Brussels needs to change its climate policy

Over the last ten years, documents issued by the European Commission have steered Member States towards a systematic downsizing of the production capacities of fossil fuels and conventional energy production methods, as well as the deregulation of household energy prices. The idea behind the efforts is to force supply chain actors to switch to renewable-based production at an increased pace through the forced withdrawal of traditional technologies. Deregulation, as expected by Brussels, will make short-term energy demand more flexible through price signals, which will help weather-dependent (and therefore unpredictable) technologies be integrated in the system and encourage households to radically reduce their energy needs through higher tariffs.

However, the current energy crisis clearly shows that both approaches are wrong. The Brussels guidelines cause unexpected social damage to an extent that jeopardises the social acceptance of the community’s climate protection efforts. As a result of the downsizing of extraction and conventional energy transformation capacities, the European Union’s import exposure has significantly increased, making it completely vulnerable to other large regions and world market trends. The deregulation of household prices and the increase in tariffs have met much more inflexible demand than expected, so the trend has not resulted in a decrease in energy demand but in a drastic increase in household burdens, which has led to increasingly severe social tensions.

Although the current situation clearly shows the structural problems of the European energy market, the conclusion drawn from the crisis by the leaders of the Commission is not to change their wrong approaches, but, on the contrary, to intensify them in the future. It is particularly worrisome that Brussels continues to insist on its proposal, which would further burden the carbon footprint related to residential buildings and transport through the introduction of a new centralised emission trading scheme, thus raising the already unprecedentedly high energy prices.

The results of the research of the 2021 Project Europe conducted by Századvég show that European citizens reject Brussels’ efforts: They see high energy prices and rising supply risks as a growing problem and expect policymakers to strengthen the community’s own supply capacities. In addition, the survey for the research was conducted between 1 August and 15 September 2021, so the responses reflect people’s pre-energy crisis concerns and needs, which are likely to have intensified in recent weeks as a result of the situation.

High prices are a growing threat

Since most Member States have deregulated their energy prices, the official protection mechanisms that previously protected households from the risks of market change have been removed. As household energy prices have also risen in purchasing power parity in most EU countries over the last ten years (i.e., they are placing an increasing burden on households), the threat of high tariffs is becoming more pronounced in people’s daily lives. The combined consequence of the elimination of traditional supply capacities and the reduction of regulatory control is that states have less and less room for manoeuvre in mitigating the high price environment and potential market shocks, which people are experiencing through rising energy prices.

The results of the research show that 43 percent of European citizens are very much or extremely afraid that energy may be too expensive for many people in their country, and a further 35 percent of people have some of this fear. The proportion of those who are not very much or not at all afraid of high tariffs is only 18 percent. There is much less fear in countries that have resisted Brussels’ deregulation efforts and retained (or reintroduced) some kind of official safety net. In Hungary, for example, where prices are officially fixed, less than a third of people are very much or extremely afraid of expensive overhead costs, and almost the same proportion is not very much or not at all afraid of price increase.

The above question was also surveyed among the European adult population in the framework of the 2016 European Social Survey (hereinafter ESS)¹. A comparison of the results of the ESS 2016 and the current results of the Project Europe show an unfavourable trend: The proportion of Europeans who are extremely afraid of high prices has doubled in the last five years, and the proportion of respondents belonging to the category of not at all or not very much afraid has decreased by almost 10 percent. Regarding Hungary, however, the trends are favourable: the proportion of those who are not at all afraid has doubled compared to the rate five years ago.

In Europe, Hungarians feel the most secure in their electricity supply

In regional comparison, supply problems have been rare in Europe over the last twenty years, and the general confidence of European citizens in the energy sector is relatively high. Based on the results of the research, 46 percent of respondents are not at all afraid of power outages. However, it is an important warning that, compared to the responses to the ESS research question of power outages caused by insufficient supply asked five years earlier, European confidence has significantly deteriorated: the share of the two favourable categories has fallen by a total of 10 percent, increasing the proportion of the somewhat and extremely permanent categories. Although the periodic supply shortages caused by the decline of traditional and emerging weather-dependent renewable capacities following the Commission’s guidelines have so far led to an increase in price spikes, European citizens feel the risk that further efforts may sooner or later jeopardise their security of supply.

It is noteworthy that Hungarians are the most confident in their electricity supply security: two-thirds of respondents are not at all or not very much afraid of power outages (moreover, the share of the former category has doubled compared to ESS results five years ago), and the proportion of those who are extremely afraid of the occurrence of unexpected events is within the margin of error. The top priority objective of Hungary’s energy policy is the security of supply, therefore in the last decade, it has strengthened the regulatory mechanisms through which it can guarantee the fulfilment of its objective and paid special attention to the availability of predictable (primarily nuclear) capacities, in addition to the increasing share of renewable production units in its energy mix. Although the rise of weather-dependent production and high import rate pose significant challenges to Hungary, as is the case in most European countries, Hungarian energy policy typically refrains from rapid and radical interventions, trying to meet its climate protection commitments in a balanced way. This responsible attitude increases Hungarian citizens’ sense of security.

Europe’s internal capacities should be developed and not reduced

The Commission’s efforts to forcibly reduce conventional energy production and conversion capacity are weakening Europe’s self-sufficiency. The pace of elimination is significantly faster than the rate of energy demand reduction and the introduction of alternative solutions, forcing an increasing share of community demand to be met by imports. As a result of the unfavourable trend, prices are rising and the competitiveness of energy-intensive economic activities is declining, which could jeopardise emissions from strategic sectors such as the food industry through spill-over effects.

An important lesson from the coronavirus pandemic and the deepening energy crisis is that in an unfavourable global environment, the vulnerability of strategic sectors can pose a significant threat to the community as a whole. The results of the research clearly show that Europeans expect decision-makers to rebuild their own capacities: 88 percent of respondents consider it important that their country should not be reliant on other countries regarding strategic products.

Robust societal expectations are incompatible with Brussels’ vision of a radical transformation in the energy market. Member State leaders, in accordance with their mandate received from their voters, need to represent the needs and interests of the citizens of their country, but this cannot prevail or can prevail in a very limited way in the current European policy environment. Therefore, the leaders’ task is not to step up measures to make Brussels’ vision a reality, but to change them in line with the expectations of European citizens.