Europe’s Energy Reckoning: Gas Shortages in Europe and Future Implications (2022-4)
23 April 2022
The European continent in response is shifting to ‘dirty coal and oil’ and debating the revival of nuclear power to bridge the gaps in its energy demand - to the detriment of the transition towards a low carbon future in Europe in the short term. [...] The mid-2021 reform also included a one-time reduction in permits, the inclusion of the maritime sector into the regulation, a faster phase-out of free permit allowances for Emissions-Intensive and Trade-Ex- posed (EITE) sectors of the economy, and the proposal of a Carbon Border Adjustment Mechanism - tariffs on products from nations without carbon regulation. [...] When the United Kingdom (UK) with- drew from the EU, and the ETS alongside it, the total permits available within the system fell by the amount that had been >V>Ìi`ÌÌi1°/ÃÜÕ`>ÛiLiiÃ}wV>ÌvÌi economies of all member states had progressed towards de- carbonization evenly and were still comparatively in a similar position to their EU partners as at the onset of the program. [...] When the supply issues of 2021 and the pandemic hit (elaborated further in the next sections), shoot- ing natural gas prices up, the reaction was to turn coal- and wÀi`«ÜiÀL>V (which emit approximately double the emissions of natural gas) in a scramble to meet the winter de- mand for heating and energy. [...] Towards the end of Q2 in 2021, gas prices exponentially rose in reaction to the gradual economic recovery from the COVID-19 pandemic, as European demand rebounded in the summer following vaccination efforts in the second quarter of 2021.