Hello, doctor, I'm in pain: energy prices are going up!

The temperature keeps climbing

Energy prices have risen sharply since the beginning of the year in France (and across Europe), with gas and electricity prices skyrocketing^[1] : +300% and +190%, respectively.

The fever The factors affecting gas and electricity prices are multifaceted:

The market price of electricity is highly sensitive to the price of natural gas

• The market price of electricity is determined by the price of the last power plant called upon to balance supply and demand on the power grid, and that plant is typically a gas-fired facility. This approach, promoted by the EU, applies on a European scale through interconnections between countries.
• Thus, even though gas-fired power plants account for less than 10% of electricity generation in France, electricity prices are bearing the brunt of rising gas prices. This is the main reason for the changes in electricity prices.
• Consequently, the market price does not reflect the reality of the relatively stable production costs of the main forms of power generation: 70% for nuclear and 10% for hydroelectric.

Geopolitics: Russia's Energy Giant Puts Pressure on Europe Over Gas

• Russia, the EU's leading supplier of gas (and oil)^[2], is not increasing its exports to put more pressure on the EU to bring the Nord Stream 2 gas pipeline in the Baltic Sea online.
• European gas suppliers have partially abandoned long-term contracts (which set a price over an extended period) with Russia in the wake of the events in Ukraine, and are thus more exposed to market price volatility.

Economy: The post-COVID recovery is stronger than expected and is putting pressure on energy demand

• China is facing energy shortages that are limiting its production levels. In response, it is reopening 15 coal mines despite its climate goals^[3].
• Southeast Asia also has the means to pay more for its energy on the global market, at the expense of the EU. Liquefied natural gas (LNG), which is a globalized resource, is thus primarily shipped to Asia^[4].

Physical limitations: the volume of available supplies is limited

• After years of losses, the U.S. shale gas (and oil) industry is finally facing reality. Production will no longer increase^[5].
• Norway, the EU's second-largest gas supplier, has more or less reached its maximum production capacity^[6].

Climate: The Price of CO2 Is Rising

The price per metric ton of CO2 that fossil fuel industries must pay on the European market rose from €30 to €60 in 10 months following announcements of increased climate ambition (“Fit for 55”)^[7]. Even though speculation may have played a role, this increase accounts for only 20% of the rise in electricity prices^[8].

A little bit of morphine Please!

In France, the government is responding to short-term problems with short-term measures by providing an energy subsidy to financially vulnerable households (which are often also energy-vulnerable). And then what? Are we just waiting for the next crisis?

It's time to take a look at our addiction opposite:

Energy accounts for only 10% of household spending, and yet without that 10%, it would be impossible to drive to work, buy food, or even heat our homes in the winter^[9].

It is precisely because we forget that this energy is essential for meeting our basic needs (heating, food, transportation) that this is such a sensitive issue for energy-vulnerable households (who are forced to drive kilometers to get to work or live in poorly insulated homes).

And the more we will get high fossil fuels, plus the alarm clock It'll be tough

Unless we reduce our energy consumption, energy prices are structurally set to rise in the long term because, among other reasons,^[10], :

• Fossil fuels will become:
  • More rare (limited stock),
  • Most contested (emerging countries),
  • Heavier taxes for their carbon emissions.
• The cost of producing low-carbon energy is higher than that of fossil fuels because these energy sources are less energy-dense and/or require more labor (solar power in France costs 60€/MWh, while gasoline costs 4€/MWh).

How about we would to live freely: rather prevent that to die, right?

Since energy is the primary source of greenhouse gas emissions, the first step in addressing climate change is to reduce energy consumption.

However, the more expensive energy is, the more careful people are about their energy consumption.

Raising energy prices in a predictable manner over the long term, while distributing the burden equitably, amounts to a social contract between the government, businesses, and citizens to increase our resilience to climate change.

An energy-efficient country is more than just a technocratic measure to address climate change; it is a liberating vision for society:

• Strengthen our independence energy, to increase our resiliencegeopolitics.
• Create jobs with the money saved on our fossil fuel bill (~50 billion euros), which is widening our trade deficit.
• Innovate fortechnologiesenergy-efficient and therefore compatible with climate change.
• Promote the local to learn more about our regions and better understand where the objects around us come from.
• Spend less time stuck in traffic so that breathe better and enjoy life more close to home.
• Carbon-Free Consumption (social: more friends, more family; cultural: more books, more movies) rather than impulsively consuming energy-intensive, unsustainable products.