its dependence on Russian fossil fuels



Germany has recently halted an controversial gas pipeline plan that was supposed to increase Russian gas deliveries to Germany. The developments do not alter the fact that Europe remains heavily dependent on Russian oil. It is good news that the European Union is making plans to become more self-sufficient in this field. The European Commission will announce next week how it plans to become energy independent.


The EU should diversify its energy portfolio, and also eliminate Russian natural gas. Its energy policy is more progressive than the United States' and other major powers'. Furthermore, it is more focussed on the global community, rather than national partisanship. Its policies are in line with global climate change, as well as the need to slowly transition from hydrocarbons to renewable energy sources.


Even though Russia and the EU share the energy cost yet the EU still relies on Russian energy for a substantial part of its energy demands. The majority of Russian gas flows through Eastern Europe via Soviet-era pipelines. While Moscow has been seeking to build new pipelines, they will only supply just a portion of the energy used in Europe.



Solutions to the Crisis



There are numerous solutions to the European energy crisis. The governments have tried a variety of solutions to solve the issue, ranging from granting fuel subsidies and reducing consumption taxes to passing on increased wholesale prices to industry. However, it's likely that these strategies will be successful without the involvement of companies. While untargeted aid may be politically beneficial, it risks undoing the incentives that consumers are given to save energy.


The first step to solving Europe's energy crisis is to determine the root of the problem. The problem is that the EU has not yet addressed the root cause of the problem. European leaders blame Russia, which has been slowing down gas pipelines. The continent has been hit with price hikes for electricity and severe gas shortages as a consequence. In order to compensate for this several countries have increased their usage of fuel oil and coal.


You may also be interested in the wide range of natural gas supplies. European countries heavily rely on natural gas imports from Russia. The cost of natural gas has increased by tenfold since 2000. Furthermore, demand for gas is not elastic, and the growth in supply will not result in a reduction in consumer demand.


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