Renewables are already protecting the EU against inflation. By supporting the European Commission’s RePowerEU plan, EU energy ministers can further the deployment of cheap renewables and reduce Europe’s exposure to costly fossil fuels.
The source of Europe’s inflation
Fossil fuels have been responsible for the largest inflationary shocks in Europe since World War II, beating that of the oil crisis in the 1970s. In September 2022, the price of energy was 40.8% higher than a year before, contributing to 36% of the overall high inflation figures in the EU.
EU renewables prevented even-higher inflation
Wind and solar produced a record quarter of the EU’s electricity from March to September 2022. The record increase in renewables compared to last year avoided the need for eight billion cubic metres of additional fossil gas at a cost of €11 billion. Renewables avoided higher energy prices in the EU and subsequent higher inflation rates.
RePowerEU: critical for EU’s energy security and affordability
EU energy ministers now have the opportunity to drive home the advantages of clean energy. In addition to the climate benefits, accelerating the deployment of cheap renewable energy will reduce Europe’s exposure to costly fossil fuels.
The REPowerEU proposal sets new, higher targets for renewable energy and energy efficiency. Backing these targets will drive accelerated investment ahead of future winters. It’s the sensible option for Europe’s energy security, strained government budgets and consumer energy bills.
Higher ambition for quicker results
Increasing ambition will help deliver quick results for the next three winter seasons. Global gas markets are likely to remain tight for the next years as there will be low additional supply from LNG producers in the near term. Therefore, a gas diversification strategy is unlikely to solve the energy cost crisis in Europe, especially for the next three to five years. In addition, it could risk creating a gas oversupply in the long run, given the EU gas demand projections by 2030.
EU’s credibility as a global energy transition leader
The EU’s current presence in global LNG markets has been a major driver of the increase in global LNG prices. Major producers are opting to break existing long-term contracts in order to benefit from those prices, causing very significant political and economic challenges for the EU’s partners.
The RePowerEU package is a critical signal to the rest of the world. It shows that Europe is responding to the current crisis by accelerating its clean energy transition to achieve a considerable reduction in gas consumption over the next years. Once adopted, RePowerEU can become a foundation on which the EU can build energy partnerships, in support of a global energy transition.