2023-07-19 17:26:24
According to new estimates from the International Energy Agency (IEA), electricity demand in the European Union is expected to fall by 3% in 2023 to reach its lowest level in twenty years.
Soaring energy prices and slowing European economies are the main culprits for the drop in demand.
A record 6% collapse in EU electricity consumption was recorded in the first half of 2023. This decrease is the consequence of the energy crisis following the invasion of Ukraine by Russia.
The industrial slowdown is responsible for two-thirds of this decline in 2022.
According to the International Energy Agency (IEA) report, this is putting Europe’s industrial competitiveness under pressure, as production continues to lag despite prices falling from record highs. Last year. The document states that overseas subsidies like the US Inflation Reduction Act (IRA) and Japan’s Green Transformation Act”influence the reduction of production, plant closures, as well as the suspension and diversion of investments“.
At the same time, global electricity demand is expected to increase, driven by the decarbonization of energy systems, the growing use of air conditioning as global temperatures rise, and the growth of emerging and developing economies. . Electricity demand is expected to grow in China and India. Beijing is expected to register annual growth of 5.2% over the next two years.
These emerging countries continue to depend on fossil fuels, China and India have increased their coal-fired power generation in the first half of 2023 due to the reduction in hydropower due to drought.
The IEA forecasts a rebound in global electricity demand in 2024. This same year might be the first in which more electricity will be produced from renewable energies than from coal.
At the same time, the Industry Committee of the European Parliament supported the EU electricity market reform project.
The text, presented by the European Commission in March, aims to protect consumers from soaring prices, boost the uptake of renewable energy and maintain the competitive advantage of European companies on a global stage.
Parliament has backed consumers’ rights to more stable, long-term contracts, prohibiting suppliers from unilaterally changing the terms of a contract and cutting off electricity supplies to vulnerable customers.
MEPs also supported ‘contracts for difference’ (CFDs), which allow public authorities to compensate energy producers if market prices fall too sharply, but also to collect payments from them if prices are too high.
“This reform aims to give the European electricity market a sense of stability, so that we never once more have to suffer the prices of this crisis.“, specifies the rapporteur of the text in Parliament, Nicolás González Casares.
However, the position adopted by the Parliament does not include a ceiling on the exceptional income of energy companies in the event of a future energy crisis, a measure initially supported by Nicolás González Casares. The EU has introduced a temporary windfall tax on energy companies in 2022 to help cushion household bills during the crisis.
“Not all political groups saw things the same way“, explains the MEP.
The parliamentary committee also voted in favor of opening negotiations with the Council, a decision which will have to be approved at the next plenary session of the hemicycle.
So far, EU ministers have failed to adopt a common position due to the difficulty of finding a satisfactory agreement for the 27 member states whose economies and energy mixes are very different.
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