With the return of spring and the prices of gas and electricity on the wholesale markets returning to levels prior to the outbreak of the Russian offensive in Ukraine, it is tempting to believe that the European energy crisis is over. Tempting… but illusory: the difficulties will continue and, with them, permanently high prices.
On the gas front, a recent report published by the French Institute for International Relations (Ifri) by Leslie Palti-Guzman and Marc-Antoine Eyl-Mazzega illuminatingly explains why, both in the short term – in 2023 – that in the medium term, Europe will have to deal with a volatile and high gas price. Admittedly, Europe has been able to adapt to the triple shock of 2022, the energy decoupling with Russia, the French nuclear crisis and that of hydroelectricity throughout Europe. It did so by reducing its demand for gas and by massively importing Qatari and American liquefied natural gas (LNG), at a high price, the gas bill in 2022 having been multiplied by… ten times compared to that of 2020, and by three compared to 2021. This golden age of LNG in Europe is not about to end: as the two experts explain, Russian deliveries will fall further in 2023, while Japanese demand will remain high , and the Chinese take off again. For their part, Europeans will not be able to reduce their consumption by 15% each year…
On the electrical front, the same observation: the future is not very bright. If it is difficult to know how the production of hydraulic electricity will evolve, undermined for a few years by the drought, there is hardly any suspense concerning French nuclear production. While it has been declining for years until it reached its lowest level for thirty years in 2022, at 279 terawatt hours, the government is asking EDF for a plan to increase it to 380 terawatt hours by… 2030. The 400 terawatt hours and more with which she pranced over the previous decade are now but a distant memory. Even the rapid rise of renewable energy, even energy savings, even energy efficiency measures will not be enough to compensate. The political causes of this state of affairs have now been clearly established thanks to the analytical work remarkably carried out by MPs Raphaël Schellenberger and Antoine Armand, respectively chairman and rapporteur of the National Assembly’s commission of inquiry into energy sovereignty: the “three decades of energy wandering” pay cash.
The American gas umbrella
If we add to this bleak picture the recent decision by OPEC to cut production for geopolitical reasons, largely directed against the United States, the picture is complete. Let’s take advantage of spring and summer, because the energy meters will probably go crazy again in the fall!
Whatever the ambitions of European strategic autonomy, the reality is that the Old Continent is not about to regain control of its energy destiny, which will depend on Asia, Vladimir Putin and the weather. And will pay a high price for its gas, since Europeans are reluctant to sign long-term contracts to obtain supplies directly on the markets, to the delight of American shale gas producers, the United States now being the main Europe’s gas supplier. Relying on the American gas umbrella, financed by the various energy shields put in place by European governments to protect consumers, is not without irony.
Investor and essayist David Baverez reminds us mischievously: dear European taxpayers and consumers, you are financing the Inflation Reduction Act, this gigantic machine for subsidies to the American green industry which plans to distribute nothing less than 400 billion dollars – to the bottom line – to manufacturers of batteries, solar panels and all low-carbon technologies when they invest on American soil! So much the better for the climate, so much the better for European companies investing in the United States, too bad for European industry… This will have difficulty coping with another surge in gas prices, and it is not excluded that in 2023 the European States must regain control if the markets panic. And turn, once again, to the American ally because, there is no third energy way.
Cécile Maisonneuve is president of Decysive and advisor to the energy and climate center of Ifri.