Simultaneous Energy Crises in China and Europe... Dilemma of Eco-Friendly Policies

Three UK Power Suppliers Bankrupt Due to Natural Gas Price Surge... EU Environmental Meeting to Hold Countermeasure Conference on July 6

Netherlands TTF Exchange Natural Gas Price Trends

[Asia Economy Reporter Park Byung-hee] As simultaneous energy crises erupt worldwide due to power shortages causing factory shutdowns in China and soaring electricity prices in Europe, green policies have fallen into a dilemma. The energy crisis was triggered by restrictions on fossil fuel use in the name of environmental friendliness, which caused coal prices, a major power generation resource in China, and natural gas prices in Europe to skyrocket.

According to Bloomberg on the 29th (local time), the European Union (EU) plans to hold an environment ministers' meeting on the 6th of next month at Poland's proposal. The meeting will discuss the current energy crisis and green policy issues.

The Polish government explained the reason for convening the meeting, stating, "Energy prices are soaring across Europe, placing unprecedented burdens on businesses and citizens." It added, "When considering energy and environmental policies, social acceptability must be taken into account. Otherwise, energy and environmental policies will fail."

Coincidentally, the EU Commission found itself in a difficult situation as the energy crisis occurred right after it announced the ambitious green policy 'Fit for 55' on July 14. Fit for 55 aims to drastically reduce carbon emissions to 55% of 1990 levels by 2030. However, in reality, natural gas prices, a power source, have soared, and electricity and carbon emission permit prices have risen, increasing the social cost burden.

The natural gas trading price at the Netherlands TTF exchange, the benchmark for European natural gas, recorded 83.85 euros per megawatt-hour (MWh) on the 29th. It has surged 338% since the beginning of this year. Bloomberg reported that on the same day, three power supply companies in the UK went bankrupt due to the inability to bear the soaring natural gas raw material costs.

Fit for 55 requires approval from member state governments and the European Parliament. After the announcement of Fit for 55, each government submitted amendments, and negotiations on these are expected to proceed. Due to the severe energy crisis, significant difficulties are anticipated in the negotiations. Bloomberg expects the negotiations to take about two years.

China has also strengthened carbon emission regulations this year as President Xi Jinping declared carbon neutrality by 2060 and with the Beijing Winter Olympics opening early next year. As a result, coal power generation, China's largest power source, has decreased, leading to the worst power shortage in history. The Chinese government is reportedly considering raising industrial electricity prices to cope with the power shortage.

This content was produced with the assistance of AI translation services.