“The invasion of Ukraine gave a dramatic acceleration to the energy crisis, but it was not the trigger. Not even the physiological response of the markets to the exit of the recession caused by Covid, which turned out to be much faster than expected, can explain, alone, the exceptional peaks in the price of gas and other fossil sources “. To write it are Stefano Fantacone and Demostenes Floros who in their book ‘Crisis or Energy Transition? How the conflict in Ukraine changes the European strategy for sustainability ‘(Diarkos) propose a different reading: “the reading we propose in this volume – the authors write – rather highlights the link that has come to be established between the objectives of the green transition and the reconfiguration of traditional energy markets “.
The reference, they underline, “is in particular to the gaps that can be found in the European strategy, which today finds itself forced into the worst possible combination: the simultaneous increase in energy prices of the present and energy of the future”. The problem with the energy transition, the authors note, “is, in fact, that even if everyone agrees on its necessity, there are still no market advantages to achieve it”. The green choice, at present, they observe, “is, in short, a choice that imposes a cost. And of course for families and businesses it is quite different to bear the costs of the transition in a context of low prices for traditional energy, rather than a facing a real explosion in bills and production costs “.
A necessary but not sufficient condition for the transition, Stefano Fantacone and Demostenes Floros underline, is that “there is no shortage of fossil energies, that is, that the prices of the latter remain stable or in any case within a range of fluctuations compatible with the expansion of the economy. This condition began to weaken in the second half of 2021 and finally disappeared with the war in Ukraine “. In fact, they note, in the span of 18 months, between January 2021 and June 2022, the price of natural gas increased in Europe by 420%, the cost of oil jumped from 52 to 115 dollars per barrel and coal recorded a increase of 366%. “The resulting rise in inflation jeopardizes the post-pandemic recovery and makes the path of the green transition bumpy”, they underline.
For Fantacone and Floros the situation that has arisen is attributable, in particular, to having underestimated “the geopolitical dimension of the energy markets” and this has made Italy and Europe “particularly vulnerable to the price shock. postpandemic “. A vulnerability that is immediately measured, they observe, in the increase in the cost of imported energy recorded in 2021: + 181% in Italy, + 135% in Germany, + 101% in China and India and + 69% in the United States. “A shock therefore with a common origin, but with asymmetrical effects, because it affects some countries – especially the European ones – much more than others”.
The choice of gas and Russia by Europe, the authors underline, was a strategy that “contained clear elements of rationality” in view of the energy transition: “natural gas is in fact the least polluting of fossil sources and is therefore logical privileging its use during the energy transition. The Russian Federation also had the advantage of being a reliable and low-cost supplier, not to mention the political significance of an expansion of integration towards the East “. A “Pangloss-like” solution that “behind the appearances of the best of all possible worlds hid lethal contradictions”. And now Europe finds itself having to manage the game of supply and demand of natural gas “having lost control of the first and never having had control of the second”.
Stefano Fantacone has been director of the Europa Research Center since 2010, an expert in quantitative evaluation of public policies and macroeconomic forecasting models, he regularly carries out public relations on the trend of the Italian and international economy at institutional offices (Ministry of Economy and Finance, Cnel, Court of Auditors, Parliamentary Budget Office). Demostenes Floros is a geopolitical and economic analyst. You are a lecturer at the Master in International Business Relations Italy-Russia of the University of Bologna, as well as being responsible and lecturer of the IX course of Geopolitics established at the Open University of Imola (Bologna). Since 2019, you are a Senior Energy Economist at the Europa Research Center. For Diarkos you have published the essay: War and Peace of Energy. Italy’s natural gas strategy between the Russian Federation and NATO (2020).