Private Energy Creates Public Problems.
As the world continues to struggle with its financial recovery from the COVID-19 pandemic alongside dealing with the economic fallout created by the Russian invasion of Ukraine, a new challenge is emerging for consumers everywhere. This challenge is an energy crisis that has started to dramatically increase the price of electricity and gas in homes across Europe. But is this a crisis that should be paid for by the European people or is this yet another example of exceptions being made for companies to maintain profit over sustainability?
But why are these prices so high? Firstly, the recovery from the global pandemic increased the demand for gas to an extent that supply could no longer be met, already causing an important increase in gas prices in 2021. Secondly, the Russian invasion of Ukraine and the diplomatic strains and embargoes resulting from it due to most of Europe’s condemnation of Russia
Russia being one of Europe’s main natural gas providers, Russia ended up in a position where it could use its valuable export as a form of power over the rest of Europe. For instance, since the 2nd of September, the major gas pipeline, Nord Stream 1, that connects Vyborg, Russia, and Greifswald, Germany, has been closed by Russia. Vladimir Putin stated that, in order to reopen it, the sanctions imposed against Russia must be lifted.
These price hikes have been slightly tackled by some governments. For instance, the Dutch government has, since April, reduced the VAT from 21% to 9% on natural gas, electricity, and district heating. In the United Kingdom, Liz Truss has claimed that she is considering freezing electricity bills to help households (despite writing off the idea in August) and in Belgium, Prime minister Alexander de Croo announced the state will provide up to 200 € per month per household to help alleviate the crisis. These measures, although well-spirited, are far from enough given the severity and cost of the crisis. It is also disappointing to see that those responsible for the crisis aren’t being held accountable, namely energy companies and the governments themselves.
The main problem with energy companies as they currently exist is that they are profit driven and therefore not as focused on sustainability as they should be. There has been a slight shift from energy companies to shift their images to be more “environmentally friendly”, but they come across more as publicity stunts or greenwashing rather than substantial changes. The shift to green energy is seen more as an opportunity to monopolize rather than create real sustainability.
For example, Engie-Electrabel, a French-owned energy company. Electrabel is a major European energy company and is currently the biggest in the Benelux. It made over 3.4 billion € profit in 2021, paying dividends of 1.244 billion € to its parent company Engie, a major increase from 2.5 billion € profit in 2020. These profits mostly come from Belgium, where Electrabel sells energy to over 6 million people and has a strong monopoly on energy in the region of Wallonia. There is no sign from the government currently that Engie will be taxed more than they already are, allowing the company to raise the prices of energy to maintain its profit margins. This seems to be more important to them than helping out the many people who are and will continue to struggle with the price of energy in the months to come. This is a pattern that can be seen all over Europe leaving many households wondering how they will be able to keep their heads above water for the months to come.
The energy crisis is yet another example of how bad the privatisation of essential services can be. From expensive healthcare in the US to terrible public transport in the UK, it is disappointing to see the inaction of many western governments leaving their citizens to the mercy of a profit-driven market rather than actually providing and helping them out.
More energy crises are likely unless changes are implemented, as a system based on privatised energy and reliance on non-renewable sources of energy is what led us to this point. The need for growth that a capitalist system relies on cannot coexist with a world reaching a breaking point that needs more sustainability.