Patrick Vranckx, a bakery owner in Temploux, Belgium — 50 miles southeast of Brussels — is panicked. His Boulangerie Pâtisserie Vranckx, which sells hand-molded bread and pastries to about 400 customers every day, is already struggling to keep up with skyrocketing energy costs, and winter promises even greater pain.
“We won't be able to hold out many more months,” he told Yahoo News, noting that electricity prices have quadrupled over the past year.
With delivery of Russian natural gas, which last year provided 40% of Europe’s supplies, now down to a trickle, OPEC cutting oil production, hydropower crippled by this summer’s drought, renewable electricity not fully in force, and temperatures already falling as winter approaches, Europe is bracing for the worst energy crisis the continent has ever known. Government officials and energy agencies are warning of possible blackouts as the cold sets in. Energy may even be rationed as part of “robust demand-reduction measures,” Thorfinn Stainforth, an analyst at the Institute for European Environmental Policy, told Yahoo News, adding that industrial customers are likely to be hit first.
Johan Lilliestam, who leads the Energy Transitions group at Germany’s Institute for Advanced Sustainability Studies in Potsdam, Germany, has dubbed the dire situation “Europe’s Energy Drama,” and says that each day seems to deliver a new cliffhanger. Two weeks ago, it was the suspected sabotage of the underwater Nord Stream pipelines, which closed them down for good and set off European panic about the security of other gas pipelines amid an energy standoff with Russia. Last Thursday, just as the 27-member European Union was finalizing its sanctions on Russian oil, OPEC+ announced it had reached a deal with Moscow to slash petroleum production, a move that some believe could accelerate inflation.
“I don’t think the announcement will strongly affect supply, but it may affect prices,” Lilliestam told Yahoo News, while noting that the deal came “despite strong calls from the West not to take measures that could further increase oil prices.”
In France, normally an electricity exporter to its Western Europe neighbors, thanks in part to its investments in nuclear power, the state electricity agency is warning of possible cutoffs. Half of the country’s 56-reactor nuclear fleet is down, due to corrosion and maintenance, Phuc-Vinh Nguyen, research fellow at the Jacques Delors Energy Center, told Yahoo News. The reduced production of electricity is particularly worrisome, he said, since the French rely on electricity for heating. What’s more, wage strikes by oil workers have severely reduced French gasoline supplies, as witnessed this weekend by long lines at stations, a third of whose pumps are running dry.
Across the continent, everything from coal to wood is scarce. Tom Goethals, who normally delivers cords of firewood grown in Belarus and Russia to 30 pizzerias and 300 customers in Brussels, had to switch to a French supplier because of shortages and high transportation costs. Demand, meanwhile, has gone through the roof.
“People are afraid they won’t have heat or it will be too expensive to use,” Goethals said, adding that some Belgian suppliers are already out of wood for the season and that most suppliers’ prices have doubled due to shipping costs.
Despite expedited plans to transition to renewable sources of energy in the wake of Russia’s invasion of Ukraine, the European Union remains dependent on natural gas, which powers a large portion of industrial production, power generation and heating needs, particularly in industrial countries like Germany. To bridge the gap, the EU is being forced to import expensive liquefied natural gas from Qatar and the U.S., a move that has sent electricity and heating prices to all-time highs. Norway is now Europe’s main gas supplier through its pipelines, but is cutting its neighbors no deals, leading to accusations of war profiteering.
French President Emmanuel Macron, who plans to confront gas suppliers about their prices, told business leaders in Paris last week that “In a spirit of great friendship, we will say to our American and Norwegian friends: ‘You’re super, you supply us with energy and gas, but one thing that can’t go on for too long is us paying four times more than the price you sell to your industry,'” Bloomberg reported. He added, “That is not exactly the meaning of friendship.”
With no sign that the crisis will ease anytime soon, European governments are trying to put in place measures to shield consumers and to save energy. Last week, the EU’s executive branch, the European Commission, imposed a windfall tax on fossil fuel producers, capped electricity prices for most utilities and called for households to cut electricity demand during peak consumption periods by at least 5%. In its quarterly report, the Paris-based International Energy Agency, pointing out that Europe is facing “a winter of unprecedented uncertainty of supply due to Russia’s behavior,” warned that “a complete shutdown of Russian pipeline flows to the European Union cannot be ruled out,” and urged consumers to slash natural gas consumption by 13%, by turning down thermostats and water heaters.
Europe’s natural gas storage caverns are nearly 90% full, but those reserve stocks are only enough to last three months, and future gas supplies appear uncertain, all the more since caps on gas prices may come into effect. Across much of the continent, heavily polluting coal plants that had been scheduled to be decommissioned are operating again, nuclear plants that had been turned off are powering back up, fracking is being discussed, new gas pipelines are being proposed and Europeans are being asked to heat their homes to no more than 19° Celsius, 66° Fahrenheit, although some stores and offices, won’t exceed 17°C (62° F).
“Most people have purchased additional blankets and [sweaters], and they’re stalling turning on their heating until the cold really sets in,” said Andy Hughes, an estate manager who lives in Cirencester, England, where nighttime temperatures have fallen sharply in recent weeks.
The difference between energy prices in Europe and the United States is stark, with the average Western European paying 41 cents per kilowatt hour while American households pay around 15 cents. That disparity is hitting ordinary citizens in Europe hard.
“Vulnerable people are really squeezed now,” Stainforth said.
Lilliestam also worries about how the manufacturing sector will deal with unprecedented energy prices. “How much loss can industry take?” he asked. “How long can they carry these prices? How long can you just shut down production and then still come back?"
While the crisis has affirmed the need to transition from fossil fuels to renewable sources of energy, it has also made clear that it won’t happen quickly enough to meet Europe’s energy demands this winter.
“It can't be stressed enough, how much we really need — and there's so much that could be done with renewable energy now, the prices are so advantageous,” Stainforth said, adding, “There's no reason why just large amounts of renewables can’t be deployed across the European Union now, to make sure we're in a good position in two, three, five,10 years from now, both climate-wise but also energy security-wise.” Had Europe moved more rapidly earlier, he noted, “We wouldn't be having these problems with the wild fluctuations of consumer prices and industrial prices, and problems with energy security.”