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    Climate policies not to blame for gas price spike: EU

Summary

The current spike in natural gas prices is because of the overreliance on fossil fuels, the EU's energy commissioner claimed.

by: Daniel Graeber

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Climate policies not to blame for gas price spike: EU

European energy commissioner Kadri Simson told members of parliament October 6 that soaring natural gas prices had less to do with climate policy than the bloc's dependence on fossil fuels.

The exponential rise in natural gas prices has contributed to a 200% spike in wholesale electricity prices in the European economy over the first nine months of the year

Simson fought back against claims that climate policies are to blame, while at the same time acknowledging that wind and hydropower performed below expectations.

“We have to be clear,” she said. “The current price hike has little to do with our climate policies and much to do with our dependence on imported fossil fuels and their volatile prices.”

European gas prices have soared in recent months as a result of a sharp rebound in demand and constrained supply. The contract for November gas delivery at the Dutch TTF hub reached an unprecedented $1,937/'000 m3 on the morning of October 6, ICE trading data show. Not until the April contract do gas prices settle back into the double-digits.

“Market expectations indicate that this is a temporary situation, but gas prices will remain high throughout the winter and should gradually decrease from spring next year based on current demand forecast,” Simson said.

Her comments echo those of central bank officials who stand firm in their conviction that inflationary pressures are a temporary factor. Nevertheless, Simson said that continued strength in commodity prices could eventually undermine economic growth.

“This price shock cannot be underestimated,” she said. “It is hurting our citizens and in particular the most vulnerable households, weakening competitiveness and adding to inflationary pressure. If left unchecked, it risks compromising Europe’s recovery as it takes hold.”