Critical supply situation due to dependence on Russian energy
Europe’s energy security is at stake. Since the start of Russia's war of aggression against Ukraine, the situation on international energy markets has worsened significantly, especially in Germany and Italy. Due to the difficult situation, Germany has already dusted off the emergency plan for its gas supply and has already triggered the first two of the three escalation levels (early warning and alarm level). If the third and final escalation level of the plan is reached, gas rationing is likely to be brought in for certain industries.
Risk of recession if gas taps are turned off
In a joint analysis by Germany’s five leading economic research institutes, economists predict the German economy would suffer massive losses if gas supplies were disrupted in 2022 and 2023. Around EUR 220 billion, or 6.5% of German economic output, would be at risk. Even today, the effects of dependence on fossil fuels from Russia are considerable. For consumers, ever-increasing electricity and gas bills are becoming an increasing strain.
Renewables are relatively cheap
At the same time, inflation is now ubiquitous. Consumers in the European Union paid 40% more for electricity, gas and other fuels in May 2022 than in the same month last year. The prices of natural gas, coal and oil have soared as a result of the sanctions against Russia and the resulting shortages of fossil fuels. The prices of capital goods in the European Union, however, have only increased by a comparatively modest 8%. These large differences between the prices of fossil fuels and capital goods – including wind turbines, solar plants and heat pumps – have direct consequences for electricity generation.