That distant goal of free and clean energy

The Draghi paper refers to the Marshall Plan, a juxtaposition reminiscent of von der Leyen in December 2019 when she compared her Green Deal to a mission to the moon. Five years on, we get confirmation that we haven't gotten much off the ground and that, instead, our energy prices are too high. Electricity to businesses runs at €200 per megawatt hour (MWh), compared to €80 in China and the US, while gas costs us €60 compared to €20 in the US, or €40 in China. Having identified the problems, the document proposes actions. The instruments indicated, unfortunately, are always the same: more renewables, more market, but also more controls against speculation and lots of state aid. Some yielding, however, is beginning to be seen in the Commission's orthodoxy, hitherto unconditionally anchored to the energy transition. Among the 18 measures planned in the energy chapter, 9 for gas and 9 for electricity, some appear feasible, others difficult, while some are always part of the escape from reality. Positive is the increased aggressiveness against gas suppliers, if only to hold them to account for the huge profits they have made, and are making, selling us gas. Their production costs are below €10 per megawatt-hour, while they have been selling it to us for three years at over €30, with peaks as high as €300 as in September two years ago. Trading companies, whose weight is well analysed, end up in the crosshairs, as do the United States and Qatar and, above all, our neighbouring Norway, not a member of the EU, but the richest country in the world, according to UN indicators, after Switzerland, thanks to gas and oil exports to the EU. Another novelty is the wish to negotiate long-term gas supplies, somewhat in contradiction to the Commission's 30-year demand, which was radically against contracts lasting 10 years and more. Today, in order to find additional supply to bring prices down, one has to be willing to sign contracts for up to 10 years, to give the sellers the opportunity to cover the huge investments needed. It is good that it is stated that nuclear power will help the transition, even if reference is then made to the future generation, to avoid talking about today's nuclear power. In reality, action is needed now, as much of Europe's electricity system rests on the basic capacity of the 56 French nuclear power plants, which are old and whose replacement by new, large power plants is problematic. We may go ahead with new small reactors, but they will not arrive for 10 years and in the meantime our industry will be dead, while we could immediately build large plants like those under construction in China. Another important opening concerns the capture and storage of CO2, a tool that will not solve the problem, but will help, even if it will be very difficult because of the controversy it raises.

Ineffective are the usual measures related to electrical renewables. More capacity from wind and photovoltaics is welcome, but this will worsen the dependence on China, which is now irreversible. Right to do more electricity grids, but this tends to increase costs and prices, indeed tariffs. It may help to put more controls on the financial gas markets, but then the Americans who have very low prices, with so much finance, what should they do? It seems mostly exotic to point to new financial instruments as the way to get cheap electricity to industries. PPAs, power purchasing agreements, are a kind of state-guaranteed, prospective pricing that have little to do with the market mechanisms so much praised elsewhere in the paper. It is dangerous to renew interest and enthusiasm about hydrogen, which will perhaps do something, but which is proving to be extremely difficult compared to the initial enthusiasm, while it is more realistic, albeit difficult, to continue, as indicated, on bioenergy.

The paper is silent on the reasons why other people's energy prices are so low, i.e. the large production of gas from fracking in the US and the large consumption of coal in China, but it points out very well that the energy transition has so far worsened our competitiveness. A small step forward, but the moon of free, clean energy remains a long way off.