High energy costs are forcing factories across Europe to stop production

Europe's energy Shortage



Europe's high energy prices have forced factories to shut down all over the world. European industrial production saw its largest drop in July in over two years. Today, the industry is in crisis. To address rising energy costs the European governments have given approximately 500 billion euros. Germany for instance, has privatized its utility company Uniper to try to control costs.



Europe's energy crisis



Europe's energy security crisis is a significant issue which affects the entire continent. Despite abundant coal, natural gas, and sources of uranium, the continent is currently dependent upon foreign sources of energy for its energy needs. Additionally, anti-nuclear, and anti-fossil fuel policies have hindered European energy production.


There are many approaches to tackle Europe's energy security issue. One method is to create conditions that allow for the production of energy. This is a much more sustainable solution than the idea of imposing taxes on the profits of energy companies. Europe is currently undergoing a major energy market reform. Although it's not the most likely option but it is the most efficient way to reduce the cost of energy and increase security in energy supply.


The European Union will need to deal with the deep differences among the member states over nuclear energy. The European Union could reduce its dependence on Russian energy sources and make use of nuclear power in order to meet its goals for climate change. A large portion of Central and Eastern Europe, however, disagree with the German government's anti-nuclear policy. In addition it is possible that the United States' nuclear power industry is likely to regain market share that was lost to Rosatom because of its pro-nuclear energy position.



Problems caused by its dependence on Russian fossil fuels



Germany recently halted an unpopular pipeline project in order to increase Russian gas deliveries to Germany. Despite these developments, Europe is still heavily reliant on Russian oil and gas. The European Union plans to become more self sufficient on this front. In the coming week next week, the European Commission is expected to unveil its plan to become energy independent.


The EU must diversify its energy portfolio, and eliminate Russian natural gas. Its energy policy is more forward-looking than those of the United States' and other major powers'. And it is more focused on global community rather than national parochialism. Its policies are in sync with global environmental change and the need for gradual transition from hydrocarbons into renewable energy sources.


While Russia as well as the EU are both energy consumers, the EU is still dependent on Russian energy for a significant part of its energy requirements. Much of the gas that Russia produces is delivered via pipelines built in the Soviet era that traverse Eastern Europe. Even though Moscow is looking to build new pipelines, it can only provide only a small amount of energy used in Europe.



Solutions to the Crisis



There are a variety of solutions for Europe's energy shortage. There are numerous solutions to the energy crisis in Europe. This includes fuel subsidies and reducing consumption taxes and passing on higher wholesale prices on to industry. It is highly unlikely that these approaches will work without the involvement of businesses. It may be politically beneficial, but it could ruin the incentive consumers receive to save energy.


The first step to resolving the energy crisis that is plaguing Europe is to determine where the problem is coming from. The most important issue is that the EU has not yet addressed the root cause of the issue. Russia is being blamed by European authorities for reducing gas pipelines. In turn, the continent has seen a rise in electricity prices and gas shortages. To offset this various nations have increased the use of fuel oil and coal.


Another alternative is to consider different natural gas sources. European nations heavily depend on natural gas imports from Russia. The price of natural gas has risen tenfold since 2000. Additionally, the demand for gas is not elastic, and the rise in supply will not result in the reduction of consumer demand.


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