The gravity of the situation in the energy market is in the alarmist tones used by a member of the Government: “If the cost of energy increases too much, our companies lose competitiveness and citizens, especially those with a medium-low income, struggle further to pay for goods. primary such as electricity and gas. These things must be said ”. These are the words of the Minister for Ecological Transition Roberto Cingolani who, speaking at a CGIL conference in Genoa, announced a 40% increase in gas and electricity bills starting from October. An increase even worse than the forecasts of analysts who had estimated it at around 30%. The minister then later clarified that “the government is working to mitigate the price increases”. As learned from HuffPost, the measures to be implemented were discussed today at the Treasury. And there has been talk of various hypotheses, such as the reduction of VAT or even subsidies for taxpayers with low incomes. Among the hypotheses in the field there is also the one suggested by Arera, the energy authority, of a long-term intervention on system charges, those that every two months inflate the items in the bill, but that have little to do with it. with actual consumption, because they are intended to cover costs relating to activities of general interest for the energy system.
“The marked fluctuation”, Nomisma Energia president Davide Tabarelli told HuffPost, “indicates that things are getting worse, prices are literally going tangent. At this rate, many people this winter risk finding themselves without heating ”. To understand the extent of the increase, which now risks being discharged on domestic and business energy bills, two dates and two figures are enough: if in April 2020 gas cost six euros per megawatt hour, in September 2021 we are at 61 euros per megawatt hour. “The cost we record today, which has skyrocketed, indicates above all a scarcity of the good, in the physical sense of the term”, adds Tabarelli.
The shortage does not concern only gas but is generalized: there is a lack of steel, aluminum, semiconductors, timber. The increase in the prices of raw materials is today more and more a source of concern but in the energy case it is more so. If for the former, prices hit the production costs of companies and only subsequently are they passed on to consumers; those of energy and gas are immediate, and every two months they hit the pockets of taxpayers directly. As reported by a study by SOStariffe, the energy raw material accounts on average for a fork ranging from 28 to 37% of the final cost.
Each quarter the Arera updates the tariffs for the composition of bills by incorporating the market prices of gas and electricity. In the last few months, hand in hand with the post-Covid economic recovery, the amounts for gas and electricity have seen double-digit increases due to the boom in global demand recorded with the advent of vaccines. Already last July there was the risk of seeing the bills of Italian citizens rise by more than 20%. The Draghi government has partially sterilized the maxi-price increase with an emergency measure, reducing electricity to + 9.9% and gas + 15.3%. The result is that on an annual basis, according to Arera’s estimates, a typical Italian family will pay around 62 euros more for electricity and 13 euros more for gas.
But the uptrend does not seem destined to stop in the short term. “There is certainly a high level of speculation, many are marching on these prices. On the other hand, there are all the conditions for betting on the upside at this particular moment. Demand rebounded after the collapse due to the pandemic, but it should be noted that it is only slightly higher than in 2019 ”. However, the matter cannot be dismissed by placing the “blame” only on speculation. There are other problems along the supply chain. The gas storage centers destined for the European market at this time of the year should have already been saturated in view of the winter, and instead they travel to a minimum: “Storage usually starts in April, at the end of the cold season”, explains Tabarelli . “However this year the cold lasted until May. In June, prices were already on the rise and many preferred to delay waiting for them to fall again, so as not to lose too much, thus delaying procurement for stocks ”.
Other critical issues in the supply of gas come from supplier countries: lower supplies are being recorded from Norway and Russia, Europe’s main supplier. “The much discussed gas pipeline that will bring gas to Germany without passing through Ukraine, Nord Stream 2, even if completed and ready to go into operation, will only be able to go to full capacity next year”, explains the president of Nomisma. Power. “In the meantime, there are disputes over tariffs and long-standing political problems between Russia and Ukraine, from where the pipes to the European market pass. Not only that: Russian structural problems are also manifesting upstream of the transport of raw materials, that is, before the gas enters the gas pipelines connected to the European network, problems substantially due to years of lack of investment “. Last February, for example, there was an explosion at a gas pipeline compression station in the Orenburg region, near Kazakhstan.
A final element that is contributing to the rise in prices is due to CO2 and the need to decarbonise the economy, to fight the climate crisis. Companies that produce carbon dioxide (the main greenhouse gas), including energy companies, in the EU have to pay to do so, by buying emissions quotas in the European Ets system. In practice, these are the rights for companies to emit a predetermined quantity of carbon dioxide. The price of these allowances is gradually increased to push companies to decarbonise. But this also leads to an increase in production costs, and therefore in the tariffs on the bill. According to Prometeia data, between November 2020 and June 2021 the cost of energy for companies rose by more than 70%, that of natural gas by 113%, of oil by 67%.
By drawing on the resources obtained from the sale of emission allowances in the ETS system, the Government in July managed to avoid the maxi-increase expected for the third quarter of the year. The resources to cushion the (first) blow of the high-energy cost, and included in the Labor and Business Decree of 30 June last, amount to 1.2 billion. We tried to raise more money from more funds, a part (about 80 million) even subtracted from the Parks for the Climate program, and therefore from the Italian green and protected areas. A logical contradiction in times of ecological transition that has not failed to raise controversy, extinguished by the promise of Minister Cingolani to make up for the shortfall as soon as possible.
In Europe, the price per megawatt hour of energy has on average exceeded, in some cases even abundantly, 100 euros: in Italy it is around 130 euros, in May 2020 it was around 20 euros. To give further boost to energy prices, as mentioned, there are the CO2 emission rights in the ETS quota system which, traded on the markets, have seen their market value increase in line with the economic recovery and with the strong push by the European Commission to cut emissions to get closer to the goal of climate neutrality. If last March the price was 40 euros per ton, today we have managed to exchange a ton of CO2 for more than 60 euros.
“Any system that allows the price to rise in seventeen months in this way simply does not work. The European system has failed, the market is not efficient ”, continues Tabarelli. “And in this Europe has its grave responsibilities. Now, first of all, it is necessary to diversify the gas supply and reduce dependence on foreign suppliers. We need to go back to producing domestic energy. In the past, Italy was able to produce 20 billion cubic meters of gas a year, today only four. Who would not like a world where energy is produced only with the wind and the sun? But the transition to the green cannot be so quick and at the same time painless ”, concludes the president Nomisma Energia. “Yet there are those who for years, even by winning the elections, have deluded us that the energy transition was a walk in the park. We have to go back to reality and reconsider everything “.
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