Main Reason Behind Europe’s “Energy Price Explosion” Is Green Policy In Europe And Germany

The major reason for Europe’s energy price explosion is green policy in Europe and Germany

By Prof. Fritz Vahrenholt
(Text translated/edited by P. Gosselin)

The media are now taking up the issue of exploding electricity and gas prices. It’s becoming increasingly obvious how dramatically the price increases are affecting private households, but above all small and medium-sized industry. Yet, when it comes to the reasons, one usually doesn’t get to the heart of the matter. The most significant price drivers are the European emission certificates, which have catapulted to over 90 €/tonne of CO2.

Prices have nearly tripled

The politically intended shortage and increase in the price of European CO2 certificates alone have doubled to tripled electricity prices since late 2020. At the current level of 93.8 €/tonne of CO2, the certificates burden lignite-based electricity with 9 €ct/kWh, hard coal-based electricity with 7 €ct/kWh and gas-based electricity by 4 €ct/kWh.

1100% in 5 years

By way of comparison, the price of electricity on the stock exchange has been around 4-5 €ct/kWh in recent years. In addition, there has been the rising price of gas, which had to meet the rising demand for electricity due to the closure of 20,000 MW of coal-fired power plants in Europe over the last 4 years and also became scarce.

The price of European CO2 certificates have increased ten-fold over the past five years. (Die kalte Sonne

Difficult to cope

In addition to the increase in electricity prices due to emission certificates, the Fuel Trading Act is hitting German small to medium size enterprises. In 2022, €30 /t CO2 will have to be paid for petrol, diesel, heating oil and natural gas. This corresponds to:

9.5 €ct/liter diesel
9.0 €ct/liter gasoline
0.72 €ct/kWh natural gas

For a medium-sized company with 100 million kWh of natural gas consumption, this means additional costs of 720,000 €. Many businesses in the metal and plastics processing industry no longer know how to cope. And although the energy price crisis was already in full swing at the turn of the year, the federal government increased the CO2 tax rate from 25 to 30 €/tonne of CO2 on January 1st, 2022.

Poor will be hardest hit

But the grand finale is yet to come because now fertilizer prices are also rising and with them food prices. The outlawing of oil and gas exploration by the listed western oil companies from Shell to BP through green guidelines from investors will continue to drive up oil and gas prices, but also wheat and soy prices worldwide. Only China, Russia and the Arab oil companies will profit from this.

Nitrogen fertilizer price per tonne in euros. (Die kalte Sonne

The poor in the world will be the worst hit.

7 responses to “Main Reason Behind Europe’s “Energy Price Explosion” Is Green Policy In Europe And Germany”

  1. Loodt Pretorius

    Professor Fritz vanherholt, one of few remaining sane Germans around in the 21st Century. Always a pleasure to read his logical and relevant comments.

  2. richard

    Feels like, Germany, is stuffed whatever it does now it has no reliable energy.

    1. bonbon

      NATOstan, created to keep Germany down, Russia out, is having a Mackindergarten tantrum!
      Two very prrominent BIS bankers from France and Germany demanded immediate NATOexit in a well known French magazine :
      Face à la crise ukrainienne, l’Otanexit de la France est une urgence absolue”

      Because of the Ukraine crisis, A French NATO exist is an absolute urgency.
      The fact that this was also from a prominent German banker is very revealing. Ukraine is used to block NordStream2.

  3. John Hultquist

    Is anyone unaware that placing a rotten apple in the middle of a box of apples isn’t a good idea?

    Thanks for shining a light on this over the past few years.

  4. pochas94

    I dunno. Is it that Germans are used to marching in lockstep?

  5. richard

    and to add to the woes – 58 billion dollars has been wiped off the value of three of Europe’s largest wind turbine companies in the last year.

  6. posa

    Unfortunately, the misery index needs to be cranked up to “severe pain” levels before Green Germany rethinks energy policies. It is too bad the poor will suffer the most. But, hey, the poor can vote, no?

    But which party can they turn to for relief? AfD?

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this. More information at our Data Privacy Policy