As a result of the Russian war of aggression against Ukraine and economic retaliation measures, energy prices have reached record levels – and they continue to rise. At the same time, time is running out to counteract the climate crisis. For that reason, AK EUROPA and Oesterreichische Nationalbank hosted a joint event to discuss measures to tackle energy prices and inflation whilst at the same time accelerating the green transition.
Taking part in the event jointly organised with Oesterreichische Nationalbank, were Daniel Gros of the Brussels think thank CEPS, Robert Holzmann, Governor of Oesterreichische Nationalbank (OeNB) and Christa Schlager of AK Wien.
Given the background of current multipolar crises, Daniel Gros (CEPS), stressed that the green transformation is more important than ever. However, the question of financing the expansion of renewable energies (e.g. wind power or photovoltaic) is not his primary concern as sufficient funding is available. In this context, he sees an EU-wide gas price cap based on the model of Spain and Portugal as critical, as one could observe in the case of Spain that gas consumption is on the increase as there is no incentive to save energy. In turn, rising gas consumption results in higher prices on the gas market and does therefore have the opposite effect. Hence, in his opinion not energy prices should be subsidised but rather the saving of energy. He regards the electricity price brake model chosen by Austria, whereby the government caps a certain percentage of the previous year’s median consumption and whereby the market price has to be paid for any exceeding consumption, as a positive example.
As part of the green transition discussion, Robert Holzmann (OeNB) pointed out that greater emphasis should not only be placed on conventional technologies, but also new technologies such as hydrogen. In his opinion, new findings in respect of utilising nuclear technology should not be ignored either. Apart from that, one had to ask the question whether Europe was indeed the optimal location for renewable energy plants such as wind power or photovoltaic. After all, many countries would already benefit from exporting energy to Europe, a reason why this international aspect (e.g. North Africa) should not be neglected. Hence, he comes to the conclusion that the economic costs for European autonomy in the energy sector would be considerable. As to the rising energy prices it would also not be possible for the state to compensate all affected to the same extent. Rather helping the most vulnerable groups had to be prioritised. In particular in context with tackling inflation it would be important to focus on targeted support measures. Otherwise, the ECB’s inflation reduction measures, with the gradual base rate increase leading the way, would be thwarted.
Christa Schlager (AK Wien) pointed out that in the meantime inflation was taking hold and that prices had not reached their pinnacle yet. For example, increased production costs in many market segments had not yet been passed on to end consumers. Hence, these increases would only be felt over the coming months. It therefore has to be top priority to lower high energy prices, being the main drivers of inflation, as quickly as possible. However, it should be noted that the energy market is no longer functioning. It is therefore necessary to intervene in the electricity market to separate the electricity price from the gas price. The relevant proposals by the EU Commission would not be sufficient as the limit to skim off excess revenues is not high enough. Regarding renewable energies, one was faced with the additional problem that apart from lengthy approval procedures there was also a lack of available skilled workers. These bureaucratic and personnel obstacles would make the transition towards environmentally friendly technologies very difficult, thereby contributing to the fact that Europe is still far away from being autonomous in the energy sector.