By Elisabeth Hellenbroich
During the last weeks Europe has been hit by a sharp increase in energy prices (above all oil, gas and electricity). This was followed by an urgent warning from the side of the EU finance ministers who expressed concern that the increase in energy prices will influence the inflationary development and hence become a major burden for the average consumer.
Viewed from the perspective of Germany, as result of the 26th September general elections, coalition negotiations are right now taking place between the Social democrats (SPD, which won more votes than the CDU/CSU coalition), the Greenies and the Liberal Party FDP. The future of Germany and its potential next government will be based on the common agreement for an ambitious “climate policy package.” This will include enormous price hikes for the average consumer in the energy sector, accompanied by inflationary prices in the food sector, in housing and in the use of fuel for automobiles. Leading German economists meanwhile have stated in a recent study that the growth perspective for the Germany economy will have to be downgraded to 2,4% this year and advised “to tighten the belt.”
For an average household this means that annually the bill for electricity alone will increase by several hundred euros. As a matter of fact, during the last months European wide energy prices climbed by 250%. In Germany electricity being traded on the stock market has become 140% more expensive, in Spain even 425 %. According to Valdis Dombrovski (EU commissioner) the driver for this trend were the “high natural gas prices.” In the big European capitals tension is growing that the future will see more social tensions and poverty. Many governments still remember the yellow vests upheaval in France, which was triggered by Macron’s announcement to demand higher taxes on Diesel fuel. At the same time there is a debate in Europe to find a “coordinated and common response” to the energy crisis. Italy wants to spend 3 billion Euros to alleviate the burden on households, while Spain temporarily reduced the value added tax on electricity and France introduced a cap on gas prices.
Russia being blamed for gas prices
There has been a chorus of protest in the last days, blaming Russia for the increase of natural gas prices. It’s an absurd allegation, which has been rejected by Russian President Putin as well as by leading European politicians. In a speech at the “Moscow Energy Week” the Russian President called for a quick “commissioning” of the already completed Nord- Stream 2 gas pipeline. He rejected the allegation that Russia was to blame for the heated up gas market, but instead offered help: “If you want us to increase the deliveries, we are ready for this. We increase them to the extent our partners ask for this.” Putin emphasized that the Russian company “Gazprom” is completely reliable in terms of delivery and transition of gas to Europe. What counts, he said, is that treaty obligations for the transfer of gas through the territory of Ukraine by using their gas transport system are being fulfilled. He further stated that Germany is the biggest consumer of Russian gas, in the first nine months 2021- by annual comparison – Germany received 131,8% , i.e. 10,124 more cubic meter of gas,” Putin stated.
According to “Zeit Online”, President Putin blamed the Europeans to be responsible, by underlining that clients in Europe made the mistake to turn to the so called Spot-market. “As result Gas prices exploded during the last months; fuel is rare and gas reservoirs right now are not as much filled up as last year. The demand for gas, after the climax of the Corona pandemics and the recovery of the global economy, has increased significantly. Many deliveries went to Asia, where gas deliverers were even higher priced (…) There was the allegation that Russia would intentionally keep down gas deliveries and exert pressure on the West. To run Nord -Stream 2, “certification is still needed from the German authorities,” Putin underlined. He added that one of the reasons, why prices actually have strongly increased, was the “cancellation of long-term treaties” from the side of the Europeans, “in favor of more trade at the commodity exchange.”
Indeed, anybody who is rational and far sighted like for example the CDU Minister President from Saxonia, Michael Kretschmer, stated that Russia is “part of the solution to the energy problem and not the cause. We need Russia – particularly on the background of the global competition concerning the energy supply security. Nord- Stream 2 and long term supply contracts could help us, to prevent energy crisis in the future.” He qualified Russia as a “reliable partner which is fully in compliance with the contracts” and further underlined that the “big German natural gas importers have confirmed to me that the supply contracts of Russian suppliers are being fulfilled.”
Similarly former SPD Chancellor Gerhard Schröder in a guest commentary in the German economic daily “Handelsblatt” rejected the idea to look at “Russia as an enemy image in a cold gas war.” As administrative chairman of the gas pipeline companies of Nord Stream and of the Russian mineral oil company Rosneft, he stated that despite the climate aims set for the future, a transition period of at least three decades is needed, “in which we will need further fossil energy resources, such as natural gas.” He therefore strongly pleaded for the use of Nord Stream 2 pipeline.
French President Macron developing a bold economic vision for the future
It is quite encouraging on the background of these developments to study more in depth the speech which on October 12th French President Macron gave at the Elysée Palais in front of a group of industrialists, researchers, students, scientists and functionaries, in order to present his “Plan France 2030”- where the President developed at length an ambitious and farsighted vision of the future. The speech which consisted of many critical remarks concerning weaknesses and deficits of the French system and industry was characterized by an optimistic vision for the future. In the German press Macron’s speech was received with skepticism, which largely has to do with the fact that Germany has made the fatal decision to “decouple” from nuclear energy a n d Coal, opposite to neighboring France which has by now 58 nuclear reactors at 19 sites and wants to become a leader for nuclear energy in Europe.
In the beginning of his speech the President outlined the main challenges which our planet is facing, among them: Climate and environmental challenges that force us to think about new ways of producing energy; demographic decline, where our societies are confronted with the aging of an old population, a drop in birth rates and migration; the challenge of inequality and acceleration of digital technologies, which deepen the split in society. Geopolitical and anthropological shocks and the pandemics have exposed our vulnerabilities, such as the dependence on foreign countries (an example during the pandemics was the issue of masks and vaccination). Therefore we must learn the lesson that we “rebuild our productive independence, and produce on a European level what we will need today and tomorrow. We must have an educational and social model,” Macron pleaded. Another lesson learned from the pandemics was, as he put it, that we had an “extraordinary acceleration of innovations” (for example the discovery of a vaccination). Hence “innovation is the solution to live a better life, to plan for the nation, the continent and the world and to find solutions that are good for humanity.”
Macron suggested that given the challenges “we need to have a macroeconomic strategy of industrial innovation which allows producing such results.” As well as transform our education system in order to have more success in higher teaching, in the education of apprentices and professionals, as well as ensure employment and unemployment insurance. “France has become the most attractive country in Europe.” It not only recreated since 2 years employment but it also began to reinvest in research and in higher education while at the same time new emphasis was made on redefining “sovereignty.”
Outline for the French 2030 Strategy
Industrial and technological innovations are interlinked, the President emphasized, by stating that “creative innovation by destruction” (innovation de rupture) shows a way out from what is seen as contrast between fundamental research, incremental and technological research and massive industrialization. “Our country will reindustrialize with the help of technological start- ups which are called Deep Tech. There is no industrial France against the France of the Startups (…) we should reinvest in a growth strategy (…) and increase the capacity of the French economy to grow by way of innovation, re-industrialization and by the policy to produce wealth.”
He announced that “the strategy 2030 will bring us to the point where we have to invest 30 billion Euros. (….) The key for all this is our independence and capacity to retake the destiny of France and Europe in our hands! (…) What characterizes the French is the message to the world to “defend a form of humanism which we always have chosen: freedom, enlightenment, human rights. We showed resistance against the follies of the world – even when they seemed to be dominant.”
The President underlined that “we believe in scientific and rational progress! We think that this must be at the service of humanity.” Hence the goal for France 2030 is: “Produce better and live better, have a better understanding of the world, while serving the French and European humanism.” (…) “If we French and Europeans want to win this battle which is a battle for independence and a better quality of life we must build the humanism of the 21rst Century (…) “We must produce better and emit less carbon, respect more biodiversity become neutral in carbon by 2050. That’s our aim. Our concrete aims for 2030 aim for a series of revolutions in the production of industry.”
Bold objectives for the 2030 growth strategy
The president defined 10 objectives in order to realize the “2030 Strategy for France: 1.the need to produce between now till 2030, “small and innovative nuclear reactors”, with a better management of waste. He underlined that in respect to nuclear energy France plays a unique role. With 200.000 people employed in the nuclear sector he emphasized this as a unique chance for France, which emits less CO 2, to reinvest in order to be at the forefront of “creative innovation in that sector (…) We must prepare ourselves for creative technologies and deep transformations in the nuclear sector. It’s what is called “small nuclear reactors. To arrive there, we have to invest and we are ready to do so start quickly with the projects.” This includes also the improvement of the security in terms of waste.
- Objective is: France should “become leader of green hydrogen by 2030 (…) In order to produce hydrogen one needs electricity, because we need to make electrolysis. We need electrolysis which consumes a lot of electricity. There are two strategies to produce green hydrogen: One is to make renewable energies and make electrolysis far away somewhere and then import hydrogen, like liquefied gas. But there is a second strategy which goes to the heart of our plan: we will try to produce electrolysis in France, because we have the capacity to do so and not make decarbonized electrolysis. It is an enormous chance and allows us to become a leader in this field.” He underlined that the plan is to have till 2030 two giga factories of electrolysis on French soil in order to massively produce hydrogen and an ensemble of useful technologies.
Parallel to this objective Macron called for an investment of up to 500 million Euro in “creative technologies “and emphasized as three pillars: nuclear, hydrogen and renewable energies technologies that will allow France to produce energy and electricity in a different way and distribute this world- wide.
- A third objective, according to Macron, is the aim to “decarbonize our industry.” In terms of our strategy 2030 “we want to reduce between 2015 and 2030 35% of our CO2 emissions in the industrial sector. We must assist the de-carbonization of industrial companies.” Given the fact that France by the end of this year and in the first half of 2022 will chair the EU, Macron sees this as a chance to advance this agenda. This goes together with the need of accelerating the de-carbonization of French industry, i.e. transform the steel, cement and chemical industry. He announced that all in all aside the digitalization and robotization of our industry “more than 8 billion Euros which will be invested in order to realize this aim and to finance a new mix of electricity and innovation in the production of electricity.”
Furthermore, Macron proposed measures in the transport sector (2 Million electric and hybrid cars within 2 years) as well as an ambitious program of investment in a healthy, sustainable food production, which has to be accompanied by an agricultural revolution (robots, genetics). His plan also includes more investment in the health sector. “In the country of Jean Baptiste Colbert, of manufacturers and of Malraux,” as he stated, massive investments in education and culture are necessary. He spoke about the need to engage in “intellectual and scientific adventures in space and in maritime deep sea floor expeditions,” underlining that France is the second most powerful maritime power in the world and has created a new spatial command in the military. With the firm belief in “lucid voluntarism” the President spoke about more than 30 billion Euros that should be in invested for start -ups in the Strategy 2030.