Such measures don’t offer clean solutions, for two reasons. This includes policies to encourage energy savings and increase supply but also to cap energy costs, particularly wholesale gas prices. Another class of measures seeks to stabilize and reduce wholesale prices and ensure energy security. These include retail price caps, regulated tariffs, support programs for energy-intensive companies, and liquidity or capital backing for energy companies, including even nationalization. One class of policies aims to mitigate the impact of higher costs on consumers and businesses. Europe may be about to experience its first winter without Russian gas, risking even higher prices, gas shortages, and a major recession.Įuropean governments have started to implement a range of policy responses. Wholesale prices of electricity and gas have surged as much as 15-fold since early 2021, with severe effects for households and businesses. Supplies of Russian gas-critical for heating, industrial processes, and power-have been cut by more than 80 percent this year. The EU needs a grand bargain that reduces demand, increases supply, and keeps energy markets openĮurope’s energy system faces an unprecedented crisis.
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